You are on page 1of 0

Special Report

LNG/Gas Processing Developments


E. SALEHI, W. NEL and S. SAVE, Hatch Ltd.,
Calgary, Alberta, Canada
Viability of GTL for the North American gas market
New developments in horizontal drilling, in combination
with hydraulic fracturing, have greatly expanded producers
ability to recover natural gas and oil from shale plays in North
America. High shale gas activity has increased dry shale gas
production in the US by around five timesfrom 1 trillion cu-
bic feet (Tcf ) in 2006 to 4.8 Tcf in 2010which is over 20% of
the dry natural gas production volume in the US.
1,2
Considering that there are 750 Tcf of technically recover-
able shale gas resources in the Lower 48 states, the shale gas
portion of the US overall dry gas production is forecast to rise
to 40%50% over the next two decades.
1,2,3
Likewise, in Can-
ada, the technically recoverable shale gas total of 355 Tcf pro-
vides a promising resource, as it is more than five times the 62
Tcf of proven reserves of conventional natural gas in Canada.
4

Projections show that total US and Canadian shale gas produc-
tion will increase from about 9 billion cubic feet per day (Bcfd)
in 2010 to over 25 Bcfd in 2025.
5
Shale gas: A game-changer for North America. Shale
gas has caused the Henry Hub spot price to drop from above
$12 per thousand standard cubic feet (Mscf ) in June 2008 to
less than $4/Mscf since January 2012. Gas was traded below
$3/Mscf in the first half of 2012. The low gas price is not only
a result of cheap production methods developed during the
last few years, but also of general oversupply in an isolated
North American market.
6
Associated gas production from liquids-rich shale plays and
the large number of wells drilled in the last several years are
major contributors to the present supply and demand situation
for gas and, consequently, to the collapse in gas prices.
7
Howev-
er, as expected, price correction has been occurring since early
autumn 2012 due to production cutbacks, switches from coal-
fired to gas-fired power generation, and higher demand during
the cold season. Most references claim $3/Mscf to $4/Mscf as
the breakeven price for dry shale gas production, which means
that a profitable price range of $4/Mscf to $6/Mscf is forecast
for natural gas in the foreseeable future.
8,9
Gas transport options. The main challenge of monetizing
gas resources is logistical. Natural gas reserves close to gas mar-
kets are usually transported via pipeline. Where this is not fea-
sible, the gas can be transported with alternative methods, such
as compressed natural gas (CNG), liquefied natural gas (LNG)
and gas-to-liquids (GTL), which all address this challenge by
densifying gas and reducing transportation costs. The latter
option converts natural gas through Fischer-Tropsch (FT)
synthesis into liquid hydrocarbons, such as diesel and naphtha.
Therefore, GTL does not need to compete in the limited gas
market, unlike CNG and LNG.
A significant reduction in gas prices over the last few years
and an escalation in oil prices have led to a high spread between
oil and gas prices. This has improved economics for GTL and
made it the most promising alternative for adding value to
natural gas assets in North America. The lower states of the
US and the western provinces of Canada (Alberta and British
Columbia) have their own drivers to encourage investment in
GTL plants.
Gas-to-liquids process. The GTL process (FIG. 1) has three
main steps:
Feedstock preparation and gasification
FT synthesis
Product upgrading.
Feedstock preparation and syngas generation. The
first step, synthesis gas production, is the most expensive of
the three processes, accounting for up to 50% of the CAPEX.
Therefore, there is significant incentive for developing new
technologies to decrease the capital cost of syngas production.
Syngas [hydrogen + carbon monoxide (H
2
+ CO)] is pro-
duced through three main commercial technologies: Steam
methane reforming (SMR) and autothermal reforming
(ATR), which are both catalytic processes; and partial oxida-
tion (POX), which is a non-catalytic process. SMR does not
need an air separation unit (ASU), and the H
2
:CO ratio is
about 3, which represents an advantage for SMR in H
2
pro-
duction applications.
