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Wed 2 Aug 2006 04:00 AM

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New GTL technology could open 200 more gas fields

The US military is also considering supporting related process to switch its fuels to coal-based liquids.

A gas to liquids (GTL) process, which rivals the one used in Qatar, could open up 200 gas fields worldwide that are currently off limits to the industry, its owners told Oil&Gas Middle East last month.

Greg Jenkins, vice president of US-based Syntroleum, which developed the technology, said the process allows low start-up costs and low space requirement. This means plants can be built at fields that are too far from markets to be accessed by pipelines, and are too small to be viable for liquefied natural gas plants or the kind of GTL plants being built in Qatar.

There are some 200 such fields that have a total of 63 trillion cubic feet of gas, he said.

The first GTL plant to use Syntroleum’s process will be Canada’s Ivanhoe Energy’s planned 45,000 barrel per day (bpd) project in Egypt. Ivanhoe expects to finalise terms with Egyptian Natural Gas (Egas) to build and operate the plant within five to eight months. It will take three to four years to build once the project’s details are agreed, Jenkins said.

“[Egas’] commitment of natural gas to a project is a significant step towards the potential development of a GTL plant in Egypt,” said Leon Daniel, Ivanhoe Energy’s deputy chairman. “This agreement advances our discussions related to GTL opportunities in Egypt, which have been ongoing for a number of years.”

Syntroleum’s technology is air based as opposed to the pure oxygen process used in Qatar, so it avoids the capital costs associated with an air separation unit. Its operating costs are also lower because the initial stage of the process—mixing air, natural gas and steam under pressure and incompletely burning the natural gas to produce a specific mix of carbon monoxide and hydrogen—only needs one cycle, in contrast to the Oxygen-based process that requires two, Jenkins said. Both processes then feed the mix through a Fischer-Tropsch reactor to produce the fuels.

Syntroleum’s advantage over LNG is that the high start up costs of an LNG plant mean that only fields of at least five trillion cubic feet (tcf) of gas are commercially viable.

“Rather than compete with the Shells and Exxons in the mega projects or try and compete for those major gas reserve developments, we go for the one to five tcf fields,” Jenkins said. “There’s a subset of gas fields in the world that we think we can get at without having to go head to head with the big guys.”

A single train GTL plant using our technology where there is some existing infrastructure, such as utilities, costs about US $850 million in current capital expenditure. We don’t think anything else could approach that on a single train. This makes our technology very attractive to the region because of the lower entry fee, he said.

The first fuel from Syntroleum’s process, however, will come from a joint project with Sustec to build a coal to liquids (CTL) in Germany, which should be on-stream by 2009. It is estimated that CTL fuel will cost about US $40 – 45 per barrel to produce.

And CTL has attracted the interest of the US Air Force, which in an experiment this autumn, will fly a B52 bomber powered by Syntroleum’s jet fuel. According to USAF official Michael Aimone, the USAF uses 1% of all fuel consumed in the United States. In its Balkans campaign in the 1990s the USAF’s jet fuel consumption drove oil prices up. The impact of its switching fuels would reverberate through the world’s energy markets and allow the United States, which has massive coal reserves, to decrease its dependency on Middle East crude.

The fuel interests the military because its burning produces 90% less particles—which are picked up by heat-seeking missiles and radar—than conventional fuel. It is also much lighter and burns cooler causing less metal fatigue.

Syntroleum has been working with the US military on producing a single battlefield fuel that can burn in a ship, camp stove, tank, truck or jet.

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