© Jonathan Targett                  University of Aberdeen       Department of Geology and Petroleum Geology              ...
© Jonathan Targett                  Usage of Natural Gas for Chemical Production                                  By: Jona...
© Jonathan Targett                              AcknowledgementThe author wishes to acknowledge the helpful comments of Dr...
© Jonathan Targett                             List of Contents1. Introduction                                   page 72. ...
© Jonathan Targett                                List of Tables1. Regional Natural Gas Analyses2. Properties of the Five ...
© Jonathan Targett                               List of Figures1. Lurgi Autothermal Reformer for Partial Oxidation to Syn...
© Jonathan Targett1.   IntroductionAs a chemical feedstock natural gas has the limitation that it contains only low carbon...
© Jonathan TargettThe objectives of this overview are to:    Acquaint the reader with industrial chemicals that are, or h...
© Jonathan Targett2.     Natural Gas Composition c,eIn order to be suitable for chemical reaction, natural gas must, in mo...
© Jonathan Targett3.    Production of Hydrogen a,m,o,q,r,vA percentage breakdown of the sources and uses of hydrogen is sh...
© Jonathan Targett4.    Alkenes a,l,n,qOf the 50 million tonnes of liquefied petroleum gas, LPG, produced each year fromna...
© Jonathan Targett5.   C1 Methane Derivatives a,q     5.1. Carbon BlackMost processes for the production of carbon black u...
© Jonathan Targett6.   Synthesis Gas a,d,f,k,q,rMany commercial reactions using natural gas as feedstock commence by split...
© Jonathan Targett                                                Figure 1 – Lurgi Autothermal                            ...
© Jonathan TargettFactors that influence and enable control of the CO/H2 ratio include:          Removal vs. recycle of C...
© Jonathan Targett8.   C1 Oxygenates a,b,f,i,j,k,r,s,u,y     8.1. Methanol        8.1.1. Methanol from SyngasMethanol is f...
© Jonathan TargettExamples of investment levels for recent syngas methanol plants are shown in thefollowing table:Table 5 ...
© Jonathan TargettThe preceding table shows a breakdown of the major uses of methanol in the mid1970s. The first commercia...
© Jonathan TargettTable 7 – Formaldehyde from Methanol Dehydrogenation – Direct CostsInputs           Amount per Tonne of ...
© Jonathan Targett9.       C2 Compounds a,f,j,q,s,u         9.1. AcetyleneAlongside the calcium carbide route to acetylene...
© Jonathan Targett     9.2. EthanolThe predominant industrial synthesis processes for production of denatured ethanol(i.e....
© Jonathan Targett     Monsanto – Acetic Acid Process               Methanol Market Pricing; 1990-2001     Direct Costs   ...
© Jonathan Targett       10.1.2. Institut Français du PétroleThe IFP process has been demonstrated at a small (20 bpd) pil...
© Jonathan Targett       10.3. Fischer Tropsch SynthesisThe general technique for producing higher hydrocarbons from mixtu...
© Jonathan TargettThe most desirable reaction products are:           normal alkanes           primary and secondary, no...
© Jonathan Targett       10.4. Fischer Tropsch Plant ConsiderationsMany Fischer Tropsch processes were conceived with coal...
© Jonathan TargettFor purposes of comparison, Lurgi estimates the investment cost of its methanol-based synfuel process at...
© Jonathan Targett       10.5.3. Shell Middle Distillate Synthesis, SMDS ®Shell has been actively pursuing techniques to c...
© Jonathan Targett       10.5.5. RentechColorado-based Rentech was formed with the objective of developing GTL plants toco...
© Jonathan Targett11. Process Economic Assessment b,zThe major groups of costs that are typically considered in market pri...
© Jonathan Targett   Complexity arises from processes that generate two or more desired end-products, to   which a share o...
© Jonathan TargettThe divergence of composition between different natural gas producer regions makesexact comparisons comp...
© Jonathan TargettAssuming the direct costs and selling prices shown in the preceding table were toremain constant, the su...
© Jonathan TargettFactors not considered at this stage of analysis include:      realistic utilization assumptions; 80-90...
© Jonathan TargettTable 13 – Breakeven Conversion Cost of Syncrude for Different Investment CostsPlant Investment Cost($/b...
© Jonathan Targett                                    11.3.3. Synthetic FuelFor the example given in section 10.4 of a pla...
© Jonathan Targett                                         11.3.4. Gas to Liquids, GTL, Production   Fischer Tropsch syncr...
© Jonathan TargettMaking the simplifying assumption that refining margins are comprised only ofcapital cost repayment plus...
© Jonathan Targett12. ConclusionsThe chemical process industry is a large scale consumer of natural gas, which is usedfor;...
© Jonathan Targett      Processes requiring pure or near pure methane; e.g. chloromethanes.     Natural gas contains prim...
© Jonathan Targett13. References   a) K. Weissermel & H.J. Arpe, Industrial Organic Chemistry, 2nd edition,      translate...
© Jonathan Targetth) S. Khataniar, G.A. Chukwu, S.L. Patil, A.Y. Dandekar, The University of   Alaska, Fairbanks, Technica...
© Jonathan Targettr) Carbon Dioxide Conversion and Utilization, American Chemical Society,   edited by C. Song, A.F. Gaffn...
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NG To Chemicals

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Trying to grasp the chemistries of some important industrial CO2 consumers?

This text on how natural gas is used for chemical manufacture provides a concise overview.

