Diesel from Natural Gas

A South African firm, Sasol, announced Monday that it would spend just over 1 billion Canadian dollars to buy a half-interest in a Canadian shale gas field, so it can explore turning natural gas into diesel and other liquids. Sasol’s proprietary conversion technology was developed decades ago to help the apartheid government of South Africa survive an international oil embargo, and it is a refinement of the ones used by the Germans to make fuel for the Wehrmacht during World War II.

But with the huge spread between oil and gas prices, and predictions of oil topping $100 a barrel next year, the conversion technology could be a “a money-maker for whoever is a first mover in that space.”

Sasol figures that the natural gas needed for a gallon of diesel, plus operating costs, comes to about $1.50 a gallon. In comparison, a gallon of diesel made from crude oil now costs more than $2, even before refining, and many forecasts are for the price of oil to go higher.

While the operating costs favor conversion, there is a hefty cost of building the chemical plant to do the conversion, which might run over $1.5 billion for a new Canadian plant that would handle 40,000 barrels a day. The calculations also exclude another cost: greenhouse gas emissions, which may be higher for a conversion plant than a typical refinery, depending on how the work is done.

In addition to losing energy, the process creates excess carbon dioxide, compared to burning the natural gas or coal directly for energy. But starting with natural gas, said Mr. Strauss, the amount of carbon dioxide released per finished gallon of liquid fuel was comparable to the carbon footprint of a gallon from a traditional refinery.

The Sasol move comes as Canada is increasing its production of oil from oil sands, which is clearly carbon-intensive. Environmentalists in the United States are trying to stop large-scale imports of oil from oil sands.

Precious metals are of course precious and men and women love them - Gold, Silver, Platinum, Palladium. Crude and Natural Gas keep the world moving. Base Metals - Aluminium, Copper, Lead, Nickel and Zinc are widely used in industry.

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