GTL adds value to gas production

Distributed GTL plants could provide economic monetisation of shale gas, associated gas and stranded gas
NeviLLe HarGreaves Oxford Catalysts Group

Energy price, $/MMBtu

ith an estimated global resource base of over 800 trillion cubic metres, natural gas is projected to play an increasingly important role in the global energy economy. But with much of the gas in the form of unconventional gas such as shale gas, tight gas and coal bed methane and associated or stranded gas, the challenge is to find ways to take advantage of this potentially abundant energy resource economically and in an environmentally responsible way. Currently, much stranded gas (gas fields located far from existing infrastructure) is simply left in the ground, while associated gas (gas produced along with oil) is disposed of by reinjection back into the reservoir at considerable expense, or by the wasteful and environmentally unfriendly practice of flaring, which is subject to increasing regulation. Meanwhile, many shale gas developments are being hampered by low gas prices, which result in marginal economics for quite a few discoveries. The gas-to-liquids (GTL) process offers a potentially attractive way to improve the economics and thus enable production of all of these unconventional gas resources. For a start, like liquefied natural gas (LNG) and compressed natural gas (CNG), GTL densifies the energy to make it cheaper to transport. In principle, GTL products can be transported in existing petroleum infrastructure. What is more, by converting gas into more valuable products, including diesel, kerosene and naphtha, GTL also adds considerably to its value. For example, 10 000

35 30 25 20 15 10 5

Low-sulphur diesel

0 Jan 1997

Natural gas Jan 2012

Gas-to-liquids is attractive when diesel fuel is priced much higher than natural gas. This market is more attractive than ever before.

Figure 1 Trends in gas and oil prices

standard cubic feet (scf), worth $30 at the wellhead in many locations in North America - or even less if it cannot be easily taken to market can be converted into a barrel of oil products worth $100 as crude or even more as finished fuels. Also, in contrast to gas, oil is an internationally traded product that can be transported by a number of means. Since oil is similarly priced around the world, GTL can act as both a hedge and an arbitrage opportunity for gas producers, such as those in North America, who are faced with persistently low gas prices (see Figure 1).

Distributed option

The GTL process involves two operations: the conversion of natural gas to a mixture of carbon monoxide (CO) and hydrogen (H2) known as syngas, followed by Fischer-Tropsch (FT) synthesis to convert the syngas into a waxy

product that can be used to produce a wide range of hydrocarbon-based products, including exceptionally clean-burning diesel and kerosene (see Figure 2). In conventional GTL plants, the FT synthesis is carried out in large fixed-bed or slurry-bed FT reactors, which are designed to work on a very large scale. They require a large capital investment to set up and are only economically viable for plants producing around 30 000 b/d of liquid fuel. Examples of existing GTL plants, including the Sasol Oryx and Shell Pearl GTL plants in Qatar, operate on a vast scale. The Sasol Oryx plant in Qatar, for instance, cost around $1.5 billion to construct and is designed for production levels of 34 000 b/d. Shells Pearl plant, also in Qatar, cost around $18-19 billion to construct. It has an ultimate design capacity of 140 000 bpd GTL product, and 120 000 b/d natural gas

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Local natural gas

H2O

Blend into crude

Steam or auto-thermal reforming (SMR/ATR)

FischerTropsch

Wax and light oil

Air (SMR) or O2 (ATR)

Gas: recycle or fuel

Hydrocracking

Diesel or jet fuel

Figure 2 The GTL process

liquids, and is expected to produce about three billion barrels of oilequivalent over its lifetime. Only about 6% of the worlds known gas

fields are large enough to sustain a GTL plant of such a size, and the majority of potential undiscovered gas finds are thought to be below 1

trillion cubic feet (tcf), an amount too small to make conventional GTL plants economic. However, another option being developed distributed GTL plants for the economical production of ultra-clean liquid fuel at or near the production site does show great promise for improving profitability of smaller-scale gas deposits. The secret of success in the distributed plants lies in the use of small-scale microchannel or minichannel FT reactors designed to operate efficiently and economically when producing as little as 500 b/d of FT products. As well as being smaller an important consideration for offshore and remote applications distributed GTL plants offer more flexibility to scale production to match the available resource. For example, in the distributed GTL technology developed by Velocys, part of the Oxford Catalysts Group, several skidmounted microchannel reactor modules can be linked together in parallel to increase production

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volumes. Microchannel FT reactorbased distributed GTL plants are able to produce up to 15 000 bbl/d of clean liquid fuels economically and efficiently.

Downsizing

Boiling heat transfer

With small-scale distributed GTL, the great challenge is to find ways to combine and scale down the size and cost of the reaction hardware, while still maintaining sufficient capacity. This, in turn, depends on finding ways to reduce reactor size in order to intensify the syngas generation and FT processes. Achieving this relies on developing ways to enhance heat and mass transfer properties in order to increase productivity. Since heat transfer is inversely related to the size of the channels, reducing the channel diameter is an effective way of increasing heat transfer and thus intensifying the process by enabling higher throughput. For use on offshore installations, the equipment also needs to be able to withstand high-intensity wave motion. This is the basic logic behind the approaches being taken by the two main players currently working to develop small-scale GTL systems: Velocys and the UK-based company CompactGTL. Although both are developing integrated SMR/FT systems and are working on the basis of the same principles, the solutions they have come up with are different. In essence, both companies are developing modular solutions that combine SMR and FT, and both have found ways to reduce the size of the hardware. In standard SMR and FT processes, the reactions are carried out in 2.5-5 cm (1-2 inch) diameter tubes, or channels. In the integrated two-stage system being developed by CompactGTL which the company says is designed to incorporate modules weighing less than 25 tonnes and producing 200 b/d of liquids per module the SMR and FT reactions are carried out in a series of minichannels, typically less than 10 mm across, each containing low pressure drop catalyst-coated metallic foil structures. In contrast, the