Be sure to look at the section on synthesis gas (syngas) processes

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NG To Chemicals

  1. 1. © Jonathan Targett University of Aberdeen Department of Geology and Petroleum Geology 2003/4Usage of Natural Gas for Chemical Production Submitted by: Jonathan Targett Faculty Supervisors: Dr M.J. Pearson, Dr B.T. Cronin
  2. 2. © Jonathan Targett Usage of Natural Gas for Chemical Production By: Jonathan Targett AbstractNatural gas is an essential feedstock for the chemical process industries. Although thenatural gas proportion of hydrocarbons used for chemicals manufacture is lower inEurope than in North America or the Middle East, natural gas nonetheless accountedfor 5-10% of total hydrocarbon feedstock consumed by the West German chemicalindustry in the 1970s. The chemical industry is, in turn, an important customer for thenatural gas industry; about a quarter of Liquefied Petroleum Gas, is used forchemicals production; most notably the production of alkenes from alkanes.Applications of dry natural gas include reactions requiring pure methane; for example,the production of chloromethanes. But the largest industrial chemical application isthe generation of hydrogen needed for production of ammonia and of synthesis gas, amixture of carbon oxide and hydrogen. Synthesis gas is the raw material for the bulkof the world’s production of methanol, precursor for a wide range of industrialchemicals and a possible component in transport fuel. There is potential for extensionof synthesis gas usage, not least in Gas-To-Liquids schemes involving the formationof longer carbon chain molecules, suitable for use as liquid refinery feedstock ortransport fuel.In addition to a summary of chemical applications of natural gas, analyses of availableprocess costings have been included. These demonstrate typical return patterns fromchemical process plant investments, and reveal that Gas-To-Liquids production oftransport fuel is an increasingly attractive alternative to crude oil refining. Talk of a“hydrogen economy” can only serve to underscore the importance of chemicalproduction from natural gas, currently an indispensable source of hydrogen. 2
  3. 3. © Jonathan Targett AcknowledgementThe author wishes to acknowledge the helpful comments of Dr. Pearson during thereview of the manuscript. 3
  4. 4. © Jonathan Targett List of Contents1. Introduction page 72. Natural Gas Composition page 93. Production of Hydrogen page 104. Alkenes page 115. C1 Methane Derivatives page 126. Synthesis Gas page 137. Synthesis Gas Hydroformylation page 158. C1 Oxygenates page 169. C2 Compounds page 2010. Higher Carbon Chain Length Production page 2211. Process Economic Assessment page 3012. Conclusions page 3913. References page 41 4
  5. 5. © Jonathan Targett List of Tables1. Regional Natural Gas Analyses2. Properties of the Five Reservoir Fluids3. World Sources and Uses of Hydrogen in Percentage Terms, 19744. Ethylene Feedstocks by Region, mid 19705. Plant Investment Examples for Methanol from Synthesis Gas6. Uses of Methanol in the U.S.A and Western Europe, mid 1970s7. Formaldehyde from Methanol Dehydrogenation – Direct Costs8. Typical Coal Bed Raw Gas Composition – Lurgi Gasification9. Fischer-Tropsch Patents, 1997-200110. Typical Output Distribution for a Low Temperature FT Process11. Process Direct Cost Examples12. Plant Investment Return Examples13. Breakeven Conversion Cost of Syncrude for Different Investment Costs 5
  6. 6. © Jonathan Targett List of Figures1. Lurgi Autothermal Reformer for Partial Oxidation to Synthesis Gas2. The Synetix Methanol Process from Synthesis Gas3. The Shell Middle Distillate Synthesis Process4. Benchmark Natural Gas Prices by Delivery Form and Region5. Acetic Acid Plant Example - Investment Returns6. Syncrude Unitized Capital Cost Repayment Period7. Synfuel Plant Unitized Investment – Discounted Cash Flows8. Implied U.S. Gasoline Refining Margin, 1994-2002 6
  7. 7. © Jonathan Targett1. IntroductionAs a chemical feedstock natural gas has the limitation that it contains only low carbonchain length alkanes. Nonetheless, natural gas usage for chemical production is largeand expanding; particularly in North America and the Middle East, where a highproportion of ethylene is produced from ethane rather than oil-based naphtha. Naturalgas is also a major source of the hydrogen used for production of ammonia andmethanol, mainstays of the petrochemical economy.Commercial synthesis processes to produce chemicals from dry natural gas deposits,whose hydrocarbon content is mostly comprised of methane, were the focus ofintensive development efforts in the first half of the last century, and gave rise to thesynthesis gas processes that have grown rapidly in the last fifty years. Many of thesedevelopments were of shared value for the processing of methane from coalgasification, still a major chemical feedstock source in certain parts of the world.The oil shocks of the 1970s and 1980s focused attention upon the objective ofdeveloping alternative chemical feedstocks. In 1977, The Carter Administrationinstituted the Department of Energy, successor to the Federal Energy Administration.Among the first actions of D.O.E. was to draft legislation entitled the Fuel Use Act.Passed in 1978, the act restricted end-uses of natural gas, terming it too valuable anatural resource to burn; many provisions were, however, subsequently rescinded.Among the earliest production processes developed using natural gas-derived methaneas feedstock was Fischer Tropsch synthesis to yield higher hydrocarbons, which cansubstitute as refinery feedstock, or be used as transport fuel. Effectivelycommercialized in Germany in the 1940s, Fischer Tropsch processes declined inimportance thereafter. Today they are the focus of renewed development interest as amethod to convert gas into more easily transportable liquids, a technique known asGas-to-Liquids processing. Several oil companies with refining operations haveannounced plans to scale up FT processes, confirmation not only that the technologyis maturing, but also that the market is preparing for the incorporation of the resultingoutput. 7
  8. 8. © Jonathan TargettThe objectives of this overview are to:  Acquaint the reader with industrial chemicals that are, or have the potential to be, produced from natural gas.  Highlight a few recent developments that are likely to result in further growth of natural gas as a chemical feedstock.  Examine typical investment patterns of a few chemical processes that use natural gas or its derivatives.The major uses of natural gas in existing industrial chemical processes aresummarized below: I. Hydrogen production with carbon oxides as by-product II. Alkene production from higher alkanesIII. C1 compounds produced from methane; e.g. chloromethanesIV. Hydrogen/carbon monoxide mixtures, known as synthesis gas or syngas V. Synthesis gas hydroformylation; e.g. for the production of alcoholsVI. C1 compounds containing oxygen; most notably methanol from synthesis gasVII. Production of longer carbon chain length molecules; e.g. higher alcohols 8
  9. 9. © Jonathan Targett2. Natural Gas Composition c,eIn order to be suitable for chemical reaction, natural gas must, in most cases, befractionated to remove inorganic gases; typically these are removed for combustionalso. Separation of the individual hydrocarbon components in natural gas deposits isusually practised only where sizeable levels of higher hydrocarbons are present. Thetables below show natural gas analyses for a number of producer regions and theproperties of the five reservoir fluids.Table 1 – Regional Natural Gas Analyses Producer Region North NL France Algeria CIS Italy Sea (Groningen) Component (UK Zone) Methane 90 81 70-90 55-78 89-94 90-99 Ethane 3-4 3 3-4 8-22 4-5 0-5 Propane 1 <1 1 1-12 <2 0-2 Butane <1 <1 <1 1-2 <1 <2 Pentane <1 <1 <1 0-2 <1 <1 C6 & above <1 <1 <1 0-4 <1 <1 H2S N/A N/A <16 N/A N/A traces Other Inorganics 3-4 15 2-10 <5 N/A 0-10Source: The Natural Gas Industry, MediciTable 2 – Properties of the Five Reservoir FluidsSource: The Properties of Petroleum Fluids, McCain 9
