Gas-to-liquids fuels are becoming a reality and looming as a robust market for catalysts
ALEXANDER H. TULLO, C&EN NORTHEAST NEWS BUREAU
In early July, a collaboration between Royal Dutch/Shell, DaimlerChrysler, and a local bus company unveiled a bus powered by diesel fuel derived from a gas-to-liquids (GTL) process. The effort is similar to other experiments with alternative fuels. Earlier this year, for example, a road rally of fuel-cell-powered cars was held in California. And fleets of natural-gas-powered vehicles have been on the road for years.
However, major oil companies see nothing "alternative" about GTL fuels. ExxonMobil has invested more than $400 million in its GTL technology. Sasol Chevron, a joint venture between Sasol and ChevronTexaco established to license GTL plants, says natural-gas-based diesel will likely make up 10% of the global diesel market within 15 years.
MAGIC BUS A gas-to-liquids-fueled bus was rolled out in London earlier this month. SHELL PHOTO
Bill Bell, vice president of methanol and GTL technology and catalysts at Johnson Matthey, which intends to produce catalysts for the Fischer-Tropsch-based GTL process, shares this optimism. "We are moving from a world which exists on oil refining to one which coexists with gas refining built around GTL facilities," he says.
GTL's appeal is that it can make use of trapped gas. Countries in the Middle East, for example, have huge reserves of natural gas but little local market for it and no pipeline infrastructure to ship it to larger economies. GTL can convert it into a liquid form that is easier to export. This is the same reason such countries crack ethane to make ethylene and convert that into polyethylene, ethylene glycol, and other petrochemicals. It is also why they convert methane into methanol and liquefied natural gas (LNG).
However, GTL facilities would allow these countries to participate in the much bigger diesel fuel market. Moreover, environmental regulations are calling for the kind of low-sulfur diesel fuels that come out of the GTL process.
Of course, GTL technology is by no means a sure thing. It is used extensively by only one company, South Africa's Sasol, which started making synthetic fuels and chemicals from gasified coal a half century ago because it had no other choice. Embargoes engendered by the country's apartheid policies forced it to develop fuels from indigenous materials.
GTL processes start with synthesis gas production. The front end of the plant uses a reformer or a gasifier to convert natural gas into carbon monoxide and hydrogen. This technology is similar to processes used for years to make methanol and ammonia.
This syngas is then fed into a Fischer-Tropsch reactor, which converts it into a paraffin wax that is hydrocracked to make a variety of products, mostly diesel, but also some naphtha, lube-oil base stocks, and gases. "Fischer-Tropsch is the core of the process and where the novelty resides," Bell says.
And central to the Fischer-Tropsch process is the catalyst. "The whole enabler of a GTL plant is really the F-T catalyst," says Andrew Stotler, markets director of process technologies at Engelhard. On the other hand, he says, proven catalyst chemistries are used in the front-end syngas making and the back-end hydrocracking steps.
Luc Kersten, Shell's senior adviser on GTL technologies, agrees: "The catalyst in Fischer-Tropsch is the heart of the plant because that is where all the technology providers do a lot of work trying to distinguish themselves and getting the highest yield."
Johnson Matthey's Bell says the catalysts used in the latest generation of Fischer-Tropsch technologies are cobalt-based--usually on alumina supports and often with precious-metal promoters. "Everybody's got their view of what the formulation should be and is pretty secretive about that formulation."
Major oil companies see nothing "alternative" about gas-to-liquids fuels.
BUT THE COBALT systems aren't the only ones used. Older technologies, such as the coal-based process that Sasol employs in South Africa, use iron catalysts. Iron is suited to high-temperature processes that involve a lot of impurities like sulfur in the feedstock, experts say. However, iron produces aromatics, oxides, and other nonparaffins as by-products, while cobalt is very efficient in making paraffins from a relatively clean feedstock. "The attraction of the cobalt catalyst is its high activity and its selectivity to make the molecules we want to make," says Jeff M. Bigger, chief technology officer at GTL process developer Syntroleum Corp.
However, even Sasol has developed a cobalt catalyst for future Fischer-Tropsch plants. Another licensor, Rentech, offers an iron-based catalyst for a low-temperature process that it claims creates fewer by-products.
But the catalyst isn't everything, according to Rocco Fiato, intellectual property coordinator of GTL strategic planning at ExxonMobil. "The catalyst is one of the essential features of the process, but it is not used in a vacuum," he says, noting that his company--as well as Sasol Chevron and Syntroleum--uses a slurry process in the Fischer-Tropsch step. Shell and BP use a fixed-bed process.
