LNG vs. GTL: taking the battle to sea

David Knott
London[email protected]

As another major joins the race to develop a commercial gas-to-liquids (GTL) process, an old liquefied natural gas (LNG) idea has been revived.

GTL has been one of this year's hot topics, as petroleum companies seek ways of converting natural gas into middle distillates and synthetic crude oil (OGJ, June 23, 1997, p. 16).

Now British Petroleum Co. plc has disclosed its own GTL process, developed over 20 years but kept alive by a handful of enthusiasts during the dark days of the company's massive reorganization.

BP claims a breakthrough in plant design for the first phase of the GTL process: reaction of methane with steam or oxygen to produce synthesis gas, a mixture of carbon monoxide and hydrogen.

This first step accounts for more than half the capital cost of a GTL plant. BP and Kvaerner AS, Oslo, have developed a compact reformer to cut plant size and therefore cost.

BP and Kvaerner worked out a way to remove heat from the catalyst-filled steel tubes within the reformer, so components can be packed more closely together and overall reformer size can be reduced.

Pilot scheme

BP has completed reformer design trials at Warrensville, Ohio, and has separately developed a cobalt-based catalyst at a fixed-bed pilot plant at Hull, U.K.

Next BP and Kvaerner plan to build a demonstration plant to prove the two parts of the GTL process work together. BP's motivation is reserves of 8 tcf of gas either too far from market or currently uneconomic.

BP says the technology should give a GTL capital cost of $20,000/bbl of production capacity, compared with $30,000/bbl or more for other technologies.

A Kvaerner official said the new technology is suitable for both onshore and offshore applications and will be developed for fuel production and petrochemicals applications.

Since GTL is increasingly seen as a rival technology to LNG for gas developments, Kvaerner has also decided to hedge its bets by keeping its LNG options open.

LNG ship

Earlier this year Sasol Ltd., Johannesburg, and Norway's Statoil announced a joint project to develop a floating GTL unit that could be fitted to a production ship or semisubmersible.

The Sasol/Statoil aim is to be able to convert associated gas in offshore oil fields into synthetic crude oil, so this can be mixed with produced crude and exported to shore.

Now Kvaerner's maritime division speculates that the world's first offshore LNG production facility, comprising a gas production and liquefaction ship feeding an LNG storage/shuttle tanker, could be operational soon after 2000.

Kvaerner says it started work in 1975 on an LNG ship for sale to Iran, but the project fizzled out after the 1978 revolution there. Lately, the company has noted renewed interest in offshore LNG production.

LNG production, storage, and transportation are expensive, and this has long been regarded as an inevitability. But the recent emergence of GTL as a viable technology has helped force the LNG industry to seek cost reductions.

Kvaerner says offshore LNG technology could cut LNG project development costs by 20-30%. A Kvaerner official said, "We're now discussing definite field developments in Australia, Southeast Asia, and Africa."