[pup55]

Well, micro-anything flies in the face of the last 100 years of industrial development in the world, starting with Edison, who figured out that centralized electrical production and distribution was better (for him) than the micro scale.

The business model is the same: You have a huge, capital intense central power plant, you distribute the power via wires to the homes, who then use the power....Of course he owned everything so he had some incentive.

It's the same model as the natural gas model, you have capital intense methods of production, use pipelines to distribute it to the users....

But it is quite true that there are abundant sources of methane all around us, including us mammals if we can capture it.

The first test of the opposite model is the people with solar capturing panels on their roofs. They do their own capital investment, they do not rely on some giant operation, they capture electricity, and everything is good.

Where the model starts to break down is: not everybody can afford to put micro-electrical generating things on their roof. Some people are hard pressed to come up with the capital. One of the things that the grid system gave us is a democratization of the energy consumption. Even the poor hillbilles in Appalachia were able to eventually afford electricity.

I know we are talking about capturing methane from a broader range of sources, and that businesses are going to be involved in it first, but the point is, that the smaller you make this stuff, the slightly less capital efficient it is. In a world where energy is abundant and cheap, the capital intense central collection and distribution model makes sense. In the world where energy is rare and expensive, you get an opportunity to test the economics of the opposite model, but, not everyone is going to be able to afford to do this.....

It's a pretty simple economic calculation. You are running some type of conversion plant and you have a flare stack. It costs you X dollars to capture that methane, screen out all of the VOC's that will kill you, and it gives you Y amount of methane per year, which you then use.

The alternate is: you plug into the natural gas system, it costs you zip, and you get all the gas you need as long as it exists and as long as you can afford to pay for it.

When it finally makes sense economically to do the alternate model people will do that. Even more so if there are interruptions in your gas supply and your manufacturing plant or whatever is down for a couple of days waiting for the central distribution system to turn itself back on.

[pup55]

Addendum:

The question comes up, what about micro-scale as it applies to transportation. That seems to be the one area in which we are willing to live with the inefficiency......

the current model of transportation is: Everybody has their own micro-source of transportation, namely their car. The centralized distribution of transportation, namely capital intensive rail and bus service gets short shrift, particularly in the US....We are, for the time being, even willing to go into debt and borrow a lot of money in order to buy a car despite the economic inefficiency.

So what nature of thought disorder over the last century got us to value the micro-transportation versus the capital intense centralized form? I will leave it to the board to figure out. It does go to show, though, that it is do-able if people value it enough, over and above its economic efficiency calculation.

[TheDude]

Obviously the allure of independent transportation outweighed any negatives, and there were plenty of them involved with early automobiles. I'd say the same applied to 19th century forms of mass marketed energy sources, namely cast iron stoves. Beats a hearth. The 20th century seems to me to be all about convenience, all those appliances designed to liberate Mother from her hours of domestic toil. Who cares about efficiencies when you're some stooped over charwoman?

Putting this thing into reverse will be interesting to observe, to say the least. Right now people with a fixation on securing their own personal energy system are rarer than hen's teeth; how do you market such a meme? Will it take off of its own accord and strip the shelves bare over night?

With micro GTL what are the numbers? That's all I'm interested in anymore. People talk about the latest IPO for some flashy solar powered car, first thing I want is production numbers and MSRP. Which are usually absent from 95% of these press releases, of course.

If stripper well type economics were in place I could see a community paying for some of this kit. Maybe maintain an emergency stockpile, your own town SPR. Or have some kind of production sharing agreement with local retailers...hmmm. Or city hall could go into fuel retailing. Many do already with CNG.

[bratticus]

Well, micro-anything flies in the face of the last 100 years of industrial development in the world, starting with Edison, who figured out that centralized electrical production and distribution was better (for him) than the micro scale.

But with natural gas there are some issues that can't be solved with centralized facilities. Natural gas is difficult to transport. Building and maintaining miles of pipelines is costly and when the source of the gas is depleted you can't reasonably move the pipelines to a new location the way you could move micro-GTL stations. By converting the natural gas to a liquid fuel at the well head you can then transport it. It is even possible to blend the liquid with the oil you are producing and ship both together as one.

