- The Washington Times - Tuesday, May 24, 2005

RAS LAFFAN INDUSTRIAL CITY, Qatar - The rat’s nest of pipes and columns snaking across the desert belies a secret process that will use cobalt to turn natural gas into a powerful, clean-burning diesel fuel.

By next year, rulers of this tiny desert sheikdom hope, these gas-to-liquid (GTL) reactors under construction will bring in billions of dollars while clearing big-city smog belched by trucks and buses.

Petroleum analysts who have sniffed vials of that gin-clear GTL diesel speak of it with reverence.

“It’s a beautiful product,” said Jim Jensen, a Massachusetts-based energy economist. “The kerosene smells like perfume.”

So far, about $20 billion has been committed to build an unprecedented array of clean diesel plants in this industrial park on the southwestern shore of the Persian Gulf.

Those chipping in include oil titans Royal Dutch-Shell Group, Chevron Corp. and Exxon Mobil Corp., which is taking a $7 billion gamble on GTL, the largest investment in the corporate history of the second-largest U.S. company.

Smaller plants in Malaysia, South Africa and the United States have proved that the technology works, but none is as large as those planned here. In a few years, said Andy Brown, who heads Shell’s office in Qatar, the country will be “the GTL capital of the world.”

Birth of an industry

“This really is where GTL will come of age, where the industry will be born,” he said.

By 2011, the Qatari plants should be producing 300,000 barrels of liquid fuels and other products daily. The largest GTL plant now producing is Shell’s plant in Bintulu, Malaysia, which is churning out 14,700 barrels per day.

The investments amount to a big gamble on a clean alternative to pollutant-laden crude oil, based on an obscure “synthetic fuel” process developed to make fuel from coal in 1920s Germany.

Like Qatar’s headlong rush to produce liquefied natural gas, the ruling sheiks here are pushing GTL as an idea whose time has come.

The clean-burning fuel, with almost none of the smelly sulfur soot belched by engines burning conventional diesel, appears tailor-made for countries seeking to reduce emissions in line with the Kyoto Protocol on global warming.

Faisal al-Suwaidi, chief executive of Qatar Liquefied Gas Co., said he has received interest from Japan, Canada, South Korea, Europe and the United States, the world’s largest polluter. Although the Bush administration refused to sign the Kyoto Protocol, state and local caps on emissions are pushing refiners to clean up diesel.

Complying with Kyoto’s strictures “is agenda item Number 1 when we visit countries like Japan,” Mr. al-Suwaidi said over coffee in his office in the Qatari capital, Doha. “This is the product for them. This is ‘green diesel.’”

As far as carbon emissions go, green diesel appears to offer only a modest dent, partly because natural gas contains less carbon than oil-based diesel. The big difference is in sulfur.

Sulfur emissions from diesel engines cause as many as 10,000 deaths a year among Americans with heart and lung ailments, said William Becker, executive director of the State and Territorial Air Pollution Program Administrators/Association of Local Air Pollution Control Officials in the United States.

“It’s a matter of life and death,” he said. “And the solution depends on removing the sulfur.”

Emissions can be cut further by adding better filters that remove up to 90 percent of remaining particulates, said Richard Kassel, a fuels specialist at the Natural Resources Defense Council in New York. Sulfur-laden diesel gums up these finer filters, he said.

“Clean fuels open the door to the most advanced emission controls,” Mr. Kassel said.

Ahead of the pack

Tests of GTL fuel are under way in several countries. Shell is selling the fuel in Thailand, the Netherlands, Greece and Germany at slightly higher costs than its oil-based diesel. In Europe, Shell calls the fuel V-Power Diesel.

Mr. Kassel and other environmentalists note that GTL fuel is most attractive when high oil prices make it competitive. The fuel probably will cut smog the most in developing countries, where emissions standards will require better filters.

“It’s going to be a very important blending stock, but the idea that it’s going to compete with crude oil is overstating the case,” Mr. Jensen said. “It sort of cuts down on the use of crude, but it’s not going to massively change things.”

GTL diesel from Sasol Chevron, the South African-American joint venture and a 49 percent shareholder in the first Qatari GTL plant, will surge onto the market next year and could wind up as a niche fuel that powers fleets of city buses and trucks, said company spokesman Malcolm Wells.

More likely, said Mr. Jensen, the energy economist from Massachusetts, the clean fuel will be blended with crude-oil diesel to lower sulfur emissions into compliance with tightening standards in several countries.

Future of fuel

Analysts say the economics of GTL make sense when it is produced on a large scale and with a cheap source of natural gas. Qatar, a country that is slightly smaller that Connecticut on the Arabian Peninsula, is perhaps the world’s best source of cheap gas. It is located above a bubble containing 10 percent of the world’s known gas reserves, conveniently gathered in the planet’s largest reservoir.

By 2011, Qatar hopes that three ventures will convert natural gas into more than 300,000 barrels per day of liquids, most of that diesel fuel, but also including naphtha, liquid petroleum gas and lubricating oil. That much synthetic diesel won’t cut into the current market for oil-based diesel — 13 million barrels a day — but it might help clear some skylines.

The fuel will sell for more than conventional diesel and is hugely profitable with current oil prices at more than $50 a barrel. But Shell will still profit if oil drops to $20, said Mr. Brown, the Shell chief in Qatar.

Exxon Mobil aims to produce 155,000 barrels per day by 2011, said Wayne Harms, that company’s top executive in Qatar.

“We have a lot of money invested here. We’re going to invest a lot more,” he said.

Exxon has investments in about 200 countries, and Qatar “will be one of our top countries by the end of the decade,” Mr. Harms said.

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