On the road to cleaner diesel

The passengers who climbed aboard the bright blue and yellow bus in the Japanese region of Aichi no doubt regarded the fuel being used to ferry them to their destination as little more than a curiosity. Yet to the government of Japan it was rather more than that.

With 127 million people and few energy resources of its own, Japan depends on vast imports of oil and gas to keep the world’s second biggest economy turning. The bus in Aichi showed one potential way of ensuring access to more diverse sources of energy. Its fuel was a blend of diesel and a synthetic liquid fuel produced by Shell from natural gas, and it was taking part in a two-month trial.

In 2006, Japan announced a new national energy policy, including a pledge to reduce the use of petroleum-based transport fuels by 20% by 2030. That 20% is to be replaced by alternative fuels including biofuels and gas-to-liquids (GTL) fuel, such as that used by the Aichi bus. More trials with GTL fuel will be taking place in Japan later this year.

For countries like Japan, with huge energy demands and environmental challenges, the advantages of obtaining transport fuel from gas are clear. In a world where pressure is growing on energy supplies, it provides a hedge against dependence on high-priced oil from politically volatile regions. The local environment benefits too. GTL fuel is cleaner-burning than conventional diesel: it’s virtually sulphur-free, colourless and odourless, and emits fewer particulates and smog-causing nitrogen oxides at the exhaust. In Europe and pockets of Asia, where it’s sold as a blend with Shell V-Power Diesel, GTL fuel helps to run hundreds of thousands of cars.

Moreover, the GTL process produces more than transport fuel. Other products include kerosene for aviation and domestic heating, naphtha for chemical feedstock and lubricants. Some products go towards making household items like detergents and lipstick.

Successful trials

Natural gas is abundant, although much of it is locked in remote regions that are difficult and costly to access. Moreover, transporting it long distances is impractical and costly because of its volume. GTL technology makes accessing such resources attractive, opening up alternative markets for gas and reducing dependence on oil. And for countries like Qatar with huge gas fields on their doorstep, it offers the opportunity to diversify options for the development of energy resources. Back in the 1960s, the same was said of liquefied natural gas (LNG) – gas that is liquefied for transport by cooling it to -162 degrees Celsius (-260 degrees Fahrenheit) and is later turned back to gas usable for heating or cooking. Today, LNG has become a vital part of the world’s energy mix, with Japan, one of the earliest importers of LNG, accounting for 40% of global LNG consumption. Whether GTL will ever match the success of LNG is not clear, but both offer a way of transporting gas in a practical and affordable way.

Global demand for cleaner-burning natural gas is rising, thanks to a growing desire to reduce carbon dioxide (CO2) emissions from energy use and the fact that new oil resources are increasingly found in far-flung and hostile environments. The International Energy Agency (IEA) predicts that by 2030 demand will be 67% up on 2004 levels, if current trends continue. An expected increase in GTL production is one reason the IEA gives for the projected rise.

“There is keen interest in the GTL process,” said Daniel Simmons, natural gas expert at the IEA. “It allows gas producers direct entry in the premium oil products market. And the ultra-clean liquid fuels it produces from natural gas are gaining popularity in environmentally-aware markets.”

Trials of Shell GTL fuel in buses, taxis and public service vehicles have proved successful in several major cities and regions, demonstrating a marked reduction in local emissions. They include trials in Europe, the USA and, of course, Japan, where the bus in Aichi carried passengers to and from a major exhibition of environmentally-friendly technologies for the 21st century. Other trials are under way, including one at Delft in the Netherlands in which seven buses are running on 100% GTL fuel.

Surprise in Le Mans

But it’s in a very different public arena where, to the surprise of the motor-racing world, GTL has made its most widely publicised impact to date. In June 2006 an Audi R10 TDI using Shell V-Power Diesel with GTL became the first diesel-powered car to win the world’s most gruelling endurance race, the 24 Hours of Le Mans. For 2007 the race authorities imposed an 81-litre (21.4 US gallons) limit on the fuel tanks of diesel cars, down from the standard 90 (23.7 US gallons). Yet the Audi repeated the victory in this year’s race, again making fewer fuel stops than its petrol-powered rivals and achieving an average speed of more than 209 kilometres (130 miles) an hour. GTL fuel’s qualities of performance and efficiency were at least partly responsible for the victories.