You can't stop extracting the natural gas that's coming up with the oil you are producing without some other costly procedure such as re-injecting the natural gas into the earth again for no profit. Consequently the gas is flared off uselessly and dangerously. With micro-GTL there could be a profit motive since the resulting liquid fuel is a valuable commodity.

[bratticus]

Don't want to be a party pooper; BUT.
I just dug through the site. Found a few red flags:

1/ The site seems to have had nothing done to it since 2006.

2/ The 'careers' tag brings up 1 job- a product development engineer position.

3/ The products are forecast (in 2006) to be ready in late 07 and 08/ with no updates in 09 at all or since.

4/ The contact page gets office addresses and phone numbers only, outside of the UK. The web address provided in the UK is for a general 'green consultancy' business which doesn't mention this project at all. It is also very short of links and information in general.

I could get either of these websites knocked up out of thin air in a day for peanuts. A couple of people to answer phones in a couple different countries..... Just thinking out loud.

It does appear that Alchem was testing interest in a concept rather than having something viable.

Energix also has nothing available at this time but a press report about their research and development of their nanocatalyst process which they claim is already commercially being used to re-form various hydrocarbon sources into hydrogen.

Energix's Micro Gas-To-Liquids Concept Produces Synfuels at Lower Costs (link)

Low-Temp Production Reduces Capital Cost, Potentially Enables Mobile Production

ANAHEIM, Calif., Feb. 3 /PRNewswire/ -- Energix Research, Inc. has successfully produced liquid fuels from natural gas with a process that is more efficient -- ultimately reducing capital cost and enabling mobility. Energix Research's (http://www.EnergixResearch.com) tests indicate that its technology enables the entire gas-to-liquids (GTL) process to consume a lower percentage of the energy in the gas source and, due to the lower capital costs, the overall cost of production can be very competitive with conventional, large scale refineries which produce these fuels from crude oil. Energix expects to develop affordable, micro GTL plants to monetize underutilized resources, such as abandoned natural gas fields, coal bed methane (CBM) fields, flared gases, etc.

"We believe our process can affordably produce 50 to 200 tons per day of methanol, gasoline, diesel or di-methyl ether (DME -- a clean burning fuel substitute for LPG) with truck-mounted units using methane derived from biogas sources, such as landfills. Another source would be abandoned gas wells with very small reserves, which currently are not viable due to the inability to economically transport the fuel from the site," said Mr. Juzer Jangbarwala, CEO of Energix Research, Inc. "We will first focus on producing methanol and DME. Our vision is to eliminate the carbon footprint associated with the transport of fuel or other hydrocarbon chemical products such as solvents and alcohols. By producing high energy, low-emission GTL on site from existing gas sources that are often wasted, countries can reduce their dependence on foreign hydrocarbons and eliminate the carbon footprint associated with the transport of those products."

... skip ...

Energix Research executed the GTL process via the syngas and Fischer-Tropsch synthesis route at a high conversion rate (87%) and selectivity rate (99%) using its patent-pending, electrically activated nanocatalyst process.

... skip ...

The GTL process is the second process Energix Research is commercializing. Energix has successfully applied its proprietary process to produce hydrogen at very high conversion rates (>98%) and low capital costs ($200,000 for a 50nM3/hr plant) from various hydrocarbon feeds. Using the distributed generation philosophy, the technology has been tested to produce hydrogen at micro capacities with the same production cost of very large hydrogen generation plants, thus eliminating the need for transportation of hydrogen. Extensive reliability tests have been completed, and a 5KW on-site generator based on steam reforming of methanol for use with a fuel cell back-up power supply for the telecommunications industry will be launched later in 2009. The direct cost of producing electricity with this generator will be less than US$0.10 per KWH.

... snip ... more at web site linked in the article's title.

