This is an article about the "holy grail" of the natural gas industry: to find a process to convert natural gas to liquid fuel, such as diesel.
At least that's what I think the article is saying.
If so, there is technology out there and it is working. I just don't know if the technology is scalable and / or profitable. But if I understand what the author over at SeekingAlpha is saying, I wonder why Syntroleum, Sasol, or Shell were not mentioned?
From a very recent NY Times article:
A South African firm, Sasol, announced Monday that it would spend just over 1 billion Canadian dollars to buy a half-interest in a Canadian shale gas field, so it can explore turning natural gas into diesel and other liquids. Sasol’s proprietary conversion technology was developed decades ago to help the apartheid government of South Africa survive an international oil embargo, and it is a refinement of the ones used by the Germans to make fuel for the Wehrmacht during World War II.I find that incredible. South Africa used the technology decades ago to help survive an international oil embargo, and Americans are willing to pay $104 for oil and $4 for gasoline ........
..... the "lost decade."
ADDED TO ORIGINAL POSTING:
Here's a nice op-ed on South Africa, Sasol, and the international oil embargo. I find it interesting what Chesapeake CEO did not say. It suggests CHK is way behind the "8-ball" on this one. I find it amazing that he has not been called out on it. DKRW is doing this (natural gas to gasoline and diesel) in Medicine Bow, Wyoming, also. Who's CHK trying to kid?
If I'm not mistaken, Sasol designed the Dakota Gasification plant near Beulah ND.
ReplyDeleteYou are correct. An oblique reference is made at this site:
ReplyDeletehttp://www.scienceinafrica.co.za/2007/october/coal.htm
Fischer Tropish is nucleation, the same process that laid the oil into the Bakken in the first place, FT is phase change operation. Gas under pressure in the presence of vaccum percipitates to liquid. This process is what happens when a really big rock explodes into the earth, like the Red Wing.
ReplyDeleteExcellent comment! Thank you. I guess it's time for a stand-alone post on this subject.
ReplyDeleteFor those who are in a hurry:
The largest scale implementation of F-T technology are in a series of plants operated by Sasol in South Africa, a country with large coal reserves but lacking in oil. Sasol uses coal and now natural gas as feedstocks and produces a variety of synthetic petroleum products, including most of the country's diesel fuel.
Bruce, if you research SSL, you will find about 3-4 years ago they opened up a huge NG to Liquid in the country of Qatar. i know because i was a shareholder of SSL at the time..Althought they had some diffuculties at the beginning of process i believe all is well..
ReplyDeleteAlso DKRW is a partner in this wyo. plant with Arch coal ( ticker ACI ).. Denbury ( DNR ) has signed a contract to purchase the CO2 from this gasification plant when it is completed..
The more I read, the more I learn, and the more upset I get with the "lost decade." "We" spent ten years on wind/solar (knowing it could never scale to make a dent in global energy needs). The time and money could have been spent on "clean" coal technology and natural gas vehicles and CTL and GTL, and all of it could have been done in US. Wow, a decade wasted.
ReplyDeleteToo bad no one had an "easy-to-understand" PowerPoint presentation for past presidents.
Maybe "US Energy for Dummies," part of the "For Dummies" series of books.
The lost decade as we both call it, is a contrivance by the insinuation of derivatives over all other financial instruments, including common stocks. Derivatives obfuscate the supply of legally authorized shares, they are constructs with purpose. The lost dacade was all about hedge funds and others attempting to get hold of the ownership of vast shares of public companies by using sophisticated schemes to derive more common from the legally authorized supply than what existed in the market place. Derivatives are the source of all the anxiety caused shareholders in otherwise robust public companies, these activities were to offlay risk, by subordinating the normal price mechanisms, and replacing them with constructs which denied shareholders market prices. Oligarchic malfeasance could be the best way of describing the lost decade, as wealth was concentrated into the hands of the oilgarchic cabal operating against everyones interests accept their own.