  10. 10. © Jonathan Targett3. Production of Hydrogen a,m,o,q,r,vA percentage breakdown of the sources and uses of hydrogen is shown in thefollowing table. Hydrogen derived from oil is formed as a co-product of otherprocesses; production from natural gas is usually considered a dedicated process.Table 3 – World Sources and Uses of Hydrogen in Percentage Terms, 1974Source Percentage of Total Production VolumeOil 48Natural Gas 30Coal 16Water Electrolysis 3Other 3Use Percentage of Total ConsumptionAmmonia 59Hydrotreating 15Hydrocracking 9Methanol* 7Other 10Source: Industrial Organic Chemistry, Weissermel & Arpe* From synthesis gasThe use of methane as a source of hydrogen was first commercialized on a large scalein the first half of the last century, alongside the development of ammonia processesusing direct extraction of nitrogen from air; e.g. the Haber Process. Current USDepartment of Energy publications confirm that methane from natural gas isenvisaged as a primary source of hydrogen for carbon-free fuels, and focuses attentionon efforts to reduce the resulting hydrogen cost through improvements to existingtechnology. Methods to disassociate hydrogen from water, avoiding the emission ofcarbon oxide by-product, have continued to yield hydrogen at higher cost than thatderived from dedicated, steam reforming of natural gas or as a refinery co-product. Anadvanced, full-scale hydrogen electrolysis unit requires 4KWh of electricity per cubicmeter of H2 produced, resulting in a hydrogen cost of about $1/Kg. Plasma and solarfurnace splitting of methane are among a variety of novel techniques beinginvestigated to achieve dedicated, lower production cost, alternatives. Membraneseparation is another. 10
  11. 11. © Jonathan Targett4. Alkenes a,l,n,qOf the 50 million tonnes of liquefied petroleum gas, LPG, produced each year fromnatural gas and oil-field associated gas, a quarter is estimated to be used for chemicalsmanufacture. Where ethane and propane are separated from natural gas, the majorchemical use is conversion to the corresponding alkenes with hydrogen as co-product,employing a variety of production techniques. Starting from ethane, ethylene istypically produced by a thermal decomposition or “cracking” process; similar tosynthesis gas production discussed in section 6. Direct catalytic dehydrogenation ismore important as an emerging technique to convert propane into on-purposepropylene; a technique that accounted for approximately 1½ million tonnes ofproduction from a worldwide total of 55 million tonnes in 2003. In the same periodapproximately 80 million tonnes of ethylene were produced. The ethylene feedstockbreakdown shown below, reveals the large raw material divergence between regions.Table 4 – Ethylene Feedstocks by Region, mid 1970s Region W. Europe USA WorldFeedstock (% of Total) (% of Total) (% of Total)Refinery Gases 1 8 4LPG 1 65 23Naphtha (C5-C9) 88 1 56Other 10 26 17Source: Industrial Organic Chemistry, Weissermel & ArpeSwings in gas prices can have a large impact on feedstock selection. In early 2003, theU.S. chemical producer, Dow, is reported to have shutdown natural gas-based alkeneproduction at a Texas facility, following a spike that drove spot gas prices from $5 to$18/millionBTU. Divergent natural gas pricing regimes also have an impact uponalkene feedstock selection. In Alberta, several firms produce ethylene from ethaneobtained from nearby gas wells, and have maintained a feedstock price advantage thathas enabled them to export large volumes of ethylene derivatives such as polyethyleneto the U.S., despite higher Canadian benchmark gas prices – see section 11. A numberof ethylene production units, including a Dow plant on the U.S./Canadian border, aredesigned to consume feedstock derived either from gas or oil. 11
  12. 12. © Jonathan Targett5. C1 Methane Derivatives a,q 5.1. Carbon BlackMost processes for the production of carbon black use natural gas, which may becombusted over a deposition surface or thermally decomposed at high temperaturewithout combustion. The primary consumers of carbon black are the ink, coatings andrubber industries. 5.2. Hydrogen CyanideUsed for a range of industrial reactions, hydrogen cyanide is produced directly frommethane and ammonia, with or without the presence of oxygen: CH4 + NH3 → HCN + 3H2 ΔH298 = +251 KJ/mol CH4 + NH3 + 1½O2 → HCN + 3H2O ΔH298 = -113 KJ/mol 5.3. Carbon DisulphideThe primary end-use of carbon disulphide is for production of cellulosic polymers.Carbon disulphide is produced as follows. CH4 + S2 → CS2 + 2H2Or CH4 + 2H2S → CS2 + 4H2Or CH4 + 2S2 → CS2 + 2H2 S 5.4. Halogen CompoundsA full range of chloromethanes have been produced commercially by directchlorination of methane. Major end uses are non-flammable solvents, aerosolpropellants as well as precursors for silicon compounds. Chloromethane usage,particularly in solvent and propellant applications, has been greatly curtailed owing tofears about toxicological properties, effects on the atmosphere and persistence in theenvironment. CH4 + Cl2 → CH3Cl + HCl etc. 12
  13. 13. © Jonathan Targett6. Synthesis Gas a,d,f,k,q,rMany commercial reactions using natural gas as feedstock commence by splitting thehydrocarbon into synthesis gas, or syngas, a mixture of hydrogen, carbon monoxideand, frequently, carbon dioxide as well. The most commonly used techniques toproduce syngas are Steam Reforming, SR, Partial Oxidation, POX, and hybridprocesses combining the two. 6.1. Steam Reforming, SRIn steam reforming, steam and gaseous alkane are pumped into a reaction chamber,typically an adiabatic tube reactor or a shell&tube heat-exchanger reactor, heatedfrom the outside. The reaction is of the general form: (-CH2-)n + nH2O → nCO +2nH2 ΔHStandard = +151 KJ/mol For Methane CH4 + H2O ↔ CO + 3H2 CH4+ 2H2O ↔ CO2 + 4H2 6.2. Partial Oxidation, POXPartial oxidation involves the combustion of part of the hydrocarbon feed in a linedpressure vessel using either pure oxygen or oxygen-enriched air. The reaction is of thegeneral form: (-CH2-)n + ½nO2 → nCO +2nH2 ΔHStandard = -92 KJ/mol For Methane CH4 + ½O2 → CO + 2H2 CH4 + 1½O2 → CO + 2H2OIn the widely favoured autothermal configuration, the heat of combustion suppliesprocess warming. A commercial autothermal reformer oxidation reactor is shown inthe following figure. 13
  14. 14. © Jonathan Targett Figure 1 – Lurgi Autothermal Reformer for Partial Oxidation to Synthesis Gas A common side reaction to both the SR and POX processes is: CO + H2O ↔ CO2 + H2Courtesy: Lurgi AG, Frankfurt 6.3. Carbon Dioxide ReformingReforming of hydrocarbon with carbon dioxide is also a possible side reaction insynthesis gas production processes: CH4 + CO2 → 2CO + 2H2 ΔHStandard = >-200 KJ/molThis reaction is highlighted as a possible stand-alone process in a 2002 compilation ofpapers on CO2 conversion published by The American Chemical Society. The samereactants are also examined as a potential route to ethane and ethylene. 6.4. Process Selection ConsiderationsFeedstock choice is an important factor in generating synthesis gas with the desiredcarbon monoxide to hydrogen ratio. Various hydrocarbons can be used; one plantconstructor divides suitable feedstocks by synthesis reactor type as follows:  Steam Reforming – Natural Gas, LPG or Naphtha (C5-C9 liquids)  Autothermal Reforming – Natural Gas or Naphtha
