With most speculators looking for oil prices to go mountaineering in the near future, there are plenty of modern-day alchemists trying to gin up fuel from cheaper sources. (Including algae.) And one South African company, Sasol, is getting it done with natural gas.
This week, Sasol said it was investing about CAD$1 billion in Canadian gas fields, with plans to turn natural gas into diesel, plus some naphtha and propane on the side, according to the New York Times.
(In a petro-political side note: South Africa developed this conversion technology during apartheid, so the country could weather an oil embargo.)
What’s to like? The numbers are good. Sasol told the NYT it could convert a gallon of diesel for $1.50. (From crude oil, current prices are about $2, and that’s before refining.) In addition, there are ample natural gas reserves under North America.
What are the challenges? The cost to build a Canadian conversion plant, which would process 40,000 barrels a day, could be more than $1.5 billion. And environmentalists are fretting that emissions from a conversion plant would be worse than a typical refinery.
Sasol has conversion plants in South Africa and Qatar, and along with Canada, it has designs on Nigeria, China, and Uzbekistan. The company is clearly making gas-to-liquids chemistry work, though the big investment to do it hints at the dwindling oil supply. “You wouldn’t do this if you could find easy oil,” one observer told the NYT.
For more, along with a short explainer on the chemistry behind it, here is the story.