A Gas To Liquids Plant For the North West Shelf ?

Chevron Australia has been in the news this week after announcing plans to develop a new LNG plant on the WA mainland to process gas from its Wheatstone discovery on the north west shelf. Interestingly, as well as feeding gas into the domestic network, they are considering developing a gas-to-liquids facility as part of the plant - which may slightly reassure those who look at both our trade deficit (in which imported liquid fuels are a major factor) and the possible impacts implied by the export land model.

Gas To Liquids

GTL projects have frequently been discussed over the years but there don't seem to be a lot of concrete examples, outside of some pioneering plants in South Africa and Malaysia and some large projects being developed by Shell and Sasol/Chevron in Qatar (which Qantas is apparently considering as a source of jet fuel). The Energy Blog has a good description of the GTL process and the players in the industry, for those interested in the technical details, and Robert Rapier has previously posted at TOD on the "Promise and the peril of GTL", quoting an estimate from Syntroleum that there is enough stranded natural gas to produce 300 billion barrels of fuel.


The Wheatstone gas field is about 85 kilometres southwest of the Goodwyn platform of the North West Shelf project (180km offshore), with the two permits it encompasses containing an estimated 4.5 trillion cubic feet of natural gas. Chevron is talking about a single LNG production train producing five million tonnes of LNG per year (around a third of the size of Woodside's production at the nearby North West Shelf project) but has not given any indication of the volumes under consideration for the GTL option.

Nigel Wilson at The Australian has the most in-depth report on the development (and a shorter follow up article) - noting that while there has been speculation since 2004 that Wheatstone would be used for a gas-to-liquids plant, helping to offset Australia's ever-increasing dependence on imports, "few in the oil and gas sector believe Chevron will actually build an LNG plant based on Wheatstone".

The article goes on to speculate that it might make more economic sense to process Wheatstone gas at the North West Shelf facility as part of the development of Woodside's Pluto project, which would make a GTL facility highly unlikely, but that Chevron could be more interested in developing a standalone GTL plant than a small new LNG plant or sending the gas to the new Pluto LNG trains.

Chevron's LNG interests in Australia were seen as being its 50 per cent stake in the Gorgon project, which for more than a decade has been trying to commercialise Australia's biggest gas fields on the North West Shelf. In presentations to both the federal and West Australian governments recently, Chevron has been short on detail on what it wants to do with Wheatstone even though it has resolutely argued the reservoir will not be part of the supply for Woodside's $12 billion Pluto LNG development now under construction. ...

Chevron and its Gorgon partners, ExxonMobil and Shell, are in a bind. They want to commercialise some of Australia's best gas assets - ExxonMobil's contribution is the Jansz field, reputedly Australia's largest with an estimated 22 trillion cubic feet of gas - but the costs of the Gorgon LNG proposal are out of all scale to potential returns.

Gorgon is in the WA Government's books at $11 billion but that's a figure from several years ago. Now substitute a figure three times that for a plant that has a production licence for 10 million tonnes a year and the economics look more than a little shaky. Admittedly, Chevron has said it wants to know what environmental approval hoops it will have to go through to lift Gorgon from two trains to three and output up to 15 million tonnes a year, yet there seems little urgency in presenting the formal request to the WA Government.

And that's probably part of the problem concerning Wheatstone. For several years Chevron has talked expansively of its plans and has yet to deliver. That's why few in the oil and gas sector believe Chevron will actually build an LNG plant based on Wheatstone, even though that's what it is telling government it plans to do.

Wheatstone is about 85km southwest of the Goodwyn platform of the NW Shelf project but more than double that distance from the coast. As such, it looks logical that it should be tied into the gas reserves for the Shelf project, of which Chevron is one of the six joint venture partners, or tied to Pluto, which is only slightly further to the west.

For some years it has been reported that the gas available to the Shelf partners has been exhausted by their success in rolling over contracts with foundation customers in Japan, the $25 billion Guangdong deal in China and smaller commitments to Korea. This claim does not appear to take account of a number of small gas fields that are currently stranded on the Shelf. Having said that, any further expansion of the NW Shelf project would appear to be more commercially attractive than investing in a greenfield LNG operation virtually next door.

