Stranded Gas to Liquids

The economics for cogeneration have improved by 500% over the last 4 years. The wholesale cost of natural gas has dropped from $12.00/mcf to less than $3.50/mcf while the purchase price of electricity has increased from $0.08/kwh to between $0.15 and $0.25/kwh (and increasing) with “green premium” rates in some regions over $0.35/kwh.

Traditional liquefied natural gas LNG and standard gas to liquid GTL technologies require large amounts of gas to make investment viable. These technologies will continue to be important when producers are trying to monetize large stranded reserves. This is not applicable to the vast majority of stranded gas wells requiring many smaller scale deployments.

Avro intends to convert stranded natural gas into liquids with a combination of catalytic and biological processes fueled by clusters of 3 to 4 wells connected to one micro-refinery

While 1 one idle or stranded gas well in 10 may be viable for electrical cogeneration there exists the potential that 75% of all stranded well sites could become viable for small scale gas to liquid to production. It is our objective to procure or to develop a micro-refinery platform under $2,000,000 in capital cost capable of producing more than in 1000 gallons per day in ethanol, methanol and/or butanol or alternatively synthetic diesel.

Preliminary research indicates that our goal is feasible. We are currently conducting due diligence on several solutions which we hope to commercialize in the smaller size and scale that suits the predominant situation of most stranded gas well sites.

Why gas to liquids

A major advantage of crude oil – and one of the factors which contributed to its becoming widely used as a fuel in its refined forms such as petroleum or diesel – is the fact that it is liquid. Liquid is much easier to transport from the source where it is derived to the location where it is used. And liquid fuels are by far the most widely used in transport – be it air, sea, road or rail.

In contrast to crude oil, natural gas must be delivered by pipeline and stored as compressed (Compressed Natural Gas – or CNG) or transported in liquid form (Liquified Natural Gas – or LNG). LNG refining is big business for the oil majors in locations such as Qatar and Australia looks set to become a major global player with the recent approval of the Gorgon gas project (the Gorgon network of fields is expected to produce 15 million tons of gas annually, equivalent to 8% of the annual global production).

But much natural gas is wasted. Around half of all worldwide natural gas resources are remote or stranded in abandoned wells with reserves that are not currently economically accessible by either pipelines or LNG. Large volumes of natural gas, specifically methane, are flared at oil wells around the world. There are also significant volumes of coal bed methane (CBM) dispersed around the world in small volumes which are often uneconomical to use.

Landfill sites are another major source of methane. In most countries, if the gas is not captured and used, it is a legal requirement that it should be flared. Flaring is encouraged by incentives such as the Clean Development Mechanism (CDM) under the Kyoto Protocol, because methane is a damaging greenhouse gas (over 30 times more damaging than CO2).

Flaring of gas, from oil fields or landfill sites, is likely to be banned or to become the subject of fines in many regions, so alternative methods of disposal will need to be considered. Re-injecting the gas into oil fields is costly, so the ability to produce a commercial product from the gas makes sense from the oil and gas producers’ point of view.

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