Surplus natural gas fuels investments in gas-to-liquids projects

The huge surplus of natural gas created by the shale boom in the United States is driving investment in technology that turns gas into liquid fuel, according to synthetic fuel technology developer Velocys CEO Roy Lipski.
Velocys has developed technology that enables gas-to-liquid (GTL) plants to convert shale or flaring gas into liquid fuels for industrial use or transport. This technology can also be applied to plants that convert biomass or coal into liquid fuels.
Listed on the AIM market of the London Stock Exchange, the firm has a facility in Oxford, England, as well as two sites in the United States.
“Energy independence in North America, combined with the glut of gas being released over there, is a strong driver for us,” said Lipski.
A boom in U.S. shale gas production has created a huge surplus of natural gas, which the country plans to start exporting in 2015, a move that could have a dramatic impact on the world energy market.
Velocys supplies its technology to small-scale GTL plants that can produce between 1,000 and 15,000 barrels per day (bpd) of liquid fuels from natural gas.
The potential market for small-scale GTL is huge, at up to 25 million barrels of fuel a day, Lipski said, with the most opportunities in North America and Canada.
“Shale gas will also migrate to China and South America, which will shift gas economics all over the world,” said Lipski. These exports are expected to make global gas prices cheaper.
Converting gas from flaring into liquid fuels, particularly in Russia, is also “an easy opportunity” as it turns something into revenue that would otherwise be wasted.
Velocys has announced four projects publicly but has more in the pipeline, Lipski said.
Its technology has been chosen for a 1,100-bpd biomass-to-liquids plant in Oregon and a 2,800-bpd GTL plant in Ohio that will convert shale gas into solvents, lubricants and low-carbon transport fuels.
U.S.-based Ventech Engineers International has also placed an USD8 million order with the firm for reactors with enough capacity for a 1,400-bpd GTL plant.
In Britain, Solena Fuels has selected the firm’s technology to convert 500,000 tons a year of London’s waste into nearly 1,100 bpd of low-carbon jet fuel that will be supplied to British Airways, as well as 1,100 bpd of ultra-low sulfur diesel and renewable naphtha.
Velocys posted a loss of almost GBP7.1 million (USD11.3 million) for the six months ending June 30, 2013, compared to a loss of around GBP4.9 million (USD7.8 million) in the same period last year. The loss is due to the commercial rollout of the firm’s technology and the fact that it received no revenue from grants this year, Lipski said.
(September 30, 2013)