Shell mulls more efficient, but still costly GTL mega-project on US Gulf
London (Platts)--28Jun2013/902 am EDT/1302 GMT
Shell's hopes for a new gas-to-liquids mega project on the US Gulf Coast
would benefit from much-improved process efficiencies, but any resulting cost
savings could be limited by the need to build most of the plant outside the
US, Shell officials said this week.
Shell has improved its proprietary GTL technology to the point where it
can achieve 50% gains in throughput volumes compared to its giant Pearl GTL
plant in Qatar which came on stream in 2011, according to one of Shell's top
Recent advances in catalysts and other optimizations to GTL synthesis reactors -- the core process unit of GTL plants -- will make it possible to use fewer reactors in future projects, Shell's head GTL process engineering Arend Hoek told Platts.
Shell has been looking to replicate the success of its massive Pearl
GTL project to tap booming volumes of low-cost US shale gas with a similar
scale GTL export plant on the US Gulf Coast.
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Pearl, which was sanctioned in 2006 and took five years to build and
commission, uses 24 synthesis reactors to convert 1.6 Bcf/d of natural gas
into 140,000 b/d of premium, synthetic fuels.
Since 2006, the advances in GTL process would mean it would be possible
to achieve the same throughputs with a third fewer reactors, Hoek said,
shrinking the footprint and cost of a new plant.
Hoek said the company is also currently testing an new generation of
reactor, which includes major configuration and design changes, to further
improve GTL throughputs.
The huge cost of building a large GTL export plant, however, remains a
key factor in calculating the potential returns from a project even when a
source of low-coat gas to feed the plant is readily available.
Pearl, the world's largest GTL plant by far, required some 50,000
workers to build and saw its final costs soar from below $10 billion to
around $18.5 billion, or over $130,000 per barrel of daily output.
Shell believes that, given current GTL technology gains, cost savings
for a project the size of Pearl would be "in the 15% range, perhaps a bit
more," Shell's projects and technology director Matthias Bichsel told
reporters in a presentation.
But due to higher wages and a lack of sufficient local workforce in the
US Gulf region, Shell would likely be forced to build parts of a future Gulf
GTL project elsewhere, Bichsel said. The plant would be likely built in
modules in places such as South Korea and then shipped the US Gulf Coast to
be reassembled on the site, he said.
"The whole approach is different. Modularized plants tend to me more
expensive than 'stick-built' plants, so you gain some and you lose some,"
Bichsel said, referring to the final capital cost of the project.
Shell has said it is looking at sites in Louisiana and Texas as the
possible location for a plant producing at least 70,000 b/d of liquids from
natural gas. The higher-value, synthetic diesel produced at the plant could
be exported to Europe and high-value markets in Asia.
The company has said it does not expect to take a decision on the
feasibility of the Gulf GTL export project until around 2015.
"This is one of those things that you want to do a proper job, when we
are truly ready we'll come forward," Bichsel said, declining to estimate when
Shell would expect to take a final investment decision on the project.
Shell expects global natural gas demand to increase by 60% from 2010 to
2030, reaching 25% of the global primary energy mix with growing Asian demand
for LNG making up a large part of the increase.
The major has said it sees opportunities to invest over $20 billion
during the 2012-15 period in liquefied natural gas (LNG) and gas-to-liquids
(GTL) projects as it expands in the integrated gas business.
South Africa's Sasol has already proposed a GTL facility in the US Gulf
state of Louisiana that would be larger than its 34,000 b/d Oryx plant in
Sasol, the world's top maker of motor fuel from coal, hopes to build a
plant on a site near Lake Charles in Louisiana, which could produce up to
96,000 b/d of naphtha and diesel.
--Robert Perkins, firstname.lastname@example.org
--Edited by Kevin Saville, email@example.com
In responce to this article, Shell's press office stated that the 50% increase in its GTL reactor throughputs is a goal which has yet to be achieved. The company also said it has no estimate on when the goal may be reached.