Executive Q&A: Combating the effects of gas flaring with GTL technology
Gas Processing & LNG (GP&LNG) sat down with Mark Hess (MH), CEO of ENG. In this interview, Mr. Hess discussed the company’s recent acquisition of Calvert Group Belgium and its exclusive license to a patented gas-to-liquids (GTL) technology, as well as how ENG will deploy the technology, what companies/industries will benefit from its use, and its place in the energy transition.
GP&LNG: What is the purpose of the technology you acquired?
MH: The purpose of this technology is to convert flared gas, natural gas burned in association with oil extraction, as well as stranded gas into synthetic liquids, such as crude oil or diesel. The technology accomplishes this conversion without pre-treatment or separation of the feed gas, while accommodating all condensates and consuming less power than other processes, thus making it more economical to deploy. It has the potential to help mitigate the widespread practice of gas flaring, which each year contributes many millions of tons (MMt) of carbon dioxide (CO2) emissions globally and—along with untold caches of stranded gas—represents the waste of massive volumes of valuable natural resources.
GP&LNG: How will ENG deploy this technology?
MH: The technology will be designed into a package where the pieces are small enough to be moved on a truck and connected together at the flare site and, therefore, moved from one site to another if the need arises. Our current designs are focused on two sizes, 50 bpd and 100 bpd. The 50-bpd plant will convert approximately 500,000 sft3d of flare or stranded natural gas, and the 100-bpd plant will convert approximately 1 MMsft3d of flare or stranded natural gas. For larger flare and stranded gas sites, however, our units are scalable.
GP&LNG: In your estimation, will this technology be viewed by energy companies as a cost-effective or economically preferable solution to flaring gas?
MH: We believe that by utilizing ENG’s GTL technology, which consumes considerably less energy than its predecessors, operators can now cost-effectively capture this gas and convert it into high-value, environmentally cleaner synthetic liquids—such as crude oil or diesel, as well as naphtha and waxes—in locations where the cost for the infrastructure to transport or reinject the gas is prohibitive. Implemented in a modular fashion on a relatively small scale, it also offers the major advantages of requiring no pre-treatment or separation of the feed gas, as well as accommodating all condensates. Additionally, because it is portable, the unit can easily be installed at oil production facilities to capture the associated gas that is otherwise flared off and feed it directly into the existing pipeline, if desired. So, in return for a modest investment, oil producers can gain a significant means of revenue generation and also meet their emissions targets to mitigate climate change.
As far as the numbers go, according to the Global Gas Flaring Reduction Partnership (GGFR), the amount of gas that is presently flared each year is truly huge: about 144 Bm3. So, the total opportunity is immense.
GP&LNG: When do you project ENG can bring this technology to market?
MH: At present, we are encountering long lead times for certain components used in this technology. However, we expect these delays to gradually diminish, permitting us to deliver our first GTL unit early next year (2023). Our units will be built in a controlled shop environment and delivered to the flare or gas site for quick installation and commissioning.
GP&LNG: Which types of energy companies would be among ENG’s initial customers?
MH: Our GTL technology has previously been reviewed and accepted by several large exploration and production operators. We now have a marketing agreement in place with an oilfield service company, OiLSERV, to deploy our units in Iraq, Algeria, Libya and the UAE, and another marketing agreement under negotiation with an oilfield service company for Oman. Under these agreements, the oilfield service company would purchase the unit from us and lease it to their clients, for whom they are providing other services. In this manner, they are simply adding an additional service for their clients and have the workforce in place to deploy, operate, maintain and move the units, if desired.
Iraq alone flared the second largest amount of gas in the world last year, according to the GGFR, and Algeria was 6th. These countries represent very large markets for us. Oman was 11th on the list and is still a very large opportunity for us. The U.S., incidentally, was 4th on the list.
GP&LNG: How many units do you believe ENG can produce by the end of next year (2023)?
MH: Assuming that current supply chain issues continue to improve, we believe that by the end of next year we could be on pace to produce approximately 50 units per year.
GP&LNG: What regions/areas would be best suited for this technology?
MH: According to the GGRC, the top ten flaring countries account for 75% of global flaring. Most of these countries are in the Middle East and North Africa. The agreements we have in place and under negotiation cover several in these areas. The next logical extension would be North and South America, where we have received inquiries.
GP&LNG: Can you provide information on how the technology works and installation time?
MH: The technology utilizes a patented gliding arch plasma reformer (GAPR) and advance modified reactor (AMR) process and has, we believe, the lowest CAPEX-to-barrel cost and smallest installed footprint of any competitive GTL system. This process, which rearranges carbon, oxygen and hydrogen molecules in a manner that produces liquids and heavier hydrocarbon molecules, and allows carbon efficiencies that exceed current and traditional technologies without expensive pre-treatment, exotic catalysts or complicated processing steps.