A similar argument evolves for Pluto where Wheatstone is regarded within the gas industry, if not within Chevron, as a possible supplier to the Pluto 2 plan, which Woodside's Don Voelte says is well into the planning stage. Pluto 2 would be located on the same site as Pluto 1 which Woodside is promoting as the Burrup LNG Park that Woodside says is being designed to process gas from Pluto as well as other regional fields.

There is also the view, not a million miles from Chevron's Perth headquarters, that that company does have to get some operational runs on the board. But why not gas to liquids or even domestic gas rather than the problematic returns from a small, stand-alone LNG plant?

At this point it is difficult to determine how much (if any) liquid fuel we could see flowing from Australia's offshore gas reserves, but the surge in LNG developments does raise the question, how long will Australia's gas reserves last and where will the gas go ? I hope to have a post up on this shortly.

Cross posted from Peak Energy

The size of Wheatstone, does not at first glance appear to make it a cost effective candidate for LNG.
If, as the article suggests, Gorgon will be economically marginal, how can the much smaller field be?

Reading Nigel Wilson's articles reveals a little more. Jim Blackwell is quoted as saying that partnerships are essential "The partners of choice in our industry will be those who master the principles of partnership," Indeed he is correct, but perhaps he should be looking at his own companies track record. In 2003 we in the industry were subjected to the FUD memo, and we were supposedly working in partnership with them!!
The majors have never made the best of bedfellows and even though they are now minors in comparison to the state owned oil cos. like Saudi Aramco, a legacy of behaviour patterns remain.

Gas to liquids was used by the New Zealanders in Taranaki, where they had a plant at Motanui? This was run by Mobil and closed in the nineties when the price of oil dropped. The source for this was the Maui gas field, which was of similar size to Wheatstone. I think there was talk of a LNG plant for that field as well.

The question to be asked though, is the economic sense of turning gas into liquids at the opposite side of a vast continent/country to the major market for those liquids? Perhaps the shorter trip to SE Asia is actually the intended target market?

With regard to helping our balance of payments - who in their right mind would think the liquids are destined for this country!!!

Well - believers in the export land model believe this theory applies to all producers.

In any case, we get a lot of refined products from offshore, usually Singapore, so this would at least provide an onshore option that could be directed for internal use if need be.

Atua - I was going to mention the Kiwi methanol plant but I wasn't quite sure of the history and it doesn't seem to be a going concern now.

There has been talk about constructing a methanol plant in Darwin for a long time as well (since at least 2000) but as far as I'm aware this hasn't actually happened. MEO Australia still has project planned :


Big Gav- The Motunui plant was a combined plant that made Methanol and then converted it to synthetic petrol. Whether this is how it is done elsewhere in the world I do not know. The synthetic petrol plant was closed in April 1999. The methanol trains were mothballed, but as the following link shows, it appears Methanex is going to reopen at least one train. http://www.stuff.co.nz/4377887a13.html
Hope this is helpful.
Pique Oil


Now it seems that there will be more gas flowing from offshore Taranaki to replace the declining Maui field it makes sense to start up again - especially given current oil prices...

It is good to see that we are getting a bit of experience in this area. Australia could certainly use some GTL.

Can anyone comment on the EROEI of GTL?

As Australia appears to be more gas prone than oil, is this resource in a sense a lifeboat that may allow us some time to adjust to post peak future?

I'd guess the EROEI is better than that for LNG, but I haven't seen any figures.

From Robert Rapier's article on XTL, with inconclusive chat in the comments :

Of course there is a catch. GTL is not all that efficient. There are efficiency losses during both the POX and the FT processes. It would be far more efficient to run automobiles directly on the natural gas. Due to the fact that the gas is stranded, this is obviously not an option. But the efficiency losses are significant. According to the Syntroleum link, it takes 10,000 cubic feet of gas to make 1 barrel of fuel. 10,000 cubic feet of natural gas contain roughly 10 million BTUs, but a barrel of fuel contains only around 5.5-6 million BTUs. Forty percent of the BTUs are either lost as radiant heat, or turned to steam and consumed in the GTL plant. Unless carbon sequestration is in place (unlikely), all of those BTUs wind up as carbon dioxide in the atmosphere. On top of that, the BTUs from the barrel of fuel are going to wind up as carbon dioxide in the atmosphere after the fuel is combusted.

How long this can compensate for oil depletion depends on how much gas were in turning into LNG and shipping offshore.