Thursday, April 5, 2012

Why The Citi Paper Is So Important -- Natural Gas to Diesel -- Nothing To Do With The Bakken In The Short Term

Four natural gas-to-diesel stories (three of the four stories at the link):
  • Shell already has its Pearl gas-to-liquids facility in Qatar; went on-line last June (2011); enough diesel from natural gas to fill more than 160,000 cars/day
  • Shell considering a $10 billion plant, a "giant plant," similar to Pearl, for Louisiana; wil take up to 2 years to develop plans; make decision
  • Sasol, South Africa, is undertaking an 18-month feasibility study for a $10 billion gas-to-liquids facility adjacent to its existing chemical plant in Calcasieu Parish, Louisiana
  • Sasol, South Africa, owns stake in gas-to-liquids plant in Qatar, commissioned in 2007 (see comment below; this data point not in original post
Building these plants is prohibitively expensive; the Qatar plant cost escalated to $18 billion. Officials now say lessons learned will keep costs in check. The diesel produced in the US would be sold to Latin America and Europe. Prominent Democratic senators want the US to process natural gas in the US and not export natural gas to be refined elsewhere. But something tells me these same Democratic senators would never consider Solyndra-like loans/subsidies/guarantees to oil companies to help move these projects along. Of course, the biggest risk: the EPA stomps on gas-to-liquids technology as just another carbon foot print.
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6 comments:

  1. drjApril 5, 2012 at 8:12 AM

    here in the US we are slowly moving to using compressed nat. gas to power our trucking industry . this would seem to make more sense than the waste , expense of the conversion of gas to liquids

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    1. Bruce OksolApril 5, 2012 at 8:23 AM

      That could be; I don't know the economics. If the process of gas-to-liquids could magically appear overnight, there would already be a) a distribution system for diesel fuel across the nation in place; and, b) trucks would not need to be retrofitted.

      Right now, your neighbor driving a Ford F-350 running on compressed natural gas would be hard put to find a refueling station.

      But, yes, down the road, compressed natural gas is part of Obama's "all of the above (except coal and off-shore drilling and drilling on Federal land onshore)" approach.

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  2. donApril 5, 2012 at 10:07 AM

    Sasol previouly ( in 2007) built a NG to diesel plant in Qatar..the first several qtrs required some fine tuning, but since them it has preformed well..

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  3. donApril 5, 2012 at 10:14 AM

    MDU stated in a press release about 2 months ago of the potential to build another refinery for bakken oil to diesle, i believ e a 20,000 BO capacity..
    Would MDU be better off making this a NG to diesel and place it in say stanley/ or watford city..

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  4. Bruce OksolApril 5, 2012 at 10:22 AM

    That would make a lot of sense. The Wall Street Journal article said gas-to-liquids (GTL) refineries are very expensive. Obviously I don't know compared to what? Compared to oil to diesel? I would assume so; it must be relatively inexpensive to refine oil to diesel.

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