GTL on the roll
Qatar pursues gas to liquids despite cost pressures
By Karen Remo Listana
Posted: 31 July 2006
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The Pearl GTL project, said to be the world's largest integrated gas to liquids (GTL) complex, was launched on Thursday amid speculations that it will be postponed due to pressures on cost.
 The Pearl GTL project includes the development of offshore natural gas resources in Qatar's North Field, transporting and processing the gas to extract natural gas liquids and ethane, and the conversion of the remaining gas into clean liquid hydrocarbon products.
The complex consists of two 70,000 barrels per day GTL trains and will produce naphtha, GTL fuel, normal paraffins, kerosene and lubricant base oils - all considered clean fuels.
GTL fuel is the largest component of the product slate and can be used in existing light and heavy-duty diesel engines. With lower emissions, it can reduce local air pollution in cities and provide a strategic diversification of liquid transport fuel for importing countries.
GTL blended fuels can also enhance engine performance as demonstrated by the Audi R10 TDI win at this year's Le Mans 24-hour race.
Over its lifetime, the integrated project planned will produce upstream resources of about three billion barrels of oil equivalent. To be operational in 2009, it will make 70,000 barrels a day of liquid fuels, which will double to 140, 000 barrels a day less than two years later.
The Pearl is being developed under a Development and Production Sharing Agreement with the government of Qatar, covering offshore and onshore costs, with Shell providing 100% of project funding.
By 2004, the project was estimated to represent an investment of only $4-5 billion. The project may now cost as much as $12-18 billion.
The cost overrun was similar to Shell's Sakhalin oil and LNG project in Far Eastern Russia, which at one time was expected to cost $10 billion but by mid-2005 rocketed to $20 billion.
Last year, Qatar Energy Minister Abdullah Bin Hamad Al-Attiyah announced that three of Qatar's GTL projects originally due to come on stream in 2010-2011 were delayed due to "unbelievable" rise in cost.
"The soaring EPC costs and a need to focus our liquefied natural gas projects rather than less profitable ventures, such as gas to liquids, were the factors behind the government's decision to put a temporary halt to new projects,' he said in the 18th World Petroleum Congress in Johannesburg.
But even unbelievable cost could not hinder Qatar from becoming the GTL capital of the world.
In June, just as planned, Qatar also saw the launch of Oryx GTL, the world's first commercial-scale GTL plant.
Both the Pearl and Oryx will convert natural gas into ultra-clean, high performance synthetic fluid using a technology that has become known as gas-to-liquids or GTL.
But as Qatar GTL plants begin to operate and prove speculators wrong, the next challenge that they have to face is finding markets for their GTL products.
For more information on GTL, visit www.futurefuelsme.com
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