Velocys eyes 2016 start-up for small-scale GTL plant

Interview story by Christie Moffat

HOUSTON (ICIS)–Small-scale gas-to-liquid (GTL) technology supplier Velocys intends to have its first commercial plant up and running in the first half of 2016, CEO Roy Lipski said on Thursday.

Lipski said the commercial-scale facility in Oklahoma City, which is due to hold its ground-breaking ceremony on May 15, represents the first time that large waste management companies have “come out to back small-scale GTL”.

Though the company has declined to reveal the capacity of the plant until the ground-breaking ceremony, Lipski said the facility would be capable of producing several hundred barrels a day.

Recent low natural gas prices have been beneficial to the company, which uses natural gas as input to produce synthetic crude oil, as well as a range of refined chemicals such as fuels, specialty waxes, base oils and potentially solvents and drilling fluids.

Unlike conventional GTL facilities, which are significant in size and require access to large gas reserves, Velocys’ small-scale Fischer-Tropsch technology means that plants can be established for remote or “stranded” wells, or used to capture gases associated with the production of crude oil.

“Now, for the first time, we can take the plant to the opportunity. You can build the plant anywhere on the planet where the gas is very cheap and the product is in high demand, and situate the plant in particular conditions,” said Lipski.

“We have the ability to sidestep what’s happening, in terms of the commodity prices at the hubs.”

Future Velocys customers potentially include commodity owners in areas such as standard, waste and shale gas, along with other feedstocks such as agricultural and household waste.

Such a broad scope offers a “new bridge” between upstream and downstream, Lipski said.

In addition, the company expects to work with customers with great demand for products, such as the mining and airline industries.

Velocys has been developing small-scale GTL technology for several years.

In the 1990s, it was a government laboratory tasked with miniaturising chemical plants to be used in outer space.

Eventually, Velocys broke away to become an independent company in 2001, and has been steadily working towards commercial production.

Lipski says the Oklahoma plant, which achieved a final investment decision in 2014, is “the first of what we hope will be many plants”.

Velocys is developing the plant in a joint venture formed with Waste Management, NRG Energy and Ventech Engineers, and will use gas from a landfill site in Oklahoma.

“Our joint venture was put together to pursue a number of these plants. It’s a showcase for us as a company and we hope to roll out a program of these plants across the US,” Lipski added.

“The hopes and ambitions for this plant and its success are based around its timely execution.”

Lipski said the environmental significance of the plant could not be overlooked, as synthetic fuels tended to burn cleaner and be free of toxicity.

“It’s the first of its kind to use bio-gas, and the first time major companies have supported small-scale GTL. And because the products are coming off natural gas, the products are truly renewable,” Lipski said.

Positive feedback in Washington has also led him to feel optimistic about future support from politicians for small-scale GTL plants.

“It’s the ultimate form of recycling. Taking rubbish and turning it into oil substitutes. These products are virtually identical to products made from oil,” said Lipski.

“It looks like oil, and it smells like oil, but it’s renewable.”