G2X Energy and EMRE sign methanol to gasoline technology license and license option agreements; plans for $1.3B natural gas to gasoline plant
18 January 2013
|The ExxonMobil MTG process flow diagram. Source: EMRE. Click to enlarge.|
G2X Energy, Inc., a developer of natural gas to gasoline projects, entered into a licensing agreement to use ExxonMobil Research and Engineering Company’s (EMRE’s) methanol-to-gasoline (MTG) technology (earlier post) in the development of a world-scale natural gas to gasoline project. (Earlier post.) G2X Energy is the first to secure a long term multi-site agreement with EMRE for natural gas based methanol to gasoline projects.
G2X Energy says will leverage its strategic partnership with the Proman Group, a leading process plant engineering and operating company, and EMRE’s MTG technology to create a platform to expand natural gas’ role in the existing transportation fuels market.
|The shape-selective catalyst limits hydrocarbon synthesis to 10 carbons—i.e., gasoline range. Source: EMRE. Click to enlarge.|
The MTG process first dehydrates methanol to dimethylether (DME); an equilibrium mixture of methanol, DME and water is then converted to light olefins (C2-C4). A final step synthesizes higher olefins, n/iso-paraffins, aromatics and naphthenes. The shape-selective catalyst limits the synthesis reactions to 10 carbons—the result is sulfur free gasoline with a typical 92 Research Octane Number.
G2X Energy is currently developing gasoline projects that take advantage of expanding North American natural gas reserves. EMRE’s MTG technology, coupled with G2X Energy’s capabilities as a proven plant builder and operator, will allow natural gas producers to convert methanol directly into transportation fuel.
Lake Charles natural gas to gasoline facility. G2X plans to build a $1.3-billion natural gas-to-gasoline facility at The Port of Lake Charles in Southwest Louisiana.
G2X Energy is finalizing an option to lease 200 acres in the Industrial Canal at the Port of Lake Charles where the company will have the flexibility of shipping gasoline by pipeline or sea. G2X Energy will build its facility near Trunkline LNG, a major energy tenant operating at the port. T
G2X Energy will use natural gas to produce methanol, then convert methanol to final gasoline for 90% of its production. About 10% of the output will be liquefied petroleum gas, or propane.
Subject to additional feasibility analysis, Houston-based G2X Energy expects to make a final investment decision by the end of 2013, upon obtaining facility permits, and construction would begin in 2014 followed by estimated completion of the project in early 2017. Hiring of the plant management team will take place in mid- to late 2014, with most of the hiring for the facility to be completed by the end of 2015.
Pampa Fuels methanol plant. Separately, G2X broke ground for its Pampa, Texas-based methanol plant—Pampa Fuels.
Located on a brownfield site previously owned by Celanese Chemical and utilizing some existing operational equipment, the Pampa Fuels facility represents a modern example of reusing existing industrial infrastructure to lower capital cost for the production high-value fuels and chemicals.
The facility will produce approximately 65,000 metric tons of finished product annually to meet growing regional demand in North Texas and Oklahoma. Full-scale production is expected to begin in 2014.
Posted by: SJC | 18 January 2013 at 12:08 PM
They could stop with the DME and use it as a clean burning diesel fuel but it would probably require a different fuel tank, pump, and injector setup. It does seem that the future will involve more NG being used one way or another for transportation fuel.
Posted by: sd | 18 January 2013 at 12:23 PM
DME is good for trucks and buses. They can go right from synthesis gas to DME to diesel or gasoline. The synthesis gas can be made from natural gas, coal and/or biomass.
The beauty of synthesis is there are multiple inputs and outputs to the process, it is more flexible and versatile. If you need more diesel than gasoline right now, fine. If you have more coal than natural gas right now, fine.
Posted by: SJC | 18 January 2013 at 12:44 PM
Why export LNG when you can produce efined products such as these (methanol, DME, GTL, etc.)?
Chenieri's liquefaction plant will cost at least $6.5 Billion while this will supposedly cost $1.3B. I'd be interested to know which one is more profitable per MMBtu of natural gas input...
Posted by: juninho | 18 January 2013 at 01:04 PM
Methanol, itself, is a good substitute for gasoline in internal combustion engines, with some engine modification. And in the future methanol can power fuel cells. For more, search under the "Methanol Economy".
Posted by: huon | 18 January 2013 at 02:27 PM
Methanol works, in the 1980s California had a test program with 1000s of Ford Taurus running on M100, the program was a success.
