Do Natural Gas Vehicles Make Sense? Part II

Instead of fueling cars directly with natural gas, a second option would be to convert natural gas into a synthetic liquid fuel comparable to gasoline, a process known as gas-to-liquids (GTL).

Earth2Tech reports:

The World Bank estimates that some 150 billion cubic meters of natural gas are flared at oil fields annually, adding 400 million tons of CO2 to the atmosphere — just because it’s cheaper to burn it than transport it. But Synfuels, a startup with a new chemical process, thinks it can convert natural gas into gasoline efficiently, allowing companies to economically tap the natural gas they usually burn off. Cheaply converting the gaseous fuel into a liquid one could allow oil companies to use existing pipelines to move the fuel to market.

The idea isn’t new — the Fischer-Tropsch process has been used widely for decades to convert coal and methane into syngas and fuel. And earlier this month Rentech said it had started producing an “ultra clean synthetic fuel,” from natural gas (coal will also be a feedstock) at a demonstration unit in Colorado using an advanced version of fischer tropsch. But Synfuel says it can do it better and cheaper than competitors.

Where the Fischer-Tropsch process can make a barrel of gasoline for about $35, Synfuels claims it can produce the same barrel for $25. The secret is a very efficient process that first “cracks” the natural gas into acetylene which is later converted into ethylene using a proprietary catalyst at an efficiency rate of 98 percent, the company claims.

Founded in 1999, Synfuels licenses its technology from Texas A&M University and has been fine tuning its process at a $50 million test facility in Texas since 2005. But the startup tells Technology Review’s Tyler Hamilton that it’s close to signing a deal for its first commercial plant, potentially near Kuwait City. The company estimates there are nearly 15,000 gas fields outside North America that could be served by plants using its process.

While it is not clear how efficient Synfuels' process is, another GTL company Sasol reports that they can convert 100 MMscfd (110 terajoules per day of gas) of natural gas into 10 000 barrels a day of liquid transport fuels. The Oil Drum runs the numbers on this:

10,000 cubic feet of natural gas contain roughly 10 million BTUs, but a barrel of fuel contains only around 5.5-6 million BTUs. Forty percent of the BTUs are either lost as radiant heat, or turned to steam and consumed in the GTL plant.

If the source of methane for conversion would be flared instead, the GTL process would be good economically and environmentally. $25/barrel is much less than the $100 a barrel oil is currently trading at. Environmentally it is better to displace other sources of oil by converting the methane than burning it and releasing carbon dioxide into the atmosphere.

If the source of methane could be sold directly rather than turned into a liquid, then I don't think it makes sense economically or environmentally. As of 9/10/08, the Henry Hub spot price for natural gas was $7.65 per million Btu and oil was trading for around $100 a barrel. There are 5.78 million BTU/barrel which makes the natural gas price $44.21 per barrel of oil energy equivalent. Assuming the GTL conversion is 60% efficient, it would take $73.68 worth of natural gas to make one barrel of oil energy equivalent. If the conversion costs an additional $25 per barrel that would get you to $98.68, which is almost the same as the trading price of oil. On the environmental side, it would be better to use the natural gas to fuel NGVs directly as the conversion wastes a lot of energy that could be propelling the car. Less CO2 would be emitted per mile driven in a NGV than in a vehicle using GTL.

Converting flared natural gas into liquid fuel is a good idea, but even if you were to capture and convert all of it, the amount produced would be insignificant compared to the amount of oil consumed globally. Converting other natural gas to liquid doesn't make a whole lot of sense, so GTL is unlikely to make a big impact on how vehicles are fueled globally.

Update: Green Car Congress points out a new study showing that GTL and CTL (coal to liquid) would be cheaper than petroleum based fuels, but that their GHG emissions are likely to be much higher. I would like to know exactly what they found, but unfortunetly I can't get at the paper unless I want to pay $25, and I am too cheap for that.