Unconventional Liquid Fuels Set to Double in 5 Years

Worldwide, natural gas reserves far exceed oil reserves. Indeed, at current consumption rates, the earth has about a 45-year supply of oil, compared with a nearly 1,000-year supply of natural gas. In many locales, though, natural gas is “stranded” and thus suppliers have limited markets. A key objective of gas suppliers is the development of processing and conversion technologies, such as gas to liquids, that would enable entry to the multitrillion-dollar market for chemicals and liquid fuels.

The gas-to-liquids (GTL) business is involved in the chemical conversion of stranded natural gas feedstocks to liquid products such as transportation fuels and chemicals. Insofar as beneficial processing of the world’s huge resource base of stranded natural gas is concerned, GTL processing is a relatively recent research and development (R&D) focus of the petrochemical industry. Development of commercial-scale GTL plants, utilizing stranded natural gas, is a relatively recent development, too. _ReportsnReports

Oxford Catalysts GTL ProcessAmong those small companies moving into competition with the giant energy enterprises for that $multi-trillion global marketplace, include Oxford Catalysts, Carbon Sciences, GasTechno, and a growing number of startups.

A significant amount of the world’s natural gas resources are stranded, far from existing markets. In the U.S. market, the recent substantial increase in natural gas reserves creates a technical and market opportunity for lower cost conversion to liquid fuels and chemicals. GTL technologies can economically convert these resources into high-quality, ultra-low sulfur diesel (ULSD) fuels that can be transported to consumers or used in remote locations.
Fischer-Tropsch (FT) processing of synthesis gas (synthesis gas) has undergone significant improvements in reactor design and product recovery and is no longer limited to large-scale commercial demonstrations. The process creates liquid fuel from synthesis gas, either gasified from hydrocarbon sources or natural gas, but not crude oil. FT processing has allowed South Africa, for instance, to reduce its dependency on foreign crude after World War II.

Technically, GTL fuel production is in a relatively advanced stage of development, with commercial production well demonstrated in, for example, Qatar, Malaysia, and South Africa. Although synthetic fuels can be produced from a range of feedstocks—biomass, coal, and natural gas—the GTL process is at the most advanced stage of commercial development. In addition, GTL utilizes gas resources that are either flared or currently unmarketable. Synfuel production via GTL processing of stranded gas is approximately 100 mbbl/d (thousand barrels per day), and it is estimated that as many as 10 large-scale GTL plants will be in operation over the next decade, producing as much as 300 mbbl/d of GTL products.

Many major oil companies have announced plans to investigate producing synthetic diesel fuel via a GTL process. However, a handful of companies, such as established GTL companies Sasol, Shell, Syntroleum and Rentech, are the dominant producers. As discussed in this report, though, there are numerous “second-tier” companies that have sizable GTL support operations in engineering, design, plant construction, ancillaries, and related activities. Generally, R&D is improving the efficiency and economics of GTL production as well as quantifying the costs and benefits of production and use of GTL fuel in vehicles. _ReportsnReports

The full report is available for $4850

The unconventional fuels industry is beginning to garner a lot more attention from investors, venture capital, and the energy and chemicals industries. When the full range of unconventionals is considered -- from CTL to BTL to GTL to KTL etc. -- the potential volume of fuels falls into the 10 trillion barrel oil equivalent range and up.

The key obstacle to greater participation in XTLs is the very high upfront capital costs for facilities. The Shell Pearl Qatar GTL plant, for example, cost $20 billion in development costs -- although it is expected to provide at least $6 billion per year in profits at full capacity production, so long as the price of oil does not crash and stay low. No wonder Shell and Sasol are considering building large plants in Louisiana to take advantage of the shale gas boom in that region of North America.


China is looking at a wide range of GTL and CTL approaches, to take advantage of its own shale gas wealth and coal resource. Once China's unconventional liquid fuels processes kick into production, Chinese demand for overseas oil imports is likely to diminish. Particularly if China is able to combine its ambitious nuclear reactor development program with unconventional hydrocarbons production. Persian Gulf states are likewise looking at expanding current GTL capacity to increase the value of the massive natural gas resource there.

Finally, Russia is likely to be forced to enter the GTL marketplace, as it sees the value of its natural gas resource slipping away, as more and more of its customers develop their own native shale gas reserves.