LNG happens because countries like Japan will pay 5 times the wholesale rate in the U.S. Resources will go where money can be made, even if it does not make a lot of sense nor do a lot of good.
Posted by: SJC | 18 January 2013 at 06:52 PM
Methane is a direct substitute for gasoline in internal combustion engines, and there are no conversion losses.
The economic viability of this GTL project relies on N. American NG being cheap for decades. This seems unlikely; the break-even point for shale gas is $7-8 per mmBTU, so once the current glut abates we will see Henry Hub prices more than double again.
Posted by: Engineer-Poet | 19 January 2013 at 04:56 AM
@e-p: NG may not be cheap for decades, but close to it. There are many, many NG wells that have been drilled in Texas, Louisiana and Arkansas but not produced - they are just sitting there ready to be fracked. These will gradually be used as existing producing NG wells are depleted, thus stabilizing prices for a long time to come. Eventually, when/if prices do start to rise, the oil & gas industry will shift assets back from crude to NG (fracking for crude is where the money is right now). And when they start drilling for NG again in large numbers, the same thing will happen - they will drill many more wells than necessary and drive the price back down.
Posted by: ejj | 19 January 2013 at 07:50 AM
Some natural gas comes from oil fracking, this lowers the price. We will see whether natural gas is used for synthetic fuels, predictions can be wrong.
Posted by: SJC | 19 January 2013 at 09:58 AM
If you have an inventory of some 500,000,000 cars in the world, and lots of cheap, clean fuel that cannot be used by them.
Is is smarter to replace those 500 million cars with those able to burn the new gaseous fuel or is it wiser to build some few conversion facilities that convert the clean gaseous fuel to clean liquid fuel that the existing 500 million cars can consume?
The answer is obvious and we should be doing so. Especailly as htese new clean fuels can be tailored to produce the new targetted fuel characteristics.
Private industry is doing so. But for all the pompous chatter by the governmental bureaucrats, the government(s) are certainly not helping do so. I'm sure these new facilities are as encumbered as ever with red tape, multiple and conflicting permits, EPA siting baloney, etc.
There does not seem to be even an attempt by the government to accelerate permitting and ameliorate those concerns.
Posted by: D | 19 January 2013 at 11:30 AM
CNG/LNG for buses and trucks sounds good. It seems more practical to make liquid hydrocarbon fuels for the present needs. Eventually we may need to only make jet fuel, but we need a bridge to get to the "eventually".
Posted by: SJC | 19 January 2013 at 11:43 AM
@D: I totally agree. Boone Pickens has been trying to get vehicles converted to burn NG - but I think it is better to convert domestically produced NG into gasoline that can be used in existing ICE vehicles (with no modifications needed). I think the only reason this project is moving forward is because of the projected profit margins for G2X energy. If after the project is completed and if they start making a lot of money, do you think they will probably be gobbled up by one of the major global oil companies, even if it would create a situation where the multi-national oil company would be competing against itself?
Posted by: ejj | 19 January 2013 at 11:53 AM
It makes little sense to build a facility with a 20-50 year useful life to feed the appetites of vehicles with useful lives of 10 years or so. It makes even less sense if it converts one decent motor fuel into another at 50% energy efficiency.
You can buy an 80 cubic foot SCUBA tank for under $200, retail; figure $300 for a full-up supplemental fuel system in mass production and another $300 for a compressor capable of refilling it overnight. If you had one of these in your car, it would hold the NG equivalent of about 70% of a gallon of gasoline. If you refilled it daily, it could supply about 80% of the fuel for the average 22 mile/day commute in a 25 MPG vehicle. Figure gasoline at $3.50/gallon and natural gas at $1.10/GGE, for a savings of $2.40 per gallon displaced. That's $1.68 saved per tank per day, $50.40 per month, $605 per year. One-year payback is pretty good.
Contrast that to 20-year amortization on a GTL plant. There is no comparison.
Posted by: Engineer-Poet | 19 January 2013 at 12:43 PM
@e-p: Isn't your math (their potential profit margin) what is driving the project? NG purchased at $1.10 GGE and refined gasoline sold at $3.50 gallon = $2.40 gallon profit?
Posted by: ejj | 19 January 2013 at 03:25 PM
$2.40 per gallon revenue, not profit....but even if $1 per gallon went to all their costs, $1.40 per gallon in profit would still be pretty good.
