BP's experimental GTL plant nearing startup in Nikiski

Posted: Thursday, January 30, 2003

ANCHORAGE (AP) -- BP hopes to begin operations at its $86 million experimental gas-to-liquids plant in Nikiski in the next two months, knowing success could liberate a mother lode of natural gas from the North Slope and help extract natural gas from other remote areas of the world.

''Everybody's excited. We've got great people out here to test this technology,'' Len Seymour, a BP manager, told the Anchorage Daily News.

The scientific knowledge of how to turn natural gas into a liquid has been around for decades, but no one has yet figured out how to do it cheaply and on a large scale.

Many think that's about to change. BP and other major oil companies including Chevron Texaco, Shell, Exxon Mobil and Conoco Phillips all are taking an interest in so-called gas-to-liquids (GTL) technology. Smaller companies, university scholars and the U.S. Energy Department also are chasing the idea.

A double prize is up for grabs. The first is a new way to get so-called stranded gas to market, gas that might otherwise remain stuck in the ground for lack of a practical way to transport it. The second is the wide range of clean, sulfur-free goods that can be made from GTL, including diesel and naphtha, a raw material for making gasoline.

''The future is very, very bright with this technology,'' said Godwin Chukwu, a University of Alaska Fairbanks petroleum engineering professor and GTL expert.

In the gas-to-liquids process, raw natural gas is converted to white crude. It's clear like water, needs no special cooling or pressure to remain a liquid, and can flow down an ordinary oil pipeline to market.

Once it begins operating, the plant will take in 3 million cubic feet of Cook Inlet natural gas each day and convert it to 300 barrels of white crude, which will then be hauled to the nearby Tesoro refinery in Kenai. The plant is a partnership of BP and a London-based, Russian-owned company called Davy Process Technology.

The plan is to run the GTL plant only 18 months or less, gather as much experience and operating data as possible, then tear it down, said Dave MacDowell, gas spokesperson for BP Exploration (Alaska) Inc. If successful, the test plant could lead to far larger, commercial GTL plants capable of making 300,000 barrels a day or more.

Other big oil companies, ''a lot of them,'' are racing to perfect their own GTL secrets, Chukwu said.

The reason for the race is the potential market value of the world's remote, stranded gas assets. Very often, this gas is in the vicinity of existing oil pipelines but is left in the ground for lack of a way to move the gas to market.

If all this gas could be converted economically to a liquid, it could flow through those oil pipelines. The trans-Alaska oil pipeline would need very little modification to accommodate GTL, Chukwu said, mainly new storage tanks at Valdez.

''This is a big deal if it happens,'' said Dale Nesbitt, an energy consultant in Los Altos, Calif. ''There's huge, just absolutely phenomenal, reserves of stranded gas around the world. It's ridiculous how much gas they have in the former Soviet Union with no market.''

So far, there are no large, commercial GTL plants in the world.

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