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Oil companies seek cleaner fuel through gas alternative.

By Thomas Catan

A nov­el way to cre­ate an ultra-clean fuel for cars that uses nat­ur­al gas instead of oil is on the verge of rapid growth, ana­lysts say, dri­ven by soar­ing oil prices and a thirst for alter­na­tive fuels.

Oil com­pa­nies are invest­ing bil­lions of dol­lars in the nascent tech­nol­o­gy, called “gas-to-liq­uids” or GTL, which can be used to pro­duce qual­i­ty diesel and a range of oth­er prod­ucts nor­mal­ly derived from crude.

The process was devel­oped in Nazi Ger­many and apartheid South Africa but in a few weeks will be test­ed on a com­mer­cial scale for the first time when the largest plant opens in Qatar.

The Oryx GTL plant, a joint ven­ture between South Africa’s Sasol and Qatar Petro­le­um, is being watched close­ly by com­peti­tors and investors look­ing for the next big thing in ener­gy.

Frank Har­ris, an ana­lyst at Wood Macken­zie, the Scot­land-based inter­na­tion­al oil con­sul­tan­cy, said: “For a vari­ety of rea­sons, it would appear that the GTL indus­try is at an inflec­tion point. If Oryx is suc­cess­ful, com­bined with some of the oth­er projects in the works and this new par­a­digm for the oil price, it could be a huge cat­a­lyst for GTL.” Wood Macken­zie believes the next 10 years will see more than Dol­lars 40bn (Pounds 22.7bn) invest­ed in GTL plants — with the major­i­ty going to the tiny Arab emi­rate of Qatar. It envis­ages about 600,000 bar­rels a day of GTL prod­ucts being man­u­fac­tured by 2015.

Alan Gelder, GTL ana­lyst at Wood Macken­zie, said: “This would be a niche com­pared to the demand for oil prod­ucts, but we would expect that there could be rapid growth there­after.”

Oth­er con­sul­tan­cies, such as Cam­bridge Ener­gy Re-search Asso­ciates, see 1m b/d by 2015 of GTL pro­duc­tion. The poten­tial mar­ket is huge. Japan report­ed­ly wants one-fifth of its trans­port fuel to come from GTL or bio­fu­els by 2030.

Car­mak­ers are also inter­est­ed. Roy­al Dutch Shell is work­ing with Toy­ota, Volk­swa­gen and Daim­ler­Chrysler to cre­ate vehi­cles that run on pure GTL diesel, which com­bines high pow­er with extreme­ly low emis­sions.

With the world’s third largest gas reserves and a sta­ble lead­er­ship, Qatar is expect­ed to attract about 70 per cent of the invest­ment in the sec­tor and aspires to be “the GTL cap­i­tal of the world”. Shell and Exxon­Mo­bil plan to build plants in Qatar.

Nige­ria, Colom­bia, Alge­ria, Egypt, Aus­tralia, Trinidad and Iran are all either build­ing or con­sid­er­ing GTL projects.


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