Gas To Liquids Coming Our Way

By Eric Fox | September 19, 2011 AAA

Sasol (NYSE:SAS) recently announced the start of a study to determine the feasibility of building a natural gas-to-liquids facility in Louisiana. If approved, this would be the first plant of this type built in the United States.
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Sasol is a South African company that is one of the leaders in the technology of converting natural gas and coal into transportation fuels and other products. The process is based on technology first used by Franz Fischer and Hans Tropsch, two German scientists, in the 1920s. Sasol plans to use the rising supply of natural gas produced from shale and other formations in the United States as a feedstock, and convert it into diesel fuel and other products. The facility has an estimated cost of $10 billion. (For related reading, see Natural Gas Industry: An Investment Guide.)

Sasol Qatar GTL
Sasol is involved in a joint venture with Qatar Petroleum at the Oryx gas-to-liquids facility in Qatar. This facility was designed with the capacity to produce 32,400 barrels per day of naphtha, diesel and liquefied petroleum gas.

Other Operators
Another company involved with gas-to-liquids technology is Royal Dutch Shell (NYSE:RDS), which recently constructed the Pearl gas-to-liquids facility in Qatar. The first train here started up in June 2011, and the company expects the second train to go online in 2012. Pearl is expected to eventually produce 140,000 barrels per day of gas-to-liquids products.

Royal Dutch Shell also operates the Shell Middle Distillate Synthesis plant in Malaysia, which was one of the first commercial gas-to-liquids facilities of its type. This facility produces a number of products including naphtha, gasoil, paraffin and kerosene.

Chevron (NYSE:CHV) is building a gas-to-liquids plant in Nigeria in partnership with the Nigerian National Petroleum Company. Sasol also has an ownership interest in the Escravos plant, which is expected to startup in 2013.

Syntroleum (Nasdaq:SYNM) is a U.S. based company that operates a biofuels plant in a joint venture with Tyson Foods (NYSE:TSN). The Dynamic Fuels facility in Geismar, Louisiana, takes vegetable oils, fats, and greases and converts them into synthetic fuels. The Dynamic Fuels plant has the capacity to produce 75 million gallons per year of fuel and was operating at 87% of capacity in July 2011.

Syntroleum is also investigating the feasibility of a natural gas-to-liquids facility using technology similar to that used by other operators. If this plant is built, first production would not start until 2015.

Syntroleum also has a relationship with the China Petroleum and Chemical Corp. (NYSE:SNP) and recently announced the start up of a demonstration facility in China that is taking coal and converting it into petrochemical feedstock. The company also moved its gas-to-liquids demonstration facility from the United States to China.

The Bottom Line
Although Sasol has begun the process of bringing a large-scale gas-to-liquids facility to the United States, its will be many years before this plant is operational and ready to use the rising supply of natural gas hitting the market.

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