More than $4 billion per year will be invested for plants to convert conventional and unconventional gas into liquids to be used for fuel and chemicals, according to the latest forecast in an online report published by the McIlvaine Company.

Converting natural gas into liquid fuels is now seen as a primary way to take advantage of the large shale gas reserves in the U.S., according to the Oil, Gas, Shale and Refining Markets and Projects report. Sasol and Shell plants in Louisiana are slated to require an investment of over $24 billion. There are also plants under consideration in Alaska, British Columbia and Pennsylvania.

The largest and longest running plant is operated by Sasol in South Africa. A second plant is under development at Mossel Bay. Additional plants are slated for Thailand, Nigeria, Uzbekistan, and Brazil, the report says.

Liquids created from gas are high in purity. The diesel fuel emits fewer pollutants to the environment than diesel made from crude oil. There is also less engine wear.

McIlvaine Company says unconventional gas and coal will also be used as feedstocks. China is already operating plants using coal as a feedstock. Through indirect gasification technology coal is converted to gas and then in a further process converted to fuel or chemicals. There are a number of coal-to-chemicals plants in operation or planning, notably the Eastman plant in Tennessee, which has been making chemicals from coal for decades.

Coal bed methane and biomass are additional sources of gas, which can be converted to liquids. An alternative process for making biodiesel is with indirect gasification.

McIlvaine Company says the contribution of gas-to-liquids will be significant but will not compare to the liquids, which are extracted along with conventional and unconventional gas. By 2015, condensates and other natural gas liquids will contribute 14 million barrels per day of product.

The conversion of gas-to-liquids involves a large investment in pumps, valves and instrumentation, McIlvaine Company says. Extensive investments in air and water pollution control equipment are also required.

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