Will Gas to Liquids Technology Replace Oil?

What Is Gas To Liquids Or GTL Technology?

Gas to liquids or GTL technology has been around for several decades but has received much more attention in the past few years, thanks to rising crude prices. Using GTL technology, natural gas and coal bed methane  can be converted into longer chain hydrocarbons such as gasoline, diesel and even jet fuel.

In fact the world’s first commercial passenger jet powered by GTL fuel made from natural gas recently flew from Doha to London.  The  Qatar Airways jet, an Airbus A340-600 aircraft,  was powered by Rolls-Royce Trent 556 engines using gas to liquids derived jet fuel.

Shell produces a new type of jet fuel, called GTL Jet Fuel, which burns with lower sulphur dioxide emissions that can be used to lower air pollution at airports with low air quality such as Hong Kong and Mexico City. The fifty – fifty blend of GLT fuel and conventional jet fuel is being touted as an economically viable and more eco friendly alternative to conventional jet fuel.

There are two main processes used to turn natural gas into more complex fuels such as diesel. The Fischer – Tropsch process and the Mobil process which was developed by the company formerly known as Mobil Oil in the 1970’s.

Most natural gas can be used for gas to liquids conversion however gas that is higher in methane content is preferred.  Gas from unconventional reservoirs such as coal bed methane and shale gas are both rich in methane content and ideal for GTL conversion.

Swimming In Natural Gas

As the price of oil rises, both due to scarcity and the decline of the U.S. dollar, the price on natural gas remains low. There is such an abundance of natural gas in the United States that some companies such as EOG are actually capping newly drilled wells until prices rise. The break even point for companies to make a profit is somewhere in the $4.00 per MMBTU range and as of the writing of this article natural gas is trading at $4.40 per MMBTU or Million British Thermal Units.

The reason for all of this natural gas is the discovery of enormous shale gas reservoirs in the United States and the fact that unlike oil, natural gas is not easily transported around the world. Horizontal drilling, or the process of drilling natural gas wells sideways across an underground reservoir, has unleashed a vast supply of natural gas in the U.S.

Shale gas reservoirs such as the Marcellus shale, the Haynesville shale and newly discovered ones like Eagle Ford shale  in South Texas mean a stable source of natural gas for GTL fuel conversion. The relative stability of natural gas prices may allow refiners to produce gasoline, diesel and jet fuel cheaper from natural gas than from crude oil as refining costs come down.

As GTL conversion refineries become larger and an economy of scale takes over, the price per gallon cost of GTL conversion will drop. The Syntroleum corporation of the United States has reported that their cost of making a barrel of crude from natural gas is somewhere in the $20 per barrel range.

Is GTL Better Than CNG As A Motor Fuel?

GTL or gas to liquids derived fuels can solve  many of the problems associated with using natural gas as a motor fuel. Currently the main problem associated with powering vehicles with CNG or compressed natural gas, is lack of driving range. By concentrating the energy of natural gas in a liquid form, a GTL powered car will have the same range and power as one powered by conventionally derived gasoline. Using GTL also solves the problem of having to install costly CNG conversion kits and tanks in millions of vehicles.

For more about the United States shale gas boom see: The Marcellus Shale Gas Boom