www.DieselNet.com. Copyright © Ecopoint Inc. Revision 2002.11d
This is a preview of the paper, limited to some initial content. Full access requires DieselNet subscription.
Please log in to view the complete version of this paper.
Diesel fuels and other petroleum products are traditionally manufactured by refining of crude oil. However, they can be also produced synthetically from various carbon bearing feedstocks. The feedstock that attracts the most attention today is natural gas, but synthetic fuels can be also produced from such sources as coal or biomass.
The first and best known synthetic fuel technology is the Fischer-Tropsch (FT) process, which was developed in the 1920s in Germany. Commercial use of FT fuels, besides the two historical incidents of the World War II Germany and the South Africa during economic embargo periods, has been extremely limited. Nevertheless, the FT research work has been continued by several companies, leading to the development of a mature technological process of improving economy. Today, the major FT technology players include large oil companies, such as ExxonMobil, Shell, and Sasol. Research is also sponsored by governments, which perceive synthetic fuels as an important option for future alternative fuels . Furthermore, small development-stage companies exist (e.g., Syntroleum or Rentech) that develop and license FT processes to others.
Because of the natural gas focus, synthetic fuel processes are frequently referred to as gas-to-liquid, or GTL, technologies. That term is not covering all synthetic fuel technologies, as liquid fuels may be produced, and have been produced, from almost any carbonaceous feedstock that is either gaseous, liquid, or solid. Coal is a good example of a solid feedstock that was used for manufacturing of FT diesel fuel in the past. On the other hand, the term GTL is sometimes also used in relation to non-FT fuels, for example dimethyl ether, which can be produced from natural gas feedstock as well. This paper is limited to fuels produced through the Fischer-Tropsch synthesis, with focus on natural gas a the most important feedstock.
There are several reasons for the importance and attractiveness of synthetic diesel fuels:
On the other hand, environmental concerns may present an obstacle in the commercialization of synthetic fuels. FT fuels manufactured from natural gas bring no discernible greenhouse gas benefit relative to petroleum diesel (unless the feedstock gas was flared before the production started). Only FT fuels made from biomass can provide a life cycle CO2 emission benefit.
Potential locations for commercialization of GTL plants are in regions with ample low-cost gas resources, such as the Middle East, West Africa, and the North Slope in Alaska. Fields like those on Alaska’s North Slope contain plenty of natural gas but are far from market. The Trans-Alaska Pipeline System offers the opportunity to transport GTL products through the existing pipeline and provide high-quality synthetic hydrocarbons to world markets. GTL technology could be important in locations where associated gas is re-injected or flared for lack of nearby markets. In these locations GTL plants could produce hydrocarbons that could be conveniently refined or, if upgraded, shipped directly to market in conventional tankers. Integration of GTL technology with production and other operations offers additional incentives. Use of the byproducts of the GTL process, such as steam, power, and nitrogen, can further enhance its overall commercial value. On the other hand, GTL fuels produced from pipeline supplied natural gas would not be competitive due the higher feedstock cost.
Process economy, as influenced by the high capital costs of FT processes and the market risks due to the fluctuation of crude oil prices, presents the main barrier for wider commercialization of synthetic fuels. Whenever crude oil prices decline, economic challenges increase for synthetic fuels. The sensitivity of FT fuel cost to the crude oil price is illustrated in Table 1 .
|Natural Gas (@$0.50/MMBtu)||$4.00|
|+ Crude Oil (@$17/Bbl)||$17.00|
|+ Operating Costs||2.50||3.00|
|Total Cash Costs||19.50||7.00|
|+ Capital Recovery, Taxes||6.50||12.00|
|Total Cost to Produce||$26.00||$19.00|
It is generally agreed that FT plants can be profitable only at very low gas prices and relatively high crude oil prices. The exact figures fluctuate following the trends in the energy markets. A 2001 study estimated that for FT production to be feasible natural gas prices would have to be on the order of $0.50/MMBTU (1 MMBTU = 1 million BTU = 1055 MJ) and the crude oil prices above $20 - $25 per barrel . According to a newer estimate, FT fuels could be economical when natural gas is at $15/MCF (1 MCF = 1000 ft3) and oil is at $120 per barrel .