On the viability of A gas-to-gasoline industry in Australia

Abstract

The linear programming, energy systems analysis model, MARKAL, was used to examine the impact on the Australian energy system of a Mobil process, gas-to-gasoline plant producing up to 100 PJ/a of high octane gasoline from the year 2000. The total capital cost of the plant, including the drilling platform and shore-based infrastructure, was estimated to be 4100 MSA (1982). The costs and benefits of introducing this technology were calculated for high, medium and low assumptions on indigenous oil discovery rates, imported oil prices and overall demand levels. The effect on the Australian oil refinery sector was also briefly addressed. Under the assumptions presented to the model, a sufficient requirement for a gas-to-gasoline plant to offer a net benefit to the overall energy system is for the real price of crude oil to increase by 50 per cent by the year 2025. Even so, if the plant were introduced in the year 2000, it could not achieve the minimum desired return on investment. If the introduction were delayed for five years the prospects would improve considerably, but there would still be a less than 30 per cent chance of exceeding a 7.5 per cent real return on capital invested. Considerable government guarantees would be necessary to underpin what would appear, from present knowledge, to be a fairly risky investment proposition.