The world’s first company to have successfully developed and demonstrated a small scale modular gas-to-liquid plant is in talks with major oil companies to sell them the technology, which enables them to turn gas which would normally be flared into crude, its CEO told Emerging Markets.
The technology converts associated gas obtained from the extraction of crude into syngas, which is a mixture of hydrogen and carbon monoxide, then the syngas into synthetic crude oil which can be mixed with the crude oil extracted from the field.
The solution is important as it frees up production in oilfields where there are limits on gas flaring and where alternative methods such as re-injecting the gas into the oil reservoir or selling it on the market are not viable, Nicholas Gay, CompactGTL chief executive, said in an interview.
His company, which has been operating since 2006, opened a small demonstration plant for the technology in the north of England in 2008 and, in 2010, sold the first modular GTL plant to Brazil’s Petrobras for $45 million. Petrobras subsequently announced that it approved the technology for commercial use.
"What we have today is a proven technology that works and one which is endorsed by a major oil company that is Petrobras and we are the only people in the world to do it at this scale," Gay said.
"Our next step is to try and put it in the commercial world and get someone to buy one and build one for use in an actual oilfield."
Last week, the World Bank-led Global Gas Flaring Reduction (GGFR) partnership called on emerging countries’ governments and oil companies to join their initiative to reduce the flaring of gas obtained as a byproduct of oil extraction by 30% by 2017.
This would achieve a reduction in carbon dioxide emissions equivalent to taking 60 million cars off the road, as it would cut flaring from the current 140 billion cubic meters (bcm) in 2011 to 100 bcm by the end of 2017.
CompactGTL is in discussion with firms “both onshore and offshore” that are looking at its technology, Gay said, but did not disclose the names of the companies except for one, Russia’s Gazprom, because of confidentiality agreements. He said two of the companies were European, one was based in the US and one in southeast Asia.
Many oil firms will have to find alternatives to flaring of gas associated with crude extraction as bans on burning the gas become more common.
Other players in the gas-to-liquid market are US-based Velocys – a subsidiary of the UK-based Oxford Catalysts Group –, Ventech and World GTL.
SMALLER OILFIELDS
Turning associated gas into crude is not the only way to reduce flaring. Other solutions include re-injecting the gas back into the reservoir, capturing and selling it to the market or using it to generate electricity that would be used in the oilfield or sold on to a nearby grid.
"We never say that we are the perfect solution for everybody,” Gay said.
CompactGTL targets the smaller end of the market, the fields that produce between 50 million and 100 million standard cubic feet (scf) of gas per day onshore or around 50 million scf of gas offshore.
"We're not picking up the billion-barrel fields; we're picking up the hundreds of million-barrel fields. In those fields frequently there is no alternative," said Gay.
"Clearly, if you are near an urban centre where there is a market for the gas, you will probably sell the gas into that market place. But if there is no market for the gas, or if the logistics to get it to the markets are too great, we solve those problems."
"That's pretty much a lot of places onshore – in Africa, the former Soviet Union, South America, parts of North America – and offshore anywhere where you have a remote field," he said.
The technology should allow a quicker development of oilfields as it means that oil companies do not have to look for other ways to threat the gas or have long negotiations with other oil firms who own gas pipes or with governments who control pipelines, said Gay.
"Time in the oil industry is money. So they generate higher profits quicker," he said.
CompactGTL, which is transforming from a research and development company into a commercial operation, aims to get “at least 2 or 3” front-end engineering and design contracts from major oil companies and at least one engineering procurement and construction (epc) contract to build and deliver a GTL plant next year, according to Gay.
The company, which is owned by private equity fund Coller Capital, has 56 employees and revenue of around £2 million ($3.22 million).
"Today we have limited revenue from early stage conception and feasibility studies but the revenue should build from 2013 onwards," Gay said.