Sometimes, a combination of two technologies (ATR and
SMR, or POX and SMR) is used, depending on the down-
stream FT technology requirement. The main reactions in-
volved in these processes are shown in TABLE 1.
10,11,12
Unlike SMR, in POX, natural gas and oxygen from an ASU
produce syngas at an H
2
:CO ratio of about 1.6:1.9.
13
Shell de-
veloped POX technology to produce syngas at its two GTL fa-
cilities in Malaysia and Qatar. Some drawbacks of POX are the
LPG
Naphtha
Diesel
Natural gas
from pipeline
O
2
Steam
FT tail gas
NG preparation and
syngas production
FT synthesis Product upgrading
FIG. 1. The GTL process.
Originally appeared in:
January 2013, pgs 41-48.
Used with permission.
HYDROCARBON PROCESSING JANUARY 2013
high outlet temperature from the reactor, which leads to soot
formation, and the high cost of the reactor materials.
FT synthesis requires syngas with an H
2
:CO ratio of about
2, a value higher than that obtained using POX and lower than
that achievable with SMR.
14
ATR technology uses both POX
and SMR reactions. Natural gas, steam and oxygen are reacted
in a sub-stoichiometric flame (with a steam-to-carbon ratio
close to 1 and an oxygen-to-carbon ratio of 0.500.65), and
then converted further along the catalytic bed to produce syn-
gas with an H
2
:CO ratio of around 2.
Fischer-Tropsch synthesis. FT synthesis is the catalytic
hydrogenation of CO, which is highly exothermici.e., 165 kJ
per mole of enthalpy change per mole of CO conversion, as
shown in Eq. 1.
15
CO + 2 H
2
j CH
2
+ H
2
O H = 165 kJ/mol (1)
Eq. 1 shows that not all the energy in the reactants is trans-
ferred to the products; a portion is released as heat, and the re-
action is exothermic. However, some heat can be recovered to
produce medium-pressure steam, and then to generate power.
TABLE 2 illustrates the main reactions of FT synthesis.
11,15
Due to the exothermic nature of FT reactions, heat removal
is the main challenge for the FT reactor design. Improper de-
sign results in an increased catalyst deactivation rate and de-
creased selectivity of the preferred products.
Aside from heat-removal considerations, the reactor design
is influenced by the FT products desired. There are two ver-
sions of FT technology that work at different tem-
perature ranges, depending on the required products:
low-temperature FT (LTFT) and high-temperature
FT (HTFT).
LTFT, with an operating temperature of 200C
250C, produces a mixture of gas and liquid hydro-
carbons, with a large fraction of heavy paraffinic waxy
compounds, that aims to maximize molecules in the
diesel range.
HTFT operates at temperatures of 300C350C.
This produces lower-molecular-weight paraffins and olefins in
the gaseous phase, which maximizes gasoline production. A low
chain-growth probability (alpha) of around 0.65 is intentionally
chosen for HTFT to avoid hydrocarbon deposition on the cata-
lysts, whereas this value is 0.9 or higher for LTFT.
Both LTFT and HTFT technologies operate at pressures
of 18 bar45 bar. Since the HTFT product slate is complex,
it requires significant refining to make it suitable for use as
transportation fuel. HTFT is also more favorable for chemical
applications.
15
HTFT reactors are either fluidized bed or circulating fluid-
ized bed, whereas LTFT reactors are designed as either multi-
tubular fixed bed or slurry bed. Since the formation of a liquid
phase in the fluidized-bed reactors will disable the fluidization,
no liquid phase is present outside of the catalyst particles in
HTFT reactors.
16
Both slurry-bed and fixed-bed configurations have advan-
tages and disadvantages. Slurry reactors are more efficient in
heat transfer compared to multi-tubular fixed-bed reactors.
Higher heat transfer in slurry beds leads to improved tempera-
ture control, which limits methane production and increases
output of heavier hydrocarbons.
In contrast, fixed-bed reactors are less efficient in heat re-
moval. A significant task for slurry reactors is removing catalyst
particles from the FT wax.
17
Fine particles can be produced as
a result of catalyst attrition in the slurry phase, which is not a
concern for fixed-bed reactors since the catalyst is stationary.
Fixed-bed reactors are easier to scale up, whereas there is
more uncertainty in scaling up slurry-bed reactors. Also, fixed-
