Sunday, May 3, 2009

Synfuel - do we want to burn more money?

Synfuel is a technology recently developed to harness the wasted natural gas produced from oil wells currently being flared off in the oilfields. Natural gas exists as associated gas in oil reservoirs. The difference in pressure and temperature between in-situ (inside the earth) and surface conditions also cause gas to form from the extracted oil. Due to the difficulty to transport the natural gas, it is commonly burned on-site. This causes environmental concerns and more importantly to oil companies, money is getting burnt and they have to just sit and watch it. With projections of $3.1 billion per year revenue at $70 per barrel of gasoline if only 10% of the wasted gas captured (nearly 5% of total natural gas production), the technology can offer drastic financial benefits to the producer.
In the event of oil price surge, it might even be a more profitable option for the producers to convert a portion of natural gas from gas wells to gasoline through synfuel technology if the effect on the natural gas supply and the price can be minimal. By developing a model for price and the viability of technology application, companies might see a time they could maximize the profit through selling a 1. wasted natural gas that would be burnt otherwise and 2. gasoline that was meant to be sold as natural gas.

Scientific American Article

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