KUALA LUMPUR, Malaysia – Looking beyond gas-to-liquids, governments and private enterprises are eyeing other carbon sources of clean fuels that can also produce high quality lubricant base oils. Carbon-to-liquids activity is tied to crude prices, an industry expert noted. If crude spikes, coal-to-liquids and biomass-to-liquids will stampede.
Amy Claxton, principal of consultancy My Energy in Hummelstown, Pa., described the carbons-to-liquids technologies thatwill most likelyemerge over the next decade, at the ICIS Asian Base Oils & Lubricants Conference here on June 24. Carbons-to-liquids technology is rapidly evolving, Claxton said, and high crude prices will accelerate this evolution, especially for coal.
XTL is on the horizon, said Claxton. What is it? X can mean any carbon source: natural gas, coal, crops, petroleum coke, municipal waste. But gas-to-liquids or GTL, coal-to-liquids (CTL), and biomass-to-liquids (BTL), are the three major XTL technologies being pursued today.
Over the last 24 months, she continued, XTL has become the new GTL. GTL projects have slowed, with escalating project costs, gas allocation issues, competitiveness against liquefied natural gas, and high gas prices.
Coal has replaced natural gas as the feedstock for the majority of XTL projects around the world, Claxton said, while biomass has gained attention as a feedstock due to environmental concerns.
Any XTL can use the same Fischer-Tropsch technology to produce high quality transportation fuels, Claxton explained, and this means they can produce API Group III+ lubricant base stocks and/or Fischer-Tropsch waxes.
There are three reasons for our industry to care about XTL, Claxton said.
First, with GTL limited to host governments with large gas reserves – essentially Russia and Qatar – XTL brings opportunities for Group III+ base oils in other regions, particularly CTL in coal-rich India, China and United States, and BTL in Europe.
Access to third-party sales of XTL lubes would be good for base oil buyers seeking high quality oils, she continued, and for automakers wanting better oils. But it would not be such good news for existing base oil manufacturers with lower qualities, especially in oversupplied regions.
A second reason for the lube industry to monitor XTL, Claxton said, is increased polyalphaolefin production. About 10 percent of an XTL plants output, unrelated to lubes, is naphtha/n-paraffin. This is feed for olefin production in chemical plants. PAO prices have historically been high, but XTL could provide lower cost ethylene.
ExxonMobil, Dow and Sabic are among the companies that are looking closely at PAO from coal-to-liquids, Claxton noted. Access to lower cost PAO would be good for finished lubricant formulators, the auto industry and other high-end base oil buyers. But it would not be such good news for existing PAO manufacturers.
Finally, the prospect of more high quality base oils and PAO supplies will result in continued rationalization of older Group I plants, and further erosion of wax and bright stock supplies, Claxton said.
Turning to the global outlook for BTL, GTL and CTL, Claxton noted that GTL is not dead, but it is on life support.
BTL, she said, is evolving quickly, particularly in Europe, but on a very small scale and therefore at high cost, and with no lubricants on the drawing board.
CTL, however, offers a different picture, said Claxton. There was massive CTL activity in China, India, the U.S. and other areas in 2007-2008. For example, China announced about 30 projects totaling some U.S. $15 billion by 2020. About half involved Fischer-Tropsch technology, and Sasol, Shell, ExxonMobil and others were involved.
But it all cooled down in 2009, continued Claxton, because coal is really dirty. Governments halted projects, particularly in China. The CTL focus now is on realizing significant environmental improvements. Carbon capture and sequestration, conversion of carbon dioxide to other products, reduced water consumption, and comingling coal with 5 percent to 25 percent biomass are all under study.
One key outcome, said Claxton, is synergistic technology improvements. GTL brings improved syngas generation technology, improved oxygen separation technology and new catalysts to the table. CTL emphasizes emissions reduction technology and increased integration for energy efficiency and power generation. BTLs second generation technology is using the Fischer-Tropsch process, and uses crop residues, non-food crops, municipal and sawmill waste.
But any future XTL project activity is tied to the price of crude, Claxton emphasized. GTL is disabled at high and low crude prices.
If sustained crude prices are above $90 per barrel, she said, well see high project activity for CTL and BTL, but GTL will slow as gas in the pipeline is more profitable.
With crude in the $40/bbl to $90/bbl range, GTL, CTL and BTL will continue, albeit cautiously, she said. And with sustained crude prices below $40/bbl, crude will be more attractive than XTL, so most projects will slow or be delayed. CTL might move only in China; BTL only in Europe.
High crude prices will accelerate XTL technology, especially coal, Claxton concluded. CTL is the big play. It holds significant growth potential; its the one to watch.