Editorial comment
A. Blume, Managing Editor
Adrienne.Blume@GulfPub.com
The startup of Chevron’s $10-B, 33-Mbpd Escravos GTL plant in Nigeria in the second half of 2014 marked the operation of the world’s fifth large-scale GTL project. Additional large-scale projects are planned around the world. However, most will not get off the ground very quickly, as project costs for large-scale GTL are notoriously prohibitive, especially when transportation fuel prices are low.
Traditional GTL plants also take a long time to build. Early in the year, in the US, Sasol was forced to delay a final investment decision for its planned $14-B, 96-Mbpd GTL facility in Louisiana due to slumping oil prices. In late 2013, Shell canceled a planned 140-Mbpd GTL facility in Louisiana after the project’s price tag climbed to $20 B. Shell also cited uncertainty over long-term gas pricing for the decision.
Traditional GTL finds home in Central Asia. Large-scale GTL is still making inroads in some areas. Hyundai Engineering and Construction and LG International announced in early April that they will build a $3.9-B GTL plant in gas-rich Turkmenistan that will process 3.5 Bcmy of gas into gasoil, kerosine and naphtha. The project is expected to take 63 months to complete.
This announcement follows a smaller, specialized GTL project under development in Turkmenistan by Haldor Topsoe and Kawasaki Heavy Industries. The plant will produce 15.5 Mbpd of synthetic gasoline for the capital city of Ashgabat.
Meanwhile, Sasol is still entertaining a possible 38-Mbpd GTL project with Uzbekneftegaz in Uzbekistan, although the project has seen little movement.
A wide spread between crude oil and natural gas prices is needed to support the viability of traditional GTL plants, which are designed to produce fuel over a period of 25 to 30 years and, therefore, are costly and time-consuming to build. A return to crude oil prices of $80/bbl to $100/bbl would make large-scale GTL projects more viable, although estimates vary for the timing of such an upswing.
Small-scale GTL: A game changer? One solution to the excess costs associated with large-scale GTL plant construction is smaller-scale GTL technology, which makes GTL operations easier to set up and more financially viable in certain areas. Such projects are taking hold in Central Asia, particularly in Kazakhstan, where economic conditions are favorable for small-scale GTL as a solution to meet local transportation fuel demand.
The technology is also gaining ground in parts of the US, where small-scale processing can help solve the problem of excess gas flaring. Other site-specific applications, such as GTL fuel production from biogas and associated gas, are being tested around the world.
A number of companies are working to commercialize their small-scale GTL technologies after conducting successful demonstration projects. Several of these technologies and projects will be discussed in the next issue’s special report on small-scale processing solutions. GP
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