GTL ’13: Sasol eyes diversified product slate for Louisiana GTL plant

(Editor's note: see video at end of story for our exclusive interview with Sasol's Mark Schnell.)

By Ben DuBose
Online Editor

HOUSTON -- Sasol is emphasizing a diversified product portfolio as it continues to map out plans for the new gas-to-liquids (GTL) project at its complex in Lake Charles, Louisiana, a company executive said Tuesday.

In the keynote address at the inaugural GTL Technology Forum, Mark Schnell noted that initial GTL proposals from the 1970s were designed primarily to produce diesel and naphtha.

But in the modern energy landscape is offering additional opportunities for the GTL industry, explained Schnell, who serves as Sasol’s general manager for marketing, strategy and new business development.

“In Louisiana, we’re trying to diversity significantly,” Schnell said. “On the heavy end, that means looking at specialty waxes and lubricant base oils. On the lighter side, paraffins can be ideal feedstocks for detergent.”

Sasol is expected to make a final investment decision on the new Louisiana project in 2014, after the engineering and design review is finished. The plant is estimated to cost near $15 billion, making it about three times as expensive as a new traditional refinery. However, the ability of a GTL plant to directly tie into the affordable market for natural gas feedstocks could easily offset those costs.

The plant's two phases would start operations in 2019 and 2020, becoming the first facility in the US to produce GTL transportation fuels and other products.

Schnell noted that a diversified product slate might not make sense for units in other locations such as the Middle East,, where Sasol operates a 34,000 bpd GTL facility in Qatar. But the mainland US is a major consumer of those items, and Sasol is adjusting its strategy accordingly.

“The wax market is somewhat limited, while the base oils market is slightly larger,” he said.

Even so, Sasol is still keeping a close eye on the domestic diesel market as well. Diesel produced through the GTL process is cleaner than conventional diesel, Schnell explained, particularly given that it is zero-sulfur.

“Globally, diesel remains the workhorce for economic growth,” he said. “Diesel growth is consistently outstripping other petroleum grades, and our expectation is that trend will continue.

“In addition, it is becoming more difficult for conventional refining to meet the required product mix, not to mention the increasing requirements for stricter fuel quality standards,” he added.

If current projects are built, GTL processes would supply under 2% of the diesel market. But Schnell notes that if supplied locally or regionally, GTL diesel could have bigger impact.

“GTL could be the ideal solution to fill the growing diesel gap,” Schnell said. “Sufficient product is there to justify significant engine development around GTL diesel.”

The question is whether the market will ultimately prioritize clean diesel, thus giving GTL companies like Sasol the economic incentive to produce it in higher quantities. Factors that may spur development, according to Schnell, include tighter emissions policy measures, an increasing desire for domestic energy security and the need to move away from crude oil feedstock.

“The availability of affordable natural gas is unprecedented on the global stage,” Schnell said. “It’s on us to step up as a business and provide solutions.

“GTL products are unique, with higher quality than conventional equivalents,” he added. “The challenge is how to best position these products to capture that value.”

Sasol isn’t the only major company to target the US market for new GTL plants. Shell has also said it is considering a new project in Louisiana, with a final decision likely by the end of the year.

“There are now two big players looking at sizable plants in the US,” Schnell said. “As long as gas remains competitively priced in the US, the opportunity for large-scale GTL investments is there. It’s a matter of who is going to provide the technology and step up and make those decisions.”

The inaugural GTL Technology Forum continues through Wednesday at the Houston CityCentre.

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