According to Jack Jacometti, Shell Vice President Downstream Strategy – who has spearheaded the company’s commercial drive to develop GTL technology – the Audi’s outstanding performances on V-Power Diesel racing fuel could potentially help change the negative image of diesel in the USA. “They still think of diesel there as being slow and dirty,” he said. “This car is anything but.”

While the attractions of GTL products are clear, the level of CO2 emitted during the energy-intensive production process draws scrutiny. Oil companies, meanwhile, say a fair assessment must take into account emissions all the way from the well to the end user. According to separate studies commissioned by Shell, Sasol-Chevron and ConocoPhillips, on a life-cycle basis CO2 emissions of the GTL system are comparable to those of the oil-based refinery system, from gas extraction to conversion to liquids, to use. The studies were carried out in line with international standards (ISO) and reviewed in each case by independent life-cycle assessment experts.

Shell is nonetheless investing in research to develop ways of managing the CO2 emissions from GTL production. And just as energy efficiency in refineries has improved over time, advances to GTL technology and processes are expected to yield lower emissions in coming years.

Into the mainstream

Until now GTL has been produced on a relatively small scale. The world’s first commercial GTL plant of its type, at Bintulu, Malaysia, has been operated by Shell since 1993. But its daily output of 14,700 barrels of products is modest compared to the capacity of a large oil refinery that can refine hundreds of thousands of barrels of oil a day. Sasol, the South African energy company, and Qatar Petroleum together operate a 34,000 barrel-a-day GTL plant in Qatar; while Sasol, Chevron and the Nigerian National Petroleum Corporation are together building another GTL plant in Nigeria.

What will be the world’s largest GTL plant, known as Pearl GTL, is being built in Qatar by Shell and Qatar Petroleum. Experience gained at Bintulu has led to advances in the production process that will enable output to reach the kind of scale needed for GTL products to become more widely available. According to the IEA’s Simmons, the key to the future of the GTL industry could well rest with the success of the Pearl project.

The magnitude of Pearl GTL – being developed under a production sharing agreement between Shell and the Qatar government – is impressive. A town to house 35,000 construction workers is going up inside the sprawling industrial city of Ras Laffan and work to lay the foundations of the plant is under way. Gas will be supplied from wells 60 kilometres (over 37 miles) out to sea via two pipelines. Around 120,000 barrels a day of condensates, liquefied petroleum gas and ethane – used in industrial processes – will be extracted from the gas when it first arrives onshore. The methane-rich gas that remains will then be converted over several steps into a range of GTL products.

The plant will cover an area of some 2.5 square kilometres (around one square mile), bigger than London’s Hyde Park and Kensington Gardens together. Thousands of tonnes of catalysts – small porous particles that speed up chemical reactions – will be used which, if laid out, would cover an area the size of England. They will be more advanced than any catalysts to date, enabling faster processing. Pearl will have the world’s largest oxygen plant and a major water treatment facility, ensuring that none of the water used in the process is wasted – most will be re-used in the plant, the rest will be clean enough for irrigation use. Heat recovery units will generate 8,000 tonnes of steam per hour that will help drive the plant’s machinery.

Start-up is planned in two stages at around the end of the decade. When fully operational, Pearl GTL will produce 140,000 barrels a day of GTL products. Andy Brown, Shell Qatar Country Chair and Pearl GTL Managing Director, said GTL will go from being a source of niche products to a large-scale source for mainstream markets: “For example, when Pearl GTL is up and running we will be able to supply GTL fuel in a substantial way to fleets of buses and taxis in perhaps 10 of the world’s major cities.”

GTL today may still be a small part of the world’s energy mix. But for congested cities like Shanghai, London and Tokyo, it offers the possibility of cleaner-burning transport fuel. And for countries with scant natural energy resources like Japan, it could be another step towards a more secure energy future.

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