LNG and GTL (gas-to-liquids) are both ways of monetising gas but are doing different things. GTL is not merely a change in physical state, it’s a chemical transformation into different products. The choice between GTL and LNG depends on the particular project and location; factors to consider include logistics, the gas price and the size and value of the product market.
Capex is higher for GTL than LNG, but GTL makes a higher value product so returns can be higher (even in the current low oil price environment) particularly if the plant is “tuned” to produce high value speciality chemicals. Including GTL in a portfolio of gas monetisation projects enables the producer to hedge between oil and gas markets.
For getting natural gas into the all-important transportation sector, smaller scale GTL is an attractive alternative to LNG (and CNG). Gas itself is a poor substitute for most transportation fuel needs; switching costs for converting infrastructure and engines are inhibiting the widespread adoption of LNG and CNG for mainstream automotive purposes.
In contrast, the GTL process produces “drop in” fuels that are fully compatible with existing infrastructure and engines. GTL produces exactly the liquid fuels the world most thirsts for and is best set up to receive – diesel and jet fuel. The Energy Information Administration 2014 Annual Energy Outlook reports that the demand for diesel is expected to grow by approximately 0.9 million barrels per day (bpd) by 2040. GTL-derived diesel is highly paraffinic, has virtually zero aromatics and sulphur and burns cleanly, emitting very low levels of particulates and other pollutants – making it ideal for marine or road use.
And you can’t fly planes on gas.
Smaller scale GTL is attractive for areas that are gas rich but oil poor, and could provide a valuable source of diesel for isolated, remote communities or drilling sites, where import costs of liquid fuels are very high.
Finally, it is a way to reduce flaring of associated gas, providing a product that can be blended into crude.
What do you think? LNG or GTL? Let us know your thoughts below.
Neville Hargreaves, Business Development Director at Velocys spoke at CoTEs programme last year. Gastech’s CoTEs programme (Centres of Technical Excellence) presents a series of free-to-attend seminars dedicated to deliver knowledge and awareness of technological innovations in the natural gas industry. To submit your abstract to speak at Gastech’s CoTEs 2015 follow the banner below.
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