US economics of GTL chemicals trump fuels: EIA

By Ben DuBose
Online Editor

HOUSTON -- The economics of gas-to-liquids (GTL) projects producing chemical products are much more favorable than those targeting fuels, the lead chemical engineer of the US Energy Information Administration (EIA) said on Wednesday.

Speaking at the Monetizing C1 Methane Feedstocks Summit 2015, Vishakh Mantri outlined the pros and cons of GTL processes aimed at both fuels and chemicals.

On the GTL chemicals side, the biggest positive is favorable economics, Mantri said. For example, the market price of ammonia is almost $600/ton, while the production cost is just under $400/ton. Similarly positive margins are also to be had in the urea, methanol and waxes markets, Mantri explained.

"You also have flexible pathways for fertilizers and chemicals, more established technologies and the superior quality is marketable," Mantri said.

The negatives are that the GTL chemicals market is relatively small compared to fuels, and the current GTL chemical processes do not provide a significant improvement in greenhouse gas (GHG) reduction, which the lone exception being urea production.

With GTL fuels, the selling points are the large-size market and the mobility of small production facilities. However, those are offset by unfavorable economics in the US, driven by the low price of competing products. Though the GTL fuels are of higher quality, that justification has now been strong to win significant market share, Mantri said.

Additionally, the markets for methanol and DME as fuels are not well established in the US, he explained.

Conference attendees largely concurred with Mantri's assessment, with one executive declaring that ammonia and urea currently offer the most positive economics along the entire methane feedstocks chain.

The Monetizing C1 Methane Feedstocks 2015 conference continues through Thursday at the Westin Galleria in Houston.

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