Sunday, June 19, 2011

Qatar GTL Online

Shell reports the first cargo of GTL (gas to liquids) product sold from the Pearl project in Qatar (LINK).

Here's the math - at full production Pearl will produce 1.6 BCFD and produce 120,000 BPD condensate and 140,000 BPD GTL products. The cost was about $19 billion.

The Pearl gas volume is roughly one third of the proposed Alaska Natural Gas Pipeline. Direct comparisons for application to the Alaska gas volumes are difficult. It's fair to say that about 1.3 BCFD went to produce the 140,000 BPD of GTL liquids. If those liquids bring $100 per barrel the simple payout is 3 - 4 years.

Could a GTL plant in Alaska compete with exporting Alaska gas via pipeline? No. At a capital cost of $14/cu ft an Alaska GTL plant would cost $63 billion before adding a 30% "Alaska factor" for Arctic construction. $82 billion is my low side estimate for an Alaska GTL plant capable of processing the full 4.5 BCFD of North Slope gas. That's double or triple the cost of the pipeline.

So can GTL help Alaska? YES. Given Pearl's success, a Pearl sized Lower 48 GTL plant is now bankable. A Lower 48 GTL plant could cost less if less refined products were sold into existing refining infrastructure. If built, GTL plants would sponge up cheap shale gas, making room for Alaska gas.

Overall a large GTL success like Pearl is good news that should be replicated in North America, GTL products directly replace imported crude oil eliminating the need to convert vehicles over to compressed natural gas (CNG). Huge projects like a GTL plant will help put Americans back to work too.

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