S. Halim Hamid, A.M. Aitani
Research Institute, King Fahd University of Petroleum & Minerals
Dhahran, Saudi Arabia
Natural gas is increasingly becoming a major contributor in the industrial development of most Middle Eastern countries.
Demand there will rise steeply in coming years. This is because of the abundant and growing natural gas resources in the region (Table 1) (15679 bytes), the economic benefits of using local resources, as well as increased emphasis on a cleaner environment.
Today, proved reserves of natural gas in the Middle East are 45 trillion cu meters (tcm), or 1,488 trillion cu ft (tcf). This is over 30% of the world's natural gas reserves. The major reserves are located in Iran, Qatar, Saudi Arabia, and United Arab Emirates (mainly Abu Dhabi).1-4 Most of the reserves in Qatar, Oman, Iran, and U.A.E. are non-associated and have the potential for export via pipeline or LNG.5 Table 2 (18292 bytes) presents data on reserves and production of natural gas in the region.
During the last two decades, production has increased significantly and currently it is at 204 bcm/year. About 20% of this gross production is re-injected for oil field pressure maintenance, 13% is flared or vented, and 7% is accounted as losses. The remaining 60% represents consumption in power generation, water desalination, petrochemicals and fertilizers production, aluminum and copper smelting, and fuel for refineries and other industries .4
The extent of natural gas utilization and importance in the Middle Eastern countries is evident in the sharp decline in flaring losses that are now less than 12% compared to more than 73% in 1970 (Table 3) (10442 bytes). One of the best examples in this regard is the successful completion of a master gas system in Saudi Arabia in 1982 which permitted the recovery and processing of huge amounts of associated gas (52.0% methane) to produce NGL and LPG.6 7
Another example is the recent announcement of the construction of Qatar's LNG project which promises to make the country a leading global exporter of gas and provides the revenues to sustain the country's growing prosperity into the next century. It was the first step in Qatar's program to develop the huge North field gas reserves for export. The project is designed initially to produce 4 million tons a year of LNG, all for export to Japan. 5
Currently, the Middle East accounts for about 4% of global LNG, mainly from Abu Dhabi to Japan (4.3 million ton/year) in addition to natural gas exports from Iran to the Former Soviet Union.
The current and projected structure of natural gas consumption in the region is presented in Table 4 (10964 bytes) and Table 5 (10828 bytes). More than 50% of gas is consumed in electricity/desalination plants and 16% for the production of petrochemicals/fertilizers. However, substantial increases in gas consumption are more likely to be achieved if gas is utilized in large scale industrial or power generation applications.
Natural gas has not significantly penetrated the residential/commercial sector because of the lack of gas transport and distribution networks. Such networks are also needed to supply gas to other countries in the Middle East that are not self-sufficient in natural gas.
POWER GENERATION
Power generation is the most important sector influencing global gas demand. For Middle Eastern countries, more than 50% of marketed production is consumed in power production for electricity and seawater desalination. Almost all thermal power plants in countries bordering the Arabian Gulf burn natural gas because gas fuel offers the following advantages: 8
- Availability
- Cost (cheaper than coal on thermal unit basis)
- Low maintenance costs
- Clean burning.
Gas reserves are adequate to meet current and future demands in the Middle East. Another important feature of natural gas is that it costs less per thermal unit than liquid fuels.
Although oil radiant energy levels are much higher than gas fuel and provide higher boiler efficiency, overall operating fuel cost using gas is much lower.
The gas fuel operation minimizes the use of complex burners and requirements for fuel supporting auxiliary systems, thus lowering the operating costs for plants using natural gas. Gas fuel particulates and emissions are significantly lower.
In fact, gas-fired, combined-cycle power plants can reduce harmful environmental damage per unit of electricity generated. A 240-mw natural gas-fired plant has advantages over a comparable coal power plant that meets the current U.S. Environmental Protection Agency emissions standards. Following are the types of emissions from a gas-fired plant and the amount they are reduced compared to the comparable coal plant.8
- Sulfur dioxide, 100%
- Particulate matter, 95%
- Carbon dioxide, 58%
- Nitrogen oxide, 81%
- Sludge, 168,000 tons/year
- Ash, 60,000 tons/year.
