SMALL SCALE GAS-TO-LIQUIDS TECHNOLOGY (December 2011)

Abstract Process Economics Program Report 247B SMALL SCALE GAS-TO-LIQUIDS TECHNOLOGY (December 2011)

Fischer-Tropsch synthesis generally involves the synthesis of alkane waxes (of varying chain lengths) and oxygenates from synthesis gas (syngas), which consists primarily of a mixture of carbon monoxide and hydrogen. When configured to maximize the production of paraffinic hydrocarbons, the resulting intermediate product mix is often described as “synthetic crude oil” (syncrude). Since most of world’s gas reserves are in the form of relatively small fields that would be inadequate for world-scale Fischer-Tropsch gas-to-liquids (GTL) production capacities, interest is increasing in new and improved Fischer-Tropsch GTL production technologies that may be viable at low production capacities (below 10,000 bpd) because less than 10% of the world’s gas fields are large enough to sustain a 10,000+ bpd Fischer-Tropsch GTL plant. Reducing the production rate to 2,000 bpd makes approximately 40% of gas fields viable sources. Also of particular interest would be process technologies that would enable Fischer-Tropsch GTL production on floating production, storage, and offloading (FPSO) vessels which are finding increased use in the development of oil fields in remote deep water tracts with no alternative economical outlet for associated gas. The primary limitations of conventional Fischer-Tropsch GTL technology include the removal of process heat that can produce hot spots and severely shorten catalyst life, and effective management of two-phase flow as synthesis gas transforms into liquid hydrocarbons via Fischer- Tropsch chemistry. Both of these issues can be addressed with microchannel process technology, which improves heat transfer and controls flow through many parallel channels. When utilized in modular fashion, the application of microchannel process technology is a natural fit for converting associated gas into synthetic crude via the Fischer-Tropsch GTL process.

This PEP report reviews the leading technologies for sub-“world scale” production of natural gas-derived synthetic fuels via Fischer-Tropsch synthesis. Two gas-to-syncrude production process designs and their estimated production economics are presented, one of which is based on Syntroleum GTL technology, and the other is a modular GTL process based on microchannel technology offered by Velocys.

A private report by the Process Economics Program

Report No. 247B

SMALL SCALE GAS-TO-LIQUIDS TECHNOLOGY

by Victor Wan

December 2011

Menlo Park, California 94025

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For detailed marketing data and information, the reader is referred to one of the SRI Consulting programs specializing in marketing research. THE CHEMICAL ECONOMICS HANDBOOK Program covers most major chemicals and chemical products produced in the United States and the WORLD PETROCHEMICALS PROGRAM covers major hydrocarbons and their derivatives on a worldwide basis. In addition the SRIC DIRECTORY OF CHEMICAL PRODUCERS services provide detailed lists of chemical producers by company, product, and plant for the United States, Western Europe, Canada, and East Asia, South America and Mexico.

CONTENTS

GLOSSARY ...... XI

1 INTRODUCTION ...... 1-1

BACKGROUND ...... 1-1 Fischer-Tropsch Synthesis Fuels ...... 1-1 Offshore Oil Production and Associated Gas ...... 1-2 Small-Scale Gas-to-Liquids Technologies ...... 1-3 Microreactor and Microchannel Technology ...... 1-3

REPORT OVERVIEW ...... 1-4

2 SUMMARY ...... 2-1

GENERAL ASPECTS ...... 2-1

TECHNICAL ASPECTS ...... 2-2 Conventional Fischer-Tropsch Gas to Liquids Production ...... 2-2 Syngas Generation Step ...... 2-2 Fischer-Tropsch Synthesis Step ...... 2-2 Product Upgrading Step ...... 2-3 Utilities and By-Product Treatment ...... 2-3 Syntroleum GTL Process ...... 2-4 CompactGTL Modular GTL Process ...... 2-5 Syngas Generation and Compression ...... 2-5 Fischer-Tropsch Synthesis ...... 2-6 Velocys Microchannel GTL Process ...... 2-6 Microchannel SMR Reactor ...... 2-6 Microchannel F-T Reactor ...... 2-7 Fabrication Techniques for Commercial-scale Microchannel Units ...... 2-7 Flow Distribution ...... 2-8 Manifolding and Plant Integration ...... 2-8 Microchannel Reactor Housing Vessels ...... 2-9

Scale-up of Microchannel Reactors ...... 2-9 Process Design ...... 2-9 Syncrude via Syntroleum GTL Process ...... 2-9 Syncrude via Velocys Microchannel GTL Process ...... 2-10

PROCESS ECONOMICS ...... 2-10

CONCLUSIONS ...... 2-13

3 INDUSTRY STATUS ...... 3-1

NATURAL GAS ...... 3-4 Natural Gas Supply and Demand ...... 3-5 Natural Gas in Qatar...... 3-7 Natural Gas in Nigeria ...... 3-8 Natural Gas in the United States ...... 3-9 Natural Gas Transportation, Storage and Distribution ...... 3-11

