Transcript ONRR Application of MCR For Compression

February 11, 2015
Click Here to Add Date
 Introduction
 An Alternative Perspective of Compression
 Recycling of Residue Gas
 Relative Costs of Dehydration
 Q&A
2
An Alternative Perspective of
Compression
3
Transportation & Processing Compression
FIELD GATHERING SYSTEM
700 psig
7# H2O
2% CO2
ARMS-LENGTH THIRD PARTY TRANSPORTATION
(Royalty
Measurement
CDP Point)
PLANT INLET
COMPRESSION
COMPRESSOR
ONE
100
psig
100
psig
400
psig
COMPRESSOR
TWO
375
psig
COMPRESSOR
THREE
750
psig
700
psig
25 psi tran
50 psi tran
RESIDUE
COMPRESSOR
CRYO UNIT
900
psig
BOOSTING
COMPRESSOR
COMPRESSI
FOUR
ON
300
700
psig
psig
600 psi processing
GAS PLANT PROCESSING
4
GAS MAINLINE
TRANSPORTATION
1,000
900
800
700
Mainline Pressure Requirement
Pressure, psig
Transport
Losses
600
500
400
Transport
Losses
300
Processing
Losses
200
100
0
Royalty
Measurement
Point
(ie. WH or CDP)
Compressor
One
Transport
Losses
Compressor
Two
Transport
Losses
Compressor
Three
Processing
Losses
Plant (Processing)
Pipeline (Transportation)
5
Compressor
Four
ONRR Methodology:
 Compression required to reach mainline pressure is not allowed.
 Compression is allowed once mainline pressure is achieved.
 Residue “Boosting” compression at plant is not allowed (per regulation).
However, ONRR methodology:
 Does not consider actual function of compression
 Eliminates actual transportation and processing costs which are
allowable deductions
 Results in different outcomes based on location and arrangement of
compressors and/or type of plant
 Lessee bears costs for lessor’s value enhancement (i.e., lessee pays twice)
6
1,000
Allowable Compression Per ONRR Methodology
900
800
Pressure, psig
700
Mainline Pressure Requirement
Transport
Losses
600
500
400
Transport
Losses
300
Processing
Losses
Not Allowed:
Below Mainline
Pressure
200
100
Not Allowed:
“Boosting”
0
Royalty
Measurement
Point
(ie. WH or CDP)
Compressor
One
Transport
Losses
Compressor
Two
Transport
Losses
Compressor
Three
Processing
Losses
Plant (Processing)
Pipeline (Transportation)
7
Compressor
Four
 Allocate compression to:
– Meeting mainline pressure requirements
– Transportation function
– Processing function
 Considers “function” of compression regardless of
location within the system.
 Recognizes the transportation and processing function
of compression that exceed the services necessary to
place the gas into marketable condition.
8
1,000
Allowable Compression – Functional Allocation
Allowed: Compression for Transportation &
Processing
900
800
Pressure, psig
700
Mainline Pressure Requirement
Transport
Losses
600
500
400
Transport
Losses
300
Processing
Losses
200
Not Allowed:
Below Mainline Pressure
Not Allowed:
Below Mainline Pressure
100
0
Royalty
Measurement
Point
(ie. WH or CDP)
Compressor
One
Transport
Losses
Compressor
Two
Transport
Losses
Compressor
Three
Processing
Losses
Compressor
Four
Plant (Processing)
Pipeline (Transportation)
9
COMPRESSION
PER ONRR
Compressor
Number
Suction
Pressure
Discharge
Pressure
Pressure
Difference
(psig)
(psig)
(psi)
One
100
400
Two
375
Three
Four
Total
FUNCTIONAL ALLOCATION
Allowable
Calculation
Allowed
%
Allowable
Calculation
Allowed %
300
Not MC
0%
(400 – 300)
(400 – 100)
33.33%
750
375
(750 – 700)
750
6.67%
(750 – 375)
(750 – 375)
100%
700
900
200
Processing
100%
Processing
100%
300
700
400
“Boosting”
0%
“Boosting”
0%
225
1175
10
675
 The ONRR has labeled residue gas recompression as “boosting,”
which is not an allowable deduction per the regulations (CFR
1202.151(b)).
 Residue gas recompression is an integral part of many NGL
extraction facilities, especially those that incorporate turboexpand or J-T technology.
