Gas to Liquids (GTL) converts natural gas to a diesel fuel. Coal to liquids (CTL) converts coal to a diesel fuel. Nazi Germany used CTL to provide fuel for its panzer divisions during WWII.
Both GTL and CTL use variations of the Fischer-Tropsch method developed in Germany during the 1920s.
GTL allows stranded natural gas to be converted to an easily transported liquid, diesel fuel.
Qatar, with the world’s second or third largest natural gas reserves, and no place to ship natural gas by pipeline, has built a huge GTL plant.
Shell has invested $19 billion in the Qatari GTL plant. Shell has also invested in a liquefied natural gas (LNG) plant adjacent to the GTL plant. The GTL plant is scheduled to open this year, and turn natural gas with a value of $6 per barrel of oil equivalent into GTL products worth $100 per barrel.
At full production, it will produce 140,000 barrels per day (b/d) of GTL products and an additional 120,000 b/d of LNG.
The market for GTL is primarily Europe, where diesel cars dominate the market. It will be interesting to see whether Europe embraces GTL, since using GTL emits CO2.
Closer to home, someone is bound to raise the question whether the United States should adopt GTL as a method for using our natural gas reserves. The size of the investment and high cost of the finished product probably precludes such an investment in the U.S. The same is true for CTL.
Alaska has large stranded reserves of natural gas due to the huge natural gas discoveries in the continental U.S. Whether a GTL plant in Alaska would make economic sense should be left up to market forces.
There is another alternative for using our natural gas which is to power vehicles. T. Boone Pickens has been promoting the use of natural gas to power large highway trucks, buses, fleet vehicles, and also passenger cars.
He may be right. Why spend money converting natural gas into a diesel fuel when it can be used directly, as either compressed natural gas (CNG) or liquefied natural gas (LNG)?
The major obstacles to using CNG or LNG for powering our vehicles are the lack of fueling stations and the investment required to build them, as well as the premium paid for vehicles that can use CNG or LNG.
Fracking has vastly increased the supply of natural gas in the United States, so there is more than enough natural gas to power our cars and trucks without negatively impacting home heating costs or using natural gas to generate electricity.
The next two articles will deal directly on whether natural gas should be used for powering cars and trucks.
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