Oryx plant problems bedevil Sasol
May 24, 2007
busrep.co.za
By Justin Brown
Johannesburg - The cause of technical problems bedevilling Sasol's first gas-to-liquids (GTL) plant in Qatar had baffled Sasol's scientists, admitted chief executive Pat Davies.
"We thought by now that we would have resolved this issue," Davies said this week.
"It is taking longer to find the root cause and we don't know what the problem is," he said in a teleconference to investment analysts.
The group is planning to install extra equipment as a back-up solution for increasing plant throughput.
Lean Strauss, a Sasol executive who overseas the group's synthetic fuel efforts, said the extra equipment, which would cost tens of millions of dollars, would be implemented from the middle of next year. "The equipment will address the symptoms [of the problems]," he said.
Sasol is building a second GTL plant in Nigeria and is looking at the viability of a similar venture in Australia. The group is considering building two coal-to-liquids (CTL) plants in China at a total cost of $14 billion (R98 billion), and is investigating in CTL opportunities in India and the US.
Davies said the difficulties in Qatar would not compromise Sasol's other projects.
The key challenges were using the right catalysts at the Oryx facility and ensuring that Sasol's version of the Fischer-Tropsch (FT) process that was used at the Oryx plant was working, he added.
Oryx is Sasol's first step in the internationalisation of its FT process, which converts gas and coal into fuel. The catalytic part of the conversion had generated too high a level of impurities.
Sasol was confident it would resolve the difficulties at Oryx within a reasonable time frame, as it could draw on 50 years of experience with CTL in South Africa, Davies said.
The company also had significant problems with its first CTL plant in South Africa, he added.
The first plant was built at Sasolburg in the Free State in the 1950s.
Sasol was started by the apartheid government and used technology developed by the Nazis.
The Oryx refinery will generate a marginally positive cash flow. However, analysts suggested that, including depreciation, the plant would generate an operating loss.
Oryx was still on course to ramp up to full production within 12 to 24 months following the start of commissioning in late March - after a 15-month delay, Davies added.
The plan is for the Oryx plant to produce 34 000 barrels of fuel and other product a day.
Strauss said that as long as Oryx's problems persisted, the development of the plant would be "constrained".
Davies said daily production from Oryx for the year to June would be less than 7 000 barrels a day.
Strauss said Oryx's operating expenditure per barrel, excluding gas, was not expected to be more than between $7 and $10 a barrel.
These costs are a fraction of the oil price.
Late yesterday the spot price of Brent crude was quoted at $70.45 a barrel, close to a nine-month high and within striking distance of the record high of $78 a barrel reached last July.
The Oryx project remained "very robust", Strauss said.
On Tuesday, Sasol's shares on the JSE shed 6 percent to an intraday low of R260.02. Yesterday the stock gained just less than 1 percent to close at R263.
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