Embraced by Nazi Germany and perfected in apartheid South Africa, Sasol’s Fischer-Tropsch process, which converts gas or coal to liquid, is now the sexiest thing in energy.
In a post-9/11 world beset by sustained high fuel costs, concerns over energy security and growing environmental pressures, Sasol finds itself alone as the market leader in the conversion of both coal and gas to liquid fuels.
While competitors such as Shell and Exxon Mobil possess Fischer-Tropsch technology, their plants are small, more or less experimental in size. Sasol is the only company worldwide that has experience — 50 years in all — at using this technology at commercial scale. It reckons it has at least four years’ advantage before its competitors produce workable commercial plants. Sasol’s key competitive advantage is its gas-to-liquid (GTL) Fischer-Tropsch process.
In early June the first commercial-scale plant outside South Africa will be launched in Qatar, when Sasol (49%) and national oil company Qatar Petroleum (51%) inaugurate their $950-million (R5,4-billion), 34 000-barrels-a-day plant at Ras Laffan.
At present only South Africa has an operational commercial GTL plant, PetroSA (formerly Mossgas). Sasol converts natural gas, which is piped to Secunda and Sasolburg from Mozambique, into liquids, but as part of its coal-to-liquid (CTL) process.
GTL is a step in Sasol’s CTL process. The GTL technology being used in Qatar is next-generation, low-temperature technology, a first for Sasol. This technology offers both significantly greater energy efficiency and far less environmental impact.
GTL is attracting attention worldwide because it is cost effective, is more energy efficient than comparable conventional fuels and produces fewer emissions, especially sulphur.
Sasol as a matter of policy does not disclose its costs of production. It says that GTL fuels can be produced without government support. Cost estimates depend in part on how the natural gas feedstock, which is often flared as a waste product, is priced.
“A lot of countries continue to flare gas. We close the flare,” says Sasol Technology’s Francois Malherbe. “We increase energy efficiency — almost to 100% — by putting gas into a form where there is a lot more energy efficiency. The process does not waste any energy.”
Where natural gas is transported, specialised ships have to be used and the gas has first to be liquefied and then turned back to gas at its destination.
GTL fuels, in contrast, use existing fuels infrastructure. The gas is converted through the Sasol process to fuels such as diesel, which are then transported to the market.
Sasol currently produces the equi-valent of 160 000 barrels a day at its giant Secunda plant in Mpuma-langa. It is targeting growing its production through joint ventures by at least 450 000 barrels a day, through siting Secunda-scale plants in countries that have large deposits of gas or coal.
Paradoxically, since its technology is South African developed, Sasol’s expansion plans are all offshore.
Malherbe says the company is targeting opportunities in Australia, China, India, Nigeria, the United States and Qatar.
“Our Fischer-Tropsch process gives us leadership in both gas to liquid and coal to liquid. It does not matter whether the process starts with gas or coal,” says Malherbe. Opportunities in South Africa are limited both by market demand and a lack of natural gas supplies.
The 865km pipeline, which supplies natural gas from Pande in Mozambique to South Africa, has a capacity of 240-million gigajoules annually. At present less than half of this, 100-million gigajoules, is being used.
Increasing supply will depend on the discovery of more gas. There is also international interest in Sasol’s CTL technology from countries that have rich coal reserves, notably China, India and the US.
It is reported that Sasol’s proposed joint ventures in China will break even at between $30 and $33 a barrel, significantly below the $70 level oil was trading at this week.
But at $5-billion to $7-billion (R30-billion to R42-billion) per CTL plant, plus the need for developing related infrastructure, Malherbe acknowledges that government support is required for CTL to be an economic proposition.
He says that countries such as China, alarmed in recent times at the volatility of oil markets, are putting a high premium on energy security. CTL offers the advantage that the plants can be sited near large coal deposits that are a long way from the coast, reducing prohibitive oil transport costs.
Two CTL 80 000-barrel-a-day plants in China with a combined investment of about R70-billion are under consideration at Shaanxi and Ningxia Hua, 650km and 1 000km west of Beijing.