bed reactors are more expensive to build than slurry reactors.
However, slurry reactors require more catalyst handling and
other auxiliary equipment.
To capture the main benefits of slurry reactors (improved
heat removal) and fixed-bed reactors (simpler catalyst-han-
dling systems and lower technology risk), extensive work was
conducted by emerging technology licensors to enhance both
heat and mass transfer in fixed-bed reactors by reducing the
size of the tubes. This achievement has led to the development
of microchannel fixed-bed reactors. The microchannel FT
reactors are significantly smaller in diameter and length com-
pared to traditional fixed-bed reactors, and they can utilize
more efficient FT catalysts with a higher heat-release rate and
higher productivity.
Upgrading. FT product upgrading applies the same basic
technologies and catalysts as those used in a crude oil refinery.
Upgrading unit design depends on the feed to be processed.
11
TABLE 1. Main synthetic gas reactions
Reactor Process technology Reaction
SMR
Steam methane reforming (SMR) CH
4
+ H
2
O } CO + 3H
2
Water-gas shift (WGS) CO + H
2
O } CO
2
+ H
2
POX Partial oxidation CH
4
+ 1/2O
2
} CO + 2H
2
ATR
Partial oxidation CH
4
+ 3/2O
2
} CO + 2H
2
O
SMR CH
4
+ H
2
O } CO + 3H
2
WGS CO + H
2
O } CO
2
+ H
2
TABLE 2. Main FT reactions
Factor Reaction
Parafn formation nCO + (2n+1)H
2
} C
n
H
2n+2
+ nH
2
O
Olen formation nCO + 2nH
2
} C
n
H
2n
+ nH
2
O
Alcohol formation nCO + 2nH
2
} C
n
H
2n+1
OH + (n1)H
2
O
WGS reaction CO + H
2
O } CO
2
+ H
2
Boudouard reaction 2CO } C + CO
2
Carbon deposition CO + H
2
} C + H
2
O
Heat removal is the main challenge for the
FT reactor design. Improper design results in
an increased catalyst deactivation rate and
decreased selectivity of the preferred products.
HYDROCARBON PROCESSING JANUARY 2013
LNG/Gas Processing Developments
For HTFT, the FT products contain considerable amounts
of olefins that are removed for chemical applications, whereas
the FT products from LTFT lack sufficient olefins content to
justify their extraction.
16
The FT products, after stabilization, are hydroisomerized/
hydrocracked to produce more distillates at mild conditions.
Very severe hydroprocessing improves the weak cold proper-
ties of produced distillates (i.e., decreasing diesel cloudpoint),
but at the expense of lowering the diesel output and increasing
the yield of lighter hydrocarbons.
GTL products market. These products are unique; they are
clean, sulfur-free, paraffinic hydrocarbons. Although a broad
range of specialty products can be obtained through the GTL
process, the focus is on three main products: diesel, naphtha and
liquefied petroleum gas (LPG).
The diesel markets in North America and worldwide are
steadily growing. Particularly in Europe, rising demand is driv-
en by the road freight sector and by passenger vehicles switch-
ing from gasoline to diesel.
15
In the US, the Energy Information
Administration (EIA) projects that diesel consumption will
reach 4.5 million barrels per day (MMbpd) by 2035which
means an increase of over 40%.
18
Likewise, the National En-
ergy Board of Canada forecasts that domestic diesel consump-
tion will increase by about 50% by 2035.
19
FT diesel can be used directly or blended with crude oil-
derived diesel and burned in existing vehicle engines. FT diesel
has zero sulfur, contains low aromatics, and is mostly comprised
of linear products with a cetane number above 70, compared to
a typical cetane number of 40 for crude oil-derived diesel.
Due to these properties, FT diesel has the potential to be
sold as a premium diesel blendstock. In addition, FT diesel can
be blended with lower-cetane, lower-quality diesels to achieve
commercial diesel specifications. Aside from the listed advan-
tages, the lower emissions levels of hydrocarbons, CO, NO
x
and particulate matter (PM) make FT diesel a more promising
fuel vs. conventional diesel.
20
FT naphtha is not suitable for gasoline production because
of its low octane number and linear paraffinic nature. However,
it can be utilized as a bitumen diluent in specific markets, such
as the oil sands market in Canada. Canadian producers prefer
to export their heavy oil for processing at US refineries, for
which diluent is required.
