Gas-to-Liquids Technology Is Getting a Closer Look

Three separate news events this week have highlighted the gas-to-liquids (GTL) business this past week: Syntroleum Corp. has successfully started up a GTL pilot plant with ARCO; Frost & Sullivan has released a new business report, "Strategies and Issues in the U.S. Alternative Automotive Fuels and Engines Market;" and there is a report that Rentech Corp. has started a feasibility study to locate one of its GTL plants within an existing methanol plant. These announcements, on the heels of the proposed shutdown of the MTBE fuel-additive market in the U.S., are probably coincidental, but they interrelate with that event in an intriguing way.

Tulsa, OK-based Syntroleum has been working for years with ARCO, which was one of the early backers of the company. Together, they have installed a 70-bbl/d pilot plant at ARCO's Cherry Point Refinery near Bellingham, WA.

According to Syntroleum, the plant incorporates propriatary reactor designs for the autothermal reformer and the Fischer-Tropsch synthesis reactor. "The successful integration of the new catalyst system and the advanced reactor design represents a major step forward in assessing this important technology," says Jeff Bigger, ARCO's GTL technology manager. "Our ultimate goal is to deploy an economically attractive design for commercializing stranded natural gas resources."

Meanwhile, Gas-to-Liquids News (Phillips Publishing) reported on July 28 that Rentech, Inc is evaluating the placement of its GTL technology (which can produces commercially valuable waxes in addition to fuel) at an existing U.S. methanol facility. The methanol market has not been strong lately and does not look to improve any time soon; methanol is a feedstock for MTBE production, which may now dry up as a methanol market. Like GTL, methanol production starts with a synthesis gas process to reform natural gas; this reformer comprises 60% of the cost of a GTL plant based on Fischer-Tropsch technology. Dennis Yakobson, president of Rentech, is quoted as saying that "the cost savings of retrofitting a methanol plant with GTL technology could be 30-70% less" than a grassroots facility. The location and owner of the methanol plant was not disclosed.

Both Syntroleum and Rentech employ Fischer-Tropsch technology, a half-century-old method of making longer-chain hydrocarbon fuels by reforming natural gas or other raw material. With a gas feedstock, the gas is reformed to synthesis gas, high in hydrogen and carbon monoxide, and then catalytically reacted to form long-chain alkanes, alkenes and other potential fuels. The recent attraction of this synthetic fuel is as a way to exploit natural gas reserves that are too small or too far from pipelines that would make the gas a source of heat or power. So-called "stranded" gas exists in many regions of the world.

Finally, Frost & Sullivan, the Mountain View, CA, market research firm, has released a new report saying that there remains no clear winner among either alternative fuels, or alternative automotive-power technologies, to address transportation economics and environmental priorities.

"A number of alternative fuels can be used in internal combustion engines, burning more cleanly than gasoline or diesel," says Frost & Sullivan Analyst Joerg Dittmer, the report's author. "However, price-competitiveness is a major requirement for market acceptance, and ethanol, methanol, and biodiesel are more expensive than conventional fuels. Propane is approximately price-competitive, and natural gas is actually less expensive. Except for biodiesel, though, alternative fuels reduce a vehicle's range or need more onboard storage space because they contain less energy by volume. Natural gas offers the greatest reduction in emissions, but gaseous fuels are more difficult to handle."

"Leadership, either from government or through an industry consensus, is needed to overcome the chicken-egg problem that the industry faces," says Dittmer. "Without a consensus in favor of a specific alternative fuel, vehicle buyers are reluctant to buy AFVs, and infrastructure developers are reluctant to provide refueling stations, fearing that the technology they commit to may become obsolete."

With the report, Frost & Sullivan also promotes a Market Engineering Product Innovation Award to companies that have made the largest positive contribution to alternative fuels. This year, the award is granted to Toyota Motor Sales for introduction of the Prius hybrid EV to the U.S. market, anticipated in 2000. A similar prize, the Market Engineering Product Line Strategy Award is given to Ford Motor Co. for offering the broadest range of AFVs in North America.

The Frost & Sullivan report, "Strategies and Issues in the U.S. Alternative Automotive Fuels and Engines Market," is available for $3,450.

By Nick Basta

For more information:
Syntroleum Corp.
400 South Boston
Ste. 1000
Tulsa, OK 74103
Tel: 918-592-7900
Fax: 918-592-7979

Rentech, Inc.
1331 17th St., Ste. 720
Denver, CO 80202
Tel: 303-298-8008
Fax: 303-298-8010

Frost & Sullivan
2525 Charleston Road
Mountain View, CA 94043
tel: 650-237-4386
Fax: (650) 237-6569