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ANCHORAGE - BP's gas-to-liquids plant in Nikiski, built to test an economic way to convert natural gas to its liquid form, holds promise for bringing stranded gas to market, just not on the North Slope, executives for the oil company said.
BP engineer Steve Fortune and Ken Konrad, vice president for Alaska gas development, said using the technology for North Slope gas doesn't pan out economically.
Fortune and Konrad said the London-based company believes a conventional gas pipeline across Canada to the Midwest is a better option than a large gas-to-liquids plant on the Slope.
It's a better idea, they said, even though liquid gas could flow down the existing 800-mile trans-Alaska oil pipeline to the tanker dock at Valdez.
That agitated one state lawmaker and others who questioned BP's motives in erecting the Nikiski plant.
Konrad said he believes a gas pipeline is nearly at hand.
"My assessment is we're closer than we've ever been," Konrad said, after BP's presentation Thursday at the Petroleum Club in Anchorage.
BP spent $86 million to construct a chemical plant at Nikiski to hone technology for turning gas into a liquid that stays fluid without the aid of pressure or supercooling. The process dates to before World War II and is expensive, but BP and several other major oil companies have recently made advances as global gas demand has intensified.
Recently, two oil companies announced plans to build large gas-to-liquid plants in Qatar. In October, Shell signed a deal for a $5 billion plant capable of making 140,000 barrels per day of GTL products. And four days ago, Conoco Phillips, which, like BP, holds rights to a big slice of the North Slope gas, announced a similar GTL project in Qatar.
BP began operating its Nikiski test plant in July, making about 300 barrels a day. Using compact and secret components, it has shaved a big part of the cost off the GTL conversion, said Fortune, who helped design the plant.
"We're actually delighted with the technology," he said. "It's working really well."
BP and a partner plan to use what they've learned from the Nikiski plant to develop or license $1 billion plants for making 30,000 barrels a day of synthetic crude oil good for making clean-burning diesel and other refined products.
But no such plant is planned for the North Slope, where giant streams of natural gas that come out of the ground with oil are injected back into the ground for storage for lack of a way to get it to market.
State Rep. Eric Croft, an Anchorage Democrat who has long questioned why oil companies have taken so long to move Alaska gas to market, said he figured the Nikiski plant was nothing more than a delaying tactic.
BP and other oil companies are too busy developing their holdings elsewhere in the world while sitting on North Slope resources, said Croft, who had expected BP to announce that its GTL plant was a bust.
"It's almost more insulting to say it works really well but we're not going to do it here," he said.