To meet pipeline specifications, one third of a barrel of dilu-
ent is required for every barrel of bitumen that is to be pumped.
The growing oil sands business in Alberta, Canada has resulted
in a corresponding growing market for FT naphtha. According to
the Canadian Association of Petroleum Producers (CAPP) fore-
cast, total oil sands production will reach 3.7 MMbpd by 2025,
representing an increase of more than double the current level.
21
The other potential market for FT naphtha is feedstock for
steam crackers to produce petrochemicals. FT naphthas paraf-
finic nature makes it is an ideal feedstock for naphtha crackers,
and it gives a higher yield of cracker products (ethylene and pro-
pylene), compared to crude oil-derived naphtha. Most naphtha
steam crackers are located in Japan and South Korea. In North
America, steam crackers mainly use gas feedstocks.
There are also various industrial uses for LPG, primarily as
fuel or as petrochemical feedstock. New in-situ oil sands tech-
nologies create an alternative use for LPG, potentially aiding
in the extraction of bitumen from oil sands.
GTL economics. The oil-to-gas price spread is the main driver
affecting the viability of GTL. In fact, GTL products, such as FT
diesel and naphtha, will compete directly with crude oil-derived
products. The Henry Hub natural gas and West Texas Interme-
diate (WTI) crude oil price benchmarks are used as the basis
for the current study. FIG. 2 and FIG. 3 show the EIAs 20112035
projections for natural gas and crude oil prices, respectively.
The average prices for WTI oil and Henry Hub gas in the
forseeable future are $110/bbl and $5.60/MMBtu, respec-
tively. This translates into an oil-to-gas price ratio of about 20,
compared to a forecast average of less than 10, as estimated in
the previous 21 years (FIG. 4).
However, the EIAs 2012 projections show a $20/bbl high-
er average oil price and a $0.30/MMBtu lower average natural
gas price, which leads to a higher spread between crude oil
and natural gas prices. A higher spread means increased profit-
ability for GTL.
On average, 10 MMBtu of natural gas is required to produce
1 bbl of GTL product, of which about half is consumed to pro-
vide the energy needed for GTL processing and for generating
2
3
4
5
6
7
8
2011 2015 2019 2023 2027 2031 2035
$
/
M
M
b
t
u
Year
FIG. 2. Natural gas (Henry Hub) price projection.
18
80
90
100
110
120
130
2011 2015 2019 2023 2027 2031 2035
$
/
b
b
l
Year
FIG. 3. Crude oil (WTI) price projection.
18
HYDROCARBON PROCESSING JANUARY 2013
LNG/Gas Processing Developments
some power for export. The differential is the energy content
of the liquid product. It means that the average feedstock cost
is about $56/bbl, utilizing an average gas price of $5.60/MM-
Btu for the lifetime of the plant.
A significant portion of operating expenditure (OPEX)
for a GTL facility (e.g., labor, maintenance and insurance) is
size- and location-specific, whereas chemicals, catalysts and
utilities are not. A rough OPEX estimate of $15/bbl to $20/
bbl may be used.
15, 23
In addition, $3/bbl is assumed for the
transportation cost of the productsan assumption that is
also location-specific.
As with any process in the oil and gas industry, GTL is cap-
ital-intensive; therefore, economy of scale is important. Oryx
GTL, with $1.2 billion (B) to $1.5 B in capital expenditure
(CAPEX) and a capacity of 34,000 bpd, has a specific CAPEX
in the range of $35,000 to $44,000 per bpd.
Pearl GTL, which is an integrated upstream and downstream
project with $20 B in CAPEX and capacities of 140,000 bpd
of GTL and 120,000 bpd of NGL, translates to a specific CA-
PEX of $77,000 per bpd. The higher CAPEX for Pearl GTL
is due to the cost escalation of engineering and materials from
20062007, when Pearl GTL started construction. Oryx GTL
benefited from a lump-sum engineering, procurement and con-
struction (EPC) contract, which had been sealed prior to 2006,
hence avoiding this period of cost escalation.
20
Sasol of South Africa, which is the technology provider as
well as a major stakeholder of the Oryx GTL plant in Qatar,
seeks to build GTL facilities in North America. In the US, the
cost estimate for Sasols proposed, 96,000-bpd GTL plant in
Louisiana is $8 B to $9 B (approximately $88,000 per bpd).
24

