Qatar's 'Green Diesel' Set for Market
Monday November 6, 6:39 am ET
By Jim Krane, AP Business Writer
biz.yahoo.com
Qatar Prepares to Market First Shipment of Sulphur-Free Diesel Fuel, Made From Natural Gas
DOHA, Qatar (AP) -- Workers here are putting the finishing touches on a plant that within days will begin converting natural gas into clean-burning diesel fuel, a development that could someday cut sulfurous smog from big city skylines.
The $1 billion Oryx gas-to-liquids, or GTL, plant is the first in Qatar, which aims to be the world's largest GTL producer by next decade. Qatar sits atop the world's largest gas field, with about 9 percent of global proven reserves.
By the middle of the month, Oryx GTL Ltd. expected to begin producing 34,000 barrels per day of clear diesel fuel that burns with few traces of the sulfur that taints diesel fuel made from crude oil, said Chris Turner, who heads the Oryx joint venture between South African oil company Sasol Ltd. and Qatar's state-owned Qatar Petroleum.
The first batch of Qatar's so-called "green diesel" is scheduled for export to Europe in late December, Turner said.
"It's a Christmas present that I'm looking forward to," Turner said in an interview in his 15th floor office of the Qatar Petroleum headquarters in Doha.
Also this year, Qatari authorities say they are nearing their goal of becoming the world's largest exporter of liquefied natural gas, or LNG. Qatar now exports 25.5 million tons of chilled gas a year, about the same amount as leader Indonesia and surpassing Malaysia's 23 million tons per year.
But with $40 billion being pumped into the tiny country's LNG sector, Qatar is expected to triple its production to a globe-leading 77 million tons of LNG per year by 2011, industry experts say.
"Nobody else has the gas reserves to even come close," said Jim Adams, the chief operating officer of Qatargas 2, one of the LNG joint ventures. "It's not an inexpensive business."
Joining with state-run Qatar Petroleum in the LNG joint ventures are petroleum titans Exxon Mobil Corp., Total SA, Royal Dutch Shell PLC and ConocoPhillips Co., as well as Japanese conglomerates Mitsui & Co. and Marubeni Corp.
LNG is natural gas that is compressed by cooling it to minus-162 degrees Celsius. The frigid gas is sent aboard giant LNG tanker ships to markets in Japan, South Korea, Europe and the United States.
The more complex GTL process is based on a "synthetic fuel" discovery that converted coal into automobile fuel in 1920s Germany. Turner said the current process, which uses cobalt to convert natural gas into diesel, remains profitable with oil over $20 per barrel.
The onset of green diesel may begin to cut smog-inducing sulfur, but it won't slow global warming, which is linked to the carbon emissions from burning hydrocarbons. Experts say GTL offers only a modest cut in carbon emissions because the base product, natural gas, contains less carbon than crude oil.
Demand for clean diesel is already strong. Sulfur emissions from diesel engines cause as many as 10,000 deaths a year among Americans with heart and lung ailments, according to U.S. government figures.
Qatar's initial tanker shipment of Oryx GTL diesel has already been sold to a European refiner that Turner declined to disclose. The clean-burning fuel will be blended with regular diesel and sold as a premium fuel in Europe, where emissions standards are growing tighter and many cars burn diesel fuel, Turner said.
"There's always been regular gasoline and premium gasoline," Turner said. "But historically there's only been one diesel grade. Now you're seeing premium grades of diesel too."
Companies selling premium diesel in Europe include Shell, Total and BP.
By 2011, Qatari authorities say the country's GTL output could reach 300,000 barrels per day, after the opening of plants announced by Shell, Chevron Corp., Exxon Mobil and a joint venture between Sasol and Chevron.
Qatar's giant gas field was discovered in 1971, but the country has only recently begun to exploit it. The country's gas reserves were long considered "stranded" because markets lay beyond the viable pipeline reach.
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