Gas-to-liquids: much smoke, little fire

A.M. Samsam Bakhtiari, National Iranian Oil Company, Tehran, Iran

The initial gas-to-liquids (GTL) complexes implemented in the 1980s and early 1990s were not commercially successful for a number of reasons – the main one was that they were far too expensive (Table 1).

None of these GTL pioneers fared well. The plant at Montunui, New Zealand, designed to produce gasoline via methanol (with Mobil’s zeolite catalyst) was soon turned into a methanol plant. Both the South African and Malaysian complexes were plagued by operational problems. An explosion in the air separation unit at Bintulu, Malaysia, in 1997 further damaged the already tarnished GTL image. And the technology’s prohibitive investment costs stifled future GTL developments. In stark contrast to LNG plants, no GTL complex was ever expanded.

  Table 1. Summarized data for the first three major GTL
complexes implemented1
    Plant site
New Zealand
Mossel Bay,
South Africa
  Date of commissioning 1985 1993 1993  
  Design capacity (Mbpd) 14.5 27.5 12  
  F-T unit technology Mobil Sasol Shell  
  Investment/daily capacity barrel ($/bbl) 102,000 127,000 125,000  

Second-generation. Notwithstanding the poor results of these first-generation GTL facilities, the pioneers (i.e., Mobil, Sasol and Shell) went back to their drawing boards and came up with second-generation GTL processes. Other companies such as Exxon, BP, Syntroleum, Conoco and Rentech2 joined the fray and developed their own GTL technology. Thus, with the three "supermajor" oil companies (BP, Exxon and Shell) onboard, the GTL train picked up steam.

There were to be at least a dozen GTL complexes sprouting worldwide. A global GTL capacity of 1.0 to 1.5 million barrels/day (MMbpd) was forecast by 2005 – 2006. For diehard supporters, the sky was the limit. At the close of 2001, however, the picture is not as rosy as GTL enthusiasts would like.

Present status. Only three new GTL complexes are currently being implemented, for a total capacity of 80 thousand bpd (Mbpd): one by Syntroleum and the other two by Sasol. Syntroleum’s Sweetwater project is the clear frontrunner. If construction proceeds as scheduled, a startup date would be late 2004 or early 2005. Total investment for the project’s engineering, procurement and construction (EPC) has lately been raised by contractor Tessag Anlage GmbH (Germany) from $506 million to $599.5 million; in parallel, plant capacity has been increased from 10 Mbpd to 11.5 Mbpd.3 These latest estimates give Sweetwater an investment per daily barrel capacity of $52,000 (see Table 2).

  Table 2. Summarized data for the three second-generation GTL
complexes presently being implemented3,4
    Plant site
NW Shelf
Ras Laffan
  Scheduled startup 2004 2005 2005  
  Design capacity (Mbpd) 11.5 34 34  
  F-T unit technology Syntroleum Sasol Sasol  
  Investment estimate/daily capacity barrel ($/bbl) 52,000 23,500 23,500  

South Africa’s Sasol is planning to implement the other GTL projects in two OPEC countries: Nigeria and Qatar. Both projects have a similar design capacity of 34 Mbpd.4

The Nigerian GTL is a joint venture between the Sasol / Chevron partnership and the Nigerian National Petroleum Company (NNPC) with a 25% minority share. Project feed will be provided from the associated gases of Nigeria’s Escravos field (operated by Chevron). Haldor-Topsøe will supply the technology for the synthesis gas unit; Sasol’s Slurry Phase Distillate (SSPD) process5 will underpin the Fischer-Tropsch reaction section and Chevron’s Isocracking process will be used for the products’ separation unit.

The project’s FEED contract has gone to Foster Wheeler (UK office) and major engineering firms have been invited to prequalify for the EPC contract. The project’s total capital investment is estimated at around $800 million. Beginning of construction onsite is now scheduled for third-quarter 2002 and startup for second-quarter 2005.

The Qatar GTL shareholders are Qatar Petroleum (51%) and Sasol (49%). Gas feed will be provided from Qatar’s supergiant North Field. The FEED contract has also been given to Foster Wheeler (UK office), which had already done the project’s feasibility study back in 1997. The signing of the EPC contract is foreseen for late 2002. Total capital investment is now estimated at $800 million.

GTL prospects. In sum, GTL specialists will have to wait until late 2004 (at best) to witness the startup of second-generation commercial GTLs. And by 2005, assuming that the three new complexes are duly completed, liquids’ output should add up to 80 Mbpd – a far cry from the 1.0 to 1.5 MMbpd forecast only a couple of years ago.

Naturally, a score of GTL projects are being envisaged or under study. ExxonMobil has recently signed for an 80-Mbpd complex in Qatar. Shell is contemplating no less than four 75-Mbpd GTL projects (potential candidates are Argentina, Australia, Egypt, Indonesia, Iran and Trinidad), but will announce its final decision in early 2002. Rentech is eyeing a 10-Mbpd GTL plant in Bolivia as well as a 15-Mbpd one in Indonesia (with state-owned company Pertamina).6

And further research is ongoing as newcomers enter. BP is going ahead with its 300-bpd plant (cost, $86 million) at Nikiski, Alaska, and Conoco is erecting its 400-bpd pilot unit ($75 million), which should come onstream in mid-2002.

