Strategic backing has been given to a US technology start-up that promises to make petrol cheaper and more environmentally friendly.
Gas-to-liquids technology developer Primus Green Energy’s process converts natural gas or syngas into hydrocarbon fuel, reducing the carbon footprint of petrol by up to 10 per cent.
The technology has the potential to reduce this footprint further, to approximately 40 per cent, through a targeted use of 50-50 natural gas and landfill gas. It also removes noxious gases sulphur and benzene from the fuel, which has roughly 10 per cent of the harmful compounds found in crude oil.
‘We can take municipal solid waste, or waste wood; anything that has carbon in it,’ said George Boyajian, vice president – business development at Primus Green Energy.
‘We produce zero-sulphur, zero-benzene petrol. We’re also in the process of learning to make diesel as well. We’re making it in litre-sized quantities [but] we’re looking to make it in barrel-sized quantities.’
Primus is able to produce fuel two-thirds cheaper than conventional oil because its concept takes advantage of the arbitrage between the price of natural gas and the price of oil.
Boyajian estimates that the company can construct a 2,000 barrel a day plant for between $125m and $150m, which would otherwise cost approximately $200m to build. With the use of landfill gas as a feedstock, Boyajian expects that Primus could reduce costs further, due to the $1 per gallon premium for renewable fuel under the US Renewable Fuel Standard.
Primus has also attracted interest from companies interested in using its technology to convert stranded natural gas to oil, since it is cheaper to transport liquids than gas.
‘We can produce gasoline at $2 a gallon,’ he said. ‘Breakeven is $11 per MBTU. We can buy natural gas at $4 per MBTU today [provided crude continues to trade at $100 per barrel]. The price of natural gas and oil used to be highly correlated, but with fracking and alternative ways of producing gas, they’ve become decoupled in the past five or six years.’
Boyajian said the company is in discussions with private investors to raise up to $50m in its first equity round outside investment from its parent group, listed holding company Israel Corporation. It has also signed memoranda of understanding with strategic investors to finance its first commercial projects.
‘[Israel Corp. has put] $63m [in the company to date],’ he said.
‘They will continue to finance us. We’ve identified other sources of financing and investors that we will be announcing shortly. They’re strategic investors in the industry.’
‘We’re getting a lot of international interest because we have a lower carbon footprint [than conventional gas]; and because of the flared gas issues throughout the world. In central Asia and Africa, and Australia and South-East Asia, there are real issues around flared gas. A lot of gas resources are locked in because there’s no infrastructure to get the gas out.’
Since its parent company, Israel Corp., filed last month to float its subsidiary Israel Chemicals on the New York Stock Exchange, Primus was unable to disclose the identity of the equity investors it has already secured.
Primus is also in the market for project financing and expects to have the first commercial carbon to petrol plants up and running within the next two years.
Operationally, the company has developed a 100,000 gallon per year demonstration facility that converts natural gas from the grid (containing mostly methane) into petrol. It is in negotiations to build a 2,000 barrel per day plant in Houston and multiple 500 barrel a day flared gas plants in US offshore oil fields. Groups in the Bakken Basin shale formation in North Dakota are also interested in using its technology due to an state-wide mandate that restricts gas flaring.
‘We’re looking for equity investors and project investors,’ Boyajian said. ‘We’re looking at project investment, where groups might build our 2,000 barrel a day unit and end up writing cheques for $125m to $150m for that project. They’ll build and own or we’ll partner and build.’
This article originally appeared on www.cleanenergypipeline.com a clean energy news service operated by VB Research, a sister publication to The Engineer
The reporter, Jessica Mills Davies, can be reached at firstname.lastname@example.org.