Sasol to integrate carbon capture into China project's design

TASHKENT, Oct 23, 2009 (Asia Pulse Data Source via COMTEX) -- SSL | Quote | Chart | News | PowerRating -- South Africa's coal-to-liquids (CTL) specialist Sasol is including carbon capture and storage (CCS) options in the upfront design of a proposed 80 000-bl/d project it is studying, together with the Shenua Ningxia Coal Industry group, for possible development in the Ningxia Hui Autonomous Region of China.

Group GM Lean Strauss, who is responsible for Sasol Synfuels International and Sasol Petroleum International, tells Engineering News that an official project approval report, which will include the sequestration options, is scheduled to be handed to the Chinese govern- ment's National Reform and Development Commission (NRDC) during the first half of 2010.

Official sanction is required from the NRDC before the project will be allowed to proceed, and Strauss reports that there has been strong support for Sasol's aspiration to integrate CCS into the design of the facility. In fact, the group is hoping to become a world leader in CSS technology, viewing it as core to meeting its carbon reduction targets of 15% by 2020 at its existing operations and 30% by 2030 at its new CTL operation.

China is keen to deploy CTL to help it improve its own supply security on the back of its considerable coal reserves. But it also wants a solution that is not excessively carbon heavy, especially as international pressure mounts on it to curb its growing emissions.

During the second half of last year, the Shenua Ningxia Coal Industry group and Sasol, which is the only foreign company to have been given permission to study a CTL project in China, pulled the trigger on the formal feasibility investigation, following an initial prefeasibility study. A contract was signed with Foster Wheeler Inter- national and Wuhuan Engineering to assess the technoeconomic case for a CTL plant, which could be built at the Ningdong chemicals base.

The complex is surrounded by significant coal reserves. But the Chinese coal is of a far higher quality than the feedstock material used to produce fuels and chemicals in South Africa, and a different gasification route is, therefore, being considered.

Strauss explains that completion of the feasibility study will be an important step in obtaining the necessary approvals associated with constructing what would be Sasol's first CTL facility outside of South Africa. "This is a massive project for Sasol and it is by far our most advanced CTL initiative inter- nationally," Strauss explains.

Uzbekistan GTL on Fast Track

At the same time, the company is seeking to scale up its gas-to-liquids (GTL) investment programme in countries as diverse as Nigeria, Uzbekistan, Australia and Papua New Guinea.

There is renewed confidence in GTL now that most of the initial 'teething problems', experienced at the first commercial project in Qatar, appear to be in hand. The facility more than doubled its output in 2009 and production is expected to grow from that base in 2010, despite a shutdown that is planned for February.

The facility is producing profitably at a rate of around 26 000 bbl/d. This is still below the initial nameplate of 34 000 bbl/d, but the plant's performance has improved. Various 'debottlenecking' initiatives are currently being pursued.

However, any expansion of the plant, which at one point appeared imminent, will now only be considered once the Qatari optimisation plan for the giant North Field is concluded, probably by 2011.

"We believe that, owing to the good performance of Oryx, the plant's expansion will be very much at the front of the queue when gas is again allocated for new projects," Strauss says.

Meanwhile, lessons from Oryx are being deployed, wherever possible, at Chevron's $6-billion Escravos GTL project, in Nigeria, where Sasol has retained a 10% interest and is the technology partner. Further, Sasol, Uzbekneftegaz and Petronas are fast-tracking a feasibility study into the development of a 1,3-million-ton-a-year GTL investment in Uzbekistan, where all the "learnings" from Oryx will be integrated into the plant design.

Strauss believes that there is good alignment between the landlocked country's aspiration to improve energy security and Sasol's desire to commercialise its 'gas monetising' technology. "At the moment, Uzbekistan has limited markets for its gas and is pretty reliant on Russia's Gazprom for exports, while its imports of petroleum products are also rising. This project, we believe, would help the country to partly overcome both of these challenges."

The early indications are, therefore, fairly positive for Uzbekistan to become the third site globally to embrace Sasol's proprietary Sasol Slurry Phase Distillate process. The project itself would be based on the Shurtan gasfield, near the town of Karshi (some 600 km south-west of the capital, Tashkent) and produce GTL diesel, kerosene, naphtha and lique- fied petroleum gas.

The feasibility phase will be overseen by a joint venture company, which is currently being formed between the three partners.

"We are fast-tracking this project, because we feel very confident about our technology and our value proposition is in line with the needs of the host country," Strauss enthuses.

The GTL Niche

Strauss is also convinced that GTL is starting to carve out an interesting niche for itself in the world of gas, and is showing itself to be compe- titive, and even complementary to other gas- extraction technologies, such as pipeline gas and liquefied natural gas (LNG).

"GTL competes with oil, while pipeline gas and LNG compete with coal and other power-generation feedstocks. In other words, the price of LNG will be capped by electricity prices, while GTL products command an increasing premium over other crude-based products," Strauss outlines.

Another advantage is the relatively modest size of GTL facilities, which come in at between one-million tons a year and 1,5-million tons a year, as with the latest generation of LNG faci- lities that require production levels of up to 15- million tons a year to be cost competitive.

"That means smaller gas reserves may no longer be feasible for LNG, which requires large economies of scale. That potentially opens the way for GTL projects, which can be developed on a smaller scale, given that its products are of a far higher value."

Further, some countries, such as Australia, are beginning to demand that at least a portion of the gas be made available for domestic use, which could lead to joint LNG/GTL projects, with the LNG being exported and the diesel sold locally. "This is one of the models we are interrogating with Chevron in Australia, which is demanding that 15% of the gas be made available for domestic consumption," he reports.

This "in-country beneficiation" advantage is becoming an increasingly attractive selling proposition for GTL, he concludes.

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