Qatar's $5b GTL project on track

The world's largest gas to liquids (GTL) project in Qatar is on track with the front-end engineering and design (FEED) to be kicked off shortly by the Royal Dutch/Shell Group, which signed a heads of agreement with Qatar Petroleum (QP) last October.

The estimated $5 billion project will involve the drilling and production of 1.6 billion standard cubic feet per day of gas from two offshore platforms, to onshore gas processing and GTL conversion into new ultra clean liquid products for marketing rights worldwide.

According to the latest edition of Shell World, phase one of the development will produce 70,000 barrels per day (bpd) of GTL products when it is operational in 2008-09.

Phase Two is planned for completion less than two years later and will double the plant's output to 140,000 bpd.

GTL products include naphtha and transport fuels, normal paraffins and lubricant base oils. In addition, substantial quantities of condensate and LPG will be produced from the onshore gas processing plant.

"There are very few other companies, if any, in the world that could bring together the same upstream, downstream GTL, and new products and fuels marketing experience. To be able to bring this experience together into one integrated team leveraging Shell's project management skills is quite unique," said Andy Brown, project director.

The GTL plant in Ras Laffan will be by far the largest in the world, on par with some of the world's largest refineries, and similar in complexity to the Stanlow refinery in the UK.

Its output will be about 10 times that of Shell's GTL plant in Bintulu, Malaysia, which was the first in the world to produce ultra-clean GTL products on a commercial scale.

Building and operating the project presents many technical challenges. "But there's more to it than the technical aspects. We also have to consider how the project can contribute to sustainable development, in line with the principles to which Shell companies are committed," said Brown.

As a result of this broader approach to the project, Qatar GTL stands to deliver considerable benefits in all three dimensions of sustainable development – people, planet and profits.

Profit is a pre-requisite for any project and this one is set to give both Qatar and Shell a satisfactory return on their investment, in relation to the risks involved, even at oil prices below $20 a barrel. For Shell, it provides a robust investment. For Qatar, it represents a complementary way to commercialise gas that is competitive with some of the LNG opportunities under construction.

Apart from its scale, the Qatar GTL project is significant for several reasons. The technology of GTL produces among other things clear, colourless, sulphur-free transport fuels with excellent combustion properties. GTL can also help to allay government and consumer worries about security of fuel supply. Based on gas rather than oil, GTL introduces a welcome diversity in the fuel 'basket' reducing dependence on any one source.

"GTL also complements other ways of commercialising gas reserves, such as LNG, which serve different markets and different applications. For both resource holders and producers alike, it offers a revenue stream in a new and virtually limitless market for middle distillate products," said Malcolm Brinded, Shell's chief executive of gas and power.