industry/Business
Natural gas—the next process industry looms Tight natural gas at high prices will not only pinch existing chemical industry but will start a new one The breakup of an old, rock-solid assumption—cheap natural gas—will do more than dislocate prices of a key raw material and fuel for the chemical industry. It also promises a brand new process industry, synthetic natural gas, with ownership up for grabs among chemical, gas, coal, and oil companies. The new industry is presently germinating from technologies being readied to make "natural gas" (methane) from oil, petroleum naphtha, and coal. A concomitant development may be fast growth of an international trade in liquefied natural gas. The long-awaited trigger for commercialization of synthetic gas has finally arrived—higher gas prices sanctioned by the Federal Power Commission. This market mechanism, coupled with a growing shortage of natural gas from the ground, promises that both the incubation of process gas technologies and the country's energy crunch will end. Working out this historic transition for natural gas and all the industries it affects won't be a snap. Consider a few ramifications: • With one of its crucial fuel and material costs soaring to perhaps
$50 million natural gas liquefaction plant on Kenai Peninsula, Alaska
quadruple the old tag, chemical companies will certainly review switching to alternative chemical and energy sources. • The potential demand of the new synthetic gas technologies on foreign petroleum and natural gas is already tying up government agencies in painful decisions whether to further the country's growing dependence on imported energy sources. • A gas-from-coal boom would also stimulate a renewal of one of the oldest process industries, by-product chemicals from coal. • Tying the heat needs of coal gasification to atomic energy development could draw the two emerging industries together, favoring midwestern locations. • The capital needs of starting a new industry from the ground up would be titanic, chewing up much of the money presently eyed by traditional
Natural gas prices have been slowest climbers in rising fuel costs Price index (1967 = 100) Fuel
Coala b
Coke
0
Gas fuels
d
Crude petroleum
Change
July 1971
July 1970
182.9
150.5
22%
150.5
125.9
107.7 113.2
Actual price July 1971 (f.o.b. at source) Per million Per unit BTU
9.72
370
20
10.89
440
102.5
5
195.21
190
104.8
8
3.77
650
$
a Price per ton of utility bituminous, b Price is per net ton at Birmingham, Ala. c Index is composite of natural gas at wellhead and liquefied petroleum gas at processor's plant; price per million cubic feet natural gas at wellhead for interstate shipment, d Price is per barrel at Texas coast. Source: 8
U.S. Department of Labor
C&EN AUG. 30, 1971
process companies for their own expansion. Despite the enormous uncertainties, however, companies have plunged ahead this summer with plans to make synthetic gas one of the new births of the seventies. Earlier this month, El Paso Natural Gas chairman Howard Boyd revealed plans for the first commercial plant for converting coal into gas for pipeline transmission. El Paso's plant, contingent on FPC approval, would be a giant undertaking. Spending about $250 million, the company would build a plant in New Mexico producing 250 million cu. ft. of gas per day from some 900 million tons of recoverable coal it has acquired. On its technology, El Paso says it "contemplates" using the Lurgi (West German) coal gasification process. Assuming a prompt approval in Washington, El Paso says it could begin deliveries by 1976. The project would put El Paso on virtually all fronts in the effort to gain new supplies of natural gas. Besides the proposal in synthetic gas, El Paso is also pushing Washington for approval of its $1 billion scheme to transport liquefied natural gas to the U.S. from Algeria. Numerous other U.S. companies, including retail gas firms and construction companies such as Chemical Construction Corp., have already joined El Paso in this project. At the same time, another construction company, Lummus division of Combustion Engineering, will begin work on a $12 million plant to convert
Plant worker makes check at FMC's coal conversion pilot plant
cation. One proposed scheme envisions series of giant electrical generating plants operating on nuclear energy tied together in a nationwide grid. On the Atlantic and Pacific Coasts, waste heat from the nuclear boilers could be used to produce fresh water from the sea. In inland states, rich in coal, this heat could be used to gasify coal yielding a synthetic natural gas and a liquid coal oil rich in aromatics. The liquid stream could serve as a fountainhead for the production of fertilizers, acids, plastics, and synthetic fibers. The prospect of such nuplexes causes men charged with planning the future of coal-rich states to wax downright euphoric. "Kentucky is going to be the chemical hub of the nation,"
El Paso's Boyd: gas from Algeria
Consultant Purvin: gas from naphtha
naphtha into synthetic gas for Brooklyn Union Gas Co. A whole store of future plants may arise from a clutch of coal conversion technologies fathered by the U.S. Department of Interior's Office of Coal Research. The office has poured millions into pilot projects and pipeline gas at the Institute of Gas Technology and Consolidation Coal Co. and into liquid-gas projects at Consolidation Coal (Project Gasoline), and FMC Corp. (Project Coed). In addition, petroleum-converting technology is available from a number of companies, including the British Gas Council (through U.S. licensees). Hence, a confusing proliferation may characterize the opening thrust of synthetic gas as numerous companies try numerous technologies. Part of the confusion is that not merely gas but by-product chemicals will probably result from any largescale commercialization of synthetic gas. Raw materials for a whole group of industrial chemicals would be a byproduct, for example, from coal gasifi-
boasts Paul Grubbs, the state's commissioner of industrial development. Mr. Grubbs points to Kentucky's estimated reserves of 60 billion tons of coal as the basis for his optimism. Other states east of the Mississippi such as Illinois, Pennsylvania, Ohio, and West Virginia also could qualify as sites for coal gasification nuplexes. The State of Oklahoma has issued a $300,000 research contract to Gulf General Atomic (GGA), San Diego, to study the feasibility of converting coal to pipeline gas in such a nuplex. The study will be based on a coal gasification technique developed by Pitts-
burgh and Midway Coal Mining Co., a Gulf subsidiary, and a helium-cooled nuclear reactor developed by GGA. Such far-off, if not far-out, schemes aside, what is the immediate prospect for natural gas supplies, prices, and synthetic development? In a speech earlier this month to the petro group of the South Texas Section of the American Institute of Chemical Engineers in Houston, Tex., consultant Robert L. Purvin of New York City indicated relative priorities and prospects. First, Dr. Purvin states, "In my judgment there is no way that sufficient gas can be provided to meet its share of the energy requirements during the next decade." Second, he rules out present estimates of new natural gas at free-on-board prices of 40 to 75 cents per million B.t.u. "I can assure you," he told the engineers, "we should feel very fortunate if we can develop methods of supplying substitute natural gas from oil, from coal, or via LNG to major points of consumption for less than $1.00 per million B.t.u." The consultant favors an initial push in gas from naphtha since the time to deliveries, two years, is the shortest and would coincide with a period of desperate need. A gas-fromcoal project such as a 250 million cu.ft.-per-day scaleup contemplated by FMC might take something less than five years, although it could give a relatively low gas cost of 90 cents per million B.t.u. Dr. Purvin is also enthusiastic about crude oil gasification for three reasons. The technology is known, use would tap vast quantities of high-sulfur oil in the world now under the ecology gun, and desulfurizing oil will in any case have to involve taking the hydrocarbon apart and putting it together again. But time is short, and realizations shy. To Dr. Purvin, the beginning of wisdom is to face the facts; gas will be scarce soon and very expensive. A new industry for synthetic gas will be born in a crisis.
U.S. natural gas from the ground may be reaching its peak 1966
Production Imports Reserves Sources:
1967
1968 Billions of cubic feet
1969
17,207
18,171
19,322
20,698
21,920
480
564
652
727
821
289,333
292,908
297,350
275,109
290,746
Bureau of Mines, U.S. Department of Interior; American Gas Association AUG. 30, 1971 C&EN
9
