The origins of this hazard, air pollution, came from good intentions, but now the decisions 20 years ago are proving to be among the biggest health problems since the Great Smog of 1952 killed more than 8,000 Londoners. In the 1990s, governments across Europe were looking at ways to reduce greenhouse-gas emissions to meet their Kyoto Protocol targets and what seemed easiest was to convert cars and trucks from gasoline to diesel fuel. This move would reduce carbon dioxide (CO2) by 15% for every mile driven. Nobody raised the issue of particulate and nitrogen dioxide (NO2) pollution this would create in the central cities. Diesel engines discharge 22 times more fine particulates than gasoline engines, and these can cause pulmonary problems, particularly in young children. Asthma attacks are the number one cause of emergency hospital admissions for children in London.
Meanwhile, across the world, scientists at the Qatar Science and Technology Park (QSTP), part of Qatar Foundation, began looking at ways to turn natural gas into higher value products, such as clean diesel fuel and lubricants. As one of the world’s leading producers of natural gas and exporters of liquified natural gas (LNG), Qatar has attracted many of the industry’s key players. Researchers in the private sector and academia have also come to Qatar, working to make the process of extracting and harvesting natural gas more efficient, and reduce its impact on the environment.
But investment in further research and natural gas production is tied to the economic cycle and the price of oil and gas.
“The key to investing in gas-to-liquid (GTL) technology is to build the plant when the price of oil is going up,” says Nimir Elbashir, author of Natural Gas Processing from Midstream to Downstream (Wiley, 2019) and director of Texas A&M’s Engineering Experiment Station’s Gas & Fuels Research Center based in Qatar and Texas. “Qatar, Uzbekistan, Kazakhstan and Nigeria are geographically perfect for GTL production because the feed stock is right there and effectively free.”
Before LNG was first exported from Qatar in 1996, a new LNG terminal was required that would have cost, in today’s money, more than US$10 billion. LNG carriers cost at least $400 million, and need to dock at a port equipped to take the liquified gas. A LNG import terminal costs about $500 million to construct. All of these capital-intense components must be in place before natural gas can be shipped internationally. Royal Dutch Shell and its partner, Qatar Petroleum (QP), began looking at constructing a GTL plant in 2004. Shipping refined GTL diesel and lubricants to markets in Asia and Europe is a lot less capital intensive than transporting LNG.
Although the incentive to produce clean GTL diesel wasn’t environmentally driven, the timing of the completion of both major projects coincided with the peak of the crisis in European cities. Clean GTL diesel emits 70% less NO2, is sulphur-free and has virtually no particulate discharge.
Given the recent controversy about inaccurate emissions testing of diesel engines by Volkswagen and other manufacturers, public opinion about diesel has shifted in Europe. Nevertheless, retiring the diesel fleet will take at least a decade and particulate pollution in some Europe has led cities like Paris and London to ban traffic during critical periods of high pollution. One solution may be to switch to GTL diesel, which is why the Pearl GTL plant is running at near capacity.
Becoming the biggest GTL-producing country in the world required billions in investment and a huge research effort to make it possible. Royal Dutch Shell did have previous experience in GTL production in Malaysia, but the plant it opened there in 1993, is less than a tenth of the size of the Pearl GTL plant in Qatar and didn’t require the full recycling of the water required to cool the production facility. Sasol’s Oryx GTL plant was the company’s first foray into GTL production. Without the critical research undertaken at QSTP, neither venture have got off the ground at such a rapid pace. Shell has more than 3,500 patents across all stages of the GTL process, including more than 1,400 that were specific to Pearl GTL.
During the projected lifetime of the Pearl GTL plant, Shell estimates it will have produced the energy equivalent of over one billion barrels of oil. On a cost basis, the plant can operate profitably as long as the price of Brent Crude is above $40 a barrel. Shell invested $20 billion to construct the plant. The costs were recovered after six years of operation, and Pearl GTL is a major profit center for the company today. It produces the equivalent of 140,000 barrels of oil a day. Sasol’s Oryx GTL plant produces 34,000 barrels per day
Even with the best research and development, the economics of GTL production have to be optimum before profitability can be assured. That requires a sufficient disparity between the price of crude oil and natural gas.
“In the U.S., it would make economic sense when the price of [West Texas Intermediate oil] is nearing $100 a barrel,” adds Elbashir. “Shell recovered its $20 billion investment in the Pearl GTL plant in Qatar in just six years, and it is now one of its most profitable ventures in the world.”
“In order for the process to be less expensive than processing petroleum-based refining for transportation fuels, the natural gas feedstock has to be essentially free — as in the case of Qatar, with a large stranded gas field,” says David Ramberg, who authored the paper The economic viability of gas-to-liquids technology and the crude oil-natural gas price relationship (Energy Economics, 2019) while pursuing his doctorate at MIT. “This is one reason we don’t see many other GTL plants operating in the world, and none that are as large as the Pearl complex.”
The UN-backed Principles of Responsible Investing (PRI), representing investors with $86 trillion of assets under management, now estimates that demand for crude oil will peak in 2026 to 2028. Increasingly, large institutional investors — like Oljefondet, the $1 trillion sovereign wealth fund of Norway — have dropped any investments linked to oil exploration, based upon research showing that the internal combustion engine will eventually be replaced by electric- or hydrogen-powered vehicles. They still have energy holdings in companies that are also developing renewable and less-polluting fuels.
The UK parliament introduced the Air Pollution Bill, which would require the government to adopt tighter limits on air quality based on World Health Organization recommendations. Parliamentary committees heard testimony that the pollution in the UK’s major cities shortens the lives of 36,000 people a year, costs the economy £20 billion annually in healthcare and impacts on businesses and, if left unchecked, would cause 2.4 million new cases of disease in the next 16 years. Until electric vehicles begin to make up the majority cars and trucks on the road, the world will need cleaner solutions. And researchers in Qatar are working to make GTL diesel a viable alternative.
To learn more about the new science and technology emerging from Qatar, visit the collection.
