Gas-to-Liquids Technology Shows Promise.

• Author: JONES, PATRICIA
• Position: Liquid petroleum gas easier method for transport of North Shore resources - Company Business and Marketing - Industry Overview

There are several proposed methods to get massive North Slope gas reserves to market. Producers are looking at the GTL method, which uses the existing trans-Alaska oil pipeline.

Part of a renewed effort to commercialize North Slope natural gas reserves, Alaska's three largest oil producers are spending considerable time and money investigating a budding technology that converts gas into a marketable liquid fuel.

Called gas-to-liquids or even "white crude," the technology developed by oil-poor Germany before and during World War II produces a synthetic clean-burning diesel, as well as other products such as kerosene and naphtha.

More than 35 trillion cubic feet of natural gas has already been identified on the North Slope, primarily through crude oil exploration and development. So far, that resource has only been used in oil production to maintain pressure in underground formations.

Gas-to-liquids is now viewed as one of the three top options being considered by Alaska's oil and gas industry in its efforts to tap and commercially market North Slope gas. Those efforts include BP Exploration (Alaska) Inc.'s decision this summer to build an $86 million test plant in Nikiski and Exxon Corp.'s ongoing $400 million research effort that has produced more than 400 U.S. patents for the emerging process.

Previously, industry experts considering development of Alaska's gas resource have leaned toward the traditional method of shipping liquefied natural gas via pipeline across the state and then to Asian markets by specialized oceangoing tankers.

More recently, producers have looked at another alternative--building a gas pipeline from the North Slope to existing Canadian transportation infrastructure to deliver the resource to U.S. markets.

Yet industry experts seem to agree that all three options--including gas-to-liquids--remain uneconomical given today's market trends and the scope of such an Alaska project.

"GTL appears to be making good progress," said Roger Marks, petroleum economist for the state Department of Revenue. "Right now, none of the three scenarios are commercially viable."

But the emerging GTL technology comes with some unique attributes when compared to the more traditional gas pipeline scenarios.

For starters, the "white crude" product can be moved off the North Slope through the existing 800-mile, trans-Alaska oil pipeline, which currently carries crude oil south to the ice-free shipping port of Valdez.

"The product of this process...