Gas to Liquid (GTL): is it an attractive route for gas monetization? GTL vs. LNG Economics

A world scale LNG plant with a capacity of 4 million tons/year requires approximately 650 MMSCFD of feed gas. This same quantity of gas is estimated to produce 65,000 Bbl/day of GTL products; mainly Naphtha (17,000 Bbl/day), Diesel Oil (44,000 Bbl/day) and the remaining quantity (4,000 BPD) is assumed to be Liquefied Petroleum Gas (LPG).

1.   Investment Cost:
Investment cost required for the GTL route is estimated at $28,000/BPD of GTL products. For a 65,000 BPD plant, the investment required is therefore estimated at $1.82 billion. While, the liquefaction plant investment cost is estimated at $200/ton per annum of the LNG product.

  • Investment cost for a plant producing 4 million tons per year is estimated at nearly $800 million
  • Cost for LNG Ships, assuming 6 ships each 135,000 cubic meter capacity is estimated at   $140 million /ship, i.e. a total of $ 840 million
  • The re –gasification and other related cost counts for nearly 30% of plant investment, which is worth $240 million
  • Therefore, the total investment for the LNG route is approximately $1.88 billion

It can be concluded that the investment cost for both routes is nearly the same.

2.   Operating Cost:
Operating cost (Excluding Depreciation and Feedstock Cost) of the liquefaction plant counts for nearly $1.0 /MSCF, while shipping cost is estimated at $0.5 /MMBTU and Regasification cost is estimated at 0.3/MMBTU; i.e. a total of $1.8 / MMBTU. Therefore, the yearly operating cost for LNG route will be $375 million/year, assuming heating value of 1000 BTU/SCF, against a total operating cost of $6/Bbl or a total operating cost of about $145million/year for the GTL case (both excluding Depreciation and Feedstock cost).

Operating cost of GTL route is about $230 million/year lower than the LNG route.

3.   Revenue:
The GTL average products price namely Naphtha and Diesel oil is based on several factors;

  • Crude price; $19/Bbl
  • Naphtha and diesel oil average prices are $0.5/Bbl and $ 2/Bbl respectively higher than crude price. 
  • Quality Premium for GTL Naphtha is taken at $ 0.5/Bbl and $ 1 / Bbl for GTL Diesel

Based on the above assumptions, the average GTL products price is $ 20 /Bbl for Petrochemical Naphtha and $ 23 /Bbl for Diesel oil. As for the LPG price, it revolves around $180/ton.

The revenue from the GTL route is therefore expected to count for about $515 million/year. Based on LNG products sales price of $3.5/MMBTU, the revenue generated from the LNG production is estimated at about $730 million/year. The revenue   generated from LNG route is $ 215/year higher than that from GTL route. However, the increase in revenue for the LNG route is off – set by nearly a similar increase in its operating cost.

It can be concluded that GTL would be possibly a preferred route, if the pipeline option is not technically/economically feasible and/or the gas reserve can not support a world scale LNG plant gas.
Based on the previous figures, the profitability of both LNG and GTL production is very close and no distinct economic preference can be made. Both routes compete well with each other.
However, if a country has already a LNG production, the GTL route could be more attractive as this route gives it the opportunity to diversify the utilization of its gas reserve.
It is worth mentioning that although the investment cost varies with time, the comparative cost and conclusion are always constant and valid.

By: Osama Abdul Rahman
General Manager of Orient Environmental Consultants (OEC)


Welcome! Login in to your account

Remember me Lost your password?

Don't have account. Register

Lost Password