  15. 15. © Jonathan TargettFactors that influence and enable control of the CO/H2 ratio include:  Removal vs. recycle of CO2; reduced CO2 increases H2 proportion  SR steam to carbon ratio; higher S/C ratio increases H2 proportion  SR and POX combination; SR favours higher H2 yield  Proportion of methane feedstock; highest H/C ratio7. Synthesis Gas Hydroformylation a,f,j,q,t,wAmong the routes to alcohols is the addition of synthesis gas to olefins. In the mostwidely used process, the formation of “oxo” alcohols takes place in two steps, the firstbeing the reaction to normal and iso-aldehydes: R-CH=CH2 + CO + H2 → R-CH2-CH2-CH=OOr → R-CH-CH=O CH3Aldehyde intermediates are then hydrogenated to produce normal or branchedalcohols, and may also be used to produce carboxylic acids. In a processcommercialized by Shell, long chain alcohols can be produced in a single step. Shellhas also recently announced the development of a process to hydroformylate ethyleneoxide to propanediol, a monomer whose end uses include production of polyesterthermoplastics and thermoset resins. Depicted below, the ethylene oxide route isheralded as an economic advance. H2C-CH2 + CO + H2 → CH2OH-CH2-CH=O + H2 → CH2OH-CH2-CH2OH OThe analogous route to butanediol via hydroformylation of propylene oxide, hasalready been commercialized, and accounts for an increasing share of total availablecapacity. Process advances in the production of on-purpose propylene oxide are likelyto boost the importance of the syngas/PO route to butanediol. 15
  16. 16. © Jonathan Targett8. C1 Oxygenates a,b,f,i,j,k,r,s,u,y 8.1. Methanol 8.1.1. Methanol from SyngasMethanol is formed from synthesis gas as follows: CO + 2H2 ↔ CH3OH ΔH298 = -91 KJ/mol CO2 + 3H2 ↔ CH3OH + H2O ΔH298 = -50 KJ/molFactors increasing the yield of Methanol are decreased temperature and increasedpressure. Advances in catalysis and reactor design have led to the development of lowpressure processes; approximately 100 bar. Below is a diagram of the low-pressureprocess developed by the former ICI catalysts group, now named Synetix, employinga copper catalyst.Figure 2 – The Synetix Methanol Process from Synthesis GasSource: Synetix 16
  17. 17. © Jonathan TargettExamples of investment levels for recent syngas methanol plants are shown in thefollowing table:Table 5 – Plant Investment Examples for Methanol from Synthesis Gas Capacity Cost* Start-up Location Construction Elements (Million ($ Million) Date Tonnes/Year) 0.90 $300 2001 Equatorial Guinea Engineering , Construction, Procurement and Offsites 0.85 $227 2003 Al Jubail, Engineering & Construction Saudi Arabia 0.84 $240 2004 Point Lisas, Engineering & Construction Trinidad 0.84 €200 2005 Punta Arenas, Chile Licence, Engineering and ProcurementSources: Chemicals Technology, Lurgi* UnadjustedLurgi has published the following direct cost assessment of its low-pressure, syngasMegaMethanol® process for a super-size, 1.7 million tonnes per year capacity plant,which would make it the world’s largest single production unit. Annual Capacity: 1.7 million tonnes: Capital Cost: ~ $400 million Direct Production Costs $16/mt (O2/NG split not provided) Indirect Production Costs $12/mt (excl. depreciation) Feedstock Assumption: Natural Gas Cost $0.5/million BTUTable 6 – Uses of Methanol in the U.S.A and Western Europe, mid 1970sEnd Product USA W. Europe (% of Total) (% of Total)Formaldehyde 39 51Dimethyl Terephthalate 11 16Solvent 10 10Methyl Methacrylate 3 5Methylamines 3 4Halogen Compounds 5 4Other 29 10Source: Industrial Organic Chemistry, Weissermel & Arpe 17
  18. 18. © Jonathan TargettThe preceding table shows a breakdown of the major uses of methanol in the mid1970s. The first commercial syngas methanol production plant was commissioned inthe mid 1960s. Worldwide capacity to produce methanol from synthesis gas reactorsis currently greater than 20 million tonnes annually. 8.1.2. Methanol by Direct Hydrogenation of Carbon DioxideSynthesis of methanol from direct hydrogenation of carbon dioxide has beeninvestigated most extensively in the context of hydrogen generation from coke; seebelow. Known as the Carnol process, it is of interest for reprocessing of flue gases inpower plants, and has potential as a stand-alone route to methanol, relying on surplusheat from neighbouring processes. CH4 → C + 2H2 CO2 + 3H2 ↔ CH3OH + H2OJapanese researchers have recently demonstrated carbon dioxide hydrogenation tomethanol in a 50 kg/day pilot plant. Higher space-time yield was reported than thattypically achieved in conventional syngas methanol reactors. 8.2. FormaldehydeThe main, on-purpose processes for formaldehyde production start from methanol. CH3OH ↔ CH2O + H2 ΔH298 = +84 KJ/molOr CH3OH + ½O2 → CH2O + H2O ΔH298 = -38 KJ/molFor the dehydrogenation route, the initial investment cost for a 25,000mt/annumformaldehyde reactor is estimated, in one example, to be as low as $3-5 million.Economies of scale are indicated to be small; 5-10% on capital investment andindirect operating costs for a doubling of capacity. The process description calls forthe direct inputs shown in the following table. 18
  19. 19. © Jonathan TargettTable 7 – Formaldehyde from Methanol Dehydrogenation – Direct CostsInputs Amount per Tonne of Typical Input Cost Direct Cost Formaldehyde ProducedMethanol 1.15 mt $137/mt $158/mtCatalyst $55,000 per charge 3% of methanol ~ $5/mtUtilities Electricity, Steam, Assume: steam credit ~ breakeven Cooling WaterSource: IFPIn the U.S., formaldehyde suitable for certain end-uses has been produced directlyfrom hydrocarbon feedstock; 8% of total production in the mid 1970s. A 2000 patentassigned to Georgia-Pacific Corporation describes the oxidation of methane directlyto formaldehyde in a procedure that can use sour natural gas feedstock. Biosynthesisroutes from methanol to formaldehyde have been scaled up by ICI and others. 8.3. Formic AcidA sizeable proportion of formic acid has been obtained as a by-product of otherprocesses; for example the production of acetic acid from butane. Among thetheoretical on-purpose routes, the direct addition of water to carbon monoxide bringswith it a risk of degradation. An alternative is the reaction of carbon monoxide andalcohol yielding a formate ester, which is then hydrolysed to formic acid. Below is thegeneral reaction pathway and the methanol case. CO + ROH → ROCHO ROCHO + H2O ↔ ROH + HOOCH CO + HOCH3 → CHOCH3O OCHOCH3 + H2O ↔ HOCH3 + HOOCHCarbonylation reactions, those involving the addition of carbon monoxide, are animportant route to a number of carboxylic acids; see acetic acid – section 9.4 19
  20. 20. © Jonathan Targett9. C2 Compounds a,f,j,q,s,u 9.1. AcetyleneAlongside the calcium carbide route to acetylene, whose use has sharply declined inthe west, several processes have been developed to form acetylene via methanecombination at high temperature; a number are designed to use oil fractions also. Thetechniques fall into three categories:  Partial combustion of the feed in fire-proof ovens; e.g. Wulff process  Electrically heated; e.g. Lichtbogen or H.E.A.P. process  Indirect heating; e.g. using superheated steamAn early patent assigned to the Badische Anilin und Soda Fabrik describes one of thefirst oxidation procedures to form acetylene in conditions similar to the syngas POXreaction; the feed is partially combusted, and then quickly cooled to avoid sootformation. Autothermal reactor designs recapture combustion heat to crack theremainder of the feed. A number of variations have been commercialized; the Wulffprocess includes a subsequent cracking step after partial oxidation.First commercialized in Germany, the Hydrogen Electric Arc Pyrolysis, HEAP,process is reportedly energy intensive, but remains in commercial operation.Hydrogen is used as a heat transfer agent. Acetylene production via plasma pyrolysisof coal-bed methane was the subject of renewed study in the U.S. during the first oilcrisis in the early 1970s. High temperature indirect heating processes employingsuperheated steam have been demonstrated at various times. This technique was mostactively investigated in Japan, where a commercial plant was commissioned in 1970.Chemical production starting from acetylene has typically competed unfavourablywith equivalent processes based on ethylene. In periods of ethylene shortage, the topicof acetylene process alternatives has been revisited. A large-scale use of acetylene isthe Reppe process to produce 1,4-butanediol, an alternative to the propylene oxide-hydroformylation route to 1,4-butanediol outlined in section 6. 20
