GTL bounces back

David Knott
London
[email protected]

The announcement by Sasol Ltd. and Chevron Corp. of a gas-to-liquids (GTL) joint venture has produced an unexpected reaction from rival Syntroleum Corp., Tulsa.

Sasol and Chevron plan to use Sasol's Slurry Phase Distillate technology in conjunction with Chevron's Isocracking technology in a number of GTL projects worldwide (OGJ, June 14, 1999, p. 30).

Normally, one would expect a rival, particularly a comparatively small company such as Syntroleum, to go in for a little wailing and gnashing of teeth after such an announcement. Not in this case.

Instead, Mark Agee, president of Syntroleum, promptly issued a press release saying the Sasol/Chevron move, "is another important validation that synthetic fuels made from natural gas will likely play a significant role in meeting the growing global demand for clean fuels.

"This action by Chevron is the most positive evidence that we have seen since the dip in oil prices last year that momentum for GTL is once again increasing."

Three-part process

Sasol and Syntroleum are effectively competitors in the early stages of the process, and, at first glance, the Sasol-Chevron JV deal threatens Syntroleum.

In simplistic terms, the GTL process comprises three main steps: conversion of natural gas to synthesis gas, conversion of synthesis gas to synthetic crude, and cracking of the syncrude.

Now Syntroleum has developed the Autothermal Reformer (ATR) process, which it claims is the most cost-effective way to produce synthesis gas (OGJ, June 23, 1997, p. 16).

But Sasol has a gas-to-syngas process as well, and its flagship is a Fischer-Tropsch process for making syncrude from syngas. And both Sasol and Chevron have processes for converting syncrude to transport fuels.

So far, Syntroleum has licensed its process to ARCO, Enron Corp., Kerr-McGee Corp., Marathon Oil Co., Texaco Inc., and YPF SA. Its list of "development partners" includes Daimler Chrysler, AMEC Process & Energy Ltd., London, and Kellogg Brown & Root.

Big deal

While a curmudgeon might say Agee simply saw an opportunity to get the Syntroleum name in the press, Agee's enthusiasm appears to be genuine.

A Syntroleum official told OGJ that, while Syntroleum might have preferred to be in a deal with Chevron instead of Sasol, the Sasol-Chevron tie-up will not be bad for Syntroleum.

"We've been carrying the torch for GTL for several years," said the official. "Exxon Corp. started it all but then quit, and the industry had become cynical about GTL during the oil price decline last year. We are simply delighted that companies with credibility are validating something that we've been saying for years."

The official said that, while there is a long way from a memorandum of understanding to a final contract for the Nigerian GTL project announced by Sasol-Chevron, Syntroleum actually hopes it will come to fruition for the momentum it will give to the GTL industry.

"There is so much business out there for GTL," said the official, "that if we put all the players together once GTL takes off, we still would not have the capacity to meet demand."