Major hurdles. If fresh GTL projects seem to be having enormous difficulties in taking off, it is because they face an array of problems. Here’s a review of six major hurdles confronting them:

1. Although some momentous improvements in technology have been achieved during the past decade, GTL complexes are still very expensive propositions. Capital investment has been drastically reduced from around $100,000 per daily capacity barrel (DCB) for the first generation to around a current $34,000/DCB (Table 3) for second-generation plants. But even this is still proving too costly.

  Table 3. Breakdown of capital investment estimate
for a typical second-generation GTL complex
with a 50-Mbpd design capacity7
  Facilities and major units Capital investment,
$ million
  Inside battery limits    
    Gas treating unit   120  
    Air separation units   230  
    Syngas units   180  
    Fischer-Tropsch reactors   220  
    Products’ separation units   190  
  Outside battery limits    
    Utilities and common facilities   360
  Total depreciable cap. inv. 1,300  
    Licensee fees    75  
    Initial catalyst and chemicals    60  
    Commissioning and startup    40
  Total initial cap. inv. (TICI) 1,475  
    Contingency (@ 15% of TICI)   225  
  Total capital investment 1,700  
  Capital investment/daily capacity barrel:
$1,700,000,000/50 Mbpd = $ 34,000/DCB.

Moreover, there is no reason to believe that a $20,000/DCB target is feasible in the near future. Sasol is already above the target with its preliminary estimate on both its projects. A model developed by the RAND Corp. for predicting future GTL investment levels foresees an average of $50,000/DCB for 2001 – 2002.

2. Although GTL efficiency of between 8.2 to 10.2 MMBtu/bbl of liquid produced has been reported,8 the higher figure of 10 MMBtu/bbl seems more realistic for processes being implemented (e.g., Syntroleum and Sasol). It will be difficult to further improve on this threshold as second-generation processes have already been thoroughly optimized.

The gas input of 10 MMBtu/liquid barrel translates into a 62%-overall thermal efficiency. Achieving such a theoretical percentage in practice will prove immensely difficult since first-generation complexes have had difficulty achieving even 50%.

3. Most second-generation Fischer-Tropsch processes are based on cobalt catalysts. This metal commands a virtually sulfur-free gas feed (<1 ppm wt), as even traces of sulfur would poison it. Thus, for most projects, the cost of a desulfurization unit has to be included in the complex’s capital investment.

4. In grassroots GTLs, scale-up problems have so far been grossly underestimated. None of the second-generation processes have been commercialized, and both Sasol and Syntroleum are now attempting major scale-ups with their pioneering efforts: Sasol faces a scale-up of roughly 7 X on its slurry reactor9 and Syntroleum even a steeper step on its fixed bed. However, the scale-up of a fixed bed is infinitely easier than that of a slurry one.

Nonetheless, Syntroleum’s compulsory filing with the Securities and Exchange Commission has underlined caveats and mentioned "risk factors and uncertainties" such as "the potential that commercial-scale GTL plants will not achieve the same results as those demonstrated on a laboratory or pilot basis".10

5. Due to their technical novelty, pioneering efforts are always susceptible to unexpected problems – as in the case of first-generation GTL complexes. In turn, the almost inevitable mishaps in the course of project execution tend to inflate overall investment costs by between 10% and 20%. And second-generation GTL complexes cannot expect to be an exception.

6. The price of natural gas worldwide and especially in the U.S. is a critical factor.11 With an average of 10 MMBtu/liquid barrel produced, even a gas price as low as $2/MMBtu would induce a price of $20/bbl for GTL products, only taking feed costs into account.

The higher the gas price, the more feasible it will be to pipe it directly (e.g., Alaskan gas).

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The author wishes to acknowledge the assistance provided by Miss Behdis Islamnour in the course of this research.

Literature Cited

1 Samsam Bakhtiari, A.M., "Gas-to-liquids: an option for OPEC countries?," OPEC Review, Winter 1993.

2 Rentech Corporation built a small 250-bpd GTL unit at Pueblo, Colorado, in 1993. This unit was later transferred to India to produce diesel and industrial waxes for Donyi Polo Petrochemicals.

3 See Press Releases at

4 From Sasol Press Releases at Products will be: fuel, 24 Mbpd; naphtha, 9 Mbpd; and LPG, 1 Mbpd.

5 The SSPD process is based on a slurry-bed demonstration plant of 2.5 Mbpd (with a 1-meter-diameter reactor) that has been operating at Sasol’s research center since 1993.

6 European Chemical News, Sept. 24, 2001.

7 Estimates from the author’s personal database and International Gas Report, July 23, 2001, pp.4 – 5.

8 International Gas Report, April 27, 2001, p.28.

9 Sasol’s scale-up for its 17 Mbpd modules will be achieved on hand of results obtained at its 2.5 Mbpd demonstration plant (see note 5 above).

10 See the company’s SEC filing on its Home Page at

11 Samsam Bakhtiari, A.M., Hydrocarbon Processing, September 2001, p. 21.

Ali Morteza Samsam Bakhtiari is a senior expert in the Corporate Planning Division of the National Iranian Oil Company (NIOC), Tehran, Iran. He specializes in questions related to the global oil, gas and petrochemical industries, with special emphasis on the Middle East. Formerly, he lectured on design and economics at the chemical engineering department of Tehran University’s Technical Faculty. Dr. Samsam Bakhtiari holds a PhD in chemical engineering from the Swiss Federal Institute of Technology (ETH), Zurich, Switzerland. He can be contacted by e-mail at:

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