Economics of GTL Technology for Gas Utilization

Abstract

Abstract The world's natural gas proven reserves show enormous clean burning energy resources that call for its effective and efficient utilization. These gas resources, exceeding 6000 trillion cubic feet (TCF), currently represent a significant proportion of the energy equivalence of proven oil reserves. With over sixty (60) percent of such gas reserves located too far from potential markets, there is need to evaluate the prospective economics of promising technologies for the monetization of these stranded gas reserves. The main focus of this paper is the economics of the chemical conversion of natural gas to synthetic liquid fuels, favored by recent advances in Fischer-Tropsch (F-T) synthesis techniques, welcomed shift-to-liquid fuel transportation operations, and increased demand for clean burning diesel fuels. The value of this emerging technology will be the ability to turn natural gas reserves, currently too remote from the market, into high-quality premium products that could be transported as liquid fuels. The effect of capital expenditures (CAPEX), annual operating expenditures (OPEX), product price and various tax schemes on the rate of return (ROR), pay out time (POT) and the net present value (NPV) is investigated to access the economic viability of GTL plants. The range of CAPEX utilized is based on the production of one barrel of hydrocarbon liquid per day (BLPD) whereas the OPEX are expressed as percentages of CAPEX. Also, a construction period of three years is considered, while a 10% net-back on product sales is incorporated to account for the cost of natural gas feedstock. Monte-Carlo simulation is utilized to run sensitivity analysis, incorporating the probabilistic approach, to generate insightful scenarios on the project economics. The results (measures of profitability and their certainty bands) are analyzed and presented in tables, histograms and charts for a 100, 000 BLPD GTL plant.