CHEVRON, SASOL FINALIZE GLOBAL GTL ALLIANCE, TO INVEST $5 BILLION

In October Chevron and Sasol announced the signing of final agreements for the creation of a new company, Sasol Chevron Holdings, as part of their 50/50 global joint venture founded on Gas-To-Liquids (GTL) technology. The companies initially announced their intention to expand their GTL activities to a worldwide scale in June 1999.

The new company intends to implement GTL ventures worldwide, anticipating investments totaling in excess of US$5 billion over the next 5 to 10 years.

The new company is based in Bermuda, but joint venture services will be provided from London.

The venture is built on the foundation laid by Sasol, a leader in state-of-the-art Fischer-Tropsch technology. It will utilize proprietary technologies of both companies--Chevron’s ISOCRACKING and Sasol’s Slurry Phase Distillate Process—and draw on Chevron’s strengths and resources in international upstream gas development and production, and both parties’ technical strengths and experience in marketing premium GTL products.

Sasol Chevron Holdings will actively pursue application of GTL technology for selected Chevron and Sasol reserves of natural gas, for third-party gas reserves and on behalf of host countries seeking to monetize their gas reserves. In addition, it will foster the development of a GTL industry and global markets for GTL fuels, and will design, build and operate plants throughout the world to manufacture and market premium environmentally friendly fuels and products.

The Nigeria Escravos Gas-To-Liquid (EGTL) project, announced September 8, is to be the first GTL project in which the global joint venture will be involved.

The Slurry Phase Distillate Process is a Sasol proprietary process for converting reformed natural gas into waxy syncrudes. Utilizing technology from Haldor Topsoe, a Danish company, methane is mixed with oxygen and a catalyst to create a mixture of carbon monoxide and hydrogen (synthesis gas). In a Slurry Phase reactor, the synthesis gas is heated to about 450ºF and mixed with another catalyst to form various liquid hydrocarbons (the Fischer-Tropsch conversion), yielding condensates and waxy syncrudes.

ISOCRACKING is a Chevron proprietary process used to upgrade waxy syncrudes by separating heavier molecules, which are usually solid at room temperature, then rearranging them so they become liquid. This process yields a lighter, premium fuel such as synthetic fuels and naphtha, that contain virtually no sulfur and little nitrogen.

Sasol and Chevron feel there are many potential synergies between the two companies that make this opportunity beneficial to both parties.

Purpose of the Joint Venture (JV)

The JV will market high performance, environmentally friendly fuels with virtually no sulfur, no aromatics and cetanes of about 70. (Normal diesel fuels have cetanes of 45 to 50.) These fuels will set a new standard in the industry.

The JV will design, build and operate the GTL plants and market the products produced.

Environmental Impacts of an Alliance

Utilization of this GTL technology has the potential to reap a double environmental benefit. GTL products are expected to set a new global standard for high performance, environmentally friendly fuels, which are suitable for use in conventional diesel engines and fuel cells. GTL fuels have virtually no sulfur and no aromatics, resulting in substantially lower hydrocarbon, carbon monoxide, nitrogen oxide and particulate emissions when compared to conventional diesel fuels. Secondly, GTL technologies facilitate monetization of gas that is produced in association with oil thus eliminating the need to flare gas in areas where there is no existing infrastructure or commercial market.

Economic and Environmental Benefits

The GTL process takes gas that is currently flared or lacks a market and produces a premium, environmentally friendly fuel, creating a double environmental benefit of reduced CO2 emissions and reduced urban pollution in end-product markets like Europe.

It provides an opportunity to generate additional jobs and revenue for both Africa, the likely site of the first global JV plant, and other countries in the region and the world.

New Technology: There is a considerable amount of new equipment, engineering expertise, and management technology that will be incorporated with these projects. This provides a training source for the workforce and an avenue to increase their skills and competitiveness in the world market.

Infrastructure Development: Major projects provide new infrastructure facilities such as the development or expansion of shipping facilities and ports, communication systems, and transportation systems.


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