The high generating efficiency of natural gas burned in a modem combined-cycle generating plant, together with much lower carbon dioxide and sulfur emissions, give natural gas a considerable edge over fuel oil and coal. If natural gas is substituted for coal for power generation, carbon dioxide emissions could be lowered by 46% (Table 6) (9566 bytes). A gas-fired, combined-cycle plant would even curb carbon dioxide emissions by 56% due to the high efficiency of the process.
The prospects for natural gas are best as a fuel for new electrical power generating installations. For the same quantity of electrical output, the capital cost of oil-fired and particularly coal-fired capacity is significantly greater and the construction period is significantly longer than that of gas-fired capacity (Table 7) (10045 bytes). The gas-fired generation costs are at least $10/1,000 kwh lower than that of coal-fired capacity (without taking the cost of fuel into consideration).
At a coal price of $50/ton, the cost of 1,000 kwh of electricity is estimated at $46; at a heavy fuel price of $75/ton the cost of 1,000 kwh is $38 while at a natural gas price of $2.5/MMBTU, the cost of 1,000 kwh is estimated at $27. (Low sulfur heavy fuel was priced some $95/ton in New York in September 1993.)
Based on these figures, it becomes clear that where gas is available, gas-powered stations will be built in preference to all other sources. 2
The domestic alternative of natural gas vs. oil or coal for any economy holds vast economic benefits. This applies to emerging economies in Middle Eastern countries and the Asia/Pacific region.
Power demand in the Middle East is rising rapidly. This reflects the sustainable economic and population growth in this region. An estimated $50 billion is to be spent before the year 2000 by Middle Eastern countries to add another 35,000 mw to the current capacity of 57,000 mw (Table 8) (26646 bytes). Most new power plants will be concentrated in Saudi Arabia, U.A.E., and Kuwait.'
PETROCHEMICAL PRODUCTION
Natural gas is used as a process fuel in most petrochemical processes and as feedstock for some, primarily ammonia and methanol. Production of other methane derivatives is minor.9 10 Natural gas liquids (NGL) which contain ethane, propane, butanes, and gas condensate are used as feedstocks for olefins production, accounting for about 40% of the world's ethylene production (Table 9) (7472 bytes).
Middle Eastern countries consumed about 17% of natural gas/NGL production in 1992 for petrochemicals production. More than 90% of the total petrochemical output is based on methane and ethane in addition to a similar proportion of fertilizer production. Olefins production in the region uses ethane as the main feedstock. The abundance of associated gas, especially in Saudi Arabia which has a gas gathering system, has ensured the availability of low-cost ethane (and LPG), which is very suitable for the production of ethylene due to the low co-product yield.2 6
Global ethylene demand is forecast to grow at an average rate approaching 5%/year through 2000. Growth will be higher in the Middle East where it is projected to increase from a rate of 5% in 1993 to 6.5% by 2000 (Table 10) (5537 bytes). Middle East ethylene and derivatives capacity will double during the decade. Ethylene capacity alone will rise from 3.1 million tons in 1990 to almost 4 million tons in 1995, then jump to 6.3 million tons by the year 2000.12 13
More than 75% of the ethylene produced in the region goes to Saudi Basic Industries Corp. (Sabic) petrochemical company and its affiliates in Saudi Arabia. The company, which is 70% owned by the government, owns a world class olefins plant in Saudi Arabia and is a joint venture participant in two others there. It is also affiliated with numerous joint ventures making derivatives. The prerequisite for Sabic's success has been mainly the availability of cheap and plentiful feedstocks, principally methane, ethane, propane, and butane. Other factors for this success are the joint ventures with major petrochemical producers, low cost for utilities, advantageous financing, and the establishment of global marketing.
The existing and expected capacity (1995) for the petrochemical industry in major Middle Eastern Gulf countries are presented in Table 11 (5929 bytes). The first phase of this industry was mainly based on the production of ammonia and methanol from methane as well as ethylene and its basic derivatives by utilizing ethane derived from natural gas.
