Synthetic Diesel Fuel

W. Addy Majewski

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Abstract: Synthetic diesel fuels can be made from carbon containing feedstocks, such as natural gas or coal, in a process developed by Fischer and Tropsch in the 1920s. That process has been further developed by oil companies and is considered a viable option of natural gas utilization. Synthetic diesel fuels are characterized by excellent properties, such as very high cetane number and no sulfur content. They can be used in existing diesel engines without modifications or mixed with petrodiesel. Several studies found significant reductions in all regulated diesel emissions, including NOx and PM, when using synthetic fuel.

Introduction

Diesel fuels and other petroleum products are traditionally manufactured by refining of crude oil. However, they can be also produced synthetically from various carbon bearing feedstocks. A common conventional feedstock is natural gas, but synthetic fuels can be also produced from such sources as coal or biomass. Some renewable fuel scenarios also envision synthetic fuel production using electric energy and CO2 captured from stack gases or separated from ambient air.

The first and best known synthetic fuel technology is the Fischer-Tropsch (FT) process, which was developed in the 1920s in Germany. Commercial use of FT fuels, besides the two historical incidents of the World War II Germany and the South Africa during economic embargo periods, has been very limited. Nevertheless, the FT research work has been continued by several companies, leading to the development of a mature technological process of improving economy. Today, the major FT technology players include large oil companies, such as ExxonMobil, Shell, and Sasol. Research has also been sponsored by governments, who perceive synthetic fuels as a possible option for future alternative fuels [815]. Furthermore, small development-stage companies exist that develop and license FT processes to others—examples include Syntroleum or Rentech, two US-based companies active in the 1990s/2000s.

Because of the natural gas focus, synthetic fuel processes are frequently referred to as gas-to-liquid, or GTL, technologies. The term does not cover all synthetic fuel technologies, as liquid fuels may be produced, and have been produced, from almost any carbonaceous feedstock that is either gaseous, liquid, or solid. Coal is a good example of a solid feedstock that was used for manufacturing of FT coal-to-liquid (CTL) diesel fuel in the past. So called electrofuels (e-fuels), produced by combining hydrogen made via electrolysis using renewable electricity with CO2 captured from concentrated sources such as industrial flue gases or from the ambient air into a variety of fuels, is an example involving fuel synthesis that is promoted by some as a way to address GHG emissions [4642]. On the other hand, the term GTL is sometimes also used in relation to non-FT fuels, for example dimethyl ether, which can be produced from natural gas feedstock as well. This paper discusses hydrocarbon diesel fuels produced through the Fischer-Tropsch synthesis, with focus on natural gas as the most important feedstock.

There are several reasons for the importance and attractiveness of synthetic diesel fuels:

On the other hand, environmental concerns present an obstacle in the commercialization of synthetic fuels. FT fuels manufactured from natural gas bring no discernible greenhouse gas benefit relative to petroleum diesel (unless the feedstock gas was flared before the production started). Only FT fuels made using renewable feedstocks and/or renewable energy have the potential to reduce life cycle CO2 emissions relative to petroleum fuels.

Potential locations for commercialization of GTL plants are in regions with ample low-cost gas resources, such as the Middle East, West Africa, and the North Slope in Alaska. Fields like those on Alaska’s North Slope contain plenty of natural gas but are far from market. The Trans-Alaska Pipeline System offers the opportunity to transport GTL products through the existing pipeline and provide high-quality synthetic hydrocarbons to world markets. GTL technology could be important in locations where associated gas is re-injected or flared for lack of nearby markets. In these locations GTL plants could produce hydrocarbons that could be conveniently refined or, if upgraded, shipped directly to market in conventional tankers. Integration of GTL technology with production and other operations offers additional incentives. Use of the byproducts of the GTL process, such as steam, power, and nitrogen, can further enhance its overall commercial value. On the other hand, GTL fuels produced from pipeline supplied natural gas would not be competitive due the higher feedstock cost.