Analysts say China could be making up to 1,2-million barrels a day of coal-based synthetic fuel within a decade, about 50% of 2005 imports, Reuters reports. Coal-rich China has reserves of 126-billion tons of coal. Sasol says that “new-generation technologies makes it possible to build CTL plants with clean coal technologies. These sharply reduce air emissions and other pollutants, while increasing the amount of energy gained from every ton of coal.
“The development of more environmentally benign coal-based technologies, combined with the potential for the commercial storage of concentrated carbon dioxide [Norway has been pumping unwanted gases into a deep-sea reservoir for a decade], now allow coal-rich countries to benefit from their coal reserves.”
Malberbe explains that Fischer-Tropsch technology is more environmentally friendly than conventional refining because it is sensitive to sulphur and so the feed is gasified to remove the sulphur early in the process. “This means there are almost zero sulphur emissions coming out of the FT process.”
Sasol and two coal-mining partners, Shenhua Corporation and Ningxia Coal, began phase two of a feasibility study in February this year.
Sasol’s international opportunities are 70% in GTL and 30% in CTL. “GTL receives more attention because it is easier to convert from gas to liquid than coal to liquid,” says Malberbe.
Qatar and GTL technologies are where the immediate action is. Oryx is located at the world’s largest natural gas field. The Emir, HH Sheikh Hamad bin Khalifa Al Thani, is aiming to turn Qatar into the GTL capital of the world. Qatar plans to raise gas production to about 25-billion cubic feet a day by 2011 from 11-billion at present, Reuters reported.
Sasol’s 34 000-barrel-a-day plant could be extended by 100 000 barrels a day with plans to grow capacity further by an additional 130 000 barrels a day.
Sasol’s main competitor in Qatar is Shell, which has a 14 000-barrels-a-day Fischer-Tropsch plant used for making waxes, in Malaysia.
Shell said last month that it will look carefully again at rising costs before making a final decision on going ahead with a $6-billion, 140 000-barrels-a-day GTL plant. The first phase of this plant is due to go on stream in 2008, the Trade-Arabia website reported from Doha.
Also under development is the Escravos GTL plant in Nigeria, which is being built by the Nigerian National Petroleum Corporation and Chevron Nigeria using technology licensed from Sasol. This plant, using gas which is currently flared, is expected to be operational in three years time.
Sasol employs about 1 650 people in its technology division, Sasol Technology, including about 150 people with PhDs. It is the largest employer of chemists and scientists in the country. The company makes over 200 products and has more than 1 000 patents.
Franz Fischer and Hans Tropsch developed their technology in the early 1920s. It was used in England during the 1930s by Imperial Chemical Industries. Royal Dutch Shell helped finance early German research as did Standard Oil, headquartered in the US.
A greener diesel
Diesel produced by Sasol’s gas-to-liquid (GTL) process meets growing diesel demand internationally and new high environmental standards imposed in markets such as the United States, Europe, Japan and Australia, where the maximum permissible sulphur content in diesel has been cut from 5 000 parts per million (ppm) 15 years ago to as little as 10ppm today.
“This GTL diesel has a sulphur content of less than five parts per million. It provides superior performance to diesel engines while reducing emissions,” says Sasol.
In South Africa, Minerals and Energy Department regulations effective from January this year require the sulphur content of diesel be lowered from 3 000ppm to 500ppm.
Spokesperson Johann van Rheede says Sasol turbo diesel is sold locally “at a bit of a premium” as it is cleaner for diesel engines, requiring far less servicing.
“It is very popular with fleet and 4×4 owners,” he says, one fleet operator being able to reduce servicing by a factor of four.
A 2001 study conducted by Sasol with Barloworld Logistics and DaimlerChrysler South Africa found that using a diesel fuel with ultra-low sulphur content as well as high-quality engine oil, the oil-drain intervals can be extended far beyond what would appear to be possible in South Africa, given that operational conditions have traditionally been seen as much harsher than those in Europe. — Kevin Davie