However, this resulted in producing a narrow range of products and was hinged on the market price development of these few products. Ethylene crackers using ethane as feedstock do not produce the important byproducts which are used as basic raw materials for other major petrochemical plants. 13
Table 12 (5459 bytes) gives typical yields of various feedstocks for ethylene plants. NGL feedstock for ethylene and other olefins shows the best yields for future diversification into other petrochemical products." In fact, Sabic has already used a flexible cracker (naphtha or LPG) for Petrokemya II in July 1993. It is expected that future crackers will incorporate flexibility to allow more use of LPG and condensate as feedstock.13
The production of MTBE from methanol and isobutylene (derived from dehydrogenation of isobutane) is one of the best petrochemical investment opportunities. It represents a way of converting natural gas into motor fuels (gasoline) whose consumption exceeds 750 million tons per year. It is estimated that by 2000 the global demand for MTBE will reach 33.6 million tons compared to the present demand of 24.2 million tons.2 It should be noted that MTBE is produced by both refiners and dedicated MTBE plants; however, refinery MTBE production capability rarely exceeds 100,000 ton/year, whereas dedicated world scale plants are much larger (500,000-800,000 ton/year).
The capacity of MTBE in the Middle Eastern countries is about 2.6 million ton/year and expected to reach 7 million ton/year by the year 2000.
The successful development of technologies that convert LPG (derived from gas processing) to aromatics such as UOP/BP Cyclar and IFP Aroforming processes is vital for the diversification of petrochemical products in the region. These processes are well suited for natural gas-rich countries and for the production of benzene and paraxylene needed for styrene/polystyrene and polyester production, respectively. Companies such as Shell and Sabic are considering these processes for the production of aromatics from LPG in the Gulf countries.
NATURAL GAS CONVERSION
The conversion of natural gas to synthetic hydrocarbon transportation fuels reached commercialization stage in 1985 with the operation of New Zealand's gas-to-gasoline plant. In South Africa, a Sasol (Sasolburg) type plant was built in 1991 to convert offshore natural gas to liquid transportation fuels using a combination of Lurgi's syngas process and Sasol technology. Recently, in 1993 a plant was constructed in Malaysia to convert natural gas to diesel fuel using the Shell middle distillate synthesis (SMDS) process. Exxon and Statoil of Norway have also developed technologies to convert gas to middle distillates (GMD).
Synthetic fuels have the advantage that they are fully compatible with existing fuel distribution systems and car/engine fuel systems.15 These fuels are environmentally friendly. Although gas conversion will not displace crude oil as a source, it could attain a significant market share within the next 20 years.
The synfuels technologies are well-suited for countries with sufficient gas but who need to import oil or oil products to meet their local demand. Capital and operating costs for synfuel complexes are highly dependent on location and product slates produced. In the beginning, much attention was directed at the Fischer-Tropsch synthesis, but in addition, a new wave of methane catalysis emerged. This trend encompassed the synthesis of methanol, the conversion of methanol to hydrocarbons, and the direct conversion of methane to higher hydrocarbons.15 16
The gas-to-gasoline process in New Zealand uses Mobil Oil Corp.'s technology through the indirect conversion of natural gas to methanol which is converted to high-quality gasoline. About 80% of the produced hydrocarbons are in the gasoline range of which 40% are BTX. The plant was designed to process 4.0 million cu m of natural gas/day into 4,400 tons methanol/day and then to 570,000 tons gasoline/year (about 14,500 b/d).15 In the process, natural gas is converted to methanol using conventional syngas-methanol synthesis technology. Methanol conversion is carried out in fixed-bed reactors containing Mobil's ZSM-5 catalyst to produce gasoline. However, due to the current price of oil, the process is not economical.
The direct conversion of natural gas to diesel fuel is now being applied by Shell SMDS technology in the first commercial plant (12,000 b/d) at Bintulu, Malaysia.17 The process consists of three stages: syngas manufacture (CO and H2), heavy paraffins synthesis, and heavy paraffins conversion.
The paraffins synthesis step is a modified Fischer-Tropsch (FT) process which emphasizes high yields of useful products of long chain waxy molecules. The last conversion step combines the high selectivity towards middle distillates leading to a very high overall yield of product in the desired range of kerosine, gasoil, and some naphthas.