0.25mm to 5mm 0.25mm to 5mm

High heat flux 10 higher heat flux than conventional reactors

FT

Figure 3 The Velocys Fischer-Tropsch microchannel reactor module

Velocys system for distributed GTL takes advantage of microchannel technology to shrink the hardware and intensify the processes. In this developing field of chemical processing, chemical reactions are intensified by reducing the dimensions of the reactor systems. This reduces the heat and mass transfer distances, and enables reactions to occur at rates 10-1000 times faster than in conventional systems. Microchannel FT reactors contain thousands of thin process channels filled with FT catalyst, interleaved with water-filled coolant channels. Since the small-diameter channels dissipate heat more quickly than conventional reactors, more active catalysts can be used (see Figure 3). For example, the Velocys microchannel FT reactors take advantage of a highly active FT catalyst developed by Oxford Catalysts to accelerate FT reactions by a factor of 10-15 times compared to conventional reactors. A skid-mounted module of Velocys microchannel FT reactors that can be prefabricated and delivered to site has the capacity to produce around 500 b/d. Several modules can be linked together in parallel, making it relatively easy and inexpensive to increase production volumes as necessary. The modular nature of the system makes it easy to transport and install plants in remote locations both on- and offshore, and to scale the plants to match the resource. The relative ease of installation and

flexibility in terms of output shows great promise for improving profitability and helping the shale gas industry to expand. And based on the number of known small gas fields and present oil prices, this approach could also unlock an estimated $500 billion worth of value annually from undervalued gas resources.

Technology on trial

This potential has not gone unnoticed. For example, in June 2011, Velocys announced that a major exploration and production company is considering the possibility of incorporating its microchannel FT reactors into a planned 5000+ b/d GTL facility onshore in North America. It is designed to convert shale gas into finished synthetic fuels. Distributed GTL technology based on microchannel FT reactors is also attracting interest for processing associated and stranded gas both on- and offshore. PTT, the Thai state-owned energy company, and Petrobras, the Brazilian state oil company and the largest company in Latin America, are both currently exploring the potential technical, environmental and commercial advantages of Velocys distributed GTL technology to enable the costeffective transformation of associated gas into high-quality synthetic products that can be handled using existing infrastructure. In February 2010, PTT and the

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Oxford Catalysts Group signed a binding memorandum of understanding (MOU) to further the development of the Groups microchannel GTL technology, focusing initially on its potential use for associated gas in onshore fields. Under the terms of the MOU, PTT agreed to provide funding of $5 million over two years to support the development and commercialisation of the Groups microchannel SMR technology. In April 2011, a 6 b/d GTL demonstration plant, incorporating microchannel steam methane reforming (SMR) and FT reactors, along with all the auxiliary equipment required to convert methane to FT products, was shipped to a test site at the Petrobras Lubnor refinery in Fortaleza, Brazil. The skidmounted plant was built as part of a joint demonstration and testing agreement (JDTA) between Velocys, offshore facility developers MODEC, global engineering firm Toyo Engineering, and Petrobras. Trials are due to begin operations following re-assembly, pre-commissioning and commissioning at the Fortaleza site. Meanwhile in January 2012, CompactGTL announced that Petrobras has trialled and qualified its mini-channel technology. The potential for distributed GTL technology to monetise resources that are currently considered uneconomic is capturing the interest of a growing number of gas producers, who are now looking at these systems with interest. Several other companies are also conducting engineering studies to assess the potential uses of Velocys GTL facilities for other applications. Gas producers are not the only ones who stand to benefit from the development of technologies for distributed production. The FT reaction also plays a central role in biomass to liquids (BTL), one of the processes used for biofuels production. A major problem with BTL is down to the fact that biomass is not very dense; it takes roughly one tonne of biomass to produce one barrel of liquid fuel. To avoid the economic and environmental costs of transporting feedstock to central

processing plants, BTL production facilities need to be relatively small and located near the source of the feedstock. The same small-scale FT technology that lies at the heart of distributed GTL could also play a role in establishing the distributed production of biofuels via BTL as a practical and economically feasible option. Following successful trials of the Velocys microchannel FT reactor at a biomass gasification plant in Gssing, Austria (see PTQ, Q2 2010), the technology is attracting interest from biofuels producers. The Oxford Catalysts Group has received orders for two commercialscale microchannel reactors from the Portuguese company SGC Energia for use in a 50 b/d biofuels plant due to begin operating in Brazil in 2012; and for two more microchannel FT reactors from a Fortune 500 company committed to the distributed production of synthetic fuels, which plans to use them in a commercial synthetic fuels plant in the US. When it comes to monetising smaller-scale gas resources that are currently not economic to develop, while at the same time producing environmentally friendly and ultraclean fuels, bigger, it seems, may not always be better.

reference 1 International Energy Agency, www.world energyoutlook.org/docs/weo2011/factsheets. pdf

Neville Hargreaves is Business Development Director at Oxford Catalysts, primarily responsible for developing opportunities with customers and partners in Europe and Asia. Since 2004, he has focused on new clean technologies for energy and chemicals, has led two small businesses and launched a successful innovation programme for the UK government. He holds a MA in chemistry from Cambridge University, UK, and a PhD from University College London, and is a Fellow of the Royal Society of Chemistry.

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