Shell, Qatar Petroleum to build 140,000 b/d GTL plant

Diesel Fuel News, Oct 27, 2003 by Robert Gough

Royal Dutch/Shell and Qatar Petroleum (QP) will build what promises to be the world's largest gas-to-liquids (GTL) plant--a 140,000 b/d facility in Ras Laffan using Shell's Middle Distillate Synthesis (SMDS) technology.

Shell and QP expect the first phase (a 70,000 b/d train) to go online between 2008 and 2009 with the second train coming on-stream two years later. The plant will produce diesel (60%), naphtha and lubricant base oils (40%) using Shell's proprietary Fisher Tropsch process. Shell intends to market both blended and unblended FT diesel from the plant, Jack Jacometti, VP for SMDS Global Development told Diesel Fuel News.

The plant's cost was not disclosed but Jacometti said it will be built for under $20,000 per daily barrel (about $2.8 billion). About 1.6 Bcf/day of low-cost natural gas feedstock from Qatar's North Field wil contribute to the "very competitive capex," he said. Front end engineering and design contracts will be awarded by year-end 2004 or early 2005.

Shell is working with regulatory agencies and automotive companies to explore marketing "neat" FT diesel from the plant for use in city fleets as an alternative to compressed natural gas, Jacometti said.

"It's a bit of a quest. Obviously, the blended product is the easy stuff. You just put it into the existing infrastructure. But marketing neat is the really interesting prospect requiring advanced drive trains" and "a dedicated design, tailor-made" to make optimum use of FT diesel's properties, he said.

"We are investigating our options and there may be some interesting developments with the automotive sector soon," Jacometti said.

Shell is currently testing neat FT diesel in Berlin with Volkswagen. It's also working with DaimlerChrysler on optimizing engines to maximize their use of FT diesel, he said.

Shell is in talks with government authorities in the European Union, China, Japan and California to market its FT diesel. Naphtha from the plant may be exported to Southeast Asia as a premium cracker feedstock for petrochemical operations, Jacometti added.

However, other markets may present themselves over time, he added. "The Middle East is a nice location because you can go left or right [on the map] with your product."

Shell doesn't expect its FT diesel to command a premium over conventional diesel. "Our forecasts of future profitability haven't factored in a premium," said Shell spokesman Stacy Dixon. But last year, Shell reported receiving a 7.5 c/gal premium for its Pura brand GTL-blend diesel being sold in Thailand.

Shell and QP's announcement Oct. 20 comes just 10 months after SasolChevron and QP said they'll build a 37,000 b/d GTL plant at Ras Laffan. Marathon and ConocoPhillips also are conducting feasibility studies for building commercial scale plants in Qatar.