NATURAL GAS: EXTENDING THE BOOM
Natural gas is a clean, abundant and environmentally friendly energy resource that is becoming increasingly central to US energy policy thanks to new natural gas well and shale fracturing technology. It is expected to constitute an increasingly greater part of world energy consumption over the next few decades.
As the natural gas industry plans for the future, a few major questions present themselves:
• Transporting and storing natural gas can be costly and involved. As demand rises, how will the industry meet the logistical challenges?
• Natural gas is a highly price-volatile energy resource. How can the industry stabilize prices?
• Finally,how can the US maximize the domestic benefit of this growing industry?
Through investment in next-generation fission technologies, specifically Molten Salt Reactors (MSRs), natural gas producers can create innovative, profitable answers to each of these issues.
LNG: A STORAGE AND TRANSPORTATION SOLUTION
Natural gas often has to be stored and transported over long distances from gas well to the consumer.
These logistical challenges could potentially be solved by converting natural gas to a liquid form — Liquified Natural Gas (LNG). However, this type of liquefaction, storage, and transportation are currently associated with considerable cost and use of energy, making these technologies economically unfeasible for the US market. However, this is not true for foreign markets.
Since 2010, more than 95 major capital investments in the gas-intensive manufacturing sector have been announced, representing more than $90 billion in new spending and hundreds of thousands of new jobs.
Low natural gas prices have sparked interest in large-scale LNG exports to higher-priced markets, such as Europe and Asia. While high volumes of LNG exports would increase profits to natural gas producers, the resulting increase in domestic natural gas prices will potentially disrupt the growth in domestic manufacturing, natural gas fleet vehicle conversions, and electricity generators. Consequently, the United States is faced with a crucial critical policy decision today: balancing future demand for LNG exports versus the realization of domestic value-added opportunities of cheap natural gas.
SNG: STABILIZING PRICES FOR A STRONGER MARKET
The argument against exporting our Natural Gas resources
There are Geopolitical reasons to export Natural Gas
Converting materials like these into a gas that can be used in existing natural gas networks creates many options for the natural gas industry. Gas products can be manufactured and fed into the distribution system at a point much much closer to the end user, allowing greater flexibility in storage and transportation. Accessible, ready supplies of SNG energy will stabilize prices.
The conversion of coal and other feedstocks into SNG takes place in several steps:
- Gasification of coal, petrocoke, biomass or waste to produce a gas rich in hydrogen and carbon monoxide
- Shift conversion to adjust the ratio between hydrogen and carbon monoxide
- Acid gas removal, where carbon dioxide and hydrogen sulphides are removed in a washingprocess
- High temperature methanation to convert carbon oxides and hydrogen to methane (SNG)followed by drying and possibly compression of the product SNG to pipeline conditions
- Production of oxygen for the gasification process in an Air Separation Unit
- Recovery of sulphur from the acid gas removal unit, for example by converting the sulphur toconcentrated sulphuric acid in a Wet Sulphuric Acid (WSA) unit
Given the benefits, why hasn’t the natural gas industry embraced SNG? The answer is simple: cost.
There is currently one commercially viable and profitable Coal-to-SNG plant operating in the world, the Great Plains Synfuel Plant (GPSP) in North Dakota. Prior to the natural gas “fracking” boom, ten similar plants were scheduled for construction in the United States. When the price of natural gas fell, plans for these plants were put on hold. Still, the GPSP has remained competitive in this challenging market through producing a range of products, including high purity carbon dioxide used for Enhanced Oil Recovery (EOR) in Canadian oil fields, ammonia-based fertilizers, ammonia sulphate, and nitrogen and xenon gases. As the price of natural gas rises, this diversified portfolio is less important to the profitability of the company.
Energy is a major cost in producing SNG at the GPSP. If the cost of energy can be reduced, the cost of SNG can be reduced. Powering the process using the heat from a modular Molten Salt Reactor (MSR) is a tantalizing possibility. A thorium-powered MSR reactor has the potential to cut the cost of heat by more than half, radically reducing the cost of producing SNG.
Because MSRs can be made very small, they can be placed very close to coal sources (and other feedstock resources) so SNG could be produced on demand, eliminating the need to store and transport SNG vast distances.