Posted by: ejj | 19 January 2013 at 03:29 PM
Henry hub price for NG is around $3.50/mmBTU, around 40¢/gge. At 50% efficiency, feedstock costs $0.80/gallon. The plant costs $1.3 billion and the web site claims 65,000 tons of MeOH/yr. The amortization at 10% over 20 years is $12.5 million/yr, or about 50¢/gallon of methanol. Roughly double that for the cost of gasoline, assuming it's just deoxygenated methanol at half the mass (it's somewhat less).
If you raise the price of NG to the shale gas cost of $7.50/mmBTU, feedstock goes to $1.70/gallon, total cost to $2.70/gallon. This is barely competitive with petroleum. If NG goes to halfway between the cost of shale gas and the world price of $15/mmBTU, cost goes to about $3.60/gallon. Meanwhile, one gge of NG would cost only $1.30 at Henry hub prices (probably $2/gge retail).
In an energy-constrained world, the only reason you'd ever want to convert NG to commodity fuels at 50% efficiency is if you can't get it to market any other way.
Posted by: Engineer-Poet | 19 January 2013 at 04:07 PM
@e-p: I think you hit on the answer...it's not anticipated to get to market in any other (significant) way, other than municipal power generation & household use. There was an orgy of drilling for NG for 5 years and now there is a supply of it that will last for decades...and that apparently isn't accounting for new exploration & production in areas not drilled yet.
Posted by: ejj | 19 January 2013 at 05:25 PM
The current fracced NG supply will not last for decades. The decline rate of these wells is on the order of 80% in their FIRST year; as soon as the "drill it or lose it" contracts are finished, the supply will contract swiftly.
Even if fracced NG costs upwards of $8 or even $10 per million BTU, it still makes great sense as motor fuel; it's both clean and cheap compared to petroleum. This is part of the resistance to allowing CNG/LNG vehicles; that substitution would upset an apple cart which includes a lot of powerful interests.
That is also why I want to see it happen.
Posted by: Engineer-Poet | 19 January 2013 at 08:33 PM
From today's Yahoo! News:Yup.
Posted by: Engineer-Poet | 20 January 2013 at 08:15 PM
@e-p: Clearly you make a compelling argument about the economics of NG in and of itself. However, there doesn't seem to be any significant government funding or potential tax breaks incentivizing these projects - it is being driven primarily by private sector cost/benefit analyses. Therefore there must be some significant projected profit margin involved, however wasteful this process may be....ie. getting it to the markets in the form where there is the most demand (gasoline). The market does not want NG vehicles (because of the conversion costs?) - it wants petro-gas vehicles.
Posted by: ejj | 23 January 2013 at 11:37 PM
The market "wants" vehicles with low purchase cost and good usability. There is a distinct lack of public CNG fueling infrastructure, which makes it impossible to take vehicles like the Honda Civic GX even between relatively close major cities. These are barriers to market penetration.
I'm not sure why NGVs are so expensive compared to gasoline, though I suspect that the lean NOx catalysts required for lean-burn engines are a substantial part of it. At least one manufacturer has shifted from lean-burn to EGR so that a conventional 3-way catalyst can be used. If that slashes the cost of the aftertreatment system and it can be moved down to the LDV market, we'll see the price of NGVs drop.
LNG is moving into heavy trucking on its own merits, and even if NG prices rise to historically high levels it is still far cheaper than ULSD. This is a trend that is not going to stop anytime soon; the only factor is how fast the twin pressures of clean-air mandates and price arbitrage will push it along.
Posted by: Engineer-Poet | 25 January 2013 at 06:50 AM
"You can buy an 80 cubic foot SCUBA tank for under $200"
Or you can blow up your house killing yourself and your children. Launch projectiles at your neighbors too!
Why? To save a few pennies a day!
I work in the nuclear industry and I can tell you what the cost of safety is. We have to show we do not accidentally kill people.
Wing nut generally just kill themselves and their families. However, to do something on a large scale requires that the equipment and service providers show that it meet safety standards. The saving go away.
Posted by: Kit P | 27 January 2013 at 08:26 AM
Savings of 2/3 of a gallon-equivalent per day is about $2.20 at today's gasoline prices around here; that's over $800 per year. It would be more in California. If you could get a one-year payback it would be very attractive to almost everyone.
Perhaps the Twit can find me a report of an NGV rocketing its fuel tank at neighbors. I've not encountered one, but I'm always willing to add to my collection of items for my "News of the Weird" folder.
Posted by: Engineer-Poet | 28 January 2013 at 01:58 AM