WITH THE IMMINENT START of gas-to-liquid (GTL) operations at Qatar's ORYX plant at Ras Laffan industrial city, as soon as the required commissioning and validation process is completed, Qatar Petroleum (QP) and its South African-US partner, Sasol-Chevron (S-C), will have completed the first phase of one of the Middle East's most important gas projects.
ORYX, a joint venture between QP, holding a 51% stake, and S-C with a 49% stake, is part of a bold strategy described by Qatar's energy minister, Abdullah bin Hamad Al Attiyah (who is also the chairman of QP), to make Qatar the "world capital of the GTL industry". It is a strategy that appears to be well on the road to success.
The capital expenditure on this one project has been just under $1bn. The facility will be supplied with 330,000cu ft a day of 'lean' methane-rich gas from the Qatar offshore North gas field and will produce 24,000 barrels a day (b/d) of low sulphur diesel, 9,000 b/d of naphtha and 1,000 b/d of LPG. Qatar's North gas field has proven reserves of over 900tr cu ft of natural gas.
While GTL has long been viewed as a viable alternative to conventional oil, that viability has hinged on GTL fuels being cost-competitive with oil. With world markets now in almost unanimous agreement that the age of cheap oil is over, the age of gas appears to have arrived and Qatar is well placed to exploit its massive gas field reserves.
Qatar is thought to possess the world's third largest reserves of natural gas after Russia and Iran, and the growing importance of gas as an energy source cannot be overstated. Gas has already secured a greater share of the world's energy mix than coal, and some experts predict that within two decades it will replace oil as the world's dominant energy source.
Between them Qatar, Iran, Turkmenistan and Russia hold more than half of the world's total known gas reserves, but it has been Qatar that has taken the lead in forging international partnerships to develop GTL plants to utilise this increasingly valuable hydrocarbon resource.
For all gas's advantages, which include not being subject to production limits in the same way that oil is for OPEC member states such as Qatar, it has the distinct disadvantage of being difficult to move to markets. Gas pipelines are costly to build, but GTL technology has now been developed that can turn huge volumes of natural gas into more manageable liquids to enable easier transportation.
When Qatar first considered how best...