GTL (Gas To Liquids) Technology
Here’s a note specifically meant for chemist/senior energy analyst Glenn Doty, my go-to guy for questions of this nature. I thought I’d post it here, since other readers might be interested.
Glenn: Do you mind looking at this for a few seconds and commenting? It’s a GTL technology that converts natural gas into diesel or jet fuel, breaking down the CH4 into syn gas and using FT to create the final product.
My personal comment is that a synthetic fuels enterprise couldn’t possibly make sense when it the reactants are fuels that already value. What these guys offer (if it works at all) is like manufacturing cars by buying cars off the assembly line, dismantling them into parts, and then reassembling them back into cars. Am I right?
Note for other readers who may not be following this:
GTL = gas-to-liquid fuels
CH4 = methane, the largest component of natural gas
syn gas = synthetic gas, the simple gases that are created when larger organic molecules are broken down
FT = Fischer Tropsch, a technology that synthesizes fuels from syn gases
Hi Craig.
As you well know, for a business proposition to be viable, it’s not a question of efficiency, it’s a question of the value of the inputs vs the value of the outputs.
In this case the company is planning on making a smaller-scale diesel synthesis plant in an area with a large amount of stranded natural gas.
Natural gas is a relatively easily traded commodity. The Henry Hub price today seems to be about $2.87/mcf (thousand cubic feet, or approximately one MJ of chemical energy).
But you can only sell the gas if you can get it to a pipeline that gets it to a hub, or a power plant, or a house with NG heating… If you have a small plot that is rich in NG but a few hundred miles removed from the nearest significant pipeline, it could cost a fortune to expand the pipeline network to accommodate your little field, which might not be viable, or might take 30 years to pay back, if you’re field is too small.
Hence: Stranded gas. It’s there, but it’s worthless because you can’t exactly put it in bags and take it to a market. It’s still quite common in the oil industry to flare natural gas coming out of the wellhead in many fields, because the gas volume isn’t worth expanding the gas pipelines to capture it. Obama made that illegal in many cases, and forced oil and gas companies not to do that… and of course Trump reversed that so most of them are doing it again.
What this GTL plant is offering, specifically by offering a small production facility, is a chance to take stranded gas or the flared gas, and convert that into diesel which is more transportable, and worth far more per MJ of chemical energy as well.
A typical GTL plant involves both a WGS (water gas shift: H2O+CO–>2H2 + CO2 + energy) and FT (Fischer Tropsch: (2x+1)H2+(x)CO –> CxH(x+2) + xH2O + energy). Both reactors are exothermic. So it gives off a lot of heat and a lot of water. Both are useful for oil field operations.
So this company is hoping to get oil companies to invest in their production facility to take a waste product and convert it into three things of value specifically within the region of the oil field operations: diesel, heat, and steam.
To re-address your analogy. This would be like taking assembled vehicles from the junkyard, scrapping them for metal and spare parts, and making new vehicles that actually work.
I’m not advocating for the plant. I know how complicated something like this is. If you recall our CARMA platform was also a partial GTL concept, that was partially powered by stranded (curtailed) wind. I understand the economics, but I don’t know their “secret sauce” so I cannot even speculate as to whether their idea has merit.
Most GTL’s are extremely large. We had four patents based on fluid flow and thermal dynamics that would allow for efficient downsizing for our concept. If they don’t have something really interesting then the small plant size will kill their profit potential.
Glenn: Thanks very much. If I can get them to speak with you about their “secret sauce,” would you be willing to review it?
I could try… Right now I’m slammed.
I haven’t had much time for anything… but I would be interested in looking at it if things calm down.
I’d be interested on a personal level, to be honest. I’m curious as to how they think they’ll shrink the economics of scale.
The NDA will have to be very carefully worded though. We’ve done a lot of work on this, not all of which has been well protected, but I don’t want to give up something I put years into because someone else mentioned it in a paper that I’m reading now.
Great. Let me pass this along.
Nice analysis from Glenn!
Craig,
It’s difficult from your description to identify the difference between Patrick Six’s
Green Innovative Energy (GIE), plant and a myriad of other small scale gas-to-liquid technologies.
GWTI claims to have developed the first small scale plant able to convert natural gas or
coalbed methane economically into water, high cetane diesel fuel, and thermal energy
enabling the generation of electricity for profitable sale back to the grid.
GTI’s prospectus claims to be seeking capital or a joint venture partner on the basis such a plant will return profits of 20% to 25% annually with a total return on capital of over 400% over on the 20 year life of the plant.
On the surface, such a claim seems very dubious.
The market for such technology is vast since the amount of small scale waste product gas is considerable and if able to be harvested economically would find ready customers.
The problem confronting companies like GWTI, is not only economies of scale and viability of logistics, but a myriad of competitors with better organizational skills, capital resources and superior technology.
Many GTL technologies are hardly new, most are simply variations on the 93 year old Fischer-Tropsch method. GWTI seems to fall into this category.
Over the last decade other chemically based technologies have been developed as alternatives to the Fischer-Tropsch method and show much greater promise of economic viability when small scale operations are involved.
Corporations such as Siluria Technologies Inc of San Francisco, are better organized, possess greater resources and backed by years of proven research. Siluria is just one of many corporations developing such alternate technology.
Nor are the major oil companies lagging behind. Shell’s Middle Distillate Synthesis (SMDS) process, involves over 3,500 patents. Chevron, BP, Sasol and Chevron are all spending large sums in research and commercialization of Gas to liquid technologies.
Air Liquide has for many years made enormous investment on a global scale to develop a wide Gas to Liquid technologies.
The idea that oil companies would rather waste or “flare off” gas is a misconception. The oil industry is acutely aware of maximizing profit and offsetting costs. The industry is also acutely aware of utilizing every component of the resource they produce as a potential profit centre.
In regard to GWTI, a modicum of research would reveal the strengths and weakness of this company and whether the technology is valuable and unique.
That sort of analysis must involve knowing the technology the company possesses, the strength of the competition and the resources, including capital and logistical ability to compete in such a crowded market where competition is very fierce and alliances are very important.
Many former Biofuel companies have switched direction to develop Gas to liquid technology and have sought investment/jopint ventures from major corporations. An example can be found in one of the former US stars in Biofuels, Biofuels Power Corp of Humble Texas, forming a joint venture with ThyssenKrupp Industrial Solutions(Germany and S. Africa) and Liberty GTL) to develop a pilot GTL plant at the BFLS power plant site in Houston.
There are so many similar projects underway all over the world . The most exciting being developed to utilize ‘waste’ or ” pollutant” gases released in coal mining (or released by coal seam technology). A “mobile” GTL plant was designed and trialed able to be transported in containers and capable of operating in even remote Coal mining sites. Interest in commercializing this technology in the US waned and investment was drying up until the election of President Trump. Since then the policies of the administration have proved effective, interest and investment has revitalized dramatically and a new generation of improved technology has eventuated that promises to make this technology economically lucrative.
In this area US technology is far in advance of European or Asian, but a great deal of ground was lost when some of the companies developing the technology were sold to Asian investors and neglected during the Obama era.
Gas to Liquid technology shows great promise and well funded, well organized corporations capable of developing truly superior and and innovative technology will prosper. As is always the case, 95% of remaining hopeful projects and companies will find the competition too fierce and either merge or disappear.
GTL technology is an often overlooked subject when discussing environmental technology and it’s good to see you taking an interest 🙂