GTL adds value to gas production

Distributed GTL plants could provide economic monetisation of shale gas, associated gas and stranded gas
NeviLLe HarGreaves Oxford Catalysts Group

Energy price, $/MMBtu

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ith an estimated global resource base of over 800 trillion cubic metres, natural gas is projected to play an increasingly important role in the global energy economy. But with much of the gas in the form of unconventional gas — such as shale gas, tight gas and coal bed methane — and associated or stranded gas, the challenge is to find ways to take advantage of this potentially abundant energy resource economically and in an environmentally responsible way. Currently, much stranded gas (gas fields located far from existing infrastructure) is simply left in the ground, while associated gas (gas produced along with oil) is disposed of by reinjection back into the reservoir at considerable expense, or by the wasteful and environmentally unfriendly practice of flaring, which is subject to increasing regulation. Meanwhile, many shale gas developments are being hampered by low gas prices, which result in marginal economics for quite a few discoveries. The gas-to-liquids (GTL) process offers a potentially attractive way to improve the economics and thus enable production of all of these unconventional gas resources. For a start, like liquefied natural gas (LNG) and compressed natural gas (CNG), GTL densifies the energy to make it cheaper to transport. In principle, GTL products can be transported in existing petroleum infrastructure. What is more, by converting gas into more valuable products, including diesel, kerosene and naphtha, GTL also adds considerably to its value. For example, 10 000

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Low-sulphur diesel

0 Jan 1997

Natural gas Jan 2012

Gas-to-liquids is attractive when diesel fuel is priced much higher than natural gas. This market is more attractive than ever before.

Figure 1 Trends in gas and oil prices

standard cubic feet (scf), worth $30 at the wellhead in many locations in North America -— or even less if it cannot be easily taken to market — can be converted into a barrel of oil products worth $100 as crude or even more as finished fuels. Also, in contrast to gas, oil is an internationally traded product that can be transported by a number of means. Since oil is similarly priced around the world, GTL can act as both a hedge and an arbitrage opportunity for gas producers, such as those in North America, who are faced with persistently low gas prices (see Figure 1).

Distributed option

The GTL process involves two operations: the conversion of natural gas to a mixture of carbon monoxide (CO) and hydrogen (H2) known as syngas, followed by Fischer-Tropsch (FT) synthesis to convert the syngas into a waxy

product that can be used to produce a wide range of hydrocarbon-based products, including exceptionally clean-burning diesel and kerosene (see Figure 2). In conventional GTL plants, the FT synthesis is carried out in large fixed-bed or slurry-bed FT reactors, which are designed to work on a very large scale. They require a large capital investment to set up and are only economically viable for plants producing around 30 000 b/d of liquid fuel. Examples of existing GTL plants, including the Sasol Oryx and Shell Pearl GTL plants in Qatar, operate on a vast scale. The Sasol Oryx plant in Qatar, for instance, cost around $1.5 billion to construct and is designed for production levels of 34 000 b/d. Shell’s Pearl plant, also in Qatar, cost around $18-19 billion to construct. It has an ultimate design capacity of 140 000 bpd GTL product, and 120 000 b/d natural gas

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Gas 2012 25

and is expected to produce about three billion barrels of oilequivalent over its lifetime.com . in the distributed GTL technology developed by Velocys. part of the Oxford Catalysts Group. As well as being smaller — an important consideration for offshore and remote applications — distributed GTL plants offer more flexibility to scale production to match the available resource. an amount too small to make conventional GTL plants economic. several skidmounted microchannel reactor modules can be linked together in parallel to increase production 26 Gas 2012 www. Only about 6% of the world’s known gas fields are large enough to sustain a GTL plant of such a size.Local natural gas H2O Blend into crude Steam or auto-thermal reforming (SMR/ATR) FischerTropsch Wax and light oil Air (SMR) or O2 (ATR) Gas: recycle or fuel Hydrocracking Diesel or jet fuel Figure 2 The GTL process liquids. For example. another option being developed — distributed GTL plants for the economical production of ultra-clean liquid fuel at or near the production site — does show great promise for improving profitability of smaller-scale gas deposits.eptq. However. The secret of success in the distributed plants lies in the use of small-scale microchannel or minichannel FT reactors designed to operate efficiently and economically when producing as little as 500 b/d of FT products. and the majority of potential undiscovered gas finds are thought to be below 1 trillion cubic feet (tcf).

