California-based Greyrock Energy announced Nov. 4 that investors have made a final investment decision (FID) to build a novel gas-to-liquids (GTL) diesel plant near Houston, due for start-up by the end of 2015.

The actual size and capex of the plant were not disclosed, but Greyrock CEO Robert Schuetzle told Hart Energy that his company’s technology normally would enable GTL projects ranging from 100 to 5,000 barrels per day (bbl/d).

Schuetzle added that while the project developer isn’t disclosing capex on this project, the Greyrock scheme can enable construction of GTL plants at capex costs that would be substantially below the quoted costs for some major recent GTL projects including the Royal Dutch Shell Plc “Pearl” GTL plant in Qatar and the proposed Sasol Ltd. GTL plant in Louisiana.

The project has been fully financed and the permitting process is underway. Schuetzle added that because the project would have relatively low emissions, getting the required air permit likely won’t hold up the project completion. Fabrication of the required plant modules is also underway, but Schuetzle declined to identify which companies are building the modules.

“Greyrock targets midstream operators and producers who can profit by transforming abundant, low-cost natural gas into higher-value transportation fuels without the costly, large-scale processes that are typical with traditional GTL solutions,” according to the company.

The Houston project is being funded by a consortium of investors led by Dallas-based Sterling Private Capital and Eagle Oil and Gas Co., according to Greyrock.

“Greyrock’s facilities produce premium synthetic diesel fuel from natural gas or natural gas liquids (NGL) using the company’s groundbreaking ‘GreyCat’ catalyst and ‘distributed GTL’ (dGTL) solution,” according to the company.

“Modular gas conversion can be achieved from a variety of abundant gas sources, including natural gas, NGL, stranded gas resources and associated gas.”

“We believe Greyrock has the most advanced platform for small-scale gas-to-liquids conversion of natural gas into high value liquid transportation fuels and we support them in this vital initiative,” Sterling Private Capital CEO Art Harding added.

“In addition to conversion of natural gas into fuels, we are very excited about the opportunity to convert NGL, especially ethane, in geographies where ethane pricing is depressed and a challenge for producers to deal with,” Eagle Oil and Gas chairman Pat Bolin noted.

According to Greyrock, its proprietary catalyst applies “lessons learned from its industry experience in polymer chemistry to identify the mix of chemistry and engineering design required to achieve this direct-to-diesel” solution.

”Greyrock’s proprietary ‘GreyCat’ catalyst, which is not a traditional Fischer-Tropsch catalyst, directly converts syngas into diesel fuel with high selectivity. Our ‘GreyCat’ catalyst eliminates the wax upgrading stage and therefore reduces complexity and cost associated with small scale GTL plants.

“This allows Greyrock to effectively scale down its systems to small modular units that can be sited in areas where other, larger projects would not be cost effective. Greyrock’s ‘GreyCat’ catalyst is manufactured in the United States using readily available materials.

“Greyrock’s diesel fuel is a premium product that features high cetane, no sulfur and good lubricity. Greyrock’s fuels are not bio-diesel, but are true hydrocarbon diesel fuels that directly replace petroleum-based fuels.

“Our fuels do not cause engine performance or durability issues and can be blended with traditional diesel fuels to boost cetane, lower overall sulfur and increase lubricity. Greyrock’s ‘dGTL’ system can also produce a reformulated gasoline blendstock which may be used to bring gasoline-based fuels into compliance with newer, more stringent environmental regulations,” according to the company.

Jack Peckham can be reached at jpeckham@hartenergy.com.