There's a new idea on the table for using North Slope gas: a "gas-to-liquids" plant that would convert gas to high-value liquid fuels and other products, including petrochemical feedstocks.

State senators Lesil McGuire and Bill Wielechowski, who co-chair of the Natural Resources Committee in the state Senate, say they plan to introduce legislation when lawmakers convene in Juneau this month that would encourage companies with expertise in the field to build a major gas-to-liquids plant in Alaska.

This would give the state and North Slope producers an option in the event a major natural gas pipeline is delayed, both senators said.

"It's time we took a serious look at this technology. We need to let industry know that Alaska is open for business on converting gas and oil to ultra-clean fuels," said Wielechowski, a Democrat from Anchorage.

McGuire, a Republican from Anchorage who chairs the Energy Committee of the senate, said she and Wielechowski attended a course recently in South Africa on applications of the Fischer-Tropsch process, the technology used to manufacture liquids from gas or carbon-based solids like coal and biomass. The two also toured operating gas-to-liquids projects.

"I was surprised to learn that this is no startup technology. Companies have been using this process for over 60 years," McGuire said.

Wielechowski and McGuire met with representatives from Sasol, the major South African energy company, who said they have been interested in an Alaska project for years, but felt they had been rebuffed by Alaska state officials who were focused on development of a $30 billion-plus natural gas pipeline from the North Slope to Alberta.

Richard Peterson, president of Alaska Natural Gas-to-Liquids, a company working to develop an Alaska GTL project, confirmed McGuire's comment, saying that when he brought senior Sasol officials to Alaska in 1999 to explore ideas for GTLs, they were rebuffed by the state.

"They were told they were not welcome in Alaska," Peterson said.

Wielechowski said he wants Alaska to be seen as open to other ideas on using North Slope gas, and his "open-for-business" comment is intended to reassure Sasol and other companies interested in such a project, he said.

The idea has also support in the state House, where Rep. Mark Neuman, R-Wasilla, has been interested for some time in gas-to-liquids and the possibility that a plant in Southcentral Alaska could help make a pipeline bringing North Slope gas to southern Alaska economically possible.

McGuire said she has mentioned the idea to Gov. Sean Parnell, who seemed interested, and will pursue it further with Parnell and other state officials.

"I don't want this to be seen by them as detracting from a large gas pipeline, because that won't be the case," she said.

McGuire said state geologists have told her that substantial gas resources would eventually be discovered and developed on the North Slope. There will be enough gas to support both a pipeline and a gas-to-liquids project, McGuire said.

Both senators are interested in the idea of a GTL plant on the North Slope that could ship liquids through the Trans-Alaska Pipeline System. Wielechowski said a plant could also be built near Cook Inlet, where it could use gas delivered through a spur pipeline that could branch off a large-diameter pipeline built through Interior Alaska or a "bullet" pipeline built directly from the North Slope if the big pipeline is delayed.

Peterson, of ANGTL, said a GTL plant in Southcentral Alaska could be built at a smaller scale than a North Slope GTL plant, and that it could help subsidize a bullet line or spur line.

Rep. Neuman, who co-chairs the House Resources Committee, believes a gas-to-liquids plant could anchor a pipeline bringing North Slope gas to southern Alaska.

A major industrial customer like a GTL plant for either a bullet line or a spur line would help make either line economically viable, and would help keep its tariffs affordable for North Slope gas delivered to Southcentral Alaska gas and electric utilities, Neuman said.

McGuire said the U.S. Department of Defense is encouraging development of a gas-to-liquids or coal-to-liquids plant using the Fischer Tropsch process because the high-grade fuels that would be produced are needed in new-technology jet engines.

The department has tentatively selected Alaska as a good location for such a plant in serving the needs of military forces in Asia-Pacific and the Arctic, she said.

Wielechowski said GTL plants could be built both on the North Slope and in Cook Inlet.

McGuire said a North Slope GTL would transform North Slope gas into synthetic fuels that could be shipped through the oil trans-Alaska oil pipeline. "It could be a key to extending the life of the pipeline," she said.

Production of conventional oil from North Slope fields is declining and there are concerns that TAPS could approach the end of its economic life within a few years.

McGuire said she was impressed by the range of products from Sasol and other South Africa companies working in the gas-to-liquids and coal-to-liquids industries. Alaska has large undeveloped coal reserves, and the Fischer-Tropsch process could be used to make liquid fuels from those, as is done in South Africa, she said.

Sasol manufactures diesel, gasoline, jet fuel and a variety of petrochemical feedstocks that support a local petrochemical industry. Because of its homegrown industries, South Africa is largely self-sufficient in fuel.

Although the early-generation plants benefited from government start-up subsidies, Sasol's newer plants are more efficient, to the point that the company is now engaged in building large plants in Qatar and China.

Shell Oil has developed a gas-to-liquids plant in Malaysia, from where the company exports ultra-clean diesel to the U.S. and petrochemical products to Asia.

ExxonMobil Corp. has done extensive work on its own approach to gas-to-liquids and has considered GTL as a serious option for developing its North Slope gas reserves. ExxonMobil's plan, developed in the late 1990s, was for a GTL plant to be built on the North Slope with the liquid products shipped through the trans-Alaska oil pipeline.

The Fischer-Tropsch process was developed by German scientists in the 1920s. During World War II, Germany built Fischer-Tropsch plants to make fuels from coal. After the war, German scientists were brought to the U.S. to work with American companies in building a Fischer-Tropsch plant in Texas.

It was not commercially viable due to low oil prices at the time. South Africa meanwhile had formed Sasol to develop domestic coal resources.

Sasol engineers and scientists visited the Texas plant and adopted the technology to build its coal-to-liquids and gas-to-liquids industries.

Copyright (c) 2010, Alaska Journal of Commerce, Anchorage. Distributed by McClatchy-Tribune Information Services.