http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.29Change: -0.09
R/$ = 11.70Change: -0.05
Au 1207.85 $/ozChange: 1.57
Pt 1174.50 $/ozChange: -1.50
 
 
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|SECURITY|Africa|CoAL|Design|PROJECT|Resources|Security|Shell|Africa|Security|Energy|Product|Security|Solutions|Security
Construction|SECURITY|Africa|CoAL|Design|PROJECT|Resources|Security|Shell|Africa|Security|Energy|Security|Solutions|Security
construction|security|africa-company|coal|design|project|resources|security-company|shell|africa|security-facility|energy|product|security-industry-term|solutions|security-person
© 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)
 
 
 
 
 
 
 
 
Other Oil and Gas News
Updated 6 hours ago Gas has the potential to account for more than 40% of the electricity generated in sub-Saharan Africa (SSA) from 2020 onwards, a new report by McKinsey & Company shows, adding that, by 2040, gas-fired capacity could be responsible for more than 700 terawatt-hours in...
OFF-SHORE GAS The CCCI is encouraging industrial clients to incorporate liquid natural gas infrastructure for industrial-scale power generation in the Western Cape
Industrial forum the Cape Chamber of Commerce and Industry (CCCI) is working closely with provincial and city representatives to incorporate liquid natural gas (LNG) infrastructure for industrial-scale power generation in the Western Cape.
Clough CEO Kevin Gallagher
Engineering and construction group Murray & Roberts (M&R) has signalled its intention to accelerate the internationalisation of its Australia-based oil and gas unit, Clough – a strategy underpinned by a dramatic tapering off of greenfield liquefied natural gas (LNG)...
More
 
 
Latest News
Updated 1 hour 50 minutes ago The Gauteng Provincial Government has outlined plans to develop a handful of “mega” human settlements as part of an ambitious long-term housing development strategy aimed at narrowing the housing backlog, with plans afoot to replace informal settlements with...
Eskom power stations
Updated 2 hours 3 minutes ago While State-owned power utility Eskom was unable to cut off electricity supply to some of its neighbouring trade partners, it was able to reduce energy exports by 10% when load shedding was implemented locally. The Department of Public Enterprise explained that Eskom...
Finance Minister Nhlanhla Nene
Updated 2 hours 7 minutes ago While the new tax introductions and hiked levies outlined in Finance Minister Nhlanhla Nene’s inaugural budget speech this week were likely to hit consumers hard, it was deemed the most efficient option for government to narrow its fiscal gap without hurting South...
More
 
 
Recent Research Reports
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 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 network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
 
 
 
 
 
This Week's Magazine
National flag carrier South African Airways (SAA) is in an advanced stage of renegotiating its deal with European airliner manufacturer Airbus to acquire A320 single-aisle (or narrow body) aircraft. The aim is to replace ten of the aircraft still on order with five...
Worldwide, the main thrust in the ports industry over the past decade or more has been to increase efficiency. Traditionally, ports have been run by engineers and mariners and, in the past, increasing a port’s capacity was achieved by expanding the harbour. “That has...
What do you do when an elephant has a toothache? You call Dr Gerhard Steenkamp from the University of Pretoria’s (UP’s) faculty of veterinary science, Onderstepoort, one of only two elephant ‘dentists’ in the world.
The 2015 Sanlam/Business Partners Entrepreneur of the Year (EOY) competition was launched earlier this month in Johannesburg, with the main focus on creating and inspiring entrepreneurs to create jobs and boost the economy.
In a recent letter to the editor that I sent to Engineering News (Concerns regarding South African portion of Square Kilometre Array) and in a follow-up article elaborating further (We must start preparations to build our own synchrotron light source), I stated my...
 
 
 
 
 
 
 
 
 
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