[Gerben]

Micro-GtL in a sense of natural gas to FT-diesel doesn't make sense unless oil prices are guaranteed to remain high. GtL only profitable on a large (huge) scale at current prices. A more simple process (requiring a lower investment) to create methanol or DME might make sense. For many locations it will be a lot cheaper to transport the gas as CNG or LNG (micro-LNG installations exist as well). In some countries natural gas is stranded for non-technical reasons: the government subsidizes oil-based fuels. Ending subsidies is an easier solution.

[bratticus]

Micro-GtL in a sense of natural gas to FT-diesel doesn't make sense unless oil prices are guaranteed to remain high. GtL only profitable on a large (huge) scale at current prices. A more simple process (requiring a lower investment) to create methanol or DME might make sense.

Oil prices rise until they bump into the "4% barrier".

The first peak oil recession: Interview with Steven Kopits (link)

Kopits: The US has experienced six recessions since 1972. At least five of these were associated with oil prices. In every case, when oil consumption in the US reached 4% percent of GDP, the US went into recession. Right now, 4% of GDP is $80 oil. So that’s my current view: If the oil price exceeds $80, then expect the US to fall back into recession.

Is this valid? The most recent of the six times was Sept 2007 when we hit the 4% point followed by recession in Dec 2007. I welcome any input on how to calculate the price of oil required to be 4% of the 2007 US GDP. This is just my playful effort at it.

Since I can't get a single answer about the 2007 US GDP so here are two:

GDP: $13.84 Trillion (2007 Est.)

GDP Purchasing Parity Power - $14.56 trillion (2007 est.)

13.84 * 0.04 = 0.5536 so 4% of the 2007 US GDP is about $553 billion.
14.56 * 0.04 = 0.5824 so 4% of the 2007 US GDP is about $582 billion.

US oil consumption 2007 -- 20.73 million bbl/day

In order to get the time aspect correct I'm converting yearly averages into a day. This is a bit suspect but the values being averaged are very large.

$553 / 365 = $1.515 billion "GDP day"
$582 / 365 = $1.595

20.73 * $70/bbl = $1451.10 so at $70/bbl about $1.45 billion/day
20.73 * $80/bbl = $1658.40 so at $80/bbl about $1.65 billion/day

The price of oil between $70 - $80/bbl oil for one day is around 4% of the US 2007 GDP for one day. The price of oil went into the $80/bbl range in Sept 2007.

Micro-GtL in a sense of natural gas to FT-diesel doesn't make sense unless oil prices are guaranteed to remain high. GtL only profitable on a large (huge) scale at current prices. A more simple process (requiring a lower investment) to create methanol or DME might make sense.

The Fischer–Tropsch process is used to make DME as well as diesel.

Energix's Micro Gas-To-Liquids Concept Produces Synfuels at Lower Costs (link)

... "We believe our process can affordably produce 50 to 200 tons per day of methanol, gasoline, diesel or di-methyl ether (DME -- a clean burning fuel substitute for LPG) with truck-mounted units using methane derived from biogas sources, such as landfills. Another source would be abandoned gas wells with very small reserves, which currently are not viable due to the inability to economically transport the fuel from the site," said Mr. Juzer Jangbarwala, CEO of Energix Research, Inc. "We will first focus on producing methanol and DME. ...

Thanks for pointing out that micro-LNG exists too as well as mini-LNG

Australia Starts Building Its First micro-LNG plant

Mini-LNG plant concept delivers cost-effective energy solution

Micro-LNG in China

[pup55]

unless oil prices are guaranteed to remain high

Just as a side point, there is a bit of an issue as to whether this is much of a guarantee....

Say you have to spend $10M for a tailgas capturing system that returns methane back to your process, whatever it might be....

You have an investment decision to make, and it is related directly to two things: The rate of return you want to make on your investment, and the expected price of the methane over the life of the project. Most of these projects are set up based on finite payback period, so you have to predict the methane price over the life of the project in order to make the decision...

So who is good enough to do that? Look at what has happened to the methane price over the past three years.....



