Underdog Rentech furthers gas-to-liquids plans
Denver-based Rentech Inc. recently discussed its plans to convert the newly acquired Sand Creek plant in Commerce City, Colo., from a methanol plant to a gas-to-liquids plant. Once the conversion is complete, Sand Creek would become the first commercial GTL plant in the US, 3-5 years before any other such plants are likely, the company said.
In a recent conference call, Denver-based Rentech Inc. discussed its plans to convert the newly acquired Sand Creek plant in Commerce City, Colo., from a methanol plant to a gas-to-liquids plant. Once the conversion is complete, Sand Creek would become the first commercial GTL plant in the US, 3-5 years before any other such plants are likely, the company said.
Rentech�an underdog in the GTL race, which is led by well-known companies such as Sasol Ltd., Royal Dutch/Shell Group, and relative newcomer Syntroleum Corp.�stands to benefit substantially from tightening fuel standards and growing interest in developing clean fuels technologies, the company said. As proof of this trend, it cited renewed interest in GTL technology among ExxonMobil Corp., BP, Conoco Inc., and other energy companies.
In a recently released study, Battele, a technology development and management group, identified GTL conversion as one of the ten most important energy trends of the decade, said Dennis L. Yacobson, president, chairman, and CEO of Rentech. "We believe the level of interest and activity that Rentech is experiencing is emblematic of the inevitability of gas-to-liquids as a key 21st century technology.
"GTL is in a transition period between research, development, and commercialization," said Yacobson. "Numerous energy companies have publicly demonstrated their commitment to the commercialization of GTL either through licensing agreements, technology development contracts, or capital commitments to feasibility studies and pilot plant development."
Rentech subsidiary Rentech Development Corp. and Republic Financial Corp., Aurora, Colo., jointly own Sand Creek Energy LLC, the new owner of the facility. Basic engineering work for GTL conversion has been completed. Once the conversion is complete, the plant should produce 800-1,000 b/d of high-value, clean-burning sulfur and aromatic-free diesel fuel and other products.
In July 1999, Rentech began a feasibility study with FuelCell Energy Inc., Danbury, Conn., on a commercial-scale fuel cell power plant with up to 9,000 kw of generation capacity at the Sand Creek location. That review is still under way. Once the GTL plant is operating, Rentech will submit a modification permit application to state and local authorities; the company expects to receive approval for the project within 2-6 months.
Also in July, Rentech submitted a petition to the US Department of Energy to designate its diesel fuel as an alternative fuel, making it the first GTL technology provider to petition DOE on the subject, it claims. The petition process takes several months, says Rentech.
In September, the DOE will submit a notice of intent for rulemaking for alternative fuel.
But Rentech hopes to sell more than synthetic fuels from the Sand Creek facility. A potential customer for Sand Creek's excess hydrogen is Houston-based Conoco Inc., which owns a refinery in Commerce City near the Sand Creek plant, says Rentech. The sale of hydrogen would add another source of cash flow for Rentech that would alleviate some of the cost of buying natural gas feed.
Rocky Mountain region gas is inexpensive compared to prices in other regions of the US, which also should keep feedstock costs down for Rentech. Bullish prices for gas also make more valuable the hydrogen sold, says the firm.
GTL technology cooperative efforts
Rentech is currently in "various levels of discussions" and negotiations with several companies interested in using its GTL technology, Yacobson noted.
In March, the firm said that Texaco subsidiary Texaco Energy Systems Inc. entered an agreement with it in which Texaco Energy Systems received the right to evaluate and acquire up to half of Rentech's 50% interest in the Sand Creek project. The company also continues its work under a technical services agreement with Texaco to research integrating Rentech's Fischer-Tropsch technology with Texaco's gasification process.
Rentech and Texaco signed their 18-month technical services agreement in June 1999�a follow-up to an earlier licensing agreement signed by the companies in October 1998�calling for technical and developmental work to be carried out at Rentech's research and development facility in Denver. Their efforts have been focused on technology integration and maximizing the hydrocarbon yield from synthesis gas produced via Texaco's gasification process, said Rentech. Revenues to Rentech under the agreement are expected to reach $2 million.
Rentech in August 1999 was named part of a $14.4 million DOE project led by Texaco. The Early Entrance Co-Production Plant project seeks to develop an engineering design for a new type of energy facility.
By combining efforts to develop Texaco's gasification process and Rentech's GTL technology, the companies hope to achieve their goal of converting coal and petroleum coke to energy in the form of electricity and clean GTL fuels.
Rentech and Jacobs Engineering UK, a unit of Pasadena, Calif.-based Jacobs Engineering Group Inc., in February also signed an agreement to market Rentech's synthesis GTL process technology worldwide. And in March, Rentech announced a $252 million feasibility study for a 10,000 b/d GTL plant with Denver-based Forest Oil Corp. in South Africa using Rentech's GTL process.
Yacobson said he expects Rentech's third quarter earnings to be substantially higher than in past years. Because its total revenues exceed internal projections, he said, Rentech will be able to maintain its focus on GTL and try to meet its goal of having one commercial GTL project under way by the end of this year.