http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 15.47Change: -0.03
R/$ = 13.85Change: -0.01
Au 1121.72 $/ozChange: 0.95
Pt 991.50 $/ozChange: 0.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Sep 10, 2007

Sasol says gas-to-liquids problem 'solved', but project cost to rise by $50m

Back
 
 
 
 
 
 
Construction|Africa|CoAL|Design|Gas|PROJECT|Resources|SECURITY|Shell|transport|Africa|Energy|Product|Solutions
Construction|Africa|CoAL|Design|Gas|PROJECT|Resources|SECURITY|Shell|transport|Africa|Energy|Solutions
construction|africa-company|coal|design|gas|project|resources|security|shell|transport|africa|energy|product|solutions
© Reuse this South African energy group Sasol claims to have substantially overcome the technical problems afflicting its high-profile Oryx gas-to-liquids (GTL) joint venture, in Qatar, success at which is viewed as vital to proving a technology that could offer a serious alternative transport-fuel source.

However, CEO Pat Davies revealed that the company would have to spend an additional $50-million, or five per cent of the project’s overall value, to improve the reliability of the "fixes" introduced at the facility – the plant was initially envisaged as a 34 000-bbl/d facility, with an associated capital cost of $950-million.

The facility began producing final product in January, but on May 22, the JSE and NYSE-listed group shocked the market when it admitted to experiencing technical difficulties as a result of higher-than-expected levels of fine material being produced in the Fischer-Tropsch process. This led to an immediate sell-off, which saw Sasol’s share price fall 5,47%, or R15,09 a share, on the day.

The group revealed that it was interrogating the cause and extent of the problem and that “back-up solutions” were being sought, but that these were likely to take until the middle of 2008 to finalise.

Sasol stressed throughout that the underperformance was not insurmountable, nor would it impact on its aspiration to apply the GTL technology elsewhere. But some speculated that the technology flaws where, in fact, deeper than acknowledged, with similarities even being made between Oryx and Mossgas.

STILL GTL's 'SHOP WINDOW'

Davies said on Monday that the levels of fine material (which had been choking the plant’s filters and, thus, preventing a ramp-up to full production) had been substantially reduced and that it was now targeting, for the first time, to begin operating both trains simultaneously in October.

But he refused to be drawn on when the plant would reach its nameplate output levels.

“We have now brought [the fines] down to just about the design range. So we are getting there and we have basically solved this problem. We will be installing a little bit of kit to ensure we improve the reliability on this,” Davies asserted.

He argued further that, while it was “not nice” to have to spend the additional $50-million required to improve reliability, “it is pretty insignificant in the grand scheme of things”.

“Sasol offers cutting-edge technology. But to get there, we have to take some risks. In return, our shareholders get a company that has a superior technology and returns. But, of course, that cutting edge sometimes becomes the bleeding edge and it hurts us a little bit,” Davis elaborated, noting that the group had over 100 PhDs in its employ, who “love challenges like this”.

“We are entirely confident that the technology works. We are entirely confident that Oryx is going to become the shop window for the gas-to-liquids industry that we said it would become,” Davies added.

NIGERIA PROJECT UNDER WAY

This confidence was arguably reflected in the fact that that group was proceeding with its second GTL project in Nigeria, which was expected to start up in 2010.

Davies said that the construction of the Escravos GTL project was under way, but cautioned that the Nigerian construction market was challenging and difficult to predict.

The group again emphasised the importance of both its GTL and coal-to-liquids (CTL) technologies in providing a platform for its growth in Southern African and globally.

It was continuing to pursue opportunities for the technology in China, India, Australia, the US, and in Southern Africa. In South Africa it was in the early stages of planning for a new 80 000 bbl/d CTL plant, which would be located either in the Free State, or in the Waterberg.

Davies also stressed that, while others were also pursuing GTL, it remained the technological leader in the field, and was almost on its own in the advances it had made in the area of CTL.

Royal Dutch Shell was also pursuing a GTL project in Qatar, known as Pearl, which could produce 70 000 bbl/d. But there had also been reports of challenges with that project.

TECHNOLOGY EDGE



Davies argued that Sasol’s GTL and CTL technology platforms were still setting it apart, and could emerge as crucial to closing the inevitable supply gap that would emerge as oil resources dwindle and as demand from developing countries surged. He forecast that demand from India and China alone could add 17-million barrels-a-day to the world's demand profile, on top of the current 80-million.

“We want to use our technology to build hubs around the world . . . based on natural gas and coal, to grow our upstream business, our chemicals business and, of course, to grow our liquid fuels business,” Davies said, pointing out that South Africa had as much coal in “barrels of oil equivalent as Saudi Arabia has in oil”.

The idea is to take the very large reserves of available coal and gas, and convert these into transportation fuel, which comprises 40% of the world’s current energy demand.

Global growth consultancy Frost & Sullivan said on Monday that Sasol’s core technologies were becoming increasingly important as energy security concerns rise.

“Sasol has built its growth on technically complex technologies. Ensuring the robustness of these technologies will be crucial to the continued strengthening of its market value,” research analyst Jeannot Boussougouth noted.

Sasol's share close up R3,10 at R288 a share.

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
 
Latest News
Driving the Gauteng Department of Economic Development’s (DED’s) mandate of township revitalisation, MEC for Economic Development, Environment, Agriculture and Rural Development Lebogang Maile reported on Friday that the department had provided financial support to...
Terence Goodlace
Platinum mining and refining company Impala Platinum (Implats) is providing technical support to the South African Mint on the development of a platinum coin and, in a separate initiative, on the feasibility of platinum being held as a reserve asset by the South...
MEC Sakhumzi Somyo
The R2-billion Kouga wind farm, located at Oyster Bay in the Eastern Cape, was officially opened on Friday by Economic Development, Environmental Affairs and Tourism MEC Sakhumzi Somyo. The power plant, which entered commercial operations earlier this year,...
More
 
 
Recent Research Reports
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
Real Economy Insight: Construction 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
 
 
 
 
 
This Week's Magazine
The Health and Welfare Sector Education and Training Authority (HWSETA) has joined forces with Tshwane North Technical, Vocational and Education and Training College (TNC) to train 100 young unemployed learners as artisans, and marked this with an event that took...
JAMES TEMPLETON The increase in distribution is as a result of Emira’s acquisitive growth
JSE-listed Emira Property Fund reported distributions per participatory interest (PI) of 134.27 c – a distribution growth of 9% – for the 12 months to June 20, 2015.
Earlier this month ground broke on South Africa’s latest four star green building – the first of its kind in the Eastern Cape. The modern three-storey office block is located within the Baywest City precinct in Port Elizabeth’s western suburbs, along the N2, and...
South African armoured and mine protected vehicles company Denel Vehicle Systems (DVS) has won its first order since becoming part of the Denel group at the end of April. "It's a sizeable contract," reports DVS CEO Johan Steyn. "We won the contract in July. It's a...
South African guided weapons, unmanned air vehicles (UAVs) and space company Denel Dynamics plans to increase its revenues to more than R2-billion within five years. This was reported by company CEO Tsepo Monaheng at its annual "Show and Tell" briefing in Centurion,...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96