An extensive study on the development of alternative energy sources has resulted in the Shell middle distillate synthesis (MDS) technology and the setting up of a gas-to-liquid (GTL) plant in Bintulu

IN response to accelerating global demand for energy and environmentally clean products, oil giant Shell embarked on an extensive research to develop alternative power sources.

The effort culminated in the inception of the Shell middle distillate synthesis (MDS) technology. And Shell MDS, a gas-to-liquid (GTL) plant in Tanjung Kidurong, Bintulu — the first such commercial low temperature facility in the world — was inaugurated in 1993.

Located next to the Malaysia LNG complex with excellent access to gasfields offhsore Bintulu, the plant has since gained invaluable operational experiences and market knowledge for high quality specialty products.

In essence, the Shell MDS technology provides distinctive benefits such as commercialising gas reserves offshore Sarawak, manufacturing environmentally clean products for various applications and reducing dependency on oil.

Shell MDS (Malaysia) Sdn Bhd has successfully marketed its products on a global scale through diverse business channels and is also showcasing its GTL technology to the world.

The company was incorporated on April 7, 1986 and received its project licence a year later. Preparations for detailed project implementation quickly followed, including efforts to attract joint-venture partners.

On August 22, 1989, Shell Gas BV signed a joint-venture agreement with Petronas, Diamond Gas Holdings (subsidiary of Mitsubishi Corporation) and the Sarawak state government to develop the MDS technology project.

The initial capital investment was US$850 million in 1993. Presently, the company has an issued ordinary share capital of RM500 million. In October 2002, the Shell Gas BV share was transferred to Shell Gas Holdings (Malaysia) Limited.

In December 1997, the plant was rocked by an explosion due to contamination caused by the haze. Consequently, over the next two years (1998-2000), Shell MDS (Malaysia) Sdn Bhd redesigned and reconstructed the plant before re-commissioning it. The company reportedly incurred a loss of about US$300 million in production during the rebuilding of the plant.

Shell MDS (Malaysia) Sdn Bhd is part of the gas and power business. Its managing director and marketing and finance functions are based in Kuala Lumpur while the GTL plant is located Bintulu.

The company employs about 300 workers of whom 95 per cent are Malaysians. An on-going training programme ensures the transfer of skills to Malaysians.

Technology and process

The Shell MDS technology is a modern version of the Fischer-Tropsch process invented in the 1920s to produce liquid hydrocarbon from coal. This is also known as the gas-to-liquid (GTL) process.

The technology, however, uses a selective and proprietary Shell catalyst which enables the technology to be brought to full commercial operations.

This technology is part of a whole set of Shell technologies, centred around the production of synthesis gas (syngas) from coal, natural gas and biomas, and the subsequent conversion of syngas into a range of synthetic products. This production process combines conventional and advanced technology, using the newer and more active catalysts.

There are three different stages:

• Production of syngas from the reaction of natural gas and oxygen via the shell gasification process (SGP).
• Syngas being passed through heavy paraffin synthesis (HPS) reactors equipped with the Shell proprietary catalyst. The reactors’ conditions have been chosen to favour the formation of long-chained liquid molecules (wax) and minimise the formation of gaseous compounds. The HPS is the heart of the Shell MDS process.
• Wax molecules being converted and fractionated into high quality products, predominantly middle distillates and waxy raffinat, by means of the heavy paraffin conversion (HPC) and distillation process.

The unparalleled properties of Shell MDS products have set new standards in the ‘fuels and specialities’ markets as they are manufactured from the synthesis of high quality natural gas virtually free of sulphur, nitrogen and aromatics.

The products — colourless, odourless, biodegradable and environment-friendly — are sold globally in a variety of applications under various brand names such as Shell sarasol-solvents, Shell sarapar-drilling fluids, Shell saraline- drilling fluids and Shell sarawax-waxes.

Shell MDS naphtha is highly paraffinic and ideal as a cracker feedstock for ethylene manufacture. Its paraffinic nature, coupled with its purity, results in an ethylene yield nearly 10 per cent higher than petroleum-based naphtha feedstocks.

Shell MDS kerosene has superior combustion properties, low emissions, excellent stability and water-shedding qualities. It can also be combined with naphtha as an ethylene cracker feed.

Its gas-oil has high cetane and low density, is virtually free of sulphur and aromatics, and a valuable component in gas-oil blends. Officially named as Shell GTL Fuel by the Shell Group, it’s being used around the world as a blending component to produce clean, high-performance diesel fuels.

At Shell MDS (Malaysia) Sdn Bhd, the commitment to quality remains the top priority. Based strictly on the ISO 9002 standard, the Shell MDS quality management system is a structured framework of controls, extending from management to task levels to ensure all its business activities meet set objectives while allowing for continuous improvement in performance.

Meanwhile, the Shell MDS lab performs a wide range of analyses on processes and product samples, including feed and process gases, water and effluent discharge, distillates, specialities and waxes.

The range of tests vary from simple density and titration to sophisticated carbon number distributions, applying gas chromatographic techniques. The lab has also adopted a quality system based on the internationally-acclaimed ISO/IEC 17025.

Additionally, a lab information management system, known as the sample manager LIMS, has been installed to provide efficient data management, customer reporting and inventory management.

Shell MDS (Malaysia) Sdn Bhd is committed to pursuing the following goals:

• No harm to people, protect the environment and use materials and energy efficiently when providing products and services;
• Develop energy resources, products and services consistent with these aims;
• Publicly report the performance, play a leading role in promoting best practices in the industry and manage all health safety environment (HSE) matters as critically as other business activities;
• Promote a culture in which all Shell employees share the commitment.

The successful certification of the Shell MDS occupational health and safety management system to OHSAS 18001 and of its environmental management system to ISO 14001 is testimony to the company’s commitment to pursuing the goal of no harm to people and environmental protection.

Its future goal is to go forward and be the world leader in GTL specialities. The business strategies formulated to realise this vision are anchored on four key pillars and reflect the key drivers that affect the profitability of Shell MDS.

These strategies are:

• To grow the business by developing new GTL specialities, new markets and applications for GTL products;
• To achieve operational excellence by optimising output and product mix, and maximising GTL conversion efficiency through reduced flaring and wastage.
• To reduce costs and achieve best-in-class practice and unleash human talents within the organisation by emphasising a diverse and inclusive work culture, enhancing leadership performance and empowering the business with the best talents through enriching the employee value proposition.

On October 20, 2003, Qatar Petroleum and Qatar Shell GTL Ltd signed an agreement for the construction of the world’s largest GTL plant in Ras Laffan, Qatar.

Shell’s second GTL plant will have a production capacity of 140,000 barrels per day. Customers of Shell GTL products can look forward to ample supply availability once this plant is operational around the end of this decade.

Recently, Shell MDS invited 11 senior journalists from the local and national newspapers — seven from Kuala Lumpur and two each from Sarawak and Sabah — to tour the Tanjung Kidurong plant in Bintulu.

The briefings and tour from Oct 9 to 10 were led by Shell MDS (Malaysia) Sdn Bhd communication adviser, Mark Devan and Shell Malaysia media relations manager (communications), Cindy Lopez.

On hand to receive the group were the Shell Malaysia Gas and Power Shell MDS (M) Sdn Bhd vice president and managing director, Dick Benschop, Shell Gas and Power International manager GTL Technology Global GTL Development, HP Calis, Shell MDS (Malaysia) Sdn Bhd director/general manager (marketing), Liang Kok Siang, and Shell MDS (Malaysia) Sdn Bhd senior operation manager, Tom Wong.

Among the facilities the journalists toured were the control room, the lab and the plant.