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GTL: Ambition to become the capital of novel technology

By Thomas Catan

Qatar has pro­fessed many world class ambi­tions in recent years.

But one of the most close­ly watched on the ener­gy patch is its desire to become the “world cap­i­tal” of gas-to-liq­uids or GTL — a nov­el tech­nol­o­gy that pro­po­nents hope will pro­duce a com­mer­cial­ly viable alter­na­tive to petrol for cars.

To be sure, GTL has been around for a while. The basic process was invent­ed in the 1920s and then devel­oped by Nazi Ger­many and apartheid South Africa — both of which had prob­lems get­ting enough petrol for their vehi­cles.

Ini­tial­ly it was used to turn coal into a liq­uid. Today it is used to turn nat­ur­al gas into a clean burn­ing fuel for use in diesel engines, naph­tha, lubri­cants and a range of oth­er prod­ucts.

At the moment, there is only one com­mer­cial GTL plant in oper­a­tion — a rel­a­tive­ly small one oper­at­ed by Shell in Malaysia.

But sev­er­al much larg­er plants are due for con­struc­tion in Qatar, giv­ing birth to a real mar­ket in GTL prod­ucts for the first time.

The first to enter pro­duc­tion is a $1bn plant built by a joint ven­ture between Oryx, Qatar Petro­le­um and South Africa’s Sasol, which should be in oper­a­tion next year. Shell and Exxon­Mo­bil both have com­plex plants on the draw­ing board, but have yet to take the final invest­ment deci­sion.

The stakes are high — ExxonMobil’s $7bn plant alone will be the most expen­sive sin­gle project it is under­tak­ing any­where in the world, accord­ing to Wayne Harms, the company’s coun­try man­ag­er.

For con­sumers, the advan­tages of GTL are clear — it offers the promise of a “design­er fuel” which com­bines low­er emis­sions with increased engine per­for­mance.

For Qatar, GTL rep­re­sents anoth­er way to trans­port its gas to far off mar­kets.

It enables the coun­try to gain access to the vast mar­ket for fuel in vehi­cles, and, because it is trans­formed into a sta­ble liq­uid, it can be loaded on to con­ven­tion­al tankers and does not require spe­cial ter­mi­nals at the receiv­ing end.

For the com­pa­nies, GTL is an attrac­tive alter­na­tive fuel that does not direct­ly chal­lenge their main oil busi­ness. Shell already blends GTL fuel into its V‑Power diesel in the Nether­lands, Aus­tria and Ger­many, where it is mar­ket­ed as a per­for­mance-boost­ing fuel.

Blend­ed fuels are also avail­able in Thai­land and in Greece, where they are used in taxis.

GTL can also be used neat. To show off its rel­a­tive clean­li­ness, Shell has been con­duct­ing a series of tri­als with fleets of bus­es in Lon­don and deliv­ery vehi­cles in the US and Japan.

Automak­ers such as Toy­ota, Daim­ler­Chrysler, Mit­subishi and VW have also been design­ing exper­i­men­tal engines espe­cial­ly for GTL to get the full ben­e­fits of the fuel.

The demon­stra­tions “real­ly help us work with car man­u­fac­tur­ers but also help us get the reg­u­la­tors, the gov­ern­ments and the con­sumers inter­est­ed in the prod­ucts,” says Shell’s Andrew Brown.

A win-win propo­si­tion for all? Per­haps, but there are draw­backs. While it clear­ly holds out promise, GTL prod­ucts remain rel­a­tive­ly untest­ed in the mar­ket and turn­ing gas into liq­uid uses up a huge amount of ener­gy — up to 40 per cent of the gas is con­sumed in the process, engi­neers say.

For that rea­son and oth­ers, Qatar’s ener­gy min­is­ter last month put the brakes on sev­er­al planned GTL projects, includ­ing joint ven­tures with Cono­coPhillips, Marathon Oil and a Sasol and Chevron­Tex­a­co pair­ing. Oth­er projects, includ­ing those of Shell and Exxon­Mo­bil, are unaf­fect­ed.

As a rea­son, the ener­gy min­istry said it want­ed to analyse what effect such rapid extrac­tion of gas would have on the geol­o­gy of the North Field reser­voir. But ana­lysts also believe that the logis­ti­cal chal­lenges involved in get­ting so many mam­moth gas projects under way are start­ing to place lim­its on Qatar’s abil­i­ty to exe­cute its plans.

Oth­er than Qatar, there are few coun­tries with large enough reserves of “strand­ed” gas to jus­ti­fy set­ting up a GTL indus­try.

GTL prod­ucts will cer­tain­ly start to appear through­out the world over the com­ing years.

But, in spite of its promise, GTL fuel seems unlike­ly to chal­lenge the suprema­cy of petrol for a good while yet.


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