For this analysis, a specific CAPEX of $100,000 per bpd was as-
sumed, which is higher than the Pearl GTL CAPEX and Sasols
estimated CAPEX for the US Gulf Coast. The $100,000 per
bpd translates to an estimated cost of $10/bbl of GTL products
for a GTL plant running for 30 years.
The breakdown for GTL product cost in FIG. 5 shows that
gas feedstock cost is the highest contributing factor to the total
cost of 1 bbl of GTL product. However, where the stranded
gas alternatives are to leave the gas alone or to flare it, the ne-
gotiated gas price has little relationship to the market price.
Therefore, stranded-gas GTL economics are primarily driven
by product price and CAPEX.
The breakeven point for GTL lies between $50/bbl and
$100/bbl of the crude oil price, depending mainly on the CA-
PEX and the natural gas price.
25
To evaluate the viability of a
generic GTL plant in North America, GTL product prices were
forecast based on the EIAs 2011 projection of the WTI price,
utilizing the historical relationships between diesel, naphtha
and LPG prices and the price of WTI.
The analysis of historical prices shows a relationship between
US Gulf Coast ultra-low-sulfur diesel price and WTI price, as
seen in FIG. 6. Likewise, FIG. 7 demonstrates the historical LPG
price as a function of WTI. The Mont Belvieu, Texas historical
propane spot price was assumed for the LPG price, and naphtha
was assumed to be sold at the WTI price projected by the EIA.
Assuming a GTL plant with the capacity of Oryx GTL, the
product slate would be 24,000 bpd of diesel, 9,000 bpd of naph-
tha and 1,000 bpd of LPG (although Oryx GTL announced an
even higher diesel production at the XTL Summit in London in
May 2012). The internal rate of return (IRR), which is graphed
against CAPEX in FIG. 8, considers the following items:
The assumptions made for gas price projection (FIG. 2)
GTL product price projections (FIGS. 3, 6 and 7)
OPEX
Transportation cost
A plant availability of 93%.
As shown in FIG. 8, by increasing CAPEX from $80,000 per
bpd to $200,000 per bpd, the IRR will decrease from above
20% to below 10%. FIG. 9 also shows IRR as a function of the
0
10
20
30
40
50
60
Feedstock CAPEX OPEX Shipping
$
/
b
b
l
FIG. 5. GTL product cost breakdowns.
WTI price, $/bbl
U
S

