Environmental Engineering Reference
In-Depth Information
1.6 billion cubic feet of natural gas into 140,000 barrels of petroleum
products every day. 56 Qatar provided Shell with the natural gas for free;
the project wouldn't have made sense in the United States, where pro-
ducers actually have to pay for their natural gas.
Despite the costs, a few companies have looked at doing something
similar in the United States. h ere are two ways to at ack the problem,
both of which are referred to as “gas-to-liquids,” or GTL. h e i rst is to
put methanol made from natural gas directly into cars and trucks; the
second is to make gasoline or a diesel substitute from that methanol
and use it instead. h e i rst route is cheaper for fuel producers but
requires upgrades to gas tanks and fueling infrastructure; the second
one reverses the pat ern. h e costs to produce gasoline and diesel from
natural gas are particularly uncertain, because of the sparse historical
track record for the technologies involved.
In 2008, three scholars at Carnegie Mellon University in Pit sburgh
estimated that producing liquid fuels (mostly gasoline and diesel) from
natural gas would cost $2.30 a gallon if natural gas prices were near
$9 per thousand cubic feet. 57 h ey started by surveying past costs for
the sorts of technologies a GTL plant would need. h en they tacked
on extra costs by i guring that whoever put up the money to build the
plant would expect a 15 percent annual return on their investment.
When you add in distribution and marketing costs, as well as taxes,
that's barely competitive with gasoline at the oil prices most people
expect.
Since 2008, though, assumptions about natural gas prices have been
turned upside down. If you redo their estimates with $5 natural gas,
the result is a cost of $1.45 a gallon, or about $60 a barrel, to make
synthetic fuels. h is seems like a great bet to take on.
So why haven't American industrialists thrown themselves enthusiasti-
cally into the business? Because it's risky. Assume for a moment that the
Carnegie Mellon researchers are right about the costs of building and
operating a GTL plant. If natural gas prices were to climb to, say, seven
dollars for a thousand cubic feet, and oil prices were to fall to seventy
dollars, both of which are eminently possible, GTL producers would
lose money (assuming that the researchers' other assumptions are right).
Because analysts estimate that it costs a billion dollars or more up front
 
 
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