US-based Gas Technologies has developed technology which could transform the economics of stranded gas.
Despite recent efforts, stranded gas remains a difficult issue for the industry. Legislation on carbon emissions, and a growing global movement against flaring, means that more associated gas will have to be used, converted or stored.
In many cases gas-to-liquid (GTL) technologies, although increasing in prevalence, rely on large economies of scale – or severe remoteness – to be economic. In most processes, natural gas is treated, reformed into syngas and then converted into methanol and other liquid chemicals or fuels, a complex process which requires high-maintenance catalysts. This means that most natural gas sources are too small to apply syngas GTL technologies.
A new system developed by Michigan, US-based firm Gas Technologies could change that. Its proprietary system – billed as Mini-GTL® – does not require an intermediate syngas stage or catalysts, instead converting methane into methanol in a single step using a process of direct non-catalytic partial oxidation.
Unreacted methane is scrubbed and fed back through the system, without additional energy input, until conversion is complete. The efficiencies, the company has said, are comparable to rival processes, but with a 50%-70% reduction in capital costs and up to 20% lower operating costs, according to a study undertaken by Nexant ChemSystems. Additionally, having been designed with “simple hardware, sophisticated software” in mind, the Mini-GTL® can be operated remotely and the process tuned for different gas compositions.
Mini and mobile
The entry level Mini-GTL® plant is designed to convert between 125,000-300,000 cubic feet (3,500-8,500 cubic metres) per day and costs around US$1.6 million. According to Gas Technologies, the process will generate 4.8 gallons (18 litres) of methanol, 1.4 gallons (5.3 litres) of formalin and 0.4 gallons (1.5 litres)of ethanol per 1,000 cubic feet (28 cubic metres) of methane feedstock when processing 200 mcf (5,600 cubic metres) per day of natural gas. Raw liquids can then be stored and trucked out when convenient.
The standard 300 mcf-per-day-plant fits into a standard 40-foot shipping container, meaning it can easily be transported and deployed to more remote production sites. This translates into rapid deployment, lower footprint and simpler logistics and thus eminently suited for extended well testing or early production systems. Unlike alternatives it is a direct from flare drop-in solution for emissions control.
GasTechno is focusing its commercial development on eliminating gas flares and has considered operating on high-Btu associated natural gas. The costs of production are highly dependent on scale, however, for a nominal plant processing 1 mmcf (28,300 cubic metres) per day of associated gas from a typical well in North Dakota, producing NGLs, methanol, ethanol and formalin, the payback period is just under 1 year.
These numbers are based on associated gas with value of US$1.00 per mmBtu, typical project financing (8% interest) and product pricing considering the 20th percentile of 10-year historical prices (over 10 years the prices were higher than these during 80% of the time).
Reduced capital cost is one of GasTechno’s main drivers. Even at the small scale of 1 mmcf per day, the capital costs per barrel per stream day are about US$28,000. Despite slightly lower efficiencies owing to the reduced scale, the GasTechno process remains economically attractive. The company will therefore continue to focus on small-scale gas flares where, at present, no catalytic process is economically viable.
Because Mini-GTL® does not require catalysts, it can also handle off-spec gas with higher levels of impurities, including sour gas. Without modification the plant will accept up to 50% CO2 and 25% nitrogen. That makes it suitable not only for flared natural gas, but for biogas and landfill gas as well.
For larger operations, the plant has been validated by third parties as scaling from 250 mcf (7,000 cubic metres) per day up to 30 mmcf (850,000 cubic metres) per day as a single production train. The advantage over LNG production is that multiple trains can be rapidly added to achieve greater economies of scale or removed to match the production decline curve.
Flare for innovation
The company is currently building its first plant in Michigan, which will then be moved to a field in the Bakken shale. Beyond that, it hopes to acquire a Michigan gas storage facility and finance three further Mini-GTL® plants.
The company is hopeful that the current US gas glut will prompt more producers to adopt new technologies to improve returns. As Gas Technologies CEO Walter Breidenstein told Refining & Petrochemicals Middle East magazine this summer: “More and more companies that are producing gas and selling it into the market for lower prices and even at a loss will look to us and become much more interested in a joint venture or some sort of co-operative licensing model that will allow us to implement the technology in their fields.”
The company also sees medium-term expansion plans covering plants in Russia, Malaysia, India and Singapore as reference sites, and hopes to raise additional capital to begin these plants during next year. “We have had a lot of interest from customers about working with us on new demonstration plants,” Breidenstein commented in a recent investor bulletin.
Gas Technologies now intends to deliver emissions control as a service to US shale operators, aiming to satisfy priority customers within months of signing a gas sales agreement, rather than years.
“The best method for our company to move forward quickly and efficiently is to own and operate these plants ourselves. We have the confidence and know the technology well, and have just invested US$2 million in the new plant going into commercial operations here in Michigan. We understand the risks and can move much faster than large companies on making decisions where to invest our resources and time,” Breidenstein told InnovOil.