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Monetizing stranded gas

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Natural gas is of little value unless it can be brought from the wellhead to the customer, who may be several thousand kilometers from the source. Because natural gas is relatively low in energy content per unit volume, it is expensive to transport. The cost to transport energy in the form of gas is significantly greater than for oil. This is one of the key hurdles to the increased use of gas. The most popular way to move gas from the source to the consumer is through pipelines. For onshore and near-shore gas, pipeline is an appropriate option for transporting natural gas to market. However, as transportation distances increase, pipelines become uneconomical.

Forms of transportation of natural gas energy

Fig. 1 reviews the four primary ways of bringing the energy potential of gas to the market:

  • Transportation as gas
  • Transportation as solid,
  • Transportation as liquid
  • Transmission as electric power

Gas to gas (GTG)

There are three gas-to-gas (GTG) options to bring gas to market as gas:

In pipelines, the gas is treated to meet pipeline quality requirements and compressed for transport and distribution through a network of pipelines. In compressed natural gas, the gas is treated, compressed, and shipped as compressed natural gas to the consumers. In liquefied natural gas, the gas is treated, liquefied, shipped, and regasified at the destination. The GTG options take advantage of the reduction in volume of the gas to economically transport the gas. Table 1 compares the volume reduction for the various physical-conversion-based gas monetization options.

Gas to solids (GTS)

In the gas-to-solids (GTS) option, the gas is transformed into a solid form called natural gas hydrates (NGH) and transported to the market as a solid or slurry. Regasification of the hydrate is required at the receiving end.

Gas to liquids (GTL)

In contrast to the GTG and GTS gas monetization options, which are based on a physical conversion process, gas to liquids (GTL) is a chemical conversion route involving rearrangement of molecules. GTL processes are classified into direct and indirect processes.

Direct GTL processes

Considerable research is ongoing worldwide on direct routes of converting gas into a liquid;[1] [2] [3] [4] [5]however, these routes have not yet been commercialized. Methane is a molecule in which one carbon atom is bound to four hydrogen atoms by strong chemical bonds. Hence, the chemical reactivity of methane is low, making it difficult to directly convert to a liquid. Direct conversion processes have the potential for achieving a higher efficiency than indirect (syngas-based) processes. However, the key issue with these processes is poor selectivity or conversion leading to low yields of the desired products. Some of the direct GTL routes being explored include the following.

Cold Flame Oxidation

Cold flame oxidation involves the conversion of a pressurized mixture of methane and oxygen at moderate temperatures. The main reaction is the oxidation of methane to methanol; however, further oxidation of methanol to formaldehyde often takes place simultaneously.

Direct Oxidation

Direct oxidation involves the catalytic coupling (oxidative coupling) of methane and an oxidant in the presence of a catalyst at moderate temperatures and approximately atmospheric pressure to produce C2+ hydrocarbons.

Oxychlorination

Oxychlorination involves the catalytic reaction of methane with a mixture of hydrogen chloride and oxygen to produce methyl chloride. The methyl chloride is then reacted over a zeolite catalyst to produce a mixture of aliphatic and aromatic hydrocarbons.

Indirect Oxidation

This process involves indirect oxidation of methane to ethylene at high temperatures with the use of various reducible metal oxides as oxygen carriers as well as catalysts.

Catalytic Pyrolysis

Direct methane conversion through catalytic pyrolysis involves contacting methane with a catalyst at a relatively high temperature to form ethylene.

Indirect GTL Process

Fig. 2 shows the indirect GTL routes to gas monetization. These routes involve the conversion of natural gas to synthesis gas (also called syngas), which is primarily a mixture of carbon monoxide and hydrogen. The syngas is then converted to liquid products such as methanol, dimethylether (DME), and Fischer-Tropsch (FT) liquids. The conversion of natural gas to syngas could be catalytic or noncatalytic. There are various technologies available for the conversion of natural gas to syngas. Several publications [6] [7] [8] [9] [10]cover these technology options extensively. The key parameters in the selection of a suitable syngas generation process are H2:CO ratio in the syngas, O2 /feed-gas ratio, methane slip, steam/carbon ratio, CO2 production, uses integration options and capital, and operating costs.

