The global demand for energy is expected to grow exponentially. Renewable energy will experience significant growth by 2030 and non-renewable energy will have a major share in the global energy mix. By 2030, gas will be the second-largest energy source after oil, which will have a 30% share in the global energy mix.

The demand for oil is expected to grow annually by 1.2% on an average and reach 105 million barrels per day (bpd) by 2030. The oil industry faces the relentless challenge of meeting high energy needs, as easy oil extraction has become a thing of the past. Ever since the shale gas revolution, which has led to an oversupply of gas in the United States, the need to convert stranded gas into liquid fuel has increased around the world. As a result, companies are aiming to develop a technology that will help in converting these gases to liquid (GTL).

According to the World Bank, 5 trillion cubic feet (TCF) of associated gases are flared each year, which can be monetized by implementing innovative technologies such as compact GTL. In addition, according to the Energy Information Administration (EIA)’s Annual Energy outlook, gasoline consumption is expected to decline by 2.1 million bpd by 2040. Conversely, the demand for diesel is expected to grow by 900,000 barrels per day. The additional demand for diesel can be met with the help of small-scale GTL, whose by-product is diesel.

Small-scale or mini GTL has been practiced for more than a decade. A large-scale GTL plant can convert 300 million metric standard cubic feet per day (mmscfd) of gas to 30,000 bpd of diesel or gasoline, while a methanol plant produces about 2500 tonnes per day (tpd) of methanol from 75 mmscfd of gas. In the last couple of years, mini GTL technologies have been developed to help monetize gas in small volumes (less than 25 mmscfd) and, thereby, help in reducing the wastage of gas, which otherwise would be flared in the atmosphere.

How is Mini GTL Different from Large-scale GTL?

The world’s first large GTL plant was commercialized by Shell in Bintulu, Malaysia in 1993. Large-scale GTL comes with the complexities of massive and expensive facilities, which may not be economically feasible in areas where output of the gas is less than or equal to 25 MMscfd. Moreover, large GTL projects can lead to delay in the project start-up, as the complexity involved in project execution is similar to that in any other big refinery or petrochemical project.

Mini GTL plants are compact and modularized, which are useful in unlocking opportunities that were previously uneconomic. Small-scale GTL can be modularized to specific sites and a wide range of products can be obtained that are of the same quality and grade as those obtained from conventional large-scale GTL plants.

Apart from providing a host of value-added products, mini GTL has many advantages over large-scale GTL projects. These include modularization of equipment, which helps in the installation of units in remote or challenging locations. This is possible because the reactor’s size is smaller and lighter than that in conventional technology and 70% of the plant can be factor-built before installation. Due to modularization, the plant can be built faster, with reduced delays that could lead to cost overruns.

Technology Readiness of Mini GTL to Monetize Large Amounts of Stranded Gas

There are a number of companies investing heavily in the development of mini GTL technologies. Although the basis for mini GTL is the Fisher Tropsch (FT) process, there are 12 companies that have developed innovative technologies and are about to commercialize them in the market. These 12 companies are classified based on the overall technical remaining risk and the time required to commercialize the technologies. CompactGTL, Velocys, Oberon, Fuels, and GasTechno were the ones with the lowest overall remaining risk and the closest to the commercialization of their respective projects.

Three companies—CompactGTL, Velosys, and GasTechno—are leading the mini GTL market and are competing head-to-head in commercializing their respective technologies.

Compact GTL’s new onshore plant designs have been developed by incorporating conventional reforming and modular FT processes. CompactGTL’s first demonstration plant in Brazil was approved by Petrobras; it operated stably throughout 2012.

Velosys has its own patented micro-channel reactor FT technology, which provides maximum conversion of gas to liquid by consuming less catalyst. Velosys has made significant progress in commercializing its technology is last 2 years. The company has 5 projects in the pipeline; yet, when it comes to risk, the micro-channel reactor is on the higher side when compared to conventional reactors.

GasTechno has been promoting its early adoption program since 2012. The first pilot plant was installed in 2012 in an oil and gas field in Michigan and it was successfully able to convert C1-C6 hydrocarbon from a flare to alcohols and aldehydes. However, the major concerns with GasTechno’s technology were the limited availability of long-term plant performance data, lack of selectivity of the process, and economic viability. GasTechno offers low-capital expenditure (CAPEX) plants for very small gas volumes, which is not readily addressed by other technologies.

Economic Benefits of Mini GTL

Economy plays a significant role in deciding the future of any new technology; same is the case with mini GTL. As mini GTL is deployed in places where gases with limited output is involved, economics of scale remains the deciding factor for the profitability of the project. The example of GasTechno can be taken to understand the economics of a mini GTL plant.

The GasTechno Plant can be scaled down to 1 mmscfd and the mini GTL plant can be scaled down even further, to 200 metric standard cubic feet per day (mscfd). In this case, the final processing of the raw products has to be performed at the central processing facility.

Although the economics of the mini GTL is positive, the need for a central processing facility slightly decreases the internal rate of return (IRR), thereby reducing the earnings before interest, taxes, depreciation, and amortization (EBITDA). By scaling up the plant to 5 mmscfd, the economics can be significantly increased. Though mini GTL can be an innovative technology to monetize the stranded gas, it will be economically profitable only when the available gas for input is more than 5 mmscfd.

Conclusion

The demand for finished hydrocarbon products such as diesel, lubricants, and waxes is expected to grow well. As the demand grows, the supply end is expected to get weaker. Since 1980, there has been a 70% decrease in the US refineries. As a result, the supply of important products such as petroleum waxes has reduced significantly. Mini GTL would prove instrumental is bridging this demand-supply gap. This will help the US to not only re-build the local supply chain for these products, but also reduce the dependence on imports, which stands at 70%. In this low-oil price scenario, GTL, whose rationale is to take advantage from the arbitrage gas pricing, will have a tough time to progress. Low oil prices will have a negative impact on large-scale GTL and, in the long run, small-scale GTL will benefit from this turmoil. In this tough market, quality of the product will play a vital role; hence, projects need to use the most competitive technology to achieve the best economic returns.

About Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

Frost & Sullivan

For six decades, Frost & Sullivan has been world-renowned for its role in helping investors, corporate leaders and governments navigate economic changes and identify disruptive technologies, Mega Trends, new business models and companies to action, resulting in a continuous flow of growth opportunities to drive future success.

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