Maximum wax production key to GTL plant profitability – EIA

19 February 2014 17:10 Source:ICIS News

HOUSTON (ICIS)--Maximising wax production is the only way to make a gas-to-liquids (GTL) plant profitable based on future projections for natural gas and product prices, the US Energy Information Agency (EIA) said in a report on Wednesday.

GTL facilities convert natural gas to liquid fuels such as gasoline, jet fuel and diesel, as well as make waxes. Most GTL plants use the Fischer-Tropsch synthesis process for production.

Five GTL facilities are in operation globally, the EIA pointed out in its report. The US has none but several are on the drawing board, including three in the Lake Charles, Louisiana, area – Sasol’s planned 100,000 bbl/day plant; G2X Energy’s proposed 7,500-15,000 bbl/day plant; and Juniper GTL’s planned 1,100 bbl/day facility.

In its analysis, the EIA said that smaller-scale GTL plants are economically viable under the agency’s forecasts for natural gas prices through 2040, when it sees US Henry Hub prices to average about $7.65/MMBtu, about a 75% increase from its 2020 projection of $4.37/MMBtu. The agency used 2,800/bbl day in its GTL plant profitability projection.

The US has been increasingly importing waxes, the EIA pointed out, with imports more than doubling to 1.84m bbl in 2012 from 860,000 bbl in 2000.

“As such, most GTL developers are looking to configure their plants to maximise wax production for the chemicals market instead of production of liquid fuels with minimum or no wax,” the EIA said.

GTL waxes have been gaining interest in wax markets of late, driven primarily by the expected global retreat of Group I base oil production as premium Group II and Group III base oils take centre stage because of regulatory and environmental stipulations. Unlike Group I, Group II and Group III base oils use a process technology that does not create waxes.

While the EIA projection possibly casts a cloud over Sasol's large GTL project in the US, the company has experience in making GTL waxes at its plant in South Africa, where it is looking to expand its current 200,000 tonnes/year production of hard waxes, medium waxes, liquid paraffins and waxy oils, according to industry sources.

Additional reporting by Judith Taylor

By Jeremy Pafford