The syngas is converted to liquid products through various routes: oxygenate-based route, FT-based route, and other chemicals. The oxygenate route produces oxygen-containing products such as methanol (and its derivatives) and dimethylether (DME). [11] [12] [13] [14] The FT route to liquid products produces hydrocarbon products like:

  • Diesel
  • Naphtha
  • Kerosene
  • Lubes
  • Other specialty products

Syngas also can be converted to chemicals like ammonia and their various derivatives.

Gas to power (GTP)

The gas-to-power (GTP) option, often known as gas to wire (GTW), involves the conversion of natural gas to electrical power and transmission of this power to consumers.

Screening gas transportation options

There are several options for transporting gas to the market. The distance of the stranded gas from the market plays a key role in selection of the gas utilization option. Fig. 3 shows the fraction of the gas traded, by volume, in 2001 compared with the total gas consumed worldwide. Of the gas that is traded, approximately 74% is moved through pipeline. Pipelines are generally considered the cheapest option up to 2500 km, except in cases of smaller volumes in which power generation and transmission could be a viable alternative. For distances greater than 2500 km, pipelines could still be an option; however, depending on the size of the gas field, LNG and GTL could be more attractive options. For more than 4000 km, pipelines are generally not suitable. LNG, GTL, and chemicals are more viable options. Direct GTL and NGH routes are not considered viable at this time and are not discussed further. DME is also not considered practical because of infrastructure-related issues.

One of the fundamental differences between the GTG transportation options vs. the indirect GTL options is the thermal efficiency of conversion of natural gas to products. Thermal efficiency is defined as the ratio of the net heating value of the products to the net heating value of the feed. In general, the GTG options are more efficient compared with indirect GTL routes. The maximum theoretical efficiency for conversion of natural gas to liquids by syngas production is approximately 80%; however, the maximum attainable efficiency is much smaller.[15] Thermal efficiency is an important parameter when comparing gas monetization options that produce products for the fuels market. This parameter is, however, less significant when comparing the ammonia-production option with LNG or FT GTL. Table 2 summarizes the thermal efficiencies of various processes.

Systematic evaluation of gas monetization options

The evaluation of gas monetization options is a multidimensional problem requiring a systematic approach to selecting the optimal option. In addition to the technical considerations discussed in this chapter, commercial issues and market conditions play a key role in the evaluation process. Fig. 1 shows the key steps, as well as the various parameters, involved in the process of selecting gas monetization options.

Evaluation of the asset (reserves)

The starting point for any gas monetization study is the evaluation of the gas field to ascertain the quantity and quality of gas. The cost of gas production should be estimated at this stage. In addition to the technical evaluation, a study of the geopolitical situation and business issues is also essential.

Data gathering for screening purposes

If the evaluation in the first step is positive, the next step is to gather adequate information for the screening of the various gas monetization alternatives. An economic model, which could be refined later during the final selection stages, should be developed to evaluate the options. The data gathering during this stage of the evaluation process is fairly extensive, even though the quality of information may be preliminary in nature. The depth and breadth of knowledge that is required may not be available within most companies. The need for assistance from outside consultants and contractors should be evaluated. Consideration of issues related to risk and market analysis should be initiated at this stage of the evaluation process.

Short listing of options

A short list of the alternatives is essential to minimize the amount of resources required for more-detailed analysis of the options. The short list should be limited to two or three options.

Data validation and collection

Once the short list is complete, a more-detailed evaluation of the alternatives is necessary to select the optimum route to monetize gas. Some of the gas monetization options, such as LNG, ammonia, methanol, and GTL, are unique businesses in themselves and could potentially pose challenges to companies that do not operate in that business segment. Hence, a clear set of evaluation criteria should be defined. This is essential to ensure a good fit with corporate strategies and objectives. The data collected during the screening stage should be verified, and additional data should be collected to support a more-detailed evaluation of the options. External consultants may be required to support the financial, marketing, and business management aspects of the gas monetization options.

Optimization model

The data collected in the previous step form the basis for performing a detailed economic analysis of the options. Risk and market analyses are done in parallel. Risk analysis includes technical, political, market, and financial risk.