G
u
l
f

C
o
a
s
t

u
l
t
r
a
-
l
o
w
-
s
u
l
f
u
r

d
i
e
s
e
l

p
r
i
c
e
,

$
/
b
b
l
y = 1.2198x + 0.249
0
20
40
60
80
100
120
140
160
180
50 60 70 80 90 100 110 120
FIG. 6. Historical price relationship between diesel and WTI.
26
0
5
10
15
20
25
30
35
40
1990 1995 2000 2005 2010 2015 2020 2025 2030
C
r
u
d
e

o
i
l

t
o

n
a
t
u
r
a
l

g
a
s

p
r
i
c
e

r
a
t
i
o

Year
10
Average EIA: 20
Historical ratio
EIA forecast
Current ratio
FIG. 4. Crude oil (WTI) to natural gas (Henry Hub) price ratio.
22
HYDROCARBON PROCESSING JANUARY 2013 HYDROCARBON PROCESSING JANUARY 2013
LNG/Gas Processing Developments
LNG/Gas Processing Developments
average natural gas price and the average WTI price for the ser-
vice life of the plant, at various CAPEXs.
As expected, gas and WTI pricings have a significant ef-
fect on the total economics of GTL. The economic evaluation
shows that, at a gas price of up to $8/MMBtu, assuming a CA-
PEX of $80,000 per bpd (FIG. 9), GTL could still be economical
with an average WTI price of above $120/bbl. However, most
scenarios forecast a gas price of $4/MMBtu to $6/MMBtu for
the foreseeable future.
Conversely, at a CAPEX of $200,000 per bpd, GTL would
be viable only at higher crude oil and lower gas prices. Associ-
ated gas, as the byproduct of US wet shale plays, could be a good
example for low-value, or sometimes zero-value, feedstock. In
addition, electricity as the byproduct of a GTL plant could be
exported to improve the IRR; however, it is not included in this
economic evaluation.
Furthermore, production of higher-value byproducts, such
as lube oils, paraffins and waxes, has not been considered in this
evaluation. Note: this economic evaluation has been conservative
regarding the pricing for feedstock and GTL products. Selecting
the right location with accessibility to less-expensive gas feed-
stock significantly improves economics.
Potential locations for GTL installation in North America.
Shale gas development has significantly changed natural gas
pricing in North America and gas trade between Canada and
the US. Historically, Canada has been a main gas supplier to the
US, which now produces enough gas to be in oversupply.
The two main alternatives for monetizing natural gas in both
Canada and the US are LNG and GTL. Canada has been plan-
ning to install LNG plants in British Columbia, on Canadas
West Coast, to supply Asian marketsparticularly Japan. In the
US, most planned installations are located along the Gulf Coast
and target European markets.
Although higher thermal efficiency and proven technology
make LNG an attractive alternative, the product is still sold
in the limited natural gas market. Furthermore, LNG exports
likely will not aid in reducing oil imports, of which 70% are con-
sumed by the transportation sector. GTL, on the other hand,
provides clean transportation fuels and also significantly im-
proves US energy security.
Western Canada and the US Gulf Coast each have unique
advantages and disadvantages for hosting GTL plants. Canada
is witnessing higher labor and construction costs (CAPEX and
OPEX) than the US. Conversely, Canadas huge gas resources
are landlocked, with no readily available market, which will
keep the Canadian gas price below the US gas price.
The benefit of a lower specific CAPEX in the US is mainly
due to accessibility to a lower-cost labor force. The US Gulf
Coast, in particular, benefits from proximity to a skilled labor
force and access to the coast. The large products market in the
US also supports the implementation of larger-scale GTL plants.
Canada, with the advantage of a lower gas price and growing
naphtha and diesel markets in Alberta, could be a good alterna-
tive location, especially for small- to medium-sized GTL plants.
Takeaway. New technological achievements in shale gas recov-
ery have led to an oversupply of natural gas in an isolated North
American market. This has caused an unprecedented disconnect
between oil and gas prices. Economic evaluations have shown
that the wide spread between oil and gas prices is making GTL
viable at a broad range of CAPEX values. GTL installations are
0
5
10
15
20
25
80,000 100,000 150,000 200,000
I
R
R
,

%
CAPEX, $/bpd
FIG. 8. Plant IRR vs. CAPEX.
IRR (%): 0%10% 10%20% 20%30%
30%40% 40%50%
CAPEX: $80,000/bpd CAPEX: $100,000/bpd
80
100
120
140
2 4 6 8
A
v
e
r
a
g
e

W
T
I

p
r
i
c
e
,

$
/
b
b
l
Average gas price, $/MMBtu
80
100
120
140
2 4 6 8
A
v
e
r
a
g
e

W
T
I

p
r
i
c
e
,

$
/
b
b
l
Average gas price, $/MMBtu
CAPEX: $150,000/bpd CAPEX: $200,000/bpd
100
120
140
2 4 6 8
A
v
e
r
a
g
e