The range is between 3 and 12 dollars per BCF....a factor of 4....How are you going to calculate the rate of return based on pricing of that range?

A lot of times what these people will do is go to the EIA for the government forecast of the methane prices, to avoid hiring a private forecasting service. How would that have looked in 2008?

The Henry Hub natural gas spot price averaged $7.17 per thousand cubic feet
(mcf) in 2007 and is expected to average $7.78 per mcf in 2008 and $7.92 per mcf
in 2009

(source: STEO for January 2008)

Well we all know how that one worked out. If you had made your investment based on the relatively friendly price of $7.92 per BCF and the price dropped to 3 for a significant period of time, they lost a lot of money on the project that the could have used elsewhere.

The bean counters that are running these places will not take the risk to do these projects if the price is so unpredictable.... They would rather invest their money in other projects and activities with a higher level of confidence.

So a lot, a lot, depends on the forecaster's ability, if any, to figure out the forward looking prices.

[TheAntiDoomer]

http://www.heatingoil.com/blog/brazil-g ... nology319/

Brazilian oil company Petrobras is aggressively financing technology that will convert flare gas, a byproduct of oilfield production so named because it is commonly disposed of by continuous burning during drilling operations, into a synthetic and commercially viable form of crude oil.

It may seem surprising that natural gas, a valuable natural resource, is emitted in great quantities as a consequence of oil extraction only to be thrown away like garbage. When underground oil is subjected to high pressure, gas dissolved in the liquid escapes through a separate pipeline valve that reaches the surface. Yet, the practice of combusting this “associated gas” as quickly as possible (i.e. gas flaring) has become standard for decades in oilfields too remote from potential markets or transport infrastructure to take advantage of the fuel’s value. Official estimates place the global amount of gas squandered in this way annually at ¼ of the natural gas consumption in the US. Though technology does exist for converting this gas into liquid crude oil, initiatives pursued by Petrobras-financed companies Compact GTL (UK-based) and Velocys (Ohio-based) aim to create equipment compact enough to fit on Floating Production Storage and Offloading vessels used in offshore drilling.

[copious.abundance]

Time to bump this thread!

I recently read a book which, in one chapter in particular, had some really interesting insights on the issues raised in this thread.

The book is entitled The Grand Energy Transition by Robert A. Hefner III. Mr. Hefner has been a gas driller for decades, and thus knows quite a bit about the topic. I have received the author's permission to post an extract from Chapter 6 of the book, which is the chapter of interest I referred to above. It's not too long a read, and quite interesting. Enjoy!

[…]

Differences between Natural Gas and Oil

In order to understand the abundance of natural gas and make intelligent, long-term policy decisions, we must break out of the oil and gas mind-set by thoroughly understanding the great differences between gas and oil.

The Physical Difference
Natural gas is a gas and oil is a liquid. Natgas cannot be seen or smelled. What you see on a gas stove in the kitchen is the flame, and what you smell if it leaks is a chemical odor that has been added for safety. Oil is a smelly liquid and is easy to see. Natgas is lighter than air, so instead of spilling on the ground as oil does, it floats up into the atmosphere. Natgas, like all gasses, is compressible, and liquid oil is not. A natural gas reservoir found at 20,000 feet below the surface will contain three to five times more natural gas than the same reservoir found at 3,000 feet. However, a barrel of oil found at either depth is still a barrel of oil. Oil is a viscous fluid and more difficult to remove from its reservoir deep in the earth than natgas which, because it is lighter than air, naturally seeks its way to the surface. Anyone who has ever sucked through a straw knows it takes energy to pull out your liquid drink, but when a cap is removed from a soda pop, the gas in the bottle flows out of its own accord. This is exactly how liquid oil works compared to natgas. Oil has a harder time getting to the surface and for most of the life of an oil field, has to be pumped to the surface. Of course, energy is required to run these pumps. Because natgas flows naturally to the surface, it also naturally voids its reservoir more easily than heavier, viscous oil. So when a natural gas accumulation is tapped, a larger percentage of the natgas originally in place when the field was found is recovered than is the case with an oil field.

