Sasol on September 13 revealed that it’s proposing a gas-to-liquids (GTL) project in Louisiana, estimated to cost as much as US$10 billion and produce up to 96,000 barrels per day of Fischer-Tropsch (FT) liquids including diesel, kero/jet, naphtha and specialties.

The South African-based FT specialist “will embark on a feasibility study to evaluate the viability of a GTL venture in Calcasieu Parish, La., over the next 18 months. The feasibility study will consider two options of a two million-ton-per-annum (mtpa) and a four-mtpa facility,” according to Sasol.

The plant would tap years of learnings from Sasol’s current GTL plant in Qatar, which employs Sasol’s novel slurry-phase FT scheme (see photo).

In a separate but related press announcement, Louisiana Gov. Bobby Jindahl (R) stated that “if all proceeds as planned, construction [on the Sasol GTL plant] is expected to start in 2013, and the complex would be built in two phases that upon completion in 2018 would process approximately 4.0 million tons of products per year, with a maximum capacity of 96,000 barrels-per-day.”

What’s more, “at full production capacity, the facility would consume approximately 305 billion standard cubic feet of natural gas per year; which would represent roughly $1.3 billion to $1.5 billion per year in natural gas purchases at current prices, and accordingly, Sasol’s proposed GTL complex would provide a huge new source of demand for the Haynesville Shale and other natural gas plays in Louisiana,” he said.

In an interview with Hart’s Gasification News, Sasol spokesperson Nothemba Noruwana responded to several questions about this project.

Gasification News: Roughly what proportions of various FT products would come from this plant?

Noruwana: Sasol is evaluating the construction of a approximately two million or four million tons per annum facility which will produce high-quality liquid products including GTL diesel, GTL kerosene for jet fuel blending, GTL naphtha, liquefied petroleum gas (LPG), and other chemical feedstocks. The optimal product slate will be investigated during the feasibility phase.

Gasification News: Does the economic feasibility of this proposed plant depending upon certain fiscal incentives from the state of Louisiana or the US government?

Noruwana: Sasol has a proud history in the state of Louisiana through its operations in Lake Charles. Sasol is grateful for the support it has enjoyed from the local and state of governments of Louisiana over many years and hope to build on our relationship in the years to come and so doing contribute to the well-being of the people of Louisiana. Sasol and the state of Louisiana have commenced discussions regarding mutual cooperation in the establishment of the GTL facility in Louisiana, which will continue during the feasibility phase.

Gasification News: Is there a provision for capturing and storing (or recycling) of the byproduct carbon-dioxide emissions (CO2) from this plant, if in future the US decides to impose CO2 regulation/legislation on these types of facilities? If so, then is there a customer in mind for the CO2, such as an enhanced oil recovery (EOR) operator, or a methanol or urea producer?

Noruwana: We are evaluating carbon capture and storage technology as part of the design and engineering phase of the project.

‘Cost-Efficient’ Scheme
“GTL fuels are an important part of the energy mix because they can advance energy independence in a way that is both cost-efficient and environmentally friendly,” Sasol managing director Ernst Oberholster said at a press conference announcing the project.

“This is the second ‘first-of-a-kind’ announced by Sasol in the U.S. in less than a year: In December 2010, Sasol announced the world’s first ethylene tetramerization unit, also to be built in Calcasieu Parish.”

The announcement followed by one day Sasol’s revelation that its proposed China coal-to-liquids (CTL) project in China has stalled.

That revelation came in Sasol’s fiscal-year 2011 financial report for the period ending June 30. In fiscal-year 2011, Sasol’s operating profits rose 25% compared with fiscal-year 2010, thanks not only to cost-control measures but also because of relatively higher crude-oil prices, according to the company.

“Operating profit was positively impacted by higher average crude oil prices (average dated Brent was US$96.48 per barrel (/bbl) in 2011 compared with US$74.37/bbl in 2010) and higher chemical product prices,” according to the company.