The technology, which can be used in onshore and offshore applications, has won the recognition of the U.S. Department of Energy, U.S. Air Force and many of the top oil and gas producing companies around the world. As mentioned, it is cost competitive, modular, scalable, operates at very low power levels, and can accept various gas feed compositions directly from the well pad or processing unit, with typical gas feed volumes between 200,000 sft3d and 100 MMsft3d. The GTL system yield produces 100 bbl of liquids for every 1 MMsft3 of gas feed and can be operated and monitored remotely. The installation and commissioning time for both the 50-bpd and 100-bpd units is about 30 d from delivery.
GP&LNG: Where do you think your GTL technology fits into the global energy transition?
MH: Gas flaring has a massive impact on the environment. We believe our GTL technology can have a significant impact on the amount of flaring and, therefore, help achieve the goals of the global energy transition quite well. Although there are many reasons why gas flaring continues to be so widespread, in most cases the reason is economics. Capturing, transporting, processing and selling the gas associated with oil production requires considerable investment by energy companies and, although many of these companies are heading down this path, the unfortunate truth is that the required investment is often either impractical or unavailable. However, with its ability to capture and convert this gas into useful, profitable products more economically, our technology can help to alleviate energy companies’ need to flare gas for economic reasons.
The global need for technologies of this sort could not be clearer: According to the GGFR, each m3 of associated gas flared results in about 2.8 kg of CO2 equivalent (CO2e) emissions, resulting in more than 400 MMtpy of CO2e emissions from global gas flaring. The GGFR also points out that the methane emissions resulting from inefficiencies of the flare combustion process contribute significantly to global warming. The Intergovernmental Panel on Climate Change illuminates this fact with its finding that methane is more than 80 times more powerful than CO2 as a warming gas on a 20-yr timeframe. On this basis, annual CO2 equivalent emissions are increased by nearly 100 MMt.
The GGFR has also stated that, on top of these greenhouse gas emissions, black carbon (more commonly known as soot) is another pollutant released by gas flares. Despite remaining in the atmosphere for just a few days or weeks, black carbon has the second-largest warming effect on the atmosphere after CO2. This is of particular concern in the Arctic, where black carbon deposits are believed to increase the rate at which snow and ice are melting. Research from the European Geosciences Union indicates that gas flaring emissions contribute to about 40% of the annual black carbon deposits in the Arctic.
We believe, however, that by utilizing our GTL technology, energy companies can put this flare gas to good use and potentially displace other more polluting fuels, such as coal, that generate higher emissions per energy unit.
GP&LNG: How does this technology fit into ENG’s long-term energy strategy/philosophy?
MH: Our new GTL technology complements our long-term energy strategy/philosophy perfectly. More than 3 yr ago, we decided to amass the personnel and resources necessary to pursue projects aimed at serving the green and renewable sectors of the energy industry. Our decision was based on a realization that, due to a variety of factors, projects of this kind were highly likely to increase in both number and value, and that, working with our technology partners, we could make a meaningful contribution to mediating critical global issues such as climate change, energy conservation and related problems.
ENG’s first large-scale project in this realm was to engineer and fabricate a complete modular hydrogen (H2) production facility that utilized a H2 reforming technology that consumed 20% less feed and fuel gas and produced a lower carbon footprint than conventional H2 plants. We are gratified that a great number of environmentally friendly products are producible via this H2 technology, including fuel-grade H2 for use in fuel cells, H2 for use in the hydrotreating process that produces renewable fuels, and H2 to generate products such as ammonia and methanol. Subsequently, we developed carbon capture equipment capable of removing a significant percentage of the CO2 from the steam methane reforming process, further reducing harmful greenhouse gas emissions.
Continuing our work in the carbon capture area, we partnered with a leading technology university to build a prototype CO2 sequestration reactor capable of capturing the CO2 formed during power generation and other industrial processes and storing it so it is not released into the atmosphere. Additionally, we have been selected to provide engineering, procurement and construction (EPC) services for a renewable fuels plant designed to produce 100 MMgal/yr of sustainable aviation fuel and renewable diesel from renewable feedstocks.
So, while ENG continues to provide diverse engineering, project management and other essential services to the traditional oil and gas sector, we believe our future lies in the development and implementation of groundbreaking environmental and green energy technologies.
Additionally, ENG has the capability to engineer, design, fabricate and automate this GTL product, something that is fairly unique for a company our size. We are immensely proud to be participating in this endeavor and remain genuinely excited by our prospects for success.
MARK HESS has served as Chief Executive Officer of ENG Corporation (Nasdaq: ENG) since January 2021. Prior to that, Mr. Hess served as the company’s Chief Financial Officer and Treasurer, interim Chief Financial Officer and Corporate Controller. He assumed the Corporate Secretary responsibilities in December 2017.
Prior to joining ENG, Mr. Hess served as Vice President and Chief Accounting Officer of Geokinetics Inc., and as Director of Finance for CGGVeritas, both publicly traded seismic data service companies. In total, he has more than 35 yr of experience in various accounting, merger and acquisition, and finance roles, primarily in public companies. Mr. Hess is a licensed CPA in the state of Texas and holds a Bachelor of Business Administration in Accounting from the University of Houston.