In fact, the only commercial, natural-gas-based, low-temperature Fischer-Tropsch GTL plant--Shell's 12,500-barrel-per-day unit in Bintulu, Malaysia--uses a fixed-bed process. Fixed-bed technology is more proven than slurry, and Kersten says Shell has experience with it and is ready to use it in bigger units. "For us, it is the experience we have had with the Bintulu plant that has given us a lot of confidence in further scaling up that principle," he says.
And Shell already has plans to scale up the process. The company is pursuing a plant in Qatar that will produce 140,000 bbl per day--a scale that should make the plant competitive in fuels markets. Bintulu, Kersten concedes, is successful mainly because of the unique products it turns out. "Bintulu is competitive in its own right because it produces a large proportion of specialty products," he says. "That recipe can't be translated to coming projects because those specialty markets are limited."
Although Shell stands alone as a commercial operator, Sasol Chevron is the most aggressive GTL developer. The company will begin construction later this year on a 34,000-bbl-per-day plant in Qatar that is a joint venture between Sasol and Qatar Petroleum. Sasol Chevron is also negotiating a joint-venture plant in Nigeria and is studying units in Australia and the Caribbean.
ExxonMobil, which runs multiple pilot plants of hundreds of barrels per day, is also studying a plant in Qatar, as is Syntroleum licensee Marathon. Syntroleum is studying a joint-venture plant in Bolivia.
One of the reasons GTL is entering the commercial realm is that the cost of production is coming down. Sasol Chevron says the capital cost of building a 17,000-bbl-per-day plant is about $25,000 per daily bbl of synthetic fuel. The company estimates that fixed and variable costs--including labor, maintenance, and catalysts--are about $5.00 per bbl. Moreover, the company figures that with natural gas prices hypothetically at 50 cents per million Btu--a fraction of the going rate in North America--the cash cost of synthetic fuels production is about $10 per bbl.
Theo H. Fleisch, distinguished adviser of gas technologies for BP America, says BP is experimenting with a 300-bbl-per-day plant in Alaska. He believes that BP's technology can come in 10 to 20% below the benchmark of $25,000 per daily bbl. "The purpose of our technology development was to have a lower cost technology," he says.
BETTER CATALYSTS are a big part of the drop in GTL technology costs, Johnson Matthey's Bell says. "Like most catalysts, if you look at their history you will see a steady optimization, and usually the net result is that the customer gets a more efficient, longer lived catalyst typically without paying what they did to start with." He notes that reducing precious-metal or cobalt content is one way catalyst companies can reduce costs.
However, Fleisch says economy of scale is a bigger factor in reducing GTL costs. "We believe the best way to bring down cost is by building plants," he says. "Look at the LNG industry. Over the past 10 to 15 years, the cost has come down 40%, and it didn't come down because of new technologies, it came down because of economies of scale."
Shell says the company will build its next GTL plant at less than half the unit cost of the Bintulu facility. ExxonMobil also says it cut costs in half from 10 years ago. "It brings the technology into a realm where it becomes sufficiently interesting that you would look at it as a commercial alternative," Fiato says.
Fleisch says BP's process can compete with $17-bbl Brent crude oil--less than Brent's usual price. "Ten years ago, GTL was not economically viable," he says. "That is why there was no action. It has come to the point where GTL plants can be economical. If you have the right location and the right access to gas, they can be economical, and that is why people are talking about building plants today."
And with GTL ready for ascension, a big market for catalysts is now emerging, Bell says. "We are looking at thousands of tons-plus of catalyst as inventory in a single plant. It is not insubstantial."
Engelhard's Stotler notes, sale of catalysts at a GTL plant is more than a one-time proposition. "The newer technologies are going in the direction of slurry reactors, and in that case you are constantly making up catalysts: You lose some every day, and you put some in every day," he says.
Engelhard has a supply agreement for cobalt catalysts with Sasol and Sasol Chevron. In January 2002, it started up a catalyst plant dedicated to GTL in De Meern, the Netherlands. The plant has been running at full capacity, Stotler says, and he thinks that, because Engelhard has aligned with Sasol, an expansion will likely happen in three to five years. "I believe they are ahead of the rest of the industry," he says. "We wouldn't be running at 100% of capacity if they weren't."
Stotler acknowledges that the industry will have many catalyst suppliers. "All of the major catalyst companies are focused on this area, and it is a market that's coming," he says. But with the volumes being bandied about in the GTL industry, there may be enough business to go around.