“The benefits of the higher average crude oil and chemical product prices were partially offset by an 8% stronger average rand/U.S. dollar exchange rate (R7.01/US$1 in 2011 compared with R7.59/US$1 in 2010). Overall, group production volumes improved marginally from the prior year, despite Sasol Synfuels’ major planned maintenance outage. Group cash fixed costs for the year were contained within inflation, excluding once-off charges and growth costs.”

The Sasol Synfuels International unit posted a fiscal-year 2011 operating profit of R1.2 billion (US$162 million) versus R131 million (US$17.6 million) in fiscal-year 2010.

“The operating profit in the current year was negatively impacted by once-off charges totaling R1.1 billion [US$148 million] versus a R46 million [US$6.2 million] credit” in fiscal-year 2010, according to the company.

Once-off charges included payment of antitrust administrative penalties of R112 million [US$15 million], plus R123 million (US$16.6 million) for impairment of Sasol’s investment in the Escravos, Nigeria, gas-to-liquids (EGTL) project.

During the fiscal year, Sasol pointed out that it made progress or else suffered setbacks on several projects that potentially could involve its GTL or its CTL expertise:

oAcquisition of a 50% stake in the Farrell Creek shale gas assets of Talisman Energy in the Montney Basin, British Columbia, Canada, followed by another acquisition of a 50% stake in Talisman’s “Cypress A” shale gas assets. These deals triggered “commencement of a feasibility study to determine the technical and commercial viability of a GTL plant in western Canada,” according to Sasol;

oExpansion of gas exploration and appraisal activities in Mozambique, Australia and Papua New Guinea;

oCompletion of a feasibility study for the Uzbekistan GTL plant. “The decision to proceed to front-end engineering and design (FEED) will be taken in the near term and is dependent upon certain commercial conditions,” according to Sasol;

oPullback on the proposed coal-to-liquids (CTL) project with Shenhua in China. “Given the delay in the approval from the Chinese government for our CTL project in China, we are developing other investment strategies and growth opportunities, both in South Africa and abroad. We have reallocated planned project funding for the China CTL project and redeployed staff to other projects. We remain committed to growing our other businesses in China,” according to Sasol.

A separate report by Creamer Engineering News quoted Sasol CEO David Constable as saying that the stalled China project has already cost the company some $120 million.

Sasol’s proposed “Mafutha” CTL project in South Africa is likewise stalled, pending government approvals and some scheme that would capture the resulting carbon-dioxide emissions;

oNear-completion of a pre-feasibility study for a proposed CTL project in India. “As the last phase of the study, a drilling program is being undertaken to verify the coal assumptions,” according to the company. “Sasol Mining is nearing completion of the Thubelisha shaft, which will supply both the export market and sustain Sasol Synfuels’ production. The shaft is expected to be completed in 2012. Construction on the Impumelelo colliery remains on track for completion in 2014;” and

oConstruction on the wax production facility in Sasolburg, South Africa, “continues to progress according to plan.”

As for its domestic CTL operations in South Africa, Sasol Synfuels’ operating profit increased by 15% in fiscal-year 2011 compared with fiscal-year 2010.

“Production volumes were 4% lower than the prior year primarily due to the largest planned maintenance outage in Sasol Synfuels’ history,” according to the company.

Despite that, “operating profits were enhanced by higher average oil prices. The open cycle gas turbines were successfully commissioned during July 2010, making available an additional 200 megawatts of electricity generation capacity for the Sasol Synfuels operations, thereby significantly reducing the impact of above inflation electricity price increases on Sasol Synfuels’ unit cost. Sasol Synfuels’ cash fixed cost per unit increase was contained to 4%.

“We anticipate that Sasol Synfuels’ production volumes will improve to between 7.2 million tons and 7.3 million tons in 2012 following the major planned maintenance outage which was undertaken in September 2010.”

As for the Sasol Synfuels International (SSI) unit, “operating profit increased significantly” mainly because of “increased production at the Oryx gas-to-liquids (GTL) plant in Qatar and higher product prices derived from crude oil prices, which were partially offset by a stronger rand/US dollar exchange rate. The Oryx GTL plant is producing well and achieved an 82% utilization rate for the year.”

Oryx GTL “is expected to perform at its planned operating rate of 80% to 90% of design capacity” in fiscal 2012, according to the company.

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