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Technologies Offer Gasoline from Natural Gas or Waste as Low as $75 per Barrel

Lux Research

Many alternative fuels technologies remain uneconomical today, with return on investment of over 17 years, but emerging technologies will drive down costs, says Lux Research.

BOSTON, MA – July 25, 2013 – An unprecedented price disparity between crude oil and other resources – coupled with the emergence of cheap and abundant shale gas, especially in the United States – is transforming the alternative fuels landscape, opening up opportunities to produce cheaper gasoline, says Lux Research.

With crude oil price projected to top $140 per barrel by 2035, alternative fuel technologies, which can produce gasoline at the equivalent of $75 per barrel, will rise.

“Raw materials such as natural gas and waste biomass will become increasingly viable options for making liquid fuels as new technologies tame high capital and operating costs,” said Daniel Choi, a Research Associate at Lux Research and the lead author of the report titled, “Bringing the Heat: Gas- and Waste-derived Synfuels.”

Lux Research analysts studied the cost of 21 biomass-to-liquids (BTL) and gas-to-liquids (GTL) processes. Among their findings:

  • Methanol-to-gasoline is the cheapest option. At small scale (~1,000 barrels per day), methanol-to-gasoline (MTG) is the most competitive route for liquid fuels from either natural gas ($82 per barrel) or waste ($75 per barrel).

  • GTL can make ethanol more cheaply, but offers limited product value. Among GTL approaches, ethanol synthesis has the lowest cost of $80 per barrel, while Fischer-Tropsch costs $86 per barrel and MTG costs $82 per barrel. However, ethanol has less product value, due to blending limits and lower energy density.

  • Waste biomass is a ubiquitous alternative. The U.S. Department of Energy says that waste biomass could produce 50 billion gallons of ethanol, roughly 3.5 times the current production. Processing the waste is challenging, adding $3.60/bbl to the fuel price – but that's often more than offset by feedstock cost savings.

Waste-to-liquid (WTL) Cost Breakdown: Methanol-to-gasoline (MTG) vs. Pyrolysis

*MSW: Municipal Solid Waste

The report, titled “Bringing the Heat: Gas- and Waste-derived Synfuels,” is part of the Lux Research Alternative Fuels Intelligence service.