Oil reservoirs naturally produce only 10 percent, and infrequently, up to 30 percent of the in-place oil found before additional secondary and tertiary recovery techniques must be used to increase that percentage to 40 percent or sometimes even 60 percent, but these methods are expensive and do not always work. Also, these methods require more energy use. Natural gas reservoirs generally produce 70 percent to 80 percent of the original natgas in place. So, because a much larger percentage of natural gas is recovered from a given reservoir than oil, and because natgas is compressible, more can be stored in and recovered from a reservoir as pressures increase with increasing depth in the Earth. Therefore, more Btus of energy will nearly always be produced from a reservoir below 8,000 feet if it is full of natgas than if it is full of oil.

[…]

The Technological Difference

Because oil is both chemically variable and a complex liquid, it requires a lot of complex technology. Natural gas almost always flows naturally to the surface at pressures higher than atmospheric pressures. Generally, all that is required for its use is a tank that separates any liquids that may come to the surface with natgas, along with a series of pipelines and compressors to move the natural gas across the country to consumers. Some natural gas, particularly if it is "sour" and contains sulfur, requires a relatively small plant with some sophisticated technology to separate the sulfur from the natgas and make it "pipeline quality" and useable for the customer.

By contrast, being a viscous liquid, oil requires pumps to get it out of the ground. That is why most people correctly envision oil fields with lots of "nodding donkeys," or pump jacks, to bring it to the surface where it is stored in tanks. The photos shown in Exhibits 6.2 and 6.3 are typical of an oil field with its highly recognizable jack pumps and a similar photo of a developed natural gas field.

Oil's chemical complexities and variability also mean that it must go through large refineries that break it down to its various components before its products are useful to the consumer in the form of liquid gasoline, diesel, jet fuel, or home heating oil. Because oil meets such a large segment of global energy use (about 90 percent of transportation's demand for fuel), the quantities needed each day are enormous and require capital-intensive, behemouth industrial complexes called oil refineries to process crude oil into its usable commercial products . . .

Natural gas fields are not generally known or envisioned by the public. They are generally much cleaner because natgas cannot be spilled and the wellhead is only a series of valves extending about 5 or 10 feet above the ground. For the most part, natgas comes out of the ground basically ready to go to the user, so its technology is simple, more efficient, and does not need the economies of scale required by both oil and coal. As natural gas is not a viscous, high-carbon liquid like oil, it is more efficient and much less polluting. Engines that use natural gas tend to last longer and emit much less CO2 . . .

[sicophiliac]

http://www.businessweek.com/news/2011-0 ... -u-s-.html

[peeker01]

That will never work here. The zombies will wreck it for sure.

[sicophiliac]

Well its too bad Obamas latest stimulus/jobs bill doesn't include any money for something like this. I mean why not build a couple dozen of these plants around the country. That would cut our oil imports (based on a hypothetical 100,000 barrels a day per plant) by maybe 2 million barrels a day give or take. That right there is over 10% of our liquid fuels demand and would slash oil imports by close to 20% give or take. Hell, why not take another hundred billion of the stimulus proposal and invest it in solar and wind to offset some of the natural gas we'd use for liquid fuels ? We'd create thousands of permanent jobs. Wed slash oil imports by what, 50 billion dollars a year with current prices? Also we could charge the operators of these plants a special tax to recoop some of the money the tax payers fronted to get these facilities under construction so that the net cost to tax payers is even less.

[Outcast_Searcher]

Well its too bad Obamas latest stimulus/jobs bill doesn't include any money for something like this. I mean why not build a couple dozen of these plants around the country.

Actually, after Solyndra went blooie, I remember thinking -- why not spread such money AROUND, like maybe a limit of $20 million (or so) per company, AND keep an EYE on the money while they're at it.

