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Natural Gas-Derived Liquids Eyed for Transportation Fuel Use

While normally associated with the chemicals and petrochemical industries, a number of small, niche players want to take liquids derived from natural gas and compete in the alternative transportation fuels space. The reinvigorated natural gas transportation fuel buzz has brought back methanol, introduced dimethyl ether (DME) and found potential room for bio-based fuels from natural gas.

A panel of entrepreneurs representing some new twists to the carbon sciences discussed this emerging fuel niche on Wednesday as part of the second day of ACT Expo, an alternative transportation fuel conference in Long Beach, CA. Their relatively offbeat fuels can compete with petroleum products, they said, but whether one of them can end up being a dominant alternative fuel is problematic.

The best known of the potential alternative fuels is methanol, which was a popular transportation fuel alternative in the early 1980s, particularly in California where there were thousands of methanol-fueled cars. It is one of the world's most widely traded chemical commodities and literally can be found in just about any retail product, according to Matt Roberts, government affairs director in the Americas and Europe for the Methanol Institute.

There are all sorts of applications, but Roberts said "the largest and fastest growing application [today] is in using methanol as an energy source." It is a high-octane fuel and a lot of it used in transportation is in Asia, he said.

More under the radar is DME, which Rebecca Breitenkamp, PhD, president of California-based Oberon Fuels, is trying to get launched as another option in the alternative transportation fuels sector. DME has great potential for replacing diesel, according to its advocates like Breitenkamp. It can be produced from a variety of feedstocks, although currently Oberon is concentrating on using pipeline quality natural gas.

Breitenkamp raised and answered the obvious question -- particularly with sub-$2 natural gas prices -- of why someone would want to break down the gas and make DME, instead of just burning the gas directly.

"For [compressed natural gas] CNG and [liquefied natural gas] LNG one of the challenging aspects is the infrastructure costs; there is very little of that in using methanol or DME as a transportation fuel," Breitenkamp said. There is also the issue of greenhouse gas (GHG) emissions -- albeit relatively low -- from CNG and LNG. "It is also very clean, with low sulfur and no NOx [nitrogen oxide]," she said.

Used widely in various nontransportation applications, there are many large DME plants in nations outside of the United States. It was first pursued for transportation applications back in the early 1990s when Amoco did some testing of it in diesel engines in cooperation with Navistar and other engine manufacturers. There is some long-term testing ongoing in Europe in a fleet of 10 trucks, said Breitenkamp, noting there has been "significant progress" reported so far and large reductions of carbon dioxide (CO2) emissions, using bio-based DME.

A multi-fuel, portfolio approach is also being examined by Colorado-based Sundrop Fuels, which last year launched plans to develop a nearly $500 million facility in Alexandria, LA, to produce bio-based transportation fuels derived from natural gas. Shale gas heavyweight Chesapeake Energy Corp. is one of Sundrop's major investors, according to CEO Wayne Simmons, who thinks it is critical to use the existing energy pipeline infrastructure to keep down total costs.

"We could move a gallon of fuel from the Houston Ship Channel to the New York harbor in a pipeline for about two cents/gallon," Simmons said. "If you shipped it in a rail car, you are talking about upwards of 20 or 30 cents/gallon."

Sundrop plans to break ground by the end of the year on its production plant in Louisiana and be operational in early 2015, producing about 50 million gallons annually of a variety of fuels. The plant is classified as an advanced biofuel plant because it is going to use woody biomass residues (branches/tops of trees) -- rather than a petroleum-based -- feedstock, Simmons said.

At a projected price of $2/gallon, Simmons said he is confident his facility can compete with petroleum fuels in the marketplace.

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