ReplyDeleteThank you. I agree with you as much as I understand what was going on -- which isn't a whole lot. But I agree with you. Even Warren Buffett said he was unhappy with derivatives -- until "we" found out he used them.
ReplyDeleteAs far as I am able to understand, the issues you raise continue today and will continue (consider the fees banks plan to start charging as a very minor example), so the "lost decade" will continue.
On the other hand, because this site is (pretty much) devoted to energy and (mostly to) the Bakken, my "lost decade" is generally -- generally -- much narrower concept and refers specifically to the US energy policy.
With what I know now about "clean" coal technology, reserves of natural gas, coal-to-liquids technology, and natural gas-to-liquids technology, I am absolutely appalled that "we" spent ten years baking up schemes for wind and solar power when "we" knew that neither wind nor solar could make more than a dent against total global requirements.
Had we put money against technology in those other hydrocarbon arenas, including natural gas transportation, we would be energy self-sufficient today.
It would have been interesting had President Kennedy or President Nixon or President Carter said this: by 1999, by the end of the millenium, the US will no longer import oil (or oil equivalent) for any price greater than $50/bbl. (Pick your number.)
Actually, CHK is way ahead.
ReplyDeleteCHK and Statoil partnered with Sasol for shale gas in South Africa. It is at a very early and limited phase. CHK was mostly interested in the Sasol gas to liquid technology, which might be used there. CHK has been interested in using it here. CHK has a team examining all technologies to determine viability. Some advances were needed. The old technology was inefficient. CHK predicts groundbreaking on a plant in 2013 or so. That is optimistic, but they are working hard on it. And, they do know Sasol.
Mike Stice, the head of Chesapeake Midstream was hired, in part, for his extensive background in this area.
SeekingAlpha.com generally recycles public statements, but is not very sharp. Don't take them too seriously.
For better information, check chk.com, listen to the audio of the 4Q conference all, and read the presentation. You will also hear about their Williston Basin leases, and learn that analysts think "Bakken" and "Williston Basin" are synonyms.
CHK may be the Williston Basin story of 2012.
Also, see the 2010 CHK analyst day presentation. Search the pdf for GTL. And see "Holy Grail" in the footer. The language is not new.
Natural gas could not replace oil if there was not enough of it. Now, there is more than enough. CHK lead the way in announcing that, but D.C. didn't comprehend. The knowledge is gradually sinking in.
If CHK and its peers do for oil what they did for natural gas, there will be a surplus of oil soon.
Great post. Thank you for such a detailed reply.
ReplyDeleteI keep watching for CHK to enter the Bakken; if it does, you are correct: that will be the story of the year (or at least one of the big stories -- I have to be careful what I say -- the Bakken never ceases to surprise or amaze me.
Your statement that "D.C. didn't comprehend. The knowledge is gradually sinking in" is quite accurate. The timing was off. Had this natural gas surplus developed early in the Bush II term and had he not been distracted by Iraq, the mindset in the US might be different.
I still find it amazing that South Africa survived the embargo partly because of GTL technology and the US never embraced it. Whenever something doesn't make sense, I tell folks to "follow the money." In this case, the energy industry must have seen much better margins in oil than in GTL.
As mentioned over and over again in this blog, had we put grants, subsidies, talent into GTL technology during the "lost decade" instead of wind and solar, we might be in better shape.
Again, with the possibility of CHK entering the Bakken, I will follow CHK a bit more closely.
Thank you for taking time to write.
CHK's made a whole host of partnerships, restructurings, that give proof that they are players in the Variable Time Shapes of Capital beauty pagent.
ReplyDeleteCNOOK and CHK could be leaders in moving North Central production west where pricing might be more favorable.
In OH CHK will be able to Leverage the COP facilities in SO Il for a short distancetakeaway of produced product. they have some very flexible folks in the operation and strategic planning side. Quite impressive actually.
Thank you. There is no question that if 2001-2010 was the lost decade, 2011 - 2020 will be the decade of energy, setting the tone for the rest of the century, perhaps.
ReplyDeleteThank you for taking the time to stop by to comment.