It is designed to convert shale gas into finished synthetic fuels. This. this approach could also unlock an estimated $500 billion worth of value annually from undervalued gas resources. Microchannel FT reactors contain thousands of thin process channels filled with FT catalyst. interleaved with water-filled coolant channels. the reactions are carried out in 2. more active catalysts can be used (see Figure 3). while still maintaining sufficient capacity. Since heat transfer is inversely related to the size of the channels. Downsizing Boiling heat transfer With small-scale distributed GTL. PTT. Velocys announced that a major exploration and production company is considering the possibility of incorporating its microchannel FT reactors into a planned 5000+ b/d GTL facility onshore in North America. Distributed GTL technology based on microchannel FT reactors is also attracting interest for processing associated and stranded gas both on. depends on finding ways to reduce reactor size in order to intensify the syngas generation and FT processes. A skid-mounted module of Velocys microchannel FT reactors that can be prefabricated and delivered to site has the capacity to produce around 500 b/d. the equipment also needs to be able to withstand high-intensity wave motion. This reduces the heat and mass transfer distances. in turn. both companies are developing modular solutions that combine SMR and FT. are both currently exploring the potential technical. or channels. and both have found ways to reduce the size of the hardware. the great challenge is to find ways to combine and scale down the size and cost of the reaction hardware. Achieving this relies on developing ways to enhance heat and mass transfer properties in order to increase productivity. In the integrated two-stage system being developed by CompactGTL — which the company says is designed to incorporate modules weighing less than 25 tonnes and producing 200 b/d of liquids per module — the SMR and FT reactions are carried out in a series of minichannels. each containing low pressure drop catalyst-coated metallic foil structures. reducing the channel diameter is an effective way of increasing heat transfer and thus intensifying the process by enabling higher throughput.com Gas 2012 27 . Although both are developing integrated SMR/FT systems and are working on the basis of the same principles. chemical reactions are intensified by reducing the dimensions of the reactor systems. PTT and the www. and enables reactions to occur at rates 10-1000 times faster than in conventional systems. the Thai state-owned energy company.volumes. Since the small-diameter channels dissipate heat more quickly than conventional reactors. Several modules can be linked together in parallel.and offshore. the 0. Microchannel FT reactorbased distributed GTL plants are able to produce up to 15 000 bbl/d of clean liquid fuels economically and efficiently. In this developing field of chemical processing.5-5 cm (1-2 inch) diameter tubes. This is the basic logic behind the approaches being taken by the two main players currently working to develop small-scale GTL systems: Velocys and the UK-based company CompactGTL. In contrast. The modular nature of the system makes it easy to transport and install plants in remote locations both on. For example. In February 2010. In essence. The relative ease of installation and flexibility in terms of output shows great promise for improving profitability and helping the shale gas industry to expand. And based on the number of known small gas fields and present oil prices. For use on offshore installations. the solutions they have come up with are different.25mm to 5mm 0. In standard SMR and FT processes. the Brazilian state oil company and the largest company in Latin America. environmental and commercial advantages of Velocys’ distributed GTL technology to enable the costeffective transformation of associated gas into high-quality synthetic products that can be handled using existing infrastructure.and offshore. and Petrobras.25mm to 5mm High heat flux 10× higher heat flux than conventional reactors FT Figure 3 The Velocys Fischer-Tropsch microchannel reactor module Velocys system for distributed GTL takes advantage of microchannel technology to shrink the hardware and intensify the processes. For example. the Velocys microchannel FT reactors take advantage of a highly active FT catalyst developed by Oxford Catalysts to accelerate FT reactions by a factor of 10-15 times compared to conventional reactors. typically less than 10 mm across. making it relatively easy and inexpensive to increase production volumes as necessary. Technology on trial This potential has not gone unnoticed. and to scale the plants to match the resource. in June 2011.eptq.

it seems. Under the terms of the MOU. may not always be better. Brazil. In April 2011. The skidmounted plant was built as part of a joint demonstration and testing agreement (JDTA) between Velocys. pdf Neville Hargreaves is Business Development Director at Oxford Catalysts. focusing initially on its potential use for associated gas in onshore fields. which plans to use them in a commercial synthetic fuels plant in the US. along with all the auxiliary equipment required to convert methane to FT products. the technology is attracting interest from biofuels producers. has led two small businesses and launched a successful innovation programme for the UK government. When it comes to monetising smaller-scale gas resources that are currently not economic to develop. PTT agreed to provide funding of $5 million over two years to support the development and commercialisation of the Group’s microchannel SMR technology. global engineering firm Toyo Engineering. and Petrobras. The same small-scale FT technology that lies at the heart of distributed GTL could also play a role in establishing the distributed production of biofuels via BTL as a practical and economically feasible option.eptq. it takes roughly one tonne of biomass to produce one barrel of liquid fuel. He holds a MA in chemistry from Cambridge University. reference 1 International Energy Agency. he has focused on new clean technologies for energy and chemicals.world energyoutlook. The potential for distributed GTL technology to monetise resources that are currently considered uneconomic is capturing the interest of a growing number of gas producers. BTL production facilities need to be relatively small and located near the source of the feedstock. The Oxford Catalysts Group has received orders for two commercialscale microchannel reactors from the Portuguese company SGC Energia for use in a 50 b/d biofuels plant due to begin operating in Brazil in 2012. incorporating microchannel steam methane reforming (SMR) and FT reactors.Oxford Catalysts Group signed a binding memorandum of understanding (MOU) to further the development of the Group’s microchannel GTL technology. and for two more microchannel FT reactors from a Fortune 500 company committed to the distributed production of synthetic fuels.com . UK. Since 2004. a 6 b/d GTL demonstration plant. Trials are due to begin operations following re-assembly. and a PhD from University College London. CompactGTL announced that Petrobras has trialled and qualified its mini-channel technology. Several other companies are also conducting engineering studies to assess the potential uses of Velocys GTL facilities for other applications. 28 Gas 2012 www. was shipped to a test site at the Petrobras Lubnor refinery in Fortaleza. To avoid the economic and environmental costs of transporting feedstock to central processing plants. Austria (see PTQ. while at the same time producing environmentally friendly and ultraclean fuels. www. one of the processes used for biofuels production. and is a Fellow of the Royal Society of Chemistry. Gas producers are not the only ones who stand to benefit from the development of technologies for distributed production. A major problem with BTL is down to the fact that biomass is not very dense. pre-commissioning and commissioning at the Fortaleza site. bigger. The FT reaction also plays a central role in biomass to liquids (BTL). Q2 2010). primarily responsible for developing opportunities with customers and partners in Europe and Asia. who are now looking at these systems with interest. offshore facility developers MODEC. Meanwhile in January 2012. Following successful trials of the Velocys microchannel FT reactor at a biomass gasification plant in Güssing.org/docs/weo2011/factsheets.