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3.

Hydrocarbons to the final products, like synthetic diesel

Now FT plants are currently being constructed to use remote natural gas as a feed stock.  FT fuels can potentially be produced from renewable sources such as biomass.  Production options are discussed in more detail in Section 4.4.

FT diesel fuel can be transported in conventional product tankers.  Bulk storage, product blending, truck delivery, and local product dispensing can be accomplished with existing infrastructure.  If pure FT diesel fuel is sold as a separate product, refueling stations will need to reallocate their inventory of local storage tanks or install additional storage and dispensing equipment.

FT diesel is likely compatible with existing dispensing equipment and vehicle fuel systems.  However, fuel compatibility issues have not been widely documented.  Some fuel compatability problems were identified when low aromatics diesel fuels were introduced in California.  Problems appeared to occur on older model diesel engines with a specific type of fuel system.

Major oil companies are supporting the development of FT fuels or gas to liquids (GTL) products.  Shell, Exxon, Texaco, and ARCO have built or are planning to build production facilities.  Oil Companies own many of the natural gas fields in the world and are interested in finding a market for the fuel.  Exxon included an article describing its GTL technology in their 1998 publication for shareholders which illustrates their interest in the technology.

FT fuels are attractive to oil companies since they improve the quality of diesel and make use of their natural gas resources.  These fuels are also attractive since they can be used in existing vehicles.

FT fuels will become more widely available as more facilities are constructed to take advantage of low cost remote natural gas.  The growth of the market may depend on the price of oil.  Since the cost of producing FT fuels does not drop significantly with a drop in the price of oil low oil prices have hindered the commercial production of FT diesel.  FT fuels will likely be blended to produce high cetane, low aromatic diesel before they are sold as pure clean fuel alternatives.  The blending approach allows for a build up of production and bulk storage capacity.  If a demand for pure FT fuels develops, the infrastructure will be in place.

3.6.3  Methanol Production from Natural Gas

California methanol mostly comes from Canada, with a smaller amount coming from Texas.  Since transportation of natural gas from Texas is more expensive, as it usually comes by rail rather than ship, it was not considered here.  We have also assumed that all the natural gas feedstock comes from Canada, and that the methanol is transported in Phase 4 from Canada to the South Coast by tanker ship.

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