Shell ramps up Qatari gas-to-diesel money machine

[herm]

August 28, 2012

By Andrew Callus And Peg Mackey - REUTERS - GTL Plants Are Being Considered In Louisiana And Texas

Shell estimates duplicating the plant would cost $10 billion --Ed.

A Qatari project that has been a drain on Royal Dutch Shell's capital since 2003 is on the verge of turning into a unique asset that will produce billions of dollars a year in cash for the next 25 years.

Shell shareholders in 2013 should see significant benefits from Pearl GTL, a gas-to-liquids fuel project which until now has been notorious for a development cost overrun to $18-$19 billion from the original $5 billion and which is still late for its mid-2012 date for full production.

Shell says both Pearl's trains have now operated at between 90 and 100 percent of design rates, and even though maintenance issues have run into the third quarter and kept them from working together at full capacity, that moment now could be just around the corner.

Shell has said the project would generate $4 billion of free cash flow a year at full production in a market with crude oil prices, the main determinant of the price of diesel, at $70 a barrel.

Free cash flow - cash in the bank from sales after subtracting capital spending - is among the purest profit measures.

Shell will say only that returns are in line with other integrated gas projects, but given that Brent crude now sells for over $110 a barrel, while the gas going into Pearl is effectively free, it could clearly be a significant contributor to one of the world's biggest corporate capital spending budgets - at some $30 billion this year alone.

Analysts say crude prices would have to fall below $40 a barrel before the plant loses money.... [Read More]

[Carcus]

Massive start up costs. Massive energy lost in conversion.

What a waste.

/Kind of like driving a 8,000 lb H-1 to go pick up a quart of milk. Seems like the cool thing now but you'll hate it later.

[herm]

I know, diesel.. much lower energy cost to just make methanol.

[Kurz]

Whats more efficient?
Convert Millions of cars? or just convert the fuel to a useable form?

[herm]

Each one has its place and we should have every option ready to go.. large trucks should be using compressed methane since they have the room and the infrastructure is easy for them, and they benefit greatly from minimum fueling expenses... perhaps even trains.

It is amazing a Fischer–Tropsch process is actually cost effective today. It would be nice to be nationally independent producing fuel, until we can go electric. We have to keep those F150s rolling.

[Carcus]

"The promise of converting otherwise wasted or underutilized resources into valuable commodities that can command a premium price due to their purity is tantalizing. Any excitement must be tempered with the reality that processes promoted today require extremely cheap input gas, consume 40% or more of the original energy content of gas in the process, and, in many cases, are unproven on a large commercial scale. "

Gas to Liquids - GTL
http://www.natgas.info/html/gastoliquids.html



The conversion of a car to CNG can be cheap (under $2,000). There are a few drawbacks, losing about 1/2 of your trunk (or 18" of your pickup bed) to a CNG tank is probably #1. But when you can save over 1/2 the fuel cost -- the drawbacks diminish substantially.

/CNG conversions/vehicles are fairly prominent in some other countries. As soon as we get the refuel stations I think you'll see popularity go up at a rapid pace. National fuel distributors (Love's, Quick Trip) are just starting to roll out CNG and LNG now.
// if the "bigun$" get too committed to GTL, they will likely will fight CNG/LNG to protect their investments. Lots of money, lots of lawyers, lots of lobbyists -- tough to compete with that.


///imo, a rapid push for natural gas transportation could very well be the best thing for the immediate and somewhat extended (30+? years) future. Breaking the "liquid fuel monopoly" would be a very good move. Natural gas and batteries will help to that end.

[Carcus]

One of the major problems I have with methanol is that if it were implemented it would almost certainly be in a blended form with gasoline (i.e. M10, M15, etc......)

This does very little if any to break away from gasoline/oil. Therefore, we will still end up with a deep pull towards keeping all the middle east oil lanes "free" ....and we'll just keep on selling F-16's to Iraq and other incredibly stupid shlt.

[herm]

Originally Posted by Carcus

One of the major problems I have with methanol is that if it were implemented it would almost certainly be in a blended form with gasoline (i.e. M10, M15, etc......)

an advantage of not mixing it with gasoline is that you can run wet ethanol (20% water), like they do in Brasil.. perhaps you can do the same with wet methanol.

Originally Posted by Carcus

consume 40% or more of the original energy content of gas in the process

I think that is GTL for gasoline, worse for diesel.

[chucky2]

I wonder how much cleaner the diesel from GTL is than from conventional crude? If it could be targeted at one or two usages, perhaps solutions in those usage patters could enjoy higher efficiency due to having to use less inhibiting environmental controls.

What if we could have no EGR or DPF on Clean Diesel vehicles? Have them tuned more agressively and thus get smaller - and higher mpg - engines?

Chuck

[herm]

Regular diesel is already low enough in sulfur.. supposedly GTL diesel creates less soot