Gas Processing is Produced by Gulf Publishing Company

Your source for technology information for the gas processing industry


GTL '14: CompactGTL chief details small-scale progress, impediments

By ADRIENNE BLUME
Managing Editor

Iain Baxter , COO, Compact GTLHOUSTON -- Iain Baxter, chief operating officer of CompactGTL, kicked off Gulf Publishing Company's second annual GTL Technology Forum on Wednesday with a keynote speech examining recent GTL developments.

Quite a bit of positive propaganda on small-scale natural gas processing and GTL production has been seen in the media lately, Mr. Baxter said. The world is awash in supply; US gas prices are forecast to remain low in comparison with liquid fuel prices; there have been moves to reduce gas flaring in upstream operations; technology developments have enabled higher-value fuels to be produced from waste feedstocks; and several environmental and political drivers exist for the commercialization of small-scale GTL technologies, in which a substantial amount of capital has been invested.

Although all of these factors are present, progress is still slow, and it is not moving at the pace one would expect, given these compelling arguments. "So, is there an elephant in the room, and if so, what is it? Is there more than one elephant in the room?" Mr. Baxter posited.

Large scale vs. small scale. With large volumes of gas and long distances to market, LNG exports and pipelines make sense and work well. However, if the transport distance is short and the gas volume is small, then small-scale GTL makes sense, Mr. Baxter said. Small gas volumes cannot support the large capital expenditures needed for infrastructure projects, and short distances to market do not warrant the construction of expensive transport infrastructure.

For these reasons, large volumes of gas are reinjected "just to get rid of it," the COO said. In some areas, this associated gas is holding up or frustrating crude oil production. However, there is a vast opportunity for small-scale gas processing in stranded oil reserves, with over 500 Tcf of stranded gas available worldwide.

Roadblocks to groundbreaking. "So, that's the big picture, but what are the real issues in terms of getting projects off the ground?" Mr. Baxter said. One issue is the realizable gas cost at individual project locations. In the upstream sector, there is low-cost, zero-cost and even negative-cost gas available for exploitation. However, project sites are critical with respect to gas flow continuity; significant oil field development is needed to maintain enough streams coming in from multiple flows to support adequate gas flows for GTL operations.

Another issue to getting projects off the ground is that national gas transmission companies often limit gas sales by producers, posing a roadblock to the setup of small-scale GTL operations. Also, midstream companies often cheaply extract NGL from associated gas, make money on the liquids, and then leave behind dry gas, Mr. Baxter explained.

Other issues concern product offtake. Certification is needed for fuels, a realizable netback value must be ascertained, taxes must be considered and an export infrastructure must be guaranteed. On this last point, Mr. Baxter gave the example of producing diesel from affordable gas in a remote location. Responsibility for ascertaining adequate infrastructure to carry the diesel where it needs to go will fall on the shoulders of the project developers, he said.

Technology challenges. Issues with small-scale GTL operations include the need for a demonstrable, fully integrated process from the inside out, rather than a Fischer-Tropsch (FT) "island." Such an integrated process includes utilities, syngas generation technology, an air separation system, a steam system, a water treatment facility and power generation.

CompactGTL has several years of experience from its Brazil demonstration plant for utilities preparation and operation, especially with regard to failure scenarios. Remote small-scale projects require two-stage FT technology, making single-stage fixed-bed reactors unsuitable.

Another technology challenge is the need for modular units, rather than "modularized" construction. Standard, pre-engineered equipment from oil and gas operations is not suitable for small-scale GTL operations.            

Lastly, Mr. Baxter labeled catalyst life and replacement as "one of the elephants in the room." FT catalyst replacement in-situ would shut the whole plant down. One solution to this problem is to exchange reactor modules in pairs for spare reactors. In this way, the plant continues to operate and there are no catalyst handling and safety issues on the operational side. High availability and low OPEX are the rewards of this method.

Project development. Mr. Baxter acknowledged that the first project is key to developing any new technology concept. In the realm of financing, projects must provide enough economic headroom for financing costs. The cost of financing will be higher in the early stages because the technology is new, and there will be intense competition for capital.

Early projects are inherently entrepreneurial, the COO explained. It is difficult to convince oil and gas producers to invest in small-scale technology solutions to gas flaring when they could be investing money in additional oil and gas production. Bankable technology will be available for the projects beyond the inaugural one, making the success of the first project key. High returns are needed to overcome very high competition for capital.

Kazakhstan venture. CompactGTL recently announced a $300-MM, small-scale GTL project in Kazakhstan. Oil and gas is crucial to the country's economy, as it is a large country with a small population. Gas flaring is a prominent issue in Kazakhstan, Mr. Baxter acknowledged. There are numerous remote fields, but the gas is far from infrastructure and population centers.

CompactGTL has designed a fully integrated plant in a remote location for its Kazakhstan project. The company will provide turnkey services, and the engineering support partner is Fluor. An EPC contractor will be named at a later date. CompactGTL aims to begin operations in Kazakhstan by the end of 2017, Mr. Baxter said.

 


Market data is delayed and provided by Barchart.

FEATURED COLUMNS

Boxscore Construction Analysis
-Eugene Gerden
Chinese investors are accelerating their expansion into Russia’s oil and gas sector through the acquisition of stakes in key industry projects.
Editorial comment
-Adrienne Blume
A trend is seen in North American supplies of NGL, which have increased significantly over the past five years, as production has expanded in liquids-rich shale and tight gas plays.
Executive Q&A viewpoint
-Erik C. Scher
Emerging technology solutions to address growing petrochemicals demand and gas production are meeting with intense interest.
LNG technology
-Saeid Mokhatab
As global demand for natural gas increases, interest in unlocking and monetizing stranded gas reserves in ultra-deep waters that are difficult to develop with conventional technology will return.
President's Letter
-John Royall
The last thing you need right now is another dreary recitation of industry statistics that show how hard hit the global oil and gas industry has been in the last 18 months.


Model Based Approaches to Achieve Operational Excellence in Natural Gas Processing
Register Today
Adoption of a model-based culture has great potential to improve the performance of Natural Gas Processing operations. Throughout the entire plant lifecycle, from master planning and feasibility studies to design, start-up, operation and debottlenecking, process and economic models can be used to improve profitability for the various business scenarios encountered. This webinar will provide a glimpse of the many opportunities available for Natural Gas Processors to incorporate a model based culture to achieve operational excellence with greater agility. Various process and economic modeling approaches will be explained as well as the potential benefits that may be expected. Actual examples of the effective use of process and economic models that have provided a competitive edge for Natural Gas Processors will also be presented.
June 22, 2016 10am CDT

Register Now

 

Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2015 Gulf Publishing Company.