Economic viability of a floating gas-to-liquids (GTL) plant

Abstract

Today, a large proportion of the world's plenteous offshore natural gas resource are stranded, flared or re-injected due to constraints pertaining to its utilisation. The major constraint in the utilisation of this resource is linked to its properties, which makes it difficult to transport or store. Although the resource presents an excellent opportunity for the Gas-to-Liquid (GTL) technology (process for converting natural gas into high energy liquid fuels with qualities that surpass the most stringent current and future clean-fuel requirements), the further processing of this resource is still impeded by high cost of transportation. However, it is believed that the emerging Floating GTL concept could offer superb opportunities to bring such offshore stranded natural gas reserves to markets by converting the gas into high quality liquid fuels, at the production sites, before it is transported using conventional oil tankers or vessels. But the question is: can this venture be profitable or economically viable? In response, an Economic Model (the EV Model) to review the economic viability of the Floating GTL option was developed. Analyses on technical and economical aspects of the floating GTL application offshore are presented with case studies on Syntroleum's and Statoil's floating GTL designs. Profitability analyses were conducted using the EV model to evaluate economic parameters such as Net Present Value (NPV), Internal Rate of Return (IRR), Discounted PayBack Period (DPBP), Profitability index (PI), Break-Even Analysis (BEA) and Scale Economies for some assumed case scenarios involving both designs. In addition, sensitivity analyses were also carried out to find the most sensitive parameters which affect the viability of the floating GTL option. The economic analyses revealed that, a modest feedstock cost (~0 - $3/MSCF), high crude oil price (that stays above $30 per barrel) and reduction trend in capital expenditure (for stand alone Floating GTL plant) up to $20,00O/BPD or lower in the next few years, will open windows for the floating GTL concept. Finally, the energy policy needed to achieve the capitalisation of the plenteous offshore stranded gas resource via floating GTL is also discussed.