  21. 21. © Jonathan Targett 9.2. EthanolThe predominant industrial synthesis processes for production of denatured ethanol(i.e. H2O <5%) use ethylene. In several countries, fermentation processes from grainor vegetable feedstocks represent a larger source than synthetic production. The U.S.National Renewable Energy Laboratory gives details of an ethanol process in whichsynthesis gas is fed to a fermentation bed. Fermentation processes yield an azeotropicwater/alcohol mixture from which the water cannot be completely removed withoutdistillation using an alternative solvent; azeotropic distillation. The production ofsynthetic higher alcohol mixtures using synthesis gas is included in section 10. 9.3. AcetaldehydeThe prevalent route to acetaldehyde is oxidation of ethylene. A technique to produceacetaldehyde from synthesis gas is outlined in a Texaco patent of 1985, but there is noindication that it has been commercialized. In 1973 oxidation of C3&4 alkanesdirectly to acetaldehyde is estimated to have accounted for 11% of total production,however this route is regarded as uncompetitive owing to high levels of by-products. 9.4. Acetic AcidAcetic acid has been produced via several routes, including; oxidation ofacetaldehyde, direct oxidation of hydrocarbon (primarily butene and butane), andcabonylation of methyl acetate. Shown below is the on-purpose acetic acid productionroute using carbon monoxide and methanol. CO + 2H2 ↔ CH3OH ΔH298 = -91 KJ/mol CH3OH + CO → CH3COOH ΔH298 = -138 KJ/molThe following process cost estimate from SRI Consulting is based upon Monsanto’srhodium catalysis technique, purchased by B.P., and subsequently licensed under thetradename Cativa®, using a modified, iridium catalyst. The plant investment cost is$308/mt per year; small economies of scale are indicated for indirect operating costs. 21
  22. 22. © Jonathan Targett Monsanto – Acetic Acid Process Methanol Market Pricing; 1990-2001 Direct Costs Typical range $0.30-0.60/gallon Methanol* $0.006/lb High $1.00/gallon Carbon Monoxide $0.022/lb Low $0.20/gallon Catalyst & Additive(s) $0.007/lb * Methanol consumed = 0.0122gallons per lb of acetic Utilities $0.005/lb acid produced; methanol density = 7.9lbs/gallon Total Direct Cost $0.040/lb Sources: SRI, The Methanol Institute10. Higher Carbon Series Production from Synthesis Gas a,d,f,g,h,k,p,x,z 10.1. Mixed Higher Alcohol Synthesis, H.A.S.Mixed higher alcohols synthesis from syngas, H.A.S., has been investigated by anumber of firms primarily interested in the potential of using alcohols as oxygenateblending components in transport fuel. When compared with methanol and ethanol,higher alcohols have certain advantages as fuel additives, not least, their lower vapourpressures, a factor in avoiding engine pre-ignition.Until recently, low water solubility ethers such as methyl tertiary-butyl ether, MTBE,have been preferred to alcohols as oxygenate fuel additives, however several U.S.states have recently outlawed MTBE on toxicological grounds. The U.S. NationalRenewable Energy Laboratory reports that a number of firms have gone ahead, andscaled up H.A.S. pilot plants. 10.1.1. Snamprogetti, Enichem, Haldor Topsoe, SEHTThe SEHT process takes place in a fixed bed reactor at a higher temperature thanconventional methanol synthesis. Water is removed by azeotropic distillation. A plantwith capacity of 12,000mt/year was operated during the period 1982-87 in Pisticci,Italy. The end product, designated Metanolo piu Alcoli Superiori®, was marketed inpremium gasoline.
  23. 23. © Jonathan Targett 10.1.2. Institut Français du PétroleThe IFP process has been demonstrated at a small (20 bpd) pilot plant built in Japan.The final product, referred to as Substifuel®, contains only 0.2% water. 10.1.3. Power Energy Fuels & Western Research InstituteTrade-named, Ecalene®, the end reaction mixture consists of roughly 80% ethanol andmethanol combined with 20% higher alcohols. Scale up in a 500 gallon per day pilotplant is ongoing. 10.1.4. DowDeveloped in 1984, Dow’s process was not pursued. It gave a mixture of about 3:2:1methanol, ethanol and propanol. 10.1.5. LurgiIn Lurgi’s process, carbon dioxide is added directly to methanol to yield an unpurifiedhigher alcohol mixture with water content below 2%. The output, trade-named,Octamix®, was piloted in Europe. Lurgi is also publicizing synthetic fuel productionvia a process, known as MtSynfuels®, in which methanol is first reacted to dimethylether. DME is then dehydrated to olefin, prior to oligomerization in a Conversion ofOlefins to Distillates® step, giving carbon chain lengths mainly in the gasoline anddiesel range with only low levels of non-fuel co-products. South Africa’s Mossgas hasoperated a C.O.D. unit to produce transport fuels since 1992. DME, itself, has alsobeen used as a fuel blending component. 10.2. IsosynthesisAlthough oligomerization reactions starting from synthesis gas typically result in aspectrum of chain lengths, a process called simply, isosynthesis, is reported to yieldonly isobutane and isobutene when carried out at high pressure and temperature; 150-1000 atmospheres and 450°C. Periodic shortages of isobutene, a precursor for MTBE,have stimulated fresh interest in the isosynthesis technique, which has not beenpractised since the 1940s. 23
  24. 24. © Jonathan Targett 10.3. Fischer Tropsch SynthesisThe general technique for producing higher hydrocarbons from mixtures of carbonmonoxide and hydrogen is named after Franz Fischer and Hans Tropsch, whoperformed pioneering catalyst development in Germany in the 1920s for thegeneration of synthesis gas. Disregarding side reactions, the oligomerization ofsynthesis gas takes place in the following manner: nCO + 2nH2 → (-CH2-)n + nH2O 2nCO + nH2 → (-CH2-)n + CO2Fischer Tropsch production of transport fuels and lubricants from natural gas isconducted in Malaysia and in South Africa, where coal feedstock is also employed;the table below shows the typical composition of coal-bed gases.Table 8 – Typical Coal Bed Raw Gas Composition – Lurgi GasificationCoal Gas Component Concentration (% of Total)CH4 9-11CO 15-18CO2 30-32H2 38-40Source: Industrial Organic Chemistry, Weissermel & ArpeFischer Tropsch processes remain of active research interest, and The US PatentOffice maintains a separate category for FT patents; over seventy were filed in thisclass from 1997 to 2001. The patent assignees are shown in table 9.Table 9 – Fischer-Tropsch Patents, 1997-2001Assignee No. of PatentsExxon 34Institut Français du Pétrole 10Syntroleum 9AGIP 6Air Products 6Others 6Source: U.S. Patent Office, Class 518 24
  25. 25. © Jonathan TargettThe most desirable reaction products are:  normal alkanes  primary and secondary, normal alcohols  alpha olefinsIn many instances, however, a range of branched molecules is also likely to form;certain catalysts are even reported to yield aromatic hydrocarbons. Where a diversemix of functional terminal groups is undesirable, FT production processes mayinclude finishing steps; for example hydrogenation of olefins to alkanes, dehydrationof alcohols to olefins or hydroformylation of olefins to aldehydes, alcohols and acids.Fischer Tropsch processes can be sub-divided into those designed primarily to yield:  Synthetic crude oil (Syncrude)  Transport fuels and/or blending components  Lubricant basestocks and waxesOutput carbon chain lengths from Fischer Tropsch processes vary widely, dependingupon the oligomerization technique and catalysis. An example of the outputdistribution from a low-temperature FT process is shown in the following table.Table 10 – Typical Output Distribution for a Low Temperature FT ProcessCarbon Chain Length Refinery Designation Output Proportion (Weight %)C1-C4 Gases 5-10C5-C9 Naphtha 15-20C10-C16 Kerosene 20-30C17-C21 Diesel 10-15C22+ Wax 30-45Source: SRI ConsultingIn a recent paper about Gas-to-Liquids conversion of Alaskan gas published by theSociety of Petroleum Engineers, the importance was stressed of avoiding long chain,high melting point wax formation, and of checking that neither syncrude norsyncrude/crude oil mixtures form gels that might obstruct pipeline restart aftershutdowns; either in slug flow or in blended flow pipeline operation modes. 25
