Taking GTL Conversion Offshore
Authors: Agee Mark A. 
Published: October 2008

While technological advances within the energy industry have made dramatic improvements in lowering the cost of finding, producing and refining oil, vast quantities of remote and stranded gas still wait to be developed. Emerging gas-to-liquids (GTL) technologies may play a significant role in helping oil companies develop and monetize these resources. These factors are particularly important to offshore applications given that roughly half of the world's stranded gas is located in water.

This paper will consider potential offshore gas reserves that could represent applications for GTL technology. It will also examine current GTL process developments and their significance relative to offshore petroleum operations, including discussion of air-based vs. oxygen based GTL systems. In conventional synfuel processes, syngas is generated from natural gas via partial oxidation with oxygen, requiring an air separation plant to provide the oxygen. In these approaches, nitrogen is eliminated from the synthesis gas stream as an unwanted inert. In an air-based system the syngas step, by contrast, uses air-carried oxygen, rather than eparated oxygen, to produce a nitrogen-diluted synthesis gas. This eliminates the expense of an air separation plant needed to produce oxygen used in typical plants. It thus reduces capital costs, making possible plants with considerably smaller footprints, and also provides for a safer operating environment.

In addition, this paper will examine some of the strategic implications facing the petroleum industry from the growing potential of applying GTL technology.

Introduction

At the close of the 20th century, in spite of all the scientific and engineering achievements that have been made in the energy industry, we have left behind a vast storehouse of remote and substandard gas reserves. Estimates published in Oil & Gas Journal indicate that discovered global reserves of natural gas exceed 5,000 trillion cubic feet. It is estimated that over half of these reserves are considered stranded-largely unmarketable because of prohibitive costs of transportation to market. It is further estimated that over half of these stranded reserves are located in water.

Against this backdrop, and apart from current low oil prices, the petroleum industry faces a number of challenges, including environmental mandates for cleaner fuels, raw materials getting heavier and dirtier, process upgrading investments more difficult to justify, tightening supplies for middle distillates and naphtha, surging demand for clean fuels for power generation and transportation vehicles, and most of the reserves of the cleanest fuel-natural gas-too remote for economic delivery to market.

In this setting, economical GTL is an event waiting to happen. GTL could turn unmarketable reserves of natural gas into a form that overcomes prohibitive transportation costs, avoids long--term, high-risk, take-or-pay contracts, and helps satisfy the demand for cleaner liquid products. It could help recover some of the sunk costs in offshore gas finds that have yet to be monetized.

Hence, it is among these combinations of incentives and threats that the petroleum industry is looking closely at the new generations of GTL technologies to 1) provide profitable ways for monetizing reserves they already have discovered but are currently worthless, and 2) respond to growing market demands for cleaner fuels that are becoming more expensive to meet with conventional oil.

Given the huge quantities of natural gas that reside offshore, many oil companies have focussed attention to the possibility of utilizing GTL technology in the marine environments. Taking any form of new process techn