|The Aje field off of Nigeria.|
Syntroleum’s Nigerian subsidiary has begun drilling at the Aje-3 appraisal well off the western coast of Nigeria. Should there prove to be commercial quantities of oil and gas in the Aje field, this will become the first test of Syntroleum’s Gas-to-Liquids barge.
Syntroleum Corporation owns a proprietary air-based GTL process for converting natural gas as well as other materials like coal and petroleum coke into liquid hydrocarbons. (Earlier post.) The air-based technology is more compact, and Syntroleum strategically is targeting stranded resources: hydrocarbon reserves that are either too small or too remote from major GTL installations.
|Rendering of GTL barge.|
The company is packaging its GTL plant onto a barge, with Aje as the first projected test.
Based on Syntroleum’s internal estimates, the GTL Barge will cost approximately $400 million—actually a bargain as far as GTL processing plants go.
The air-based GTL process requires less equipment, and although it offers somewhat lower process efficiency than oxygen-based GTL processes, the capital efficiency of the plant results in a higher rate of return over the life of a project.
To put it another way, the Barge relies on the economy of construction methods versus the economy of scale to produce a satisfactory return.
The plant sits on a barge 250 feet by 450 feet weighing approximately 35,000 metric tons. Given the safety issues of dealing with pure oxygen, Syntroleum believes air-based systems have a significant advantage in a marine environment.
In addition, the mobility of a barge-mounted plant would enable the operator to mitigate long-term project and financial risk by having the ability to relocate the barge.
The process produces synthetic diesel—Syntroleum S-2— that is a paraffinic, high-cetane distillate fuel essentially free of sulfur, olefins, metals, aromatics or alcohols.
Should the “mobile” GTL technology prove itself with Aje, it will open up the possibility of numerous types of deployments, such as being able to process gas flared during oil production in locations that have no other processing capabilities for the gas. Gas flaring continues to be an issue of major concern in Nigeria, for example.
The Aje field was discovered in 1996 and the first appraisal well was drilled on this field in 1997, which proved the existence of oil and gas. In January 2005, Syntroleum and Sovereign Oil and Gas Company announced they had completed the formation of an industry group to undertake the appraisal and development of Aje.