  26. 26. © Jonathan Targett 10.4. Fischer Tropsch Plant ConsiderationsMany Fischer Tropsch processes were conceived with coal-bed methane in mind ashydrocarbon source. Coal processes include the following processing steps, several ofwhich are not required when utilizing natural gas feedstock:  Drying and grinding  Sulphur removal  Sour water removal  Acid gas removal  Slag disposalThe U.S. Department of Energy commissioned a study, including ASPEN modeling,of FT plants based on either coal or natural gas. The process modeled, yields C2-C5alkanes that are subsequently used to form longer chain length molecules. The endmixture contains no sulphur, nitrogen or oxygenates, and can be blended directly intogasoline and diesel pools. Bechtel’s estimates of the cost of an integrated plant usingnatural gas are as follows. DOE/Bechtel Syncrude Example, 1998 Plant Input at Capacity 410 MMSCF/day Plant Output Capacity approx. 45,000 bbl/day Plant Investment $1.8 Billion Syncrude Pricing Assumptions Input Gas Price Output Synfuel Cost ($/million BTU) ($/Barrel*) $0.5 $19.7 $2.0 $32.8 * Crude Oil Equivalent 26
  27. 27. © Jonathan TargettFor purposes of comparison, Lurgi estimates the investment cost of its methanol-based synfuel process at $20,000 per barrel per day of finished capacity, and gives thefollowing direct cost breakdown: Lurgi – MtSynfuel® Direct Inputs MtSynfuel® Direct Costs Gas Price Direct Cost Natural Gas 7.64mmBTU/bbl ($/million BTU) ($/Barrel) Catalyst/Add(s) $2.19/bbl $0.5 $6.66 Utilities $0.65/bbl $2.0 $18.12 10.5. Fischer Tropsch Plant DevelopmentsA recent overview of emerging Gas-to-Liquids technologies published by PetroleumEconomist summarizes the firms most active in the scaling up of FT processes: 10.5.1. Sasol & Sasol/ChevronSasol’s Fischer Tropsch development efforts have historically been directed towardsthe use of coal-bed methane. The primary outputs have been diesel fuel, FT waxesand lubricant basestocks. Sasol’s own pioneering work on the Slurry Phase Distillate,SPD® process forms the basis of a 50/50 joint-venture with ChevronTexaco, whoseinput includes syncrude processing technology. Sasol’s SPD® process is to be utilizedin new plants in Ras Laffan, Qatar (Sasol) and Escravos, Nigeria (Sasol/Chevron);each with capacity of 34,000 bpd. 10.5.2. ExxonMobil – AGC21 ®The Advanced Gas Conversion for the 21st Century process, AGC21®, has beendesigned to convert natural gas primarily into liquid refinery feedstock. It yields ahigh quality syncrude, suitable for production of lubricants and premium transportfuels, including aviation fuel. The process was demonstrated at a pilot plant in BatonRouge, Louisiana. A commercial plant is slated for construction in Qatar. Exxonclaims that over 2000 patents apply to the plant design. 27
  28. 28. © Jonathan Targett 10.5.3. Shell Middle Distillate Synthesis, SMDS ®Shell has been actively pursuing techniques to convert natural gas into liquids sincethe early 1970s. The SMDS ® process yields syncrude, waxes and long chain alcohols.Details of the individual process steps are shown in the figure below:Figure 3 – The Shell Middle Distillate Synthesis Process ®Shell has operated a pilot-scale SMDS ® plant in the Netherlands for over 20 years. In1993 it started up a full-scale production unit in Bintulu, Malaysia, jointly constructedwith Petronas and Mitsubishi. As well as waxes and middle distillates (naphtha,kerosene, diesel), plant output includes finished diesel fuel. Shell has selected eightcountries for the development of SMDS ® plant engineering studies; Egypt, Indonesia,Iran, Trinidad, Malaysia, Argentina, Australia and Qatar. 10.5.4. BP/KvaernerBP has been scaling up an FT process since the mid 1980s. In 1994 B.P.commissioned a pilot plant built by Davy Process Technology, a subsidiary ofKvaerner. More recently, BP has constructed an $86 million test plant at Nikiski,Alaska. This unit reportedly went into operation in July 2003, and is designed toconvert 3 million ft3 of natural gas into 300 barrels of syncrude per day. 28
  29. 29. © Jonathan Targett 10.5.5. RentechColorado-based Rentech was formed with the objective of developing GTL plants toconvert landfill methane into liquid fuels. A 253 bpd pilot plant was operatedsuccessfully, but owing to inadequate methane volumes, the unit was mothballed. Afeedstock switch is being investigated. 10.5.6. SyntroleumA developer of FT plant technology, Syntroleum currently operates onlydemonstration reactors, whose outputs include both transport fuels and refineryfeedstocks. Syntroleum has licensed elements of its technology to a range of energyconcerns, including Arco, Texaco, Repsol, Kerr McGee, Marathon, Ivanhoe as well asthe Australian Government. The Syntroleum FT process is employed at a 70,000 bpdunit within an Arco refinery in Washington State, and has been proposed for a GTLfacility to be operated in Qatar by Ivanhoe. Syntroleum has announced plans to build,and operate, a commercial plant of its own in Peru. 29
  30. 30. © Jonathan Targett11. Process Economic Assessment b,zThe major groups of costs that are typically considered in market pricing decisions,and that form the basis for plant investment decisions, include:  Direct costs per unit of production  Raw material input costs  Utilities consumed and credits for useful heat recovered  Direct labour inputs  Analytical costs  Credits for usable by-products  Debits for disposal of unusable by-products  Packaging and shipping  Distribution costs  Recurring costs associated with production  Maintenance  Catalyst renewal and/or replacement costs  Process licence fees  Product line research & development  Product design and specification  Production process  Packaging  Capital costs  Initial plant investment; including engineering and construction  Equipment upgrades and process improvements; e.g. debottlenecking 30
  31. 31. © Jonathan Targett Complexity arises from processes that generate two or more desired end-products, to which a share of direct and indirect costs must be allocated. These cost allocations may have an important bearing on decisions about the attractiveness of investments to separate, and purify co-product streams; use or dispose decisions. Similarly, plants in which multiple products are manufactured in batches or campaigns of a limited time period, require the development of an allocation system for indirect costs. All of the processes described in earlier sections are conceived as continuous dedicated production units that are likely to find alternative uses only in rare instances. 11.1. Natural Gas Input Pricing Natural gas tariffs are reported in the following types of measurement unit:  Thermal; e.g. British Thermal Units  Volume; e.g. Standard Cubic Feet at standard temperature and pressure  Weight; e.g. Tonnes Figure 4 – Benchmark Natural Gas Prices by Delivery Form and Region Natural Gas Pricing by Form & Region 6 5 Natural Gas Price ($/million Btu) LNG - Japan 4 LNG - EU NG - UK 3 NG - US (Henry Hub) NG - Canada 2 Crude Oil - Heat Value 1 0 1997 1998 1999 2000 2001 2002 YearSource: B.P. Statistics 31