This, of couse, would imply some sort of energy STRATEGY. A real, long term, comprehensive strategy seems to be beyond our government. Aside, of course, from taking lots of money from productive people, keeping (or wasting) most of it, and giving the rest to somone who didn't earn it. THAT is a strategy they consistently have -- unfortunately, the results are a net fiasco.

[Graeme]

World’s largest gas-to-liquid factory in Qatar costs US$19bil

With a massive development cost of US$19bil, the Pearl gas-to-liquid (GTL) plant in Qatar is the world's largest.

Banking on more environmentally-friendly and efficient GTL products compared with conventional oil refinery products, Shell together with its state-owned partner, Qatar Petroleum (QP) planned to spearhead the development of this niche industry into a larger scale commercial success.

Natural gas is processed to produce various synthetic oils such as gasoil, naptha, kerosene, paraffin and base oils.

GTL fuels are cleaner as they are free of sulphur, nitrogen and aromatics that reduce tailpipe emissions and pollution.



Shell has already blended some of its GTL gasoil from its plant in Bintulu into the Shell V-Power diesel and it is being sold worldwide.

For GTL gasoil, the Pearl GTL will be able to produce about 50,000 barrels per day of GTL gas oil, enough to fill 160,000 cars everyday.

“It is proven that GTL gasoil has a noise reduction capability for trucks,” said Wael.

GTL base oils is used in lubricants that maintain vehicle engines, gear boxes and transmissions.

Pearl GTL is slated to be the world's largest source of lubricant base oil producing about 30,000 barrels per day.

GTL kerosene, that can be used for heating and lighting, has found its greater use in aviation.

A Qatar Airways Airbus A340 made the first commercial passenger flight using a 50-50 blend of GTL and conventional jet fuel known as GTL jet fuel, in October 2009.

thestar

[ROCKMAN]

Not good news for those folks who were hoping our NG resources would wean us off oil-derived motor fuel. If it's not viable at today's NG prices it difficult to imagine it working down the road when then those prices inevitably increase.

Shell Cancels US Gas-To-Liquids Plant As Costs Rise

Reuters - Royal Dutch Shell said on Thursday it has canceled a proposed gas-to-liquids (GTL) plant in Louisiana less than two years after the plan surfaced as costs rose and the company reins in spending. The project, which would have converted natural gas to diesel, jet fuel and other refined products, was expected to cost more than $20 billion up from the minimum $12.5 billion price tag estimated in September. Expected increases in natural gas demand for power generation and for export overseas has since helped bolster prices. Shell said it was now unclear if such a project would be feasible in North America. Shell already operates the Bintulu GTL plant in Malaysia, which opened in 1993, and the Pearl plant in Qatar, the largest one of its kind, which started full operations in 2012. "Despite the ample supplies of natural gas in the area, the company has taken the decision that GTL is not a viable option for Shell in North America at this time," Shell said in a statement.

[Tanada]

The public oilco's are sitting on huge cash reserves, what better way to make use of it than investing in infrastructure for the future?

[rockdoc123]

The public oilco's are sitting on huge cash reserves, what better way to make use of it than investing in infrastructure for the future?

where do you get this from? My own perusal of various balance sheets suggests the opposite. Companies are selling assets to cover E&P capital costs, working capital in most of the companies I've looked at is good for a few months.

[Tanada]

The public oilco's are sitting on huge cash reserves, what better way to make use of it than investing in infrastructure for the future?

where do you get this from? My own perusal of various balance sheets suggests the opposite. Companies are selling assets to cover E&P capital costs, working capital in most of the companies I've looked at is good for a few months.

A couple months ago we were discussing the plans to pay big dividends because they were cash flush, has all that money suddenly dissipated?

[rockdoc123]

It might be true of a few of the bigger players. I look at all of the cdn O&G companies out of habit and most are struggling regardless of holdings in liquids rich shale in the US
Companies that already dividend will do anything they can not to decrease those dividends as it generally results in a share sell off . So I think you will see dividend payments remain in tact but capital spending accompanied with asset sales will offset them
I'm trying to remember a company who has increased dividends recently but come up dry. Someone else might know