W
T
I

p
r
i
c
e
,

$
/
b
b
l
Average gas price, $/MMBtu
80
100
120
140
2 4 6 8
A
v
e
r
a
g
e

W
T
I

p
r
i
c
e
,

$
/
b
b
l
Average gas price, $/MMBtu
FIG. 9. IRR vs. average natural gas and WTI prices at various CAPEXs.
y = 0.589x + 3.6856
0
10
20
30
40
50
60
70
80
90
0 20 40 60 80 100 120 140 160
M
o
n
t

B
e
l
v
i
e
u
,

T
e
x
a
s

p
r
o
p
a
n
e

s
p
o
t

p
r
i
c
e
(
f
r
e
e

o
n

b
o
a
r
d
)
,

$
/
b
b
l
WTI price, $/bbl
FIG. 7. Historical price relationship between LPG and WTI.
26
HYDROCARBON PROCESSING JANUARY 2013 HYDROCARBON PROCESSING JANUARY 2013
economically feasible at low natural gas prices and high forecast
oil prices, even at lofty CAPEX values of around $200,000/bpd.
New developments in FT technology will enable economi-
cally viable GTL facilities at a smaller scale, compared to ex-
isting industrial facilities. However, one must be careful to
understand the various challenges in implementing new FT
technology related to gas-loop optimization, total process in-
tegration to meet a suitable product slate, catalyst handling,
efficient startup, commissioning and operations, and a pro-
cess design to support a zero-holdup system.
A holistic view is required to consider and integrate these
factors in a practical manner. An efficient gas-loop design,
along with the appropriate level of modularization and an ef-
fective project delivery strategy, is known to impact the IRR
by 3%5%. This gives a significant boost to overall project
viability. Conversely, negating some of the practical aspects
of commercializing technology might lead to schedule and
startup delays, thereby having the opposite effect on IRR.
LITERATURE CITED
1
Review of emerging resources: US shale gas and shale oil plays, US Energy
Information Administration, July 2011.
2
Butler, N., Shale gas and global energy security, Energy Economist, 2011.
3
Fueling North Americas energy future, IHS CERA, 2010.
4
Country overview: Canada, US Energy Information Administration, October 16,
2012.
5
Canadas shale gas, Canadian Association of Petroleum Producers, February 5, 2010.
6
Shale fueling a looming energy credit crunch, Petroleum Economist, May 10, 2012.
7
After the gold rush: A perspective on future US natural gas supply and price, The
Oil Drum, February 8, 2012.
8
Brown, D., What is the cost of shale gas play? AAPG Explorer, April 2011.
9
Shell has learned from its Pearl GTL project and costs can be cut: Voser, Platts,
March 7, 2012.
10
Aasberg-Petersen, K., J. H. Bak Hansen, T. S. Christensen and I. Dybkjaer,
Technologies for large-scale gas conversion, Applied Catalysis A: General, Vol.
221, 2001.
11
Velasco, J. A., Gas to liquids: A technology for natural gas industrialization in
Bolivia, Journal of Natural Gas Science and Engineering, Vol. 2, 2010.
12
Liu, J. A., Kinetics, catalysis and mechanism of methane steam reforming, MSc
thesis, Worcester Polytechnic Institute Chemical Engineering Department, 2006.
13
Vosloo, A. C., Fischer-Tropsch: A futuristic view, Fuel Processing Technology, Vol. 71,
2001.
14
Wilhelm, D. J., D. R. Simbeck, A. D. Karp and R. L. Dickenson, Syngas pro-
duction for gas-to-liquids applications: Technologies, issues and outlook, Fuel
Processing Technology, Vol. 71, 2001.
15
Tijm, P., Gas-to-Liquids, Fischer-Tropsch, Advanced Energy Technology, Futures
Pathway, Bookland Direct, 2010.
16
Steynberg, A. P., Introduction to Fischer-Tropsch technology, Studies in Surface
Science and Catalysis, Vol. 152, 2004.
17
De Klerk, A., Fischer-Tropsch Refining, Wiley-VCH, 2011.
18
Annual projections to 2035, US Energy Information Administration, April 2011.
19
Canadas energy future: Energy supply and demand projections to 2035Energy
market assessment, National Energy Board of Canada, October 17, 2012.
20
Rahmim, I., Special report: GTL, CTL finding roles in global energy, Oil & Gas
Journal, March 24, 2008.
21
Crude oil, markets and pipelines, Canadian Association of Petroleum
