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Understand The Synthetic Fuel Industry (3 Part Series)

Understand The Synthetic Fuel Industry (3 Part Series)

(Part 2 of 3)The Department of Chemical and Materials Engineering at the University of Alberta (UofA) put together a presentation on Gas-to-Liquid conversion industry. In our first advertorial we spoke to the benefits of Synthetic fuels. In this article, we will look at the challenges faced by this industry.

Despite the justification for gas-to-liquids conversion, there are important detractors that limit interest in any alternative carbon feed-to-liquids conversion in general:

(a) Technical complexity is high. Which was compared to conventional production of fossil fuels

(b) High capital cost for XTL facilities. – The presentation suggested an increased cost per barrel over a 10 year period. Unfortunately it was not clear, but prices ranged from $30,000 bpd to $110,000 bpd for a GTL facility

(c) Investment risk, both financially and technically. The financial risk relates to the high upfront cost with long-term revenue being subject to potential price moves in commodities. This type of investment and risk structure is very common for the oil and gas industry to manage.

The presentation suggested there has been a hiatus by the US in significant research and development in this space. The question still remains. Would we see significant cost reductions and improved process efficiencies in synthetic fuel production industry if government’s started deploying significant investment in this space?

The next advertorial we will address each issue from the view point of a corporation looking to develop the small scale GTL facility utilizing natural gas in Canada.

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Darren Stewart

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