GE Supplies Turbines for Pearl GTL Project as Cost Estimates Soar

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Researched by Industrial Info Resources (Sugar Land, Texas). Contracts are beginning to be released for the massive Pearl GTL (gas-to-liquid) project in Ras Laffan Industrial City, Qatar, for which Shell (TSX:SHC) (London, United Kingdom) is providing 100% of the project funding and the state-owned Qatar Petroleum is covering offshore and onshore costs.

Estimated costs for the project have been rising since the project was officially launched in July. When the first agreement was signed in July 2004, the estimated cost for the project was $5 billion. New estimates have the cost rising towards $6.5 billion and unconfirmed reports have Qatari government officials putting the eventual cost at a possible $10 billion. The climbing trend of these overall estimates is due in part to clauses such as ‘cost-reimbursable’ becoming a part of contracts undertaken for the project.

In the upstream section of the project, 1.6 billion cubic feet per day (cfpd) of wellhead gas will be produced from Qatar’s North Field and will be transported and processed to produce 120,000 bpd of oil equivalent consisting of condensate, liquefied petroleum gas and ethane. Downstream dry gas will be used as feedstock for an integrated GTL complex, which will produce an additional 140,000 bpd of liquid hydrocarbon products. The Pearl GTL complex will consist of two 70,000 bpd GTL trains plus associated facilities.

The plant will produce a range of clean liquid products and fuels including naphtha, GTL fuel, normal paraffins, kerosene and lubricant base oils. GTL will make up the largest portion of the products and will be used in existing light and heavy duty diesel engines. Shell is developing a marketing profile for GTL in diesel fuel through a testing program with Toyota. The fuel can be transported and marketed in the existing infrastructure, is virtually sulfur free, and has ‘clean’ emission benefits. Shell claims that GTL fuel is highly efficient, which ensures a profitable return on investment.

Qatar’s North Field is considered to be the largest single non-associated gas reservoir in the world with estimated recoverable resources in excess of 900 trillion cubic feet. The project will produce upstream resources of approximately 3 billion barrels of oil equivalent.

The latest contract to be signed for the Pearl GTL project is for GE Oil & Gas (NYSE:GE) (Fairfield, Connecticut) business division to supply six PG6581B (Frame 6B) gas turbines with dual fuel IGCC (integrated gasification combined cycle) type combustion systems. In addition to the 42-megawatt (MW) generator units, the scope of the contract includes IGCC combustion engineering, combustion system lab testing, spare parts and training. This is the first time Frame 6 units will be supplied with IGCC technology.

The gas turbines will be installed in a 180 MW cogeneration configuration. The turbines will be able to burn a range of low BTU gases, including a process off-gas derived from the core GTL reactors. Natural gas is the backup fuel and will be used for plant start up. Steam injection will be used to reduce NOx emissions. The units will be manufactured in GE’s plant in Belfort, France and packaged in Florence, Italy. During the manufacturing cycle the combustor hardware will be tested at GE’s facilities in Greenville, South Carolina. Shipment is scheduled for late 2007/early 2008. The Pearl project is due to begin commercial operation by 2010.

The E+P+C (engineering, procurement and construction) contract for the project was awarded to MWKL, a joint venture between KBR (NYSE:HAL) (Houston, Texas) and JGC Corporation (TSE:1963) (Japan). The contract includes project management and start-up support of the overall onshore complex along with cost-reimbursable E+P+C activities for the utilities and infrastructure.

The contract for the supply of eight air separation units to the project in Ras Laffan has been awarded to Linde (DE:648300) (Wiesbaden, Germany). Pearl GTL will be the largest integrated GTL complex in the world. Linde will supply Pearl GTL with the air separation units to produce oxygen capacity of around 860,000 cubic meters per hour. The required oxygen capacity for this world-scale project makes this the largest single contract ever placed for air separation units. Linde will perform the basic and detail engineering, the supply of equipment and materials, as well as erection and commissioning.

J. Ray McDermott (NYSE:MDR) (Houston, Texas) eastern hemisphere has the contract to install two wellhead platforms in the North Field, which it is now constructing at its Jebel Ali, Bubai yards.

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