Making Synthetic Natural Gas from Trash
SNG AND MSR: A POWERFUL OPPORTUNITY
The US is in the midst of transitioning its electrical generation sector. As traditional coal-fired power plants are replaced with natural gas plants due to environmental regulations, and as additional natural gas peaker plants are needed on the grid to compliment intermittent power supply generators, domestic natural gas usage will increase dramatically. Demand from other countries for this type of energy will also impact the market, creating opportunities and challenges.
As demand for natural gas increases, natural gas prices will increase as well. It makes sense for the US to allow natural gas export to nations willing to pay a premium for this resource. However, legislators and the public often fear that increased energy prices will harm the US economy, leading to excessive regulations for the natural gas industry, effectively killing LNG export terminal projects. Demonstrating that developing MSR technology will head off any long-term spikes in the price of domestic natural gas due to exportation would allay fears and promote long-term investment.
Because MSRs would also produce electricity much more cheaply than natural gas, naturally supplanting electrical generation derived from natural gas, it makes sense to let market forces transition a large portion of the natural gas electrical generation sector to a much higher profit transportation fuel market over the next 60 years in the form of LNG and Compressed Natural Gas (CNG). In the long term,
the transportation fuel market for the natural gas industry offers the potential of far more profit per cu/ft of natural gas than the electrical generation sector because the market price of fuels suitable for the transportation sector is higher on an energy unit basis.
CNG is much cheaper than the current market price of gasoline and LNG offers semi-truck fleet owners large savings over the cost of diesel. Still, there is a cost associated with converting gasoline and diesel engines to either CNG or LNG and in creating the infrastructure required to support wide adoption of these fuels.
Even if natural gas companies make the gamble on transportation fuels and lose, a robust and proven technology can come to the rescue. GTL (Gas to Liquid) technology is an established, economically viable process to convert natural gas or SNG into synthetic gasoline and/or synthetic diesel fuel. In 2015, Sasol Ltd. of South Africa will break ground on a $11 billion Lake Charles, LA, GTL plant that will produce 96,000BPD of diesel fuel and other chemicals (source). Using an MSR to power this type of conversion can make the GTL process even more profitable, producing transportation fuel that is highly competitive in the American market.
So, even if CNG and LNG are never accepted as a viable transportation fuels by the US marketplace, GTL conversion is a viable option and a profitable opportunity for the natural gas industry.
Velocys making Gas to Liquids Facilities in Ohio
Sasol is building a $12 billion Gas to Liquids plant in Louisiana
DOMESTIC BENEFITS: A STRONGER FUTURE
It makes sense for US policy makers to embrace natural gas imports to higher profit markets if the natural gas industry can demonstrate through investment in MSR technology that it can extend the domestic natural gas boom, potentially in perpetuity, with economically viable SNG production. Licensing LNG export hubs would be a windfall for the US natural gas industry.
There are additional domestic economic benefits to consider. SNG and the MSR have the potential to spark oil production. The process to produce SNG creates large amounts of easily-captured high purity carbon dioxide. America has vast untapped reserves of oil in the form of Enhanced Oil Recovery (EOR) plays from traditionally played out oil fields and from heavy oil reserves. These reserves need tremendous amounts of carbon dioxide in various forms in order to harvest usable oil. Many domestic SNG plants could help spur the domestic oil industry through providing the cheap carbon dioxide used in EOR. With EOR driven from carbon dioxide produced by SNG plants, the US can extend, build upon, and dominate world oil markets.
Enhanced Oil Recovery can use Excess Carbon Dioxide
The high purity carbon dioxide and ammonia created by SNG and MSR can be used in next generation FO (Forward Osmosis) desalination plants to produce fresh water very cheaply (much more cheaply than using reverse osmosis.) (source)
Developing MSR technology offers other compelling benefits to the natural gas industry and the US economy.
- MSRs can be adapted for use as the power source for oil refinery production and the fractionation process, reducing the cost of gasoline and other petroleum based chemicals.
- MSRs can be used to produce the massive amount of cheap electricity required for the economically viable plasma gasification of municipal solid waste, creating SNG while dramatically reducing the amount of wastes placed in landfills.
- MSRs can be adapted for use to transform kerogen shale plays into crude oil using either a MSRs heat or electricity produced from an MSR.
- MSRs can produce economically attractive heat to use in heavy oil recovery for remote areas such as Alaska’s North Slope.
- Some MSR designs can consume 98% of present day nuclear waste stockpiles while producing electricity, eliminating a long-term environmental problem for the nuclear industry.With the diverse ways that MSRs can innovatively impact the energy industry, first movers and adopters of MSR technology have the potential to realize many market benefits..