Selection of option

The results of the economic analysis, risk review, and market considerations form the basis for the selection of the final gas monetization option.

Several factors need to be considered in the evaluation and selection of the gas monetization options. These factors include technical, business, and market considerations. Site-specific conditions have a significant impact on the selection process; therefore, no one solution can be considered optimal for all situations. As the gas economy of the future develops, technology advances—including the application of gas and derived products to new markets—will have a significant impact on the selection of the best alternative for monetizing gas.

Nomenclature

CII integral incorporated cascade process
CNG compressed natural gas
CPL coiled pipeline
DME dimethylether
FT Fisher-Tropsch
GTG gas to gas
GTL gas to liquids
GTM gas transport module
GTP gas to power
GTS gas to solids
GTW gas to wire
LNG liquefied natural gas
LPG liquefied petroleum gas
MMscf/D million standard cubic foot per day
mtpa million tons per annum
mTPD metric tons per day
NGH natural gas hydrates
NGL natural gas liquid
ORV open rack vaporizer
PNG pressurized natural gas
SMDS Shell middle-distillate synthesis
VOTRANS volume-optimized transport and storage

References

  1. Labinger, J.A. 2001. Low Temperature Route for Methane Conversion and an Approach Based on Organoplatinum Chemistry. Proc., 2001 Natural Gas Conversion Symposium, Girdwood, Alaska.
  2. Methane-to-Olefins and Olefins-to-Aromatics Conversions Could Be Suitable for Remote Gas. 1998. Remote Gas Strategies (November): 8.
  3. Fox, J.M., Chen, T. and Degen, B.D. 1990. An Evaluation of Direct Methane Conversion Processes. Chem. Eng. Prog. (April): 42.
  4. Kimble, J.B. and Kolts, J.H. 1986. Oxidative Coupling of Methane to Higher Molecular Weight Hydrocarbons. Paper presented at the 1986 AIChE Natl. Meeting, New Orleans, April.
  5. Taylor, C.D. and Nocenti, R.P. 1986. A Process for Conversion of Methane to Hydrocarbon Liquids. 1986 Annual Pittsburgh Coal Conference, Pittsburgh, Pennsylvania, September.
  6. Stitt, E.H. et al. 2000. Emerging Trends in Syngas and Hydrogen. Paper presented at the 2000 Worldwide Catalyst Industry Conference—CatCon 2000, Houston, 12–13 June.
  7. Schneider, R.V. and LeBlanc, J.R. 1992. Choose Optimal Syngas Route. Hydrocarbon Processing (March): 51.
  8. Christensen, T.S. and Primdahl, I.I. 1994. Improve Syngas Production Using Autothermal Reforming. Hydrocarbon Processing (March): 39.
  9. Wagner, E.S. and Froment, G.F. 1992. Steam Reforming Analyzed. Hydrocarbon Processing (July): 69.
  10. Ernst, W.S. et al. 2000. Push Syngas Production Limits. Hydrocarbon Processing (March): 100-C.
  11. Base, A. and Wainwright, J.M. 2001. DME as a Power Generation Fuel: Performance in Gas Turbines. Paper presented at the Petrotech-2001 Conference, New Delhi, India, 9–12 January.
  12. Puri, R. 2001. Technical and Commercial Viability of Delivering DME to India. Paper presented at the Petrotech-2001 Conference, New Delhi, India, 9–12 January.
  13. Gradassi, M.J. 1997. DME: Natural Gas, Fuels, and Ceramic Membranes. Paper presented at the 1997 Monetizing Stranded Gas Reserves Conference, Houston, 10–12 December.
  14. Startling, M.K. 2002. New Methanol Technologies Offer Alternatives to Dirty Fuels. World Energy 5 (2).
  15. Van der Burgt, M.J., Klinken, J.V., and Sie, S.T. 1985. The Shell Middle Distillate Process. Paper presented at the 1985 Synfuels Worldwide Conference, Washington, DC, 11–13 November.

Noteworthy papers in OnePetro

Use this section to list papers in OnePetro that a reader who wants to learn more should definitely read

External links

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See also

Gas utilization options

Stranded gas

PEH:Monetizing Stranded Gas