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Turning Gas Flares into Fuel

Microreactor developers race to turn troublesome gas into usable crude oil.
March 15, 2010

Natural gas may be the cleanest fossil fuel, but it can be an unnecessary pest when it’s produced as waste from remote offshore oil wells. Brazilian state oil company Petrobras is fueling a race between two developers of modular chemical reactors that could turn this “associated gas” into synthetic crude.

Gas guzzler: Compact GTL has used this pilot plant in Wilton, UK to turn natural gas into a synthetic form of crude oil since the summer of 2008.

U.K.-based Compact GTL will unveil a commercial partnership today with Sumitomo Precision Products, a Japanese industrial company with which Compact GTL is building a gas-to-liquid (GTL) pilot plant to be delivered to Petrobras by this summer. Nipping at Compact GTL’s heels, meanwhile, is Columbus-based microreactor developer Velocys, which announced plans last month to build a pilot plant for Petrobras using its potentially more compact design.

Success by either company could slash greenhouse gas emissions generated when remote natural gas is simply burned off at oil wells (this accounts for 0.5% of all carbon dioxide emissions from fossil fuels, according to a 2005 estimate by Oak Ridge National Laboratory). “Today we flare enough natural gas to power Germany,” says Jeff McDaniel, business development director for Velocys.

Petrobras has a particularly stringent need for a solution to this wasted natural gas. It’s now developing its Tupi field, 300 kilometers offshore, which will be the world’s largest deepwater oil field, according to energy and mining consultancy Wood Mackenzie. “One of their big challenges is going to be how to deal with the associated gas,” says Ruaraidh Montgomery, a Houston-based Wood Mackenzie analyst for Latin America.

Both Compact GTL and Velocys use the same catalytic reactions found in massive GTL facilities: natural gas is first mixed with steam to produce carbon monoxide and hydrogen; the resulting syngas is then converted into a waxy form of synthetic crude oil.

However, this is commercially viable only on a huge scale, such as the 140,000-barrel-per-day plant that Shell is building in Qatar, which will use two dozen 1,200-ton reactor vessels. Velocys and Compact GTL must squeeze the same chemistry into a package that will fit on an offshore platform or on the deck of the floating production, storage, and offloading (FPSO) vessels increasingly used to explore and service offshore oil fields.

What makes this possible is performing the chemical reactions in microchannels between one and five millimeters wide, and at higher temperatures and pressures. Rapid heat transfer enables more precise control of the temperature, and this lessens the risk of runaway reactions that could damage the catalysts or, in a worst-case scenario, destroy the plant.

The result, according to Velocys, is a roughly 200-fold acceleration of the steam “reforming” of methane into syngas. “The contact time [for reactants] in a conventional steam reformer is around one second. In microchannels, it’s around five milliseconds,” says McDaniel. The microchannel synthetic crude step is about 10 to 15 times faster. Overall, that should shrink the volume of equipment needed for an integrated GTL plant about tenfold.

Velocys’ pilot plant should generate five to 10 barrels of synthetic crude. It will employ a modular design, ganging together thousands of microchannels in reactor cubes that are roughly two feet per side. The catalysts are designed by Velocys’s parent company, UK-based Oxford Catalysts. The pilot plant will be built in Japan by Velocys partners Kobe Steel and Tokyo-based offshore equipment builder Modec, and delivered to Petrobras next year for testing.

Compact GTL is taking a similarly modular approach, with reactor cubes containing larger channels–about five to 10 millimeters across–that it thinks will translate into easier manufacturing and higher reliability. “We’ve been conservative in our degree of process intensification,” says Iain Baxter, Compact GTL’s general manager. “The oil industry isn’t one to mess with when it comes to reliability and operability.”

They also have a big jump on Velocys. Petrobras paid $45 million for Compact GTL’s 20-barrel-per-day pilot plant, which is expected to operate at an onshore Petrobras site in Brazil by August. And Petrobras is already financing the engineering of a 2,000-barrel-per-day Compact GTL plant for inclusion on a planned FPSO vessel, the Guanambi 1.

Montgomery says Petrobras is exploring other options for the associated gas of the Tupi field, including running a 300-kilometer pipeline out to the field, building FPSOs that can liquefy gas, and reinjecting the natural gas into the oil reservoirs.

The oil at Tupi sits under two kilometers of water and another five kilometers of rock and salt, making it difficult to get an accurate picture of the reservoirs. So instead of test-drilling wells for one to three months, Petrobras plans to build a fleet of FPSOs that can operate test wells for six to 18 months–long enough to generate a lot of gas but not long enough to justify building a pipeline or drilling costly reinjection wells.

Modular GTL plants, says Baxter, could be key to keeping oilfield development plans on schedule. “GTL, amongst the other alternatives, arguably offers the simplest gas solution for extended well test vessels.”

Once launched, both Compact GTL and Velocys bet that modular GTL plants will find plenty of opportunities both offshore and on land. Baxter says that is the message they see in the fact that Velocys’s partners, Modec and Kobe Steel, are spending their own money to build a pilot reactor for Petrobras: “It sends a signal that this is going to be a big market space and there is real aggressive competition for it. Other people are putting serious risk money on the table to try to get into this.”

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