First gas flows from offshore into Pearl GTL plant
30 May 2011
Oil and Gas News
OLNGAS
English
Copyright 2011 Al Hilal Publishing & Marketing Group.
QATAR Petroleum and Shell have announced the first flow of dedicated offshore gas into the Pearl GTL (gas-to-liquids) plant located in Ras Laffan Industrial City in Qatar.
Shell, which is the operator of the Pearl GTL plant developed under a production and sharing agreement with QP, has opened natural gas wells offshore allowing the first sour gas to flow through a subsea pipeline into the giant GTL plant onshore. Sections of the Pearl GTL plant will be started up progressively over the coming months.
The Pearl GTL project was launched in July 2006 and the first stone was laid by Sheikh Tamim bin Hamad Al-Thani, the heir apparent in February 2007.
Pearl GTL is the largest energy project ever launched in Qatar, in terms of total investments. It consists of two offshore platforms 60 km off the Qatar coast, connected by pipeline to the largest GTL plant ever built, located in Ras Laffan Industrial City.
Dr Mohammed bin Saleh Al Sada, Qatar’s Minister of Energy and Industry, says: "This project will play an important role in further enhancing our diversification of the North Field gas utilisation and will support the optimisation of Qatar’s competitive position in the world markets by supplying ultra clean GTL products. I would like to congratulate the Qatar Petroleum and Shell teams on first on-shore gas. The scale, technology and safety record on Pearl GTL have broken all records. This is a proud day for the State of Qatar, for Qatar Petroleum and for our partner Shell."
Peter Voser, chief executive officer of Royal Dutch Shell says: "It is an important milestone in the Pearl GTL project, and we are on a clear pathway towards the start up of GTL production. I would like to thank Qatar Petroleum and Qatar for their support throughout, to make such a substantial project possible."
Once fully operational, Pearl will produce 1.6 billion cubic feet of gas per day from the North Field, which will be processed to generate 120,000 barrels per day of condensate and natural gas liquids and 140,000 barrels per day of GTL products. GTL products are high quality, clean-burning
oil products such as gasoil, high specification lubricants base oils, and chemicals feedstock.
It will take around 12 months for production to ramp up and Shell expects to hit full capacity of 140,000 bpd of GTL products in two trains in early 2012. These products will mainly be ultra-clean fuels, including sulphur-free diesel which will be much in demand around the world in the future.
GTL in today’s market offers a better return for Qatar
The Pearl JV is not Qatar’s first GTL production plant. Oryx GTL, also located at Ras Laffan, started up in late 2006. It has a capacity of 32,400 bpd of GTL products and its fuels are sold in Europe, the Middle East and Asia. Yet it is the sheer scale of the Pearl venture which sets it apart from other GTL projects around the world.
The two trains will convert 1,600 mmcfd of well-head gas to yield 140,000 bpd of GTL products - ultra-clean gasoil/diesel, kerosene, naphtha, lubricant base oils and normal paraffin - as well as
120,000 bpd of oil equivalent of upstream products - ethane, LPG and condensate.
At the height of construction, some 52,000 workers were involved on the project, and over 2 million tonnes of materials have been imported to build the plant. (The Pearl project forms part of Qatar’s two decade-long drive to exploit its hydrocarbons resources).
Last year also saw the Qatar’s investment in LNG infrastructure reach an historic milestone, with name-plate capacity expected to hit 77 million tonnes per year (mtpy) before end-2010. Doha’s decision to invest simultaneously in GTL and LNG production has already proven to be workable.
Industry analysts had been predicting rapid growth in global demand for LNG for years to come, but in the wake of the global financial crisis, energy use among the world’s leading economies fell.
This was accompanied by an unexpected surge in domestic gas production in the US - mainly thanks to a revolution in shale gas development - and increased output from Russia. Inevitably this led to pressure on gas prices and resulted in LNG shipments being redirected from the US to other markets.
GTL in today’s market offers a better return for Qatar as compared to sending LNG to marginal markets for additional supply - mainly in the West, says Andy Brown, Qatar Shell country chairman and managing director, Pearl GTL.
He adds: "GTL has a clear role in providing a diverse source of revenues. This is a choice of economics and the state of Qatar needs to look at which technologies are providing the nation with the highest value. Clearly, there is some very good business there for sending LNG to the Far East, but GTL gives them an alternative." A further advantage for GTL products is that they are replacements for oil-derived fuels and chemicals, which makes them especially attractive when oil prices are high.
Plans had been drawn up for three other GTL projects to be built in Qatar, which would have taken the country’s combined GTL capacity to more than 400,000 bpd by 2012.
But these projects were abandoned when project costs rose sharply - with ExxonMobil having withdrawn from its equally expensive GTL venture, and the Qatari government placed a moratorium on further gas development from its offshore North Field in 2005.
Initially, the ban on further developments in the North Field was expected to be in place for just a couple of years, while the condition of the reservoir was studied, but now QP is only expected to review lifting the moratorium in 2015. By then, scientists hope to be able to tell what impact the series of gas projects launched since 1991 has had on the reservoir.
There is strong appetite among QP’s international partners to collaborate on more LNG and GTL ventures. One advantage for LNG ventures is that their trains are always designed to produce over their name-plate capacity.
For example, the 77 mtpy capacity in Qatar can automatically be stretched to produce up to 83 mtpy (equivalent of about 2 mbpd of crude oil production). Shell’s Brown says: "Any further development and expansion of the Pearl GTL is up to the state of Qatar.
"There is the potential to expand, but we can only really do so when we have the will and the contract from the state of Qatar". Shell argues that, despite the positive long-term outlook for LNG demand, the case for investing in GTL capacity has been strengthened by the financial crisis.
GTL’s diverse product slate offers much greater flexibility, both in terms of markets and end-users, than LNG, and recent experience shows that in times of uncertainty the more options gas exporters have the better. Once the moratorium on the North Field is lifted, it is more than likely that further GTL projects will be launched at Ras Laffan.
Shell could hardly have chosen a better time to bring its Qatari Pearl GTL (gas to liquids) project on stream. Natural gas is increasingly abundant; oil prices are soaring.
Al Bawaba (Middle East) Ltd. (Middle East aggregated content)