There are no gas-to-liquid (GTL) plants in the U.S. However, Emerging Fuels Technology’s Mark Agee predicts small-scale GTL plants—which convert natural gas to hydrocarbon liquids such as gasoline, jet fuel and diesel—will sprout across the country in the next few years.

As a general rule, when the gas-to-oil ratio, measured by WTI divided by the Henry Hub gas price, is 20 or greater, GTL becomes an option, said Agee, the company’s vice president of business development. Speaking during Hart Energy’s DUG Midcontinent conference, he pointed out some of the GTL synergies and opportunities.

These include instances in which:

“Trapped oil, where flaring is no longer allowed but there is a lot of oil underneath that gas and you want to get to it; curtailment of an NGL plant where there isn’t a sufficient opportunity for the methane or the ethane, and there are some regional pipeline constraints where the gas production is way ahead of the available pipeline transportation capacity,” Agee said.

As part of the GTL process, natural gas is converted into syngas, a combination of hydrogen, carbon dioxide and carbon monoxide. This step requires use of an air separation unit. The syngas is then cleaned up and moved into Fischer-Tropsch synthesis reactors, which turn the product into synthetic crude oil. Further product upgrade can lead
to diesel, jet fuel and naphtha.

GTL plants vary in size. A 500 bbl. per day to 10,000 bbl. per day GTL plant is considered small; 10,000 bbl. per day to 30,000 bbl. per day, medium; and more than 30,000 bbl. per day plant is considered large. With plans to convert natural gas into 96,000 bbl. per day of GTL diesel and other products, Sasol’s proposed GTL facility in Louisiana falls into the latter category. The project is estimated to cost between $11 billion and $14 billion, according to the company’s website.

However, Agee used a $213 million GTL plant as a model to shed some light on what would be required for a 2,000 bbl. per day plant, including natural gas, electric power, water and land requirements as well as estimated construction and labor costs, and possible revenues based on the price of diesel and naphtha.

A 500 bbl. per day GTL plant can still be economical, according to Agee.

“That would probably be what I call a flare buster, where the value of gas may be viewed as zero or negative,” Agee said.

Agee’s presentation sparked several questions, most of which involved liquefied natural gas (LNG) given much talk about LNG exports due to the abundance of natural gas in North America.

“Personally, I don’t believe LNG exports will affect GTL modeling any more than any other use of natural gas. There’s going to be a lot of uses for natural gas. This is just one more,” Agee said. “This lets natural gas flow into the middle distillates market, and that is something that LNG doesn’t do, but that doesn’t mean that LNG isn’t going to be a market.”

Agee agreed that GTL and natural gas liquefaction plants appear to present an opportunity to capture the growth in natural gas supply; however, he was unsure about how the economics of the two compare.

“It’s going to be site specific. If your resources are close to shore, you’ve got an advantage over someone whose gas resources are in the middle of the country,” he said.

So which is better for America—LNG, export or GTL?

“If you’re converting it into a liquid transportation fuel, more of the total use of the energy and the value of the upgrading is being retained in the U.S.,” Agee said. “But when you’ve got such a huge supply, and there is the opportunity to export, I don’t see that they are really competing with each other. It’s dangerous to think about the
macro; you need to think about the micro.… It’s just one more tool in the kit.”

Worldwide, there are only five GTL plants operating, with capacities ranging from 2,700 bbl. per day to 140,000 bbl. per day, according to the U.S. Energy Information Administration. Two are located in Malaysia, two in Qatar and one in South Africa. One plant is being built in Nigeria. In the U.S., three plants have been proposed—one in Lake Charles, Louisiana; Karns City, Pennsylvania; and Ashtabula, Ohio. Market uncertainty and high costs caused Shell, which operates the two Malaysian plants, to scrap plans for a large-scale GTL facility in Louisiana.

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