HISTORY OF FISCHER-TROPSCH PROCESSES ...... 3-12

COMMERCIAL STATUS OF GTL TECHNOLOGIES ...... 3-17 Sasol and Sasol Chevron Joint Venture ...... 3-18 Oryx GTL ...... 3-21 Escravos GTL ...... 3-21 Possibilities in North America ...... 3-22 Shell ...... 3-23 Pearl GTL ...... 3-24 Syntroleum ...... 3-24 Small-Scale GTL Possibilities in Brazil ...... 3-27 Oxford Catalysts/Velocys ...... 3-28 CompactGTL ...... 3-31

ENVIRONMENTAL EMISSIONS ...... 3-33 Criteria Pollutants/Air Toxics ...... 3-34

Greenhouse Gas Emissions ...... 3-34 Water Treatment ...... 3-35 Resource Consumption ...... 3-36

4 TECHNOLOGY REVIEW ...... 4-1

SYNTHESIS GAS GENERATION ...... 4-1 Wellhead Gas Treatment ...... 4-1 Feed Gas Desulfurization ...... 4-3 Steam Methane Reforming (SMR) ...... 4-4 SMR Catalysts ...... 4-5 SMR Design Considerations ...... 4-6 Adiabatic Prereforming ...... 4-7 Compact Reforming ...... 4-8 Carbon Dioxide Reforming of Methane ...... 4-9

CONVENTIONAL FISCHER-TROPSCH GTL TECHNOLOGIES ...... 4-10 Generic Process Steps ...... 4-10 Synthesis Gas Preparation ...... 4-10 Fischer-Tropsch Synthesis ...... 4-11 Product Upgrading ...... 4-12 BP-Davy Compact Reformer-Based GTL Process ...... 4-12 Syntroleum GTL Process ...... 4-13

COMPACTGTL MODULAR GTL PROCESS ...... 4-14 Syngas Generation and Compression ...... 4-15 Fischer-Tropsch Synthesis ...... 4-17 Modular Design ...... 4-18

VELOCYS MICROCHANNEL GTL PROCESS ...... 4-18 Early-Stage Development Work at PNNL ...... 4-18 Characteristics of Microchannel Reactors ...... 4-19

Development of Rh/MgO–Al2O3 Catalysts for Microchannel SMR ...... 4-20

Development of Engineered Catalysts for Microchannels ...... 4-23

Heterogeneous Model for SMR in a Microchannel Reactor with Engineered Catalysts ...... 4-25 Microchannel SMR Configuration...... 4-26 SMR Catalyst Powder Preparation ...... 4-32 Spinel Support Synthesis ...... 4-32 Catalyst Synthesis ...... 4-32 SMR Catalyst Slurry Preparation ...... 4-32 FeCrAlY “Felt” Preparation ...... 4-33 SMR Engineered Catalyst Preparation ...... 4-33 Combustion Catalyst ...... 4-33 Fabrication Techniques for Commercial-Scale Microchannel Units ...... 4-34 Selecting Shims (Sheets and Laminates) of the Appropriate Materials of Construction and Thickness ...... 4-35 Feature Forming ...... 4-35 Catalyst Substrate Integration ...... 4-35 Alignment and Stacking ...... 4-35 Joining (Bonding or Brazing) ...... 4-35 Machining and Finishing ...... 4-35 Catalyst Insertion in Bonded Microchannel SMR ...... 4-36 Microchannel F-T Reactor ...... 4-37 Fischer-Tropsch Catalyst ...... 4-39 The OMX Method ...... 4-39 Preparation of a Cobalt Fischer-Tropsch Synthesis Catalyst ...... 4-41 Flow Distribution and Manifolding ...... 4-41 Microchannel Reactor Housing Vessels ...... 4-45 Scale-up of Microchannel Reactors ...... 4-48 Pressure-Drop ...... 4-48 Heat-Transfer and Reactor Design ...... 4-49 Mechanical and Manufacturing ...... 4-49

Microchannel Fouling ...... 4-49

5 SYNCRUDE VIA SYNTROLEUM GTL PROCESS ...... 5-1

PROCESS DESCRIPTION ...... 5-1 Section 100—Syngas Generation ...... 5-1 Section 200—F-T Synthesis ...... 5-2

PROCESS DISCUSSION ...... 5-10 Materials of Construction ...... 5-10 Waste Streams ...... 5-11

COST ESTIMATES ...... 5-11

6 SYNCRUDE VIA VELOCYS MICROCHANNEL GTL PROCESS ...... 6-1

PROCESS DESCRIPTION ...... 6-1 Section 100—Syngas Generation ...... 6-1 Section 200—F-T Synthesis ...... 6-2

