Executive Q&A viewpoint

S. Golan, CEO, Primus Green Energy

The shale revolution has caused a natural gas boom in the Marcellus shale play that has been a victim of its own success. The surge in production, along with reduced demand as a result of an unusually mild winter in the Northeast, has caused prices to drop by comparison with those in other regions of the country.

Earlier this year, the price of natural gas from the Dominion Transmissions North Point/Leidy Hub in Pennsylvania was approximately $0.95/MMBtu below the price at Henry Hub in Louisiana, the main trading point for US natural gas. Stock prices for many leading producers in the Marcellus are also falling. With a lack of pipelines to transport natural gas to consumer-rich markets in the Northeast, Marcellus producers have been forced to cut production, slash expenditures and merge with companies with deep enough pockets to weather the downturn. 

Analysts see no relief in sight. Although the spread between Marcellus and Henry Hub prices has narrowed in recent months as new pipelines have drawn down supply, a pipeline buildout extensive enough to handle the excess is years away. The same is true of export terminals to ship LNG to foreign markets.

Methanol production as a solution. What is the answer to this conundrum? In a word: methanol. Methanol (CH₃OH) is a chemical molecule that can be used in many ways—from serving as the basic chemical building block for paints, plastics and solvents to innovative applications in energy, transportation fuels and fuel cells. It is one of the top five global chemical commodities in the world.

At present, the US lower 48 states import methanol from large methanol plants on the Gulf Coast or abroad. However, methanol demand can also be satisfied on a regional basis by producing it from low-cost natural gas through Primus Green Energy’s STG+ gas-to-liquids (GTL) technology.

Methanol produced regionally through the STG+ technology is competitive with methanol imported from the Gulf Coast and overseas due to lower-cost natural gas feedstock and reduced transportation costs. Another advantage is the ability to react quickly; local producers can meet regional demand in days, rather than weeks.

The Primus STG+ technology is flexible and produces high-quality gasoline, diluent and chemicals, including methanol, from natural gas. Due to the cost savings and advantages afforded by local methanol production, Primus is developing a series of North American methanol plants. These plants range in size from 160 metric tpd to 640 metric tpd and can be expanded by adding trains. As a result of its efficient, integrated design, the STG+ methanol technology is cost effective at scales as small as 2 MMcfd (50 Mcmd) of natural gas, although it can be expanded into trains eight times larger.

Unlike traditional, large, stickbuilt methanol plants, the STG+ systems are simple to deploy. The modular units are fabricated at a central location and then transported to the plant site for final assembly and commissioning. The methanol system is modular and can be integrated within existing chemical and gas processing plants or as a stand-alone system, depending on requirements. Primus’ methanol system is inexpensive to operate, converting 1 MMBtu of natural gas into 10 gal of methanol at a production cost comparable to that of larger Gulf Coast methanol plants. The technology can produce methanol from a variety of feed gas options, including natural gas, associated gas, ethane and NGL.

Primus estimates demand for methanol in the Marcellus region to be at least 500 metric Mtpy. Through its first announced project in the Marcellus, Primus plans to meet about 10% of that demand (about 55 metric Mtpy). When the project comes online in 4Q 2017, it will be the first GTL plant in the region. Due to the scalability of the pre-fabricated systems, additional trains can be added incrementally, according to need and availability of capital.

Plans call for the addition of three more trains to Primus’ Marcellus methanol project, bringing the total capacity to 640 metric tpd in the coming years. Primus is also discussing the development of purpose-built plants for larger industrial customers and planning four more methanol plants in North America. These plants will target areas with cost-advantaged natural gas that are underserved in terms of methanol production.

Advantages of the STG+ process. STG+ has low capital and operating costs, high liquid product quality, zero wastewater, process simplicity and a favorable conversion yield.

The three-step STG+ process takes place in a continuous gas-phase closed loop, with no intermediate condensation steps. The process starts with steam methane reforming, in which natural gas or other hydrocarbon gases react with steam at high temperature and pressure to produce synthesis gas, or syngas (a mixture of H₂ and CO). As mentioned, STG+ can accommodate a range of natural gas feedstock types, including pipeline gas, wellhead gas with no limits on C₂+, gas containing up to 25% CO₂ and high-ethane residue gas from processing plants.

In the second step, the syngas is converted to methanol in a fixed-bed catalytic reactor. In the third step, the water/methanol mixture is separated from other gases and fed to a distillation system that is designed to meet the operator’s methanol purity requirements. The on-spec methanol is collected from the distillation system and sent to storage. Any unconverted gas is recycled, with a portion being used to fuel the reformer. The process water is recycled as steam for the reformer.

The STG+ technology can also be used to produce gasoline by replacing the distillation unit with the back end of the STG+ natural gas-to-gasoline system, in which methanol-rich gas is converted to dimethyl ether (DME), which is converted to raw gasoline. In the fourth and final step of the natural gas-to-gasoline process, durenes (undesirable components of gasoline) are removed, producing a high-quality gasoline end product with low benzene and zero sulfur. The ability to convert to gasoline production adds another layer of flexibility to the technology.

Meeting local methanol demand with low-cost gas. The combination of an abundant supply of low-cost natural gas and a strong demand for methanol is creating an opportunity in the Marcellus for STG+ to utilize locally produced gas to meet regional methanol needs.

The STG+ technology bridges mismatches between abundant natural gas supply and restricted takeaway capacity. It also delivers profitability, even in the face of market downturns, by turning low-cost natural gas into liquid end products. GP

Sam Golan is CEO of Primus Green Energy. He is a seasoned general manager with experience as an executive leading multinational engineering, project management and manufacturing software companies from the entrepreneurial stage to an established market presence, mergers and acquisitions, and initial public offerings. In the past, he served as the general manager at Cimatron Technologies in North America. At Cimatron, Mr. Golan led the development of integrated “lean design and manufacturing” solutions for the automotive, process and aerospace industries; provided clients with comprehensive, cost-effective solutions to streamline design and manufacturing cycles; enabled collaboration with outside vendors; and shortened product delivery times. He also cofounded and managed Smart Team, a product lifecycle management company acquired by Dassault Systems SA. Mr. Golan holds a bachelor’s degree in economics and business administration.