[Tanada]

CO2 to liquid fuels moved to carrect thread please continue that discussion HERE

[lpetrich]

NEW ORLEANS (AP) — Low oil prices and a volatile market are prompting a South African energy and chemical company to drop plans for an $11 billion to $14 billion U.S. plant to convert natural gas to liquid fuels and to pull out of Canadian shale. ....

LINK

From this and the rest of this thread, it seems like GTL for liquid fuels is only borderline economically viable -- its viability is very sensitive to the relative prices of natural gas and crude oil.

However, GTL for specialty hydrocarbons like motor oil seems to be thriving. I think that it is more successful there because (1) one needs much less lubricant than fuel and (2) GTL lube has demonstrably superior performance. This makes a price premium much more tolerable.

I hope that I have gotten the economics straight.

[Tanada]

Representatives of Extiel-Advantage Somerset, the GTL (gas to liquid) plant that will locate in Somerset, were in town Tuesday and Wednesday looking at some additional properties the plant will need in the future, Somerset Mayor Eddie Girdler reported. The GTL plant will be built off Thoroughbred Drive near Somerset Rail Park on a 23-acre site that was formerly Crane Company property.

Houston-based Extiel CPG, LLC, the firm that will build and operate the plant, has established an office in Somerset Energy Center, but apparently no actual work has started at proposed plant site. Greg Carr, managing director for Houston-based Extiel CPG, LLC, told the Commonwealth Journal much of the plant’s physical structure will be manufactured in Houston and shipped by truck to Somerset. Construction will begin late this year and operations will start in 2020, according to an Extiel press release.

Extiel-Advantage Somerset is a unique (GTL) gas-to-liquid plant that converts low-cost natural gas into high-value, full-synthetic waxes, base oil and solvents. The proposed plant will be a down-sized version of a large-scale GTL plant design and will produce 250 barrels per day of ultra-clean synthetic fuel products, waxes and industrial hydrogen.

LINKY

[ROCKMAN]

Odd to see this little plant built in KY, not known for much NG production. But that may be the reason: very cheap NG with very limited access to bigger markets. That was the case years ago when I drilled in KY: lots of stranded NG. Otherwise why not build in south Texas or at the Henry Hub? At 250 bbls per day it will have zero impact on the US oil and NG market.

[Carnot]

Bonsai plant with no hope of being economic.

The products from GTL are limited and expensive. They can make good quality jet ( must be used as a blend) and diesel. GTL gasoline is low octane. The market for lubricants and waxes is limited and dominated the the main players (Shell/ Exxon). Lubricant technology is moving towards PAO's and esters rather than isoparaffins.

This plant will produce about 32 kta which would not bring in enough revenue to feed a mouse, let alone sustain all the staff, costs and operating expenses that will be required to operate and maintain this type of plant.

I would not have got past the first stage of economic assessment - it is simply too small. Even the Chinese do not build GTL and they are suckers for anything.

[ROCKMAN]

Carnot - Yeah but if you were a very small public company with a P/E ratio of NEGATIVE 35 and a return on invested capital of NEGATIVE 0.9% you would glad have any free advertising of your press release as this has spurred. LOL.

[Carnot]

Rockman, I could not agree more. You ably put a similar comment in another earlier topic. When faced with unemployment when the funds dry up it is amazing how supposedly learned people will stretch the truth to sucker in more gullible investors. No parallels with shale of course, which does, at the moment, seem to be making some money for a few in spite of the ferocious production decline rates.

[ROCKMAN]

Carnot - What many fail to appreciate (but I suspect you do) is that if a pubco knew for certain that their shale wells were going to make zero profit (neither make money nor lose it) they would still drill those wells. The key metric Wall Street values a petroleum pubco is adding proved reserves to its books y-o-y even if those new wells generate no profit. Given expenditures and revenue are stretched out over many years it is very difficult even for insiders to measure a companies profitability. And the SEC has no chance of calculating it. But with reserve reports generated by independent third party engineering companies it's butt simple to show y-o-y increases in proven reserves. Even if the company is making zero profit doing so.

[ROCKMAN]

Hell, Carnot. I just remembered one of my favorite stories. In the early 1990's I drilled horizontal wells into slowly producing conventional reservoirs in La. state waters. Did not increases proved reserves at all: just recovered the faster given the high flow rates of my hz wells. Overall increased company production from 10 million cubic feet per day to 50 million cf/d.

Hw did Wall Street respond: increased the stock price from $0.75/share to $5.00/share. And if you carefully read the fine print of our annual SEC filing we actually lost money on the wells: the total well cost was greater then the increase in net present value of the production. Even fooled a very famous Wall Street raider who subsequently succeeded in a hostile take over of the company. He didn't realize the real value of the company was the small group of professionals working there. All of who left the company after he took over. Ina few years the company filed bankruptcy, was liquidated and disappeared forever.

That history is a big part of the reason I decided to finish my career with a private company and not a public one. All my owner cared about was us making him money. Life was much more simple. LOL.