  32. 32. © Jonathan TargettThe divergence of composition between different natural gas producer regions makesexact comparisons complex, obscuring, for example, the raw material value of ethaneand propane for alkene production. In the methanol plant example from section 8, alow thermal unit price has been applied, but in the gas-to-liquid plant examples, gaspricing is omitted; instead, a conversion cost per unit of liquid output has beencalculated. 11.2. Measures of Investment ReturnThe measures used for comparisons of plant investments are listed below:  Internal rate of return – assumes plant investment occurs in one initial lump.  Project net present value – assumes a constant cost of project capital of 10%, giving an NPV10% value; terminal value assumption – plant operation is assumed to continue at least 50 years in all cases; see example - Figure 6.  Payback year – assumes process plant investment is to take one full year. 11.3. Plant Economics - Examples 11.3.1. Commodity Chemical PlantsThe following table compares the capital costs of the plant examples from precedingsections for production of methanol, formaldehyde and acetic acid:Table 11 – Process Direct Cost Examples Product Route Investment Cost Direct Direct Cost per Capacity Unit Cost Input Price Assumption ($/mt per year) ($/mt) Methanol from syngas 267-333 28 N.G. at $0.5/mmBtu O2 or air – N/A Formaldehyde CH3OH ~300 163 Methanol at $137/mt de-H2 Acetic Acid CO + 308 88 Methanol at $137/mt CH3OH CO at $0.0034/scf 32
  33. 33. © Jonathan TargettAssuming the direct costs and selling prices shown in the preceding table were toremain constant, the subsequent plant investment returns would be as follows:Table 12 – Plant Investment Return Examples*Product Annual Investment Sales Price Payback NPV10% IRR Capacity Cost Year (mt/year) ($ millions) ($/lb) ($/mt) ($million) (%)Methanol 800,000 227 0.063 139 4 428 30Formaldehyde 25,000 4 0.104 229 4 10 36Acetic Acid 800,000 227 0.136 299 3 922 52*No deflator applied, 5 year straight-line depreciation, 100% utilization, 30% corporation tax, all capital expenditure in year 1For the acetic acid example, investment returns have been calculated for variouslevels of capacity utilization across a range of gross margins; the difference betweenrevenues and direct costs.Figure 5 – Acetic Acid Plant Example - Investment Returns* Acetic Acid Plant Investment Return vs. Gross Margin at Various Capacity Utilization Rates 20% Utilization 40% Utilization 60% Utilization 80% Utilization 100% Utilization 80%Internal Rate of Return 60% 40% 20% 0% 0.00 0.02 0.04 0.06 0.08 0.10 0.12 0.14 Gross Margin (US$/lb)*Constant gross margin, no deflator applied, five year S.L. depreciation, 30% corporation tax, all capital expenditure in year 1 33
  34. 34. © Jonathan TargettFactors not considered at this stage of analysis include:  realistic utilization assumptions; 80-90% of nameplate capacity is often the highest that can be attained, after taking maintenance shutdowns into account  the arrival of new plant capacity in lumps; these can sharply reduce utilization rates of all producers; detailed return calculations require ramp-up forecasts  the volatility of commodity chemical markets; see, for example, methanol pricing shown in Section 9.4  cost-based pricing to in-house derivatives production; e.g. polymerization  competition from by-product processes with little supplementary investment requirement and direct costs restricted mainly to utilities  site costs associated with environmental compliance and decommissioningThese effects have the largest impact on those plants using processes withcomparatively high direct costs per unit of output. Recent investment decisionssuggest that producing acetic acid by direct methanol carbonylation has a strong directcost position, (i.e. low direct cost) when compared to other on-purpose routes, butacetic acid is an example of a commodity obtained from both on-purpose and by-product production. 11.3.2. Synthetic Crude OilIn a syncrude plant that is operated as a cost centre, revenue for repayment of plantcapital cost is derived from a flat conversion charge per unit of output. Natural gas issupplied to the plant in return for delivery of a specified quantity of syncrude.For different plant investment costs, the conversion charge that results in an IRR of10% (NPV10% of zero) has been calculated, and is shown for a range of plantinvestment costs in the table overleaf. 34
  35. 35. © Jonathan TargettTable 13 – Breakeven Conversion Cost of Syncrude for Different Investment CostsPlant Investment Cost($/bpd of capacity) 10,000 15,000 20,000 25,000 30,000 35,000 40,000Conversion Cost*30% Tax Payable 3.19 4.79 6.38 7.98 9.58 11.17 12.77($/barrel output)Conversion Cost*No Tax Payable 2.74 4.11 5.48 6.85 8.22 9.59 10.96($/barrel output)* NPV10= zero, no deflator applied, ten year straight-line depreciation, 100% utilization, all capital expenditure in first yearFor the purpose of assessing the size of the necessary conversion charge required tomeet plant investment costs, neither indirect plant costs, nor direct costs such asutilities required per barrel of output are considered. Using the breakeven gasconversion costs calculated above, the following figure shows the repayment periodfor a unitized investment in syncrude production; i.e. one barrel per day of outputcapacity.Figure 6 – Syncrude Unitized Capital Cost Repayment Period Repayment Period of Initial Plant Capital Cost NPV(10%) = zero, 10 year depreciation 100% Percent of Capital Cost 80% 60% 0% Tax 30% Tax 40% 20% 0% 0 5 10 15 20 25 30 35 40 45 50 Project Year from Start 35
  36. 36. © Jonathan Targett 11.3.3. Synthetic FuelFor the example given in section 10.4 of a plant to manufacture synthetic fuelaccording to Lurgi’s MTSynfuels® process, the capital cost amounts to $20,000 perbarrel per day of capacity. The cumulative discounted cash flows at various fixednatural gas conversion costs have been calculated on a unitized basis, and are plottedin Figure 7. Excluding raw materials, Lurgi estimates direct and indirect plant costsfor the MTSynfuels ® process, to be in the range of $3-4/barrel.Figure 7 – Synfuel Plant Unitized Investment - Discounted Cash Flows Proforma Cumulative Discounted Cash Flow of Synfuel Plant Investment Repayment by Fixed Natural Gas Conversion Tariff Plant Capacity Cost - $20,000/Barrel per Day $20,000 Conversion Charge $10/barrel Cumulative Discounted Cash Flow $10,000 $8/barrel $6/barrel $0 $4/barrel -$10,000 -$20,000 -$30,000 0 5 10 15 20 25 30 35 40 45 50 Project Year from Start* No deflator applied, 10 year carried straight-line depreciation, 100% utilization, 0% tax, construction period prior to year zero 36
  37. 37. © Jonathan Targett 11.3.4. Gas to Liquids, GTL, Production Fischer Tropsch syncrude production represents a supplementary processing step to an end-product which is, for many applications, no more valuable than low-sulphur crude oil. Parallels can be drawn with gas liquefaction direct costs and capital costs; taking into account supplementary “offsites” investments in pipelines, terminals, tanks and specialized shipping vessels. Many comparisons are, however, inexact and highly dependent upon individual field circumstances, such as the value of ethane and propane components, as well as the presence of existing infrastructure. A more revealing comparison can be made between natural gas synfuel costs and transport fuel costs from crude oil refining. Excluding taxes, the U.S. Department of Energy estimates that raw material accounts for about half the ex works cost of gasoline; refining margin for almost a quarter. The following figure shows the implied refining margin of gasoline from crude oil in recent years. Figure 8 – Implied U.S. Gasoline Refining Margin, 1994-2002 U.S. Gasoline Price* & Implied Refining Margin, 1994-2002 12 120 Refining Margin Gasoline Price (excl. tax) 10 100 Gasoline Price (cents/gallon) Refining Margin ($/barrel) 8 80 6 60 4 40 2 20 0 0 94 95 96 97 98 99 00 01 02 19 19 19 19 19 19 20 20 20Source: U.S. DOE, EIA*Regular Unleaded, excludes taxes 37
