SMALL CAP. RESEARCH REPORT RNTK BUY Recommendation December 1, 1997
sterlinginvestments.com
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The Oil Daily
SECTION: No. 29, Vol. 48; Pg. 1;
Conoco, DuPont blaze their own GTL trail; gas-to-liquids technology
Shook, Barbara
Conoco Inc. and its DuPont Co. parent are on a fast track to develop their own proprietary natural gas-to-liquids (GTL) technology.
The two companies combined research and development efforts early last year to create their own process for converting natural gas into middle distillates, said Paul J. Grimmer, manager of diversified businesses in Conoco's business development group.
If all goes as planned, their pilot plant will be up and running in 1999, followed by a commercial-scale facility within about five years, Grimmer told The Oil Daily.
The GTL process converts natural gas into middle distillates such as diesel, naphtha, jet fuel, refinery feedstock and other products. The process is built around conventional air separation and Fischer-Tropsch conversion technologies.
Several variations of the process have been developed in recent years. Among the large companies with GTL technologies are Exxon Corp., Royal Dutch/Shell Group and South Africa's Sasol. Two smaller companies with other versions are Syntroleum Inc. of Tulsa, Okla., and Denver-based Rentech Inc., which are licensing their technology to third parties as well as developing their own ventures.
The location for the pilot plant has not yet been selected, but it probably will be adjacent to a Conoco refinery at either Ponca City, Okla., or Lake Charles, La., Grimmer said.
Conoco had been discussing licensing Syntroleum's technology before deciding to pursue another route, he said. The company elected to call on the resources of parent DuPont, one of the world's leading research and development companies, for its expertise in catalysts, reactors and similar process technology.
The two began working together about 11 months ago and already are at the bench-test phase, Grimmer said.
He would disclose few details of their efforts, saying that all the necessary patents have not been granted. "We're not prepared to say we've got the answer yet," Grimmer said.
The economics of the Conoco-DuPont process are based on 50 cents/Mcf gas and current market oil prices. He added, "We won't develop a process that takes $ 25 oil."
He also acknowledged that Conoco and DuPont are benefiting from earlier research done by others. He estimated that after the pilot plant is built, their investment will be about $ 100 million.
By comparison, Exxon said last fall that it has put more than $ 250 million into its technology, Advanced Gas Conversion for the 21st Century. Shell has invested more than $ 1 billion in developing what it calls Middle Distillates Synthesis and building a 12,500 b/d plant at Bintulu, Malaysia. The plant is no longer operating following a Christmas Day explosion.
The GTL project marks Conoco's return to upstream technology development, Grimmer noted. In recent years, the company has been a user of technology supplied by others.
He cited another significant achievement from a corporate perspective. The joint GTL project represents the first time since their 1981 merger that Conoco and DuPont have combined their research and development efforts.
February 12, 1998
Financial Times Business Reports (FTBR)
International Gas Report
January 9, 1998
No. 338; Pg. 40;
'BOTTOMS UP(GRADE)' FOR GTL
DAVID TUDBALL
Denver-based gas-to-liquids (GTL) company Rentech says upgrading 'refinery bottoms' promises a quicker and cheaper route for conversion of gas to liquid fuels than a grass roots GTL project (see separate story). It says that based on testing synthesis gas with a low hydrogen to carbon monoxide ratio - produced by gasification of coal or low value refinery residuum (refinery bottoms) - its GTL process can efficiently convert this gas into sulphur-free liquid hydrocarbons such as clean diesel fuel or 'eco fuel'.
Rentech president and chief executive Dennis Yakobson said high sulphur, low value residual refinery products were potential feedstocks of growing importance for gasification. Within the next 10 years, a large surplus of high sulphur residue was forecast, which could not readily be absorbed by the market. Conversion of this to synthesis gas by conventional gasification technologies was an attractive option.
He said the synthesis gas, with its low hydrogen to carbon monoxide ratio, was an excellent feedstock source for conversion into liquid hydrocarbons using Rentech's proprietary and patented iron based catalyst. Rentech noted London based Chem System director Phil Hunt had estimated that by 2000 there would be a world surplus of about 25m tons/yr of high sulphur fuel oil because of its high sulphur content. If this could be converted to clean liquid hydrocarbons it would equate to about 50m bbls/yr in useable, sulphur-free diesel fuel.
Rentech says addition of one of its conversion facilities to an existing or planned gasification system at a refinery "could be operational in considerably less time than it takes to build a grass roots GTL facility of equal capacity". With refinery infrastructure, staffing and other required process equipment such as product distillation and storage already in place, such retrofitting would be "a cost and time effective solution to a growing world problem".
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