Seismic reflections: Gas to liquids could gain traction

The economics of gas-to-liquids (GTL) plants is looking increasingly interesting, driven by the widening gap between oil and natural gas prices, particularly in North America. Currently, on a heat-equivalent basis, WTI is selling for 7x Henry Hub against 2x as recently as 2008. GTL facilities are, of course, costly and the process is energy intensive but at anything like current US oil and gas prices, GTL projects are arguably viable. Interestingly, Chesapeake, the second-largest US gas producer, believes GTL could become a reality in the US later this decade.

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