  38. 38. © Jonathan TargettMaking the simplifying assumption that refining margins are comprised only ofcapital cost repayment plus plant direct* and indirect operating costs, allows thefollowing comparison between gas-to-synfuel and oil-to-gasoline production costs: Example – Lurgi MTSynfuels® Gas-to-Synfuel Processing Charge ($/barrel) Breakeven Capital Charge $5.50 11.3.2 Direct & Indirect Plant Costs* $3.00-4.00 11.3.3 Total $8.50-9.50 *Excludes raw material costAt current gasoline price levels, the cost of production of synthetic fuel from naturalgas appears to be broadly comparable with the cost of producing gasoline from crudeoil. This result gives grounds for optimism that the GTL era is truly dawning. 38
  39. 39. © Jonathan Targett12. ConclusionsThe chemical process industry is a large scale consumer of natural gas, which is usedfor; power generation, steam heating or chemical reaction. When compared to othersources of hydrocarbon, natural gas has the principal benefit that it yields fewer by-products.For use as chemical feedstock, the composition of natural gas is a particularlyimportant consideration; for example, higher alkanes make gas suitable for alkeneproduction. Some pre-reaction purification is usually necessary, regardless whetherthe feedstock source is wet or dry natural gas, coal gas, oil-field associated gas,refinery gas, or biogenically-derived gas. Advantage can be gained from processesthat are able to dispense with one or more purification step.The commercial natural gas reactions examined earlier, have each been assigned toone of the following four usage categories:  Alkene production from higher alkanes. Alkene production using alkanes separated from natural gas requires long-term, stably-priced supplies at a particular geographic location; handling capacity for LPG is one method to ensure adequate supply volumes. Gas reservoir volumes of C2&3 alkanes should be a consideration in assessing the attractiveness of field development. Direct catalytic dehydrogenation is an important technique to help balance on-purpose and by-product alkene supplies.  Processes requiring hydrogen and/or carbon oxides. Having the highest hydrogen to carbon ratio, methane is particularly valuable for the formation of hydrogen. For high volume syngas derivatives, natural gas input is almost certain to be required, either as sole raw material, or in supplement to other hydrocarbon feedstocks. Synthesis gas chemical processes appear to have economic advantages for the production of a number C1&2 compounds. Prospects for new uses of syngas appear promising. 39
  40. 40. © Jonathan Targett  Processes requiring pure or near pure methane; e.g. chloromethanes. Natural gas contains primarily methane, and has the advantage that it can be used as a sole feedstock in the exact quantities required.  Conversion into higher carbon chain length molecules. Processes to make higher carbon chain length molecules from natural gas have tended to be regarded as a higher cost route to strategic transport fuel supplies, within the framework of contingency planning for oil price shocks. At present oil prices, production of higher carbon chain length molecules from natural gas seems to represent a viable alternative. The greatest potential exists in regions with: i. large deposits of stranded gas; e.g. Alaska’s North Slope ii. large surpluses of dry natural gas; e.g. The Arabian Gulf iii. gas deposits, but little or no oil, which are located far from resupply points for liquid transport fuelsIn an environment of diminishing discovery rates of new crude oil reserves, interest inthe chemical production uses of natural gas can be expected to grow, irrespective ofcarbon cost comparisons. It is to be anticipated that oil and gas pricing structures willalign themselves so that feedstocks may be readily interchanged in a broader range ofshared applications. 40
  41. 41. © Jonathan Targett13. References a) K. Weissermel & H.J. Arpe, Industrial Organic Chemistry, 2nd edition, translated by A. Mullen, Verlag Chemie, Weinheim, 1978 b) Institut Français du Pétrole, A. Chauvel, P. Leprince, Y. Barthel, C. Raimbault, J.-P. Arlie, Manual of Economic Analysis of Chemical Processes, Feasibility Studies in Refinery and Petrochemical Processes, Translated by R. Miller & E. Miller, McGraw Hill, New York, 1981 c) W.D. McCain, The Properties of Petroleum Fluids, 2nd edition, Pennwell, Tulsa, Oklahoma, 1990 d) Fundamentals of Gas to Liquids, Petroleum Economist, London, 2003, edited by D. Bamber, T. Nicholls, J. Deaville: i) S. Idrus, Bintulu: commercializing Shell’s first GTL plant ii) M. Waddacor, GTL era is dawning, after 80 years of R&D iii) I. Dybkjær, Synthesis gas technology e) M. Medici, The Natural Gas Industry, A Review of World Resources and Industrial Applications, Newnes-Butterworths, London, 1974 f) P.L. Spath, D.C. Dayton, Preliminary Screening – Technical and Economic Assessment of Synthesis Gas to Fuels and Chemicals with Emphasis on the Potential for Biomass-Derived Syngas, National Renewable Energy Laboratory, Contract NREL-TP-510-34929, Golden, Colorado, 2003 g) Bechtel Corporation, Baseline Design/Economics for Advanced Fischer- Tropsch Technology, U.S. Department of Energy, Federal Energy Technology Center, Contract DE-AC22-91PC90027, Pittsburgh, 1998 41
  42. 42. © Jonathan Targetth) S. Khataniar, G.A. Chukwu, S.L. Patil, A.Y. Dandekar, The University of Alaska, Fairbanks, Technical and Economic Issues in Transportation of GTL Products from Alaskan North Slope to the Markets, Society of Petroleum Engineers, Paper No. 86931, 2004i) Synetix Low Pressure Methanol Process, Synetix Corporation, Billingham, www.synetix.comj) Process Economics Program, Stanford Research Institute, Menlo Park, California, http://pep.sric.sri.comk) Technologies of Lurgi Oel & Gas Chemie, MG Engineering, Company Brochure, Lurgi Oel Gas Chemie GmbH, Frankfurtl) World Liquefied Petroleum Gas Association, Paris, www.worldlpgas.comm) R.E. Uhrig, Engineering Challenges of The Hydrogen Economy, The Bent, Spring 2004 edition, Tau Beta Pi, Knoxville, Tennesseen) Chemical & Engineering News, The American Chemical Society, Columbus, Ohio: i) M.S. Reisch, Running Low on Gas, Vol. 81, No. 28, 14.7.2003 ii) A. Tullo, Petrochemicals, Vol. 82, No.11, 15.3.2004o) AirLiquide, HYOS Hydrogen Technologies, www.airliquide.comp) R.M. Smith, New Developments in Gas to Liquids Technologies, SRI Consulting, Menlo Park, California, 2004q) A.L. Waddams, Chemicals from Petroleum, 2nd edition, John Murray, London, 1968 42
  43. 43. © Jonathan Targettr) Carbon Dioxide Conversion and Utilization, American Chemical Society, edited by C. Song, A.F. Gaffney, Oxford University Press, Oxford, 2002: i. C. Song, CO2 Conversion & Utilization: An Overview, Clean Fuels and Catalysis Program, Pennsylvania State University, University Park, Pennsylvania ii. T. Inui, Effective Conversion of CO2 to Valuable Compounds by Using Multifunctional Catalysts, Air Water Incorporated, Sakai, Japan iii. M. Steinberg, Carbon Dioxide and Fuel Production, Department of Applied Science, Brookhaven National Laboratory, Upton, New York iv. Y. Wang, Y.Ohtsuka, Utilization of Carbon Dioxide for Direct Selective Conversion of Methane to Ethane and Ethylene with Calcium-based Binary Catalysts, Hiroshima University, Hiroshima, Japans) U.S. Patent Office, patent numbers; 4525481, 3686344, 6,028,228t) Shell Chemicals, www.shellchemicals.comu) The Methanol Institute, www.methanol.orgv) United States Department of Energy, www.fe.doe.govw) Oxeno, www.oxeno.comx) Exxon Newsroom, www.exxonmobil.com/Corporate/Newsroomy) Chemicals Technology, www.chemicals-technology.com/projectsz) B.P., www.bp.com/subsection.do?categoryId=95&contentId=2006480 43

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