By next year, Qatar hopes that gas-to-liquids (GTL) reactors, currently under construction, will bring in billions of dollars while, also clearing big city smog belched by trucks and buses.
In all, $20 billion has been committed to build an unprecedented array of clean diesel plants in the tiny Gulf state.
Petroleum experts, who have sniffed vials of gin-clear GTL diesel, already speak of it with reverence.
“It’s a beautiful product,” says Jim Jensen, a US-based energy economist. “The kerosene smells like perfume.”
Those chipping in include oil titans Royal Dutch/Shell Group, Chevron Texaco Corp and Exxon Mobil Corp, the last one making a $7 billion bet on GTL, the largest investment in the corporate history of America’s largest company.
Qatar’s rulers are pushing GTL as
Smaller plants in Malaysia, South Africa and the United States have proved the technology works; but none is nearly as large as those planned in Qatar. In a few years, says Andy Brown, who heads Shell’s office in Qatar, the country will be “the GTL capital of the world”.
By 2011, the Qatar plants should be producing 300,000 barrels of liquid fuels and other products daily. The largest GTL plant now producing is Shell’s plant in Bintulu, Malaysia, churning out 14,700 barrels per day.
The investments amount to a big gamble on a clean alternative to pollutant-rich crude oil, based on an obscure synthetic fuel process developed to make fuel from coal in 1920s Germany.
Like Qatar’s headlong rush to produce liquefied natural gas, its rulers are pushing GTL as an idea whose time has come.
The clean-burning fuel, with almost none of the smelly sulphur soot belched by engines firing on conventional diesel, appears tailor-made for countries looking to reduce emissions in line with the Kyoto Protocol on global warming.
Faisal al-Suwaidi, chief executive of Qatar Liquefied Gas Co, said he had got interests from Japan, Canada, Korea, Europe and the United States, the world’s largest polluter.
Although Washington has refused to sign the Kyoto protocols, state and local caps on emissions are pushing refiners to clean up diesel.
“This is the product for them. This is green diesel,” said al-Suwaidi.
As far as carbon emissions go, green diesel appears to offer only a modest dent, partly because natural gas contains less carbon than oil-based diesel, to begin with. The big difference is sulphur.
GTL fuel can help in drastically
Sulphur emissions from diesel engines cause as many as 10,000 deaths a year among Americans with heart and lung ailments, said William Becker, who represents state and local air pollution control agencies in the United States.
“It’s a matter of life and death. And the solution depends on removing the sulphur,” Becker said.
Emissions can be cut further by adding better filters that remove up to 90% of remaining particulates, said Richard Kassel, a fuels expert at the National Resources Defence Council in New York.
“Clean fuels open the door to the most advanced emission controls,” Kassel added.
“Clean fuels open the door to the most advanced emission controls”
Tests of GTL fuel are underway in several countries. Shell is already selling the fuel in Thailand, The Netherlands, Greece and Germany, charging slightly more than its oil-based diesel. In Europe, Shell calls the fuel V-Power Diesel.
GTL diesel from Sasol Chevron, the South African-American joint venture that is 49% shareholder in the first Qatari GTL plant, will surge on to the market next year and could wind up as a niche fuel that powers fleets of city buses and trucks, company spokesman Malcolm Wells said.
More likely, says economist Jensen, the clean fuel will be blended with crude-oil diesel to lower sulphur emissions into compliance with tightening standards in several countries.
The economics of GTL makes sense, experts say, when it’s produced on a large scale and with cheap source of natural gas. And Qatar is perhaps the world’s best source of cheap gas. It sits on a bubble containing 10% of the world’s known gas reserves.
By 2011, Qatar hopes three ventures will convert natural gas into more than 300,000 barrels per day of liquids, most of that diesel fuel, but also including naphtha, liquid petroleum gas and lubricating oil.
The fuel will be sold for more than conventional diesel and is hugely profitable with current oil prices above $50 a barrel. But Shell will still profit if oil drops to $40, Brown said.