An important economic benchmark for comparing FT technology is the capital cost of building a manufacturing plant. In the 1990s, that cost was in a range of $12,000 to $14,000 per daily barrel for a refinery, while the cost of various FT technologies was estimated to be in a $20,000 to $30,000 per daily barrel range [247]. It is unclear if these costs were based on GTL fuels only or if they also included the production of natural gas liquids and ethane.

However, commercial scale plants that were developed in the 2000s cost considerably more than envisioned earlier. The Sasol-Qatar Petroleum partnership’s Oryx facility that started production in 2006 and had a capacity of 32,400 barrels per day (bpd) of GTL products cost $51,000 per daily barrel. The Shell-Qatar Petroleum partnership’s Pearl GTL facility in Qatar that started full production in 2012 cost $19 billion (the initial estimate was $5 billion) to construct and was capable of producing 140,000 bpd GTL products—equivalent to a capital cost of $135,000 per daily barrel. While the period prior to the start up of the Pearl facility was a time of general cost inflation for all capital intensive projects in the energy sector (the capital cost index in the refining sector doubled from 2000 to 2012), the final cost of the Peral GTL plant was considerably more than would have been expected due to this consideration alone [4667]. Including natural gas liquids and ethane production yields, capital costs for the Oryx and Pearl facilities amount to about $42,000/bpd and $70,000/bpd, respectively [4669]. As a result of high costs, operators of GTL plants are maximizing the production of higher value GTL products such as waxes and lubricants and minimizing fuel production [4668].

In contrast to the upfront costs, the manufacturing cost of liquid products from natural gas, Figure 1, has been reduced through advancements in slurry hydrocarbon synthesis (HCS), improved syngas generation options, and new technologies for upgrading HCS products [810]. Notwithstanding these improvements, process economy presents a major barrier for wider commercialization of synthetic fuels.

[chart]
Figure 1. Decline of GTL process relative manufacturing cost in the 1990s

The economy of GTL projects is strongly influenced by the high capital costs of FT processes and the market risks due to the volatility of crude oil prices. Whenever crude oil prices decline, economic challenges increase for synthetic fuels. An example illustration of the sensitivity of FT fuel cost to the crude oil price (using historical oil and gas prices) is shown in Table 1 [815].

Table 1
Unit cost production of GTL fuel, $/barrel
Cost ComponentRefineryGTL
Natural Gas (@$0.50/MMBtu) $4.00
Crude Oil (@$17/barrel)$17.00 
Operating Costs2.503.00
Total Cash Costs19.507.00
Capital Recovery, Taxes6.5012.00
Total Cost to Produce$26.00$19.00

It is generally agreed that FT plants can be profitable only at very low gas prices and relatively high crude oil prices. The exact figures fluctuate following the trends in the energy markets. A 2001 study estimated that for FT production to be feasible natural gas prices would have to be on the order of $0.50/MMBTU (1 MMBTU = 1 million BTU = 1055 MJ) and the crude oil prices above $20 - $25 per barrel [816]. According to a newer estimate, FT fuels could be economical when natural gas is at $15/MCF (1 MCF = 1000 ft3) and oil is at $120 per barrel [1652]. Others conclude that without dramatic efficiency improvements and cost reductions, GTL will remain too expensive to compete with refined crude oil in the transportation sector, and with any carbon constraints, GTL is not viable [4657].

Other, non-Fischer-Tropsch technologies aimed at producing less expensive synthetic fuels have also been researched. One of such ventures, involving Catalytica and Syntroleum, was developing a new class of catalysts for a direct oxidation of methane into methanol and liquid hydrocarbons.

Direct liquefaction of coal is another method that can be used to produce petroleum products (the FT synthesis using coal is also called the “indirect liquefaction of coal”). In the direct liquefaction process, coal is converted to liquid hydrocarbons in a single step operation. Hydrogen is added to the coal during the conversion process to upgrade the liquid products, giving them characteristics comparable to petroleum.

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