Producers, June 2011.
22
Natural gas and crude oil prices in AEO2009, US Energy Information
Administration.
23
Gas-to-liquids: A reserve ready to be tapped, IHS CERA, July 14, 2011.
24
Sasol eyes growth in North America, exit from Iran, Hydrocarbon Processing,
September 10, 2012.
25
McCracken, R., Prostrate before Pearl, Energy Economist, July 2011.
26
Spot prices for crude oil and petroleum products, US Energy Information
Administration.
EBRAHIM SALEHI is a process engineer with more than nine
years of experience with operating and EPC companies,
including four years of PhD research in biofuels and two years of
field experience in a petrochemical complex in southern Iran. His
industry experience has taken place mainly in natural gas,
including conceptual and pre-feasibility studies on GTL in
western Canada and study opportunities for developing
compressed natural gas (CNG) and adsorbed natural gas (ANG) in Iran. Mr. Salehis
recent work experience involves the gasification and Fischer-Tropsch areas of a GTL
pre-feasibility study with Hatch, and he has developed an in-depth understanding
of gasification, Fischer-Tropsch, and upgrading technologies. Mr. Salehi received
the Industrial R&D Fellowship (IRDF) award for Hatch from the Natural Sciences
and Engineering Research Council (NSERC) of Canada.
WESSEL NEL is a senior process engineer at Hatch with more
than 14 years of experience. Of these 14 years, 12 were
dedicated to Fischer-Tropsch-related projects, including 10
years at Sasol. Mr. Nel has been the lead Fischer-Tropsch
engineer on a number of Hatchs CTL, GTL and biomass-to-
liquids (BTL) studies in recent years, and the project manager
for recent GTL studies. He has developed an extensive
understanding of established and upcoming GTL technologies from a broad
range of licensors. Mr. Nels skills include conceptual to detailed process design,
process simulation, flowsheet optimization, economic evaluation, and project
and engineering management.
SANJIV SAVE is the director of oil and gas (hydrocarbon
processing) with Hatchs oil and gas business unit. He has over
20 years of professional experience with both operating and
consulting companies, in the areas of project and business
management for multidisciplinary engineering, procurement
and construction (EPC) projects in the energy sector. Mr.
Saves specific areas of technical expertise include heavy oil
upgrading and non-conventional fossil fuelsnamely oil sands, oil shale, gas-to-
liquids (GTL), coal-to-liquids (CTL), and carbon capture and sequestration. His
solid technical qualifications, organizational and management skills, and ability
to transcend cultural barriers have led to the successful execution of several
projects. Also, his strong research and development background has contributed
to the publication of several articles, chapters and patents.
Article copyright 2013 by Gulf Publishing Company. All rights reserved. Printed in U.S.A.
Not to be distributed in electronic or printed form, or posted on a website, without express written permission of copyright holder.
Hatch is an employee-owned, multidisciplinary professional EPCM services firm that delivers a comprehensive array of
technical and strategic services, including consulting, technology, and operations services to the Mining, Metallurgical, Energy,
and Infrastructure sectors. Hatch is internationally known for its anything-to-liquids (XTL) and LNG experience and is currently
involved with one of the worlds largest LNG projects, the Gorgon Project. Hatch has served clients for over 80 years and has
project experience in more than 150 countries around the world. With 11,000 people in over 65 offices, the firm currently has
more than $35 billion projects currently under management.
Ebrahim Salehi esalehi@hatch.ca
Wessel Nel wnel@hatch.ca
Sanjiv Save ssave@hatch.ca
LNG/Gas Processing Developments