Spotlight on GTL – world-scale plants making progress

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The leaders in large-scale gas-to-liquids (GTL) technology – Shell and South Africa’s Sasol – continue to make progress in developing new projects. However, with the exception of the Oltin Yo’l project in Uzbekistan, which is likely to take final investment decision (FID) in the first half of next year, other project FIDs on world-scale projects are starting to look unlikely until the second half of this decade.

That was the message from a GTL conference held in London last month. It means that significant new production capacity is unlikely to start up much before the end of the decade, and more probably in the early 2020s.

Escravos in the commissioning phase: Meanwhile, the long-delayed Escravos GTL project in Nigeria – which had been hoping to begin operations before the end of 2013 – is now expected to start up late this year or early in 2014. According to Sasol, construction has been completed and the plant is now in the commissioning phase.

Capital expenditure on that project is approaching $10 billion, according to Chevron, one of the shareholders. This compares with the $1.2 billion or so that was spent on the Oryx project in Qatar, a similar project in terms of technology and capacity, which was inaugurated in 2006.

Oltin Yo’l: The next world-scale project to come on stream after Escravos is likely to be Oltin Yo’l, a joint-venture involving the national oil and gas company of Uzbekistan, Uzbekneftegaz, Sasol and Petronas, the Malaysian national oil and gas company (a computer-generated image of the plant can be seen above). A joint venture agreement for the project was signed by the three companies in 2009.

The 37,600 barrel/day project will use the Slurry Phase Distillate technology developed by Sasol and utilised at the Oryx and Escravos projects in Qatar and Nigeria.

“We are very close towards taking an FID,” said the project’s General Director, James Vaughan, “and are ramping up our discussions with our EPC contractor of choice. We’ve already started some construction activities on site . . . We’re talking about having product in the market in 2018.”

The project will produce diesel, kerosene, naphtha and LPG – with the diesel and kerosene providing the nation with premium transportation fuels: diesel for road vehicles and kerosene to produce jet fuel for aviation. These products will offset oil product imports.

Feedstock gas will be supplied by Uzbekneftegaz under a long-term agreement with what are said to be commercially competitive prices. An Uzbekneftegaz subsidiary will lift the diesel and kerosene.

Sasol in the US: The other large-scale projects with a good chance of coming to fruition are in North America. Mark Schnell, General Manager for marketing, strategy and business development at Sasol North America, said that Sasol’s proposed 96,000 b/d project in Louisiana was expected to take FID in 2016, when front-end engineering and design (FEED) has been completed. The project is part of a cracker and GTL complex for which the start of FEED was announced in December last year.

The GTL portion of the project will convert around 1 Bcf/d of natural gas into liquid fuels and chemicals, including diesel, naphtha, LPG paraffin, lubricant base oils and waxes. It is expected to require investment of $11-14 billion. If a positive FID is reached in 2016, the first phase would start up in 2019, with the second following in 2020.

The ethane cracker will precede the GTL facility. FID is expected in 2014 for a project that will produce 1.5 million tonnes/year of ethylene at a capital cost of $5-7 billion. Construction is expected to begin in 2014 with start-up in 2017.

“In order to phase those two projects effectively,” said Schnell, “we’re doing a deeper FEED phase for the GTL plant. So by the time we take the decision we will have done some of the detailed engineering on it already. That’s aimed at enabling us to phase the two projects in a sensible way on the same site.”

The business rationale behind the GTL project is based on the wide differential between gas and liquids pricing in North America, which Sasol believes will persist over the long-term. Moreover, said Schnell, “middle distillate is the fastest-growing segment of transport fuel demand”. He added: “ GTL produces 65-75% of product in the middle distillate range, with the balance of the slate comprising chemical naphtha or added-value chemicals, with no bottom-of the-barrel products.”

Shell in the US: The other world-scale project in North America is being developed by Shell. As Gastech News reported last month, Shell has selected a potential site in Louisiana. If it goes ahead, the plant will convert natural gas into premium synthetic products including diesel, jet fuels, speciality waxes and feedstocks for lubricants, plastics and detergents.

However, it is unlikely to come on stream until into the 2020s, given that it would take around five years to construct from FID, which is still several years away. A final decision to build the proposed Gulf Coast project will be made after site evaluation and preliminary engineering studies are completed. The project is operated by Gulf Coast GTL LLC, an affiliate of Shell Oil Company and part of the Royal Dutch Shell group.

The project would almost certainly be based on the Shell Middle Distillate Synthesis (SMDS) process that Shell has developed and implemented at its Bintulu project in Malaysia, and more recently at the Pearl GTL project in Qatar.

Shell has not announced the intended capacity of the proposed plant.