Prepare for an Energy Revolution -
President, Trinidad & Tobago's National Gas Company

The natural gas industry is at the threshold of a revolution in technology that will lead to major changes in the international energy industry.

According to Frank Look Kin, president of Trinidad and Tobago's National Gas Company (NGC,) the principal drivers behind the changes in the industry has been the green revolution, the need for alternative fuels that are cleaner and cheaper, and the need to monetise vast reserves of "stranded gas" around the world. In the energy industry in particular, the world is only now realising the extensive potential of gas-to-liquid, methanol-to-olefin and fuel cell technology.

"The changes are emerging through the development of both new technologies and new applications of old technologies. This will impact on gas utilization both as a fuel and as feedstock."

Gas-to-liquid technology refers to the chemical process by which synthesis gas is manufactured from a hydro source and then converted to liquid hydrocarbon products. Until recently, only marginal commercial production using gas-to-liquid has been achieved.

"Early efforts by Mobil, Sasol and Shell had not been commercially successful. The two major constrains have been scalability and the technical and commercial viability of the conversion phase.

"Lately, however, several technologies have entered the scene that may change the picture. These include the Exxon GTL process, the Sasol Advanced Synthol (SAS) reactor and the Syntroleum process. These technologies have concentrated on obtaining improved process economics via the design of larger plants or the reduction of capital and operating costs."

In Trinidad and Tobago's perspective, interest in this field is driven by the existence of a relatively large state-owned oil refinery and substantial gas reserves. Although TT's current proven natural gas reserve is 21 trillion cubic feet, with a reserve production of 40 years, the country's potential exploitable resources are estimated to be 67 trillion cubic feet, representing a reserve to production ratio of more than 100 years.

"It is NGC's position that investment opportunities exist in this market, at least based on the potential markets for clean, low sulphur, high octane middle distillates." Look Kin said NGC has been negotiating with Reema GTL and Sytroleum GTL about establishing plants in Trinidad. Reema GTL has already signed a term sheet for the supply of natural gas for the plant. An investment decision on each project is expected to be made by the end of 2000.

Although the methanol-to-olefin (MTO) technology has not yet been commercially applied, advances in the field will have a significant influence on the pricing and structure of the industry and the use of olefins in energy production in the future. Currently the market cannot support the large scale and low production costs required for MTO production. Benefitting from economies of scale, these large plants should reduce the cost of production of methanol by US$25 - 50 per tonne.

The recent decision by the state of California to ban MTBE has been a near fatal blow to the methanol market. For the past five years, MTBE has been the principal driving force in the growth of the methanol market. The loss of this important demand driver could mean an extended period of low prices. In this context, the development and commercialization of MTO technology is welcome news for the international methanol industry and its leading exporter, Trinidad and Tobago.

Fuel cell technology has received even more support from environmentalists than even the use of methanol and other low emission fuels as the main by-product of its use is water. A fuel cell is an electrochemical device that produces electricity directly from the reaction between hydrogen and oxygen.

"The controlled reaction of hydrogen and oxygen that occurs in a fuel cell is much more efficient than the typical burning process. Because the only products are electricity, water and some heat, the process is pollution free."
Fuel cell technology has applications in both power generation and in the development of flexible fuel vehicles, and methanol will be the main fuel source used in this industry.

The American Methanol Institute estimates that by 2010, there will be more than 2 million fuel cell vehicles on the road and these could demand more than 880 million gallons of methanol annually.

"Auto makers around the world are rushing to resolve the remaining technical and cost issues with the technology in the two to three years and have fuel cell vehicles ready for sale by 2004."

Look Kin said that the growth of the TT industry has been fueled only by the sale of natural gas. However, over the next decade, NGC will be pursuing a strategy of market diversification, and new technologies such as gas-to-liquid, methanol-to-olefin and fuel cells will have strategic significance in the future.

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