PROCESS DISCUSSION ...... 6-9 Cost Estimates ...... 6-9

APPENDIX A PATENT SUMMARY TABLES ...... A-1

APPENDIX B DESIGN AND COST BASES ...... B-1

APPENDIX C CITED REFERENCES ...... C-1

APPENDIX D PATENT REFERENCES BY COMPANY ...... D-1

APPENDIX E CONFIDENCE RATINGS ...... E-1

APPENDIX F PROCESS FLOW DIAGRAMS ...... F-1

3.1 Fuel Use Progression ...... 3-1

3.2 F-T GTL Opportunities Increase in Number as Plant Size Decreases ...... 3-2

3.3 Oilfield Associated Gas Production by Size ...... 3-3

3.4 Worldwide Gas Flaring and Reinjection ...... 3-4

3.5 Henry Hub Cash Spot Price for Natural Gas November 1993 to September 2011, Nominal Dollars ...... 3-11

3.6 Fischer-Tropsch Reactor Characteristics ...... 3-18

3.7 Schematic of the Sasol GTL Process ...... 3-20

3.8 Schematic of the Shell GTL Process ...... 3-23

3.9 Schematic of the Syntroleum GTL Process ...... 3-27

3.10 Schematic of the Velocys GTL Process ...... 3-29

3.11 Offshore F-T GTL Concept Layout ...... 3-30

3.12 Schematic of the CompactGTL Process ...... 3-32

3.13 Decline Curve versus Plant Requirement ...... 3-33

4.1 Schematic of a Compact Reformer ...... 4-9

4.2 Schematic of BP-Davy Compact Reformer-Based GTL Process ...... 4-13

4.3 Schematic of CompactGTL Modular GTL Process ...... 4-15

4.4 Schematic of a Compact SMR Reactor...... 4-16

4.5 Schematic of a Compact F-T Reactor ...... 4-17

4.6 Velocys Microchannel SMR Reactor Schematic ...... 4-19

4.7 Velocys Microchannel F-T Reactor Device Schematic ...... 4-20

4.8 Effect of Rh Loadings over Volumetric Activity ...... 4-21

4.9 Methane Conversion, CO Selectivity and H2/CO Ratio versus S/C Ratio ...... 4-22

4.10 Methane Conversion and CO Selectivity as a Function of Temperature ...... 4-25

4.11 Schematic of a Single Integrated SMR Device ...... 4-26

4.12 Microchannel SMR: Flow Orientation and Zones ...... 4-28

4.13 Microchannel SMR with Integrated Methane POX and Combustion ...... 4-29

4.14 Cross-Sectional View of a Pair of Reaction Channels ...... 4-30

4.15 Measured Thermal Profile of a Microchannel SMR Device ...... 4-31

4.16 Microchannel Reactor Fabrication Steps ...... 4-34

4.17 Schematic of a Microchannel F-T Reactor Block ...... 4-38

4.18 OMX Catalyst Synthesis and Activation ...... 4-40

4.19 Distribution of Cobalt Crystallites ...... 4-41

4.20 Flow Distribution within a Layer ...... 4-42

4.21 An Exploded View of a Reactor Formed from Shims ...... 4-43

4.22 Schematic of a Microchannel SMR Reactor Housing Vessel ...... 4-46

4.23 Schematic of a Microchannel F-T Reactor Housing Vessel ...... 4-47

5.1 Syncrude via Syntroleum GTL Process Process Flow Diagram ...... F-3

6.1 Syncrude via Velocys Microchannel GTL Process Process Flow Diagram ...... F-5

2.1 Comparative Economics for Production of F-T Syncrude Economic Summary ...... 2-12

3.1 World Natural Gas Supply and Demand ...... 3-5

3.2 Africa Natural Gas Supply and Demand ...... 3-6

3.3 North America Natural Gas Supply and Demand ...... 3-6

3.4 Asia Natural Gas Supply and Demand...... 3-6

3.5 Middle East Natural Gas Supply and Demand ...... 3-7

3.6 Qatar’s LNG Production Plants ...... 3-7

4.1 Typical GTL Feed Gas Compositions ...... 4-2

5.1 Syncrude via Syntroleum GTL Process Design Bases and Assumptions ...... 5-4

5.2 Syncrude via Syntroleum GTL Process Stream Flows ...... 5-6

5.3 Syncrude via Syntroleum GTL Process Major Equipment ...... 5-8

5.4 Syncrude via Syntroleum GTL Process Utilities Summary ...... 5-9

5.5 Syncrude via Syntroleum GTL Process Total Capital Investment ...... 5-13

5.6 Syncrude via Syntroleum GTL Process Production Costs ...... 5-14

6.1 Syncrude via Velocys Microchannel GTL Process Design Bases and Assumptions ...... 6-4

6.2 Syncrude via Velocys Microchannel GTL Process Stream Flows ...... 6-6

6.3 Syncrude via Velocys Microchannel GTL Process Total Capital Investment ...... 6-11

6.4 Syncrude via Velocys Microchannel GTL Process Production Costs ...... 6-12