VOL. XLIV

No 33

13 August 2001 

Qatar Set To Become World Center Of GTL Production

 

Qatar is preparing the ground to become the world’s leading producer of clean fuels using gas-to-liquid (GTL) technology, with one project under way and another four in the study and/or planning stage (see below) – with the prospect of output eventually reaching 425,000 b/d, MEES learns. While two other GTL projects in the Middle East are being studied in Iran and Egypt (MEES, 16 July), Qatar, with its huge reserves of natural gas in the offshore North Field, is setting the pace for what looks like being a major growth area in the global hydrocarbon industry.

 

Up to now there have been questions about the economics of GTL production. But according to the latest cost estimates, at today’s prices a project with output of more than 50,000 b/d would be very viable. Even if oil prices fell, new technological developments would ensure competitive production costs. Syntroleum’s vice-president for business development, Larry Weick, speaking at the “GTL Summit 2001” in London last June, said that ultra-clean fuels produced with GTL technology offered the potential for significant cost savings compared to fuels made from crude oil via conventional refining methods. As those costs drop below $20,000 per barrel of daily capacity, he went on, GTL’s cost advantage would be too compelling to ignore, even against crude oil prices as low as $15/B. For example, Mr Weick said, at a capital cost of $20,000/B of daily capacity, production of synthetic fuels from GTL would cost approximately $14.35/B, compared to $19.56/B for fuels  prod-

uced by conventional means – a 26% saving – “and that calculation doesn’t even count the advantage when you factor in the new environmental regulations, where GTL offers a nearly 40% cost advantage. GTL fuels already meet the new US EPA and European standards. Conventional refiners would need to spend significantly more to produce fuels as clean as GTL fuels – raising the production cost to about $23.76/B to meet the new EPA standards, based on estimates by the American Petroleum Institute.”

 

The following is a list of the various GTL projects under way or under discussion in Qatar:

 

·         Qatar’s first GTL project entered the front-end engineering and design (FEED) stage in early July, coinciding with the signature of a joint-venture agreement between Qatar Petroleum (QP, with a 51% stake) and South Africa’s Sasol Synfuels (Sasol) to develop an $800mn project at Ras Laffan Industrial City which will convert natural gas into 33,750 b/d of high grade fuels from two trains. The UK’s Foster Wheeler is contractor for the $30mn FEED phase which is expected to take nine months. The plant, scheduled for start-up in 2005 and using Sasol’s Slurry Phase Distillate (SPD) technology, will process about 330mn cfd of gas supplied by ExxonMobil’s Enhanced Gas Utilization project in the North Field to produce around 24,000 b/d of transport fuel, 9,000 b/d of naphtha and 1,000 b/d of LPG – meaning that 75% of the products will be high quality transport fuel and 25% naphtha. The liquid fuels produced will contain virtually no sulfur and have a high cetane number and very low aromatic content in the diesel. The envisaged markets are India, the Far East and Europe. At the end of this decade the plant could be expanded to raise capacity to 120,000 b/d. The financing strategy for the project is under discussion in South Africa, with the Industrial Bank of Japan as consultant.

 

·         Qatar Petroleum (QP) and ExxonMobil on 15 June announced that they had signed a letter of intent to conduct a feasibility study for a world-scale 80,000 b/d (not 100,000 b/d as reported in MEES, 16 July and 25 June) GTL plant, with lubricant products among the liquids produced. A joint QP/ExxonMobil statement said the study would provide QP with information on how the use of ExxonMobil’s proprietary AGC-21 technology in a GTL plant would contribute to the optimum utilization of gas resources from the North Field. The study will also identify and determine potential synergy opportunities with other projects and infrastructure in Qatar.

 

·         MEES learns that Canada’s Ivanhoe Energy has completed a feasibility study for a 156,000 b/d GTL project – to be brought on-stream in two 78,000 b/d phases – with technical aspects of the project now under discussion. QP decided to by-pass the letter of intent stage and go straight to the detailed terms of reference. In October 2000, Ivanhoe upgraded its Syntroleum Process volume license to a full master license status, enabling the company to pursue GTL projects around the world.

 

·         MEES also learns that QP has been approached by Conoco for an 80,000 b/d GTL project, with the idea of developing an olefin complex alongside it using the gas and liquids as feedstock. Ethane, propane and butane would come from an NGL facility and naphtha from the GTL plant.

 

·         The fifth potential GTL project, MEES understands, stems from an approach made to QP by Shell last July for a plant with capacity, according to industry sources, of around 75,000 b/d.

 

MEES further learns that Japan has expressed interest in the financing of GTL projects because of tightening products specifications in the country. The Japanese authorities want to reduce diesel specifications to below the level that can be produced from refinery-processed crude at present.