BP's trial project worth $86 million

GTL plant under way in Nikiski

Posted: Thursday, March 01, 2001

Alaska has long exported raw materials, but an experimental gas-to-liquids plant in Nikiski may soon export technology, too.

"There will be a lot of brain-power assembled in Alaska," said Ken Konrad, BP vice president for Alaska gas.

BP broke ground this month for the $86 million plant, which will test technology for converting natural gas to high-quality synthetic crude oil.

"The first step is to demonstrate our technology and gain confidence that it can work," Konrad said. "Then, we'll look at where we can use it, be it in Alaska, or

around the world. It could be in Trinidad or Bolivia or Egypt."

Kvaerner Process Technology Ltd., a Dutch firm, is providing engineering, construction management and procurement for the Nikiski project. Udelhoven Oilfield System Services, which began on the Kenai Peninsula, will install electrical instrumentation, and Austin Industrial, based in Houston, Texas, will do the heavy construction.


Photo by M. Scott Moon

A tent sits on the site of BP Exploration (Alaska) Inc.'s where workers are thawing ground for construction.

Photo by M. Scott Moon

Austin Industrial will bring a small team of managers, Konrad said, but it will use local labor and crafts for all of the construction.

"We expect to ramp up to 200 or more workers through 2001, then wind down to operations mode in early 2002," he said. "Then, it will take 15 or 20 people to operate the plant."

BP is buying major reactor vessels from manufacturers outside Alaska, Konrad said, but it is buying about $40 million in goods and services from Alaska suppliers.

It already has hired several local firms -- L&J Enterprises for snow removal, MediCenter Nikiski for emergency medical services, McLane Engineering for civil inspections and testing, and Enstar Natural Gas Co. to install low-pressure gas lines.

Dames and Moore, Raven Contractors and Arctech Services also have contracts. BP has been negotiating to buy natural gas from local suppliers. It has agreed to buy three to four megawatts of power from Homer Electric Association.

If all goes as planned, the new plant -- on 23 acres by the Kenai Spur Highway about a mile south of the Tesoro Alaska Petroleum Co. refinery -- will open in the first half of 2002.

BP will use the plant to test its technology, not for commercial production. The plant will consume about 3 million cubic feet of natural gas and produce about 300 barrels of synthetic crude per day.

"That's the size we would need to feel comfortable building an 80,000- or 100,000-barrel-per-day facility on the North Slope," said Dave Calvin, BP gas-to-liquids project manager.

The Tesoro Alaska refinery can process 72,000 barrels of crude per day. Calvin said there are three steps to producing synthetic crude. The first combines natural gas and oxygen to produce syngas, a mixture of carbon monoxide and hydrogen. The second converts the syngas into waxy paraffins. The third breaks those into lighter fuels, such as synthetic crude and diesel.

There are several ways to supply the oxygen. One is to cool air until the oxygen condenses as a liquid. However, BP produces syngas with a steam reformer, which extracts the oxygen from water. Its compact reformer occupies just a fifth of the space of traditional steam reformers, he said.

"We're able to reduce the capital cost to where it's economical," he said.

Konrad said BP probably will sell synthetic crude from Nikiski to a variety of buyers to test its use in the manufacture of top-quality refined products.

"It's incredibly pure stuff," he said. "It lends itself to production of zero-sulfur diesel, jet fuel, lube oil and other products that are ultra-pure."

Managers have been saying the Nikiski plant will operate for about five years. After that, BP could tear it down. However, Calvin said, there are other possibilities.

"I've four or five people tugging at my sleeves saying we should install a fuel cell or another type of reactor. This could become a test facility for a number of different energy projects."

Konrad said the conventional wisdom is that in Alaska, a commercial scale gas-to-liquids plant would go on the North Slope. Synthetic crude could be shipped in batches through the existing trans-Alaska pipeline.

"Typically, transporting liquids is cheaper than transporting gas," he said.

In addition, Calvin said, synergies on the slope could help make a gas-to-liquids plant profitable. A plant would produce huge quantities of steam that could be used to generate electric power, and that soon could be in short supply on the slope.

"A 60,000-barrel-per-day facility will make almost as much power as we consume on the North Slope. That has got to be a revenue stream for this to make a profit," he said.

However, Calvin said, he is no longer convinced that the slope is the only viable site for a plant. If the natural gas were available in Cook Inlet, he said, a full-sized gas-to-liquids plant could go here. The climate is less severe, the existing infrastructure is a plus and the gas could also supply other uses. A spur from a pipeline to Alberta could carry North Slope gas to Nikiski.

"Almost any permutation you can think of, we're looking at," he said.

Subscribe to Peninsula Clarion

Trending this week:


© 2018. All Rights Reserved. | Contact Us