As noted earlier, the potential for synthetic fuels from natural gas is constrained by economics rather than market. It will be highest in regions having resources of cheap gas and high rates of growth in demand for transport fuel, such as South East Asia. Synthetic fuels represent the major potential for increased gas usage due to the large world market compared to other alternative as shown in Table 13 (5132 bytes). The production/world market ratio indicates how difficult it will be to absorb a specific product in the current market place; e.g., gasoline and middle distillates are expected to meet the lowest resistance.18
OTHER USES OF GAS
Natural gas and refinery off-gases are used as fuel in most Middle East refineries. About 70% of the refineries' requirements for energy are met by natural gas.
Natural gas is also the most popular hydrogen plant feed in the region. Excluding the ammonia and methanol industries, refineries consume 85% of the hydrogen manufactured worldwide. A large amount of additional hydrogen will be required between now and the year 2000 to meet the environmental regulations introduced for gasoline and diesel. About 90% of this hydrogen demand will be met by steam reforming of natural gas. Recent estimates suggest that the demand for supplementary hydrogen production will double in the U.S. and increase five-fold in Europe by the year 2000.
METALLURGICAL INDUSTRIES
Natural gas is used as a substitute for coal, providing a source of fuel and hydrogen necessary for the iron ore reduction operation. One ton of sponge iron requires about 350 cu m of gas raised to about 410 cu m in case it is transformed into steel products. 7
Aluminum production from its oxide requires tremendous electric power. To produce 1 ton of aluminum, 2 tons of alumina and half a ton of carbon poles are needed. The electric power and carbon poles necessary for this industry are available in Middle East countries from gas and petroleum coke respectively.
OTHER INDUSTRIES
In most Middle East oil-producing countries there are projects for cement production dependent on gas for fuel. To produce 1 ton of cement requires about 28 cu m of gas. Natural gas is also used as fuel in the manufacture of glass, bricks, and ceramics.
RESEARCH
The widening applications of natural gas and the success in converting it to higher hydrocarbons necessitates a need for basic research to provide for a profitable and secure long-term future. A number of basic research topics justify enhanced funding. Some in the utilization area are:
- New uses of gas as a chemical feedstock
- Advanced concepts for methane as a transportation fuel
- Improvements in the efficiency of gas combustion
- Investigation of new ways to use gas as a source of energy for industrial processes
- Use of gas in air conditioning.
ACKNOWLEDGMENT
The authors acknowledge the support of the Research Institute, King Fahd University of Petroleum & Minerals, for conducting this work.
The Authors
He received a BS degree in chemical engineering from the same school in 1983.
Prior to joining the institute in 1983, he worked for the Saudi Arabian Oil Co. (Saudi Aramca) at the Abqaiq plant operations engineering unit. This unit is concerned with plant optimization and modifications of natural gas liquids (NGL) plants.
At the institute, he is a member of the catalyst research group, where he is engaged in catalyst evaluation and testing. He has co-authored several technical papers and he is a member of the American Society for Testing Materials (ASTM D 32 Committee on Catalysis), the Society of Chemical Industry (SCI), and the American Chemical Society (ACS).
Syed Halim Hamid is a manager of the petroleum refining and petrochemicals section of the petroleum and gas technology division of the Research Institute at King Fahd University of Petroleum & Minerals, and he is also an associate professor of chemical engineering there.
Hamid received a PhD degree in chemistry from the City University, London, in 1988. He also earned an MS degree in chemical engineering from King Fahd University of Petroleum & Minerals in 1980, a BE degree in chemical engineering from the University of Karachi in 1976, and a BS degree in industrial technology from the University of Sind in 1972.
At the institute, Hamid is coordinator of the polymer degradation and stabilization group. His fields of interest are polymer degradation and plastic weathering. Since 1982, he has been extensively involved in studying the effects of the harsh weather of Saudi Arabia on plastics. At present, he is project manager of a long-term plastic weathering project.
He is a member of the United Nations Environment Program's international committee on effects of ozone depletion. He is also a member of the American Institute of Chemical Engineers, Plastics & Rubber Institute, Society of Plastics Engineers, and the American Chemical Society.
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