Fischer-Tropsch gas-to-liquids technology : an assessment of the competitive landscape

Abstract

Global proven and speculative natural gas reserves are enormous. Unfortunately, much of these reserves is economically stranded and as a result, can not be profitably utilized using traditional methods. In another development, crude oil refiners are facing increasing pressures to produce clean fuels. Environmentalists are asking for such clean fuels that will force refiners to make outrageously high refinery-modification investments. Fischer- Tropsch Gas-to-Liquids (F-T GTL) technology may offer a sustainable solution to these challenges. On one hand, F-T GTL promises to economically monetize stranded natural gas reserves. On the other hand, F-T GTL is capable of producing fuels with qualities that surpass the most stringent current andfuture clean-fuel requirements. A competitive landscape is thus formed: gas utilization options on one side; automobile fuel production on the other side; and F-T GTL in the centre. The question is: how competitive is F-T GTL in this landscape? In response, I developed a real-time economic model using (amongst others) the Monte Carlo Method. The model captures the competitive landscape as defined, and compares the viability of competitors in the landscape, using different scenario settings. In the study I present a ranking of the competing options in the landscape in descending order of viability, based on the relative sizes of their NPVs as estimated for each baseline scenario. Finally, I interpret the rankings. Based on the outcome of this research, the answer to the question of whether the current interest in F-T GTL will be sustained or not is an emphatic 'yes'.