17 October 2000

Chevron and Sasol announced the signing of final agreements for the creation of a new company, Sasol Chevron Holdings, as part of their 50/50 global joint venture founded on gas-to-liquids (GTL) technology. The companies initially announced their intention to expand their GTL activities to a worldwide scale in June 1999.

The new company intends to implement gas-to-liquids ventures worldwide, anticipating investments totaling in excess of US$5 billion over the next five to 10 years.

George Couvaras of Sasol was named chief executive officer and Mark Koelmel of Chevron was appointed chief operating officer. Signatories to the joint venture documents on behalf of the two companies included Richard Matzke, vice chairman of Chevron Corp., and Patrick Davies, executive director of Sasol.

The venture is built on Sasol’s experience in Fischer-Tropsch technology. It will utilize proprietary technologies of both companies, including Chevron’s Isocracking™ and Sasol’s Slurry Phase Distillate Process, and draw on Chevron’s strengths and resources in international upstream gas development and production, and both parties’ technical strengths and experience in marketing premium GTL products.

Sasol Chevron Holdings will actively pursue application of GTL technology for selected Chevron and Sasol reserves of natural gas, for third-party gas reserves and on behalf of host countries seeking to monetize their gas reserves. In addition, it will foster the development of a GTL industry and global markets for GTL fuels, and will design, build and operate plants throughout the world to manufacture and market premium environmentally friendly fuels and products.

The Nigerian National Petroleum Company (NNPC) and Chevron Nigeria Limited have joined to bring a 33,000 barrel-per-day plant on stream by 2005. The Nigeria Escravos Gas to Liquid (EGTL) project, announced September 8, is to be the first GTL project in which the global joint venture will be involved. The global joint venture will support EGTL through the supply of management services, operations, and expertise. This marriage of South African, Nigerian and US interests will promote closer economic ties and development between the three countries.

Utilization of the GTL technology has the potential to provide a double environmental benefit: (1) GTL products are expected to set new global standards for premium high-performance, environmentally friendly fuels, and (2) GTL technologies facilitate monetization of gas that is produced in association with oil, thus eliminating the need to flare gas in areas where there is no infrastructure or commercial market.

GTL fuels contain virtually no sulfur and no aromatics, resulting in substantially lower hydrocarbon, carbon monoxide, nitrogen oxide and particulate emissions when compared with conventional fuels. They also have a performance advantage, with cetane values that are significantly higher than conventional diesel.

Commenting on the environmental benefits, Peter Robertson, president of Chevron Overseas Petroleum Inc., said, “We anticipate that the advent of the 21st century will see both profitable and expanded capability to convert natural gas into premium environmentally friendly fuels”. He noted that with more and more countries adopting rules for cleaner-burning fuels, demand for GTL products will significantly increase.

The Slurry Phase Distillate (SPD) process is a Sasol proprietary process for converting reformed natural gas (called synthesis gas or syngas) into waxy syncrudes. Utilizing technology from Haldor Topsoe, methane, the main component of natural gas is mixed with oxygen and a catalyst to create a mixture of carbon monoxide and hydrogen called synthesis gas, or syngas. In a Slurry Phase reactor, the synthesis gas is heated to about 240°C and mixed with another catalyst to form various liquid hydrocarbons (called Fischer-Tropsch conversion), yielding condensates and waxy syncrudes.

Isocracking is a Chevron proprietary process used to upgrade waxy syncrudes, by separating heavier molecules, which are usually solid at room temperature, then rearranging them so they become liquid. This process yields a lighter, premium fuel, such as synthetic fuels and naphtha, that contain virtually no sulfur, little nitrogen or carbon monoxide.

Source: Chevron Corporation