–
Without the recompressors, gas would not flow through the plant, a pressure drop across
the expander would not be created, the gas would not refrigerate and NGLs would not
condense from the gas stream
 Residue gas recompression is used to restore energy lost from
processing for NGL extraction.
 To the extent that the inlet gas has already achieved marketable
condition, residue gas recompression is a processing function.
11
 ONRR’s formula for compressors underestimates allowable
percentage.
ONRR Formula*:
Compressor Two:
% =
(Discharge Pressure of Unit – Marketable Condition Pressure)
(Discharge Pressure of Unit)*
(750 – 700)
750
=
6.67%
 Allowable percentage should be based on pressure differential.
% =
Compressor Two:
(Discharge Pressure of Unit – Marketable Condition Pressure)
(Discharge Pressure of Unit – Suction Pressure of Unit)
(750 – 700)
(750 – 375)
=
* From ONRR “How to Calculate a Transportation UCA.”
12
13.33%
 Results from a comparison of the two methodologies
supports the approach of basing the allowable percentage
on the pressure differential.
PRESSURE DIFFERENTIAL
PER ONRR
Allowable
Calculation
Percentage
Allowable
(750 – 700)
(750 – 375)
13.33%
43.33%
NonAllowable
(700 – 375)
(750 – 375)
86.67%
50%
Total
Formula
Percentage
Allowable
(750 – 700)
750
6.67%
NonAllowable
(700 – 375)
750
Total
13
100%
Questions?
14
Recycling of Residue Gas
15
 Federal regulation (CFR 1202.151(b)):
“A reasonable amount of residue gas shall be allowed
royalty free for operation of the processing plant, but no
allowance shall be made for boosting residue gas or other
expenses incidental to marketing, except as provided in 30
CFR part 1206.”
 A basic design characteristic of turbo-expander plants is
the necessity to recompress the residue gas due to the
substantial pressure drop incurred to achieve cryogenic
temperatures.
 Since its original development, various improvements to
the design of turbo-expander plants have allowed increased
recovery of NGLs.
16
 Relative Recovery Ethane Recovery *
Maximum Ethane
Recovery
Conventional
80%
Residue Recycle
95%
Gas Subcooled Process
93%
Cold Residue Recycle
98%
 Many design improvements utilize the recycling of residue
gas back to the demethanizer.
* Derived from Figure 16-23 in Section 16 “Hydrocarbon Recovery” of the Gas Processors Supplier Association Engineering Data Book, 12th
Edition
17
 Conventional turbo-expander flow diagram*:
Compression
Residue
* Figure 16-19 from Section 16 “Hydrocarbon Recovery” of the Gas Processors Supplier Association Engineering Data Book, 12 th Edition (with
PWM adjustments).
18
 Turbo-expander flow diagram with residue recycle*:
* Figure 16-20 from Section 16 “Hydrocarbon Recovery” of the Gas Processors Supplier Association Engineering Data Book, 12 th Edition
19
 Amount of residue gas recycled back to the demethanizer
can vary from 0% to greater than 25%.
 The increase in total residue gas flow (net residue gas to
pipeline plus recycle) requires additional residue gas
recompression horsepower.
 The incremental recompression horsepower should be
allowable as a processing cost consistent with ONRR
regulations.
– i.e. For a gas plant where 25% of the total residue gas
recompressor flow is recycled back to the demethanizer, 25% of
residue gas recompression costs and fuel are directly associated
with processing.
20
Questions?
21
Relative Costs of Dehydration
22
 There are two main technologies utilized to dehydrate natural
gas:
– Glycol absorption
– Molecular sieve adsorption
 Glycol absorption
– Absorption of water from natural gas through contact with a glycol such
as TEG (tri-ethylene glycol)
– Practical for bulk water removal
– Typically only effective to reduce the water content to about 4-5 lbs. of
water / mmscf
 Molecular sieve adsorption
– Adsorption of water from natural gas through the use of a solid material
such as molecular sieve.
– Reduces the water content of natural gas to essentially zero (“bone dry”),
which is a requirement for cryogenic processing.
– Significantly more expensive than glycol absorption (up to 10x).
23
 A typical dehydration system for a turbo-expander or
J-T plant might consist of glycol units (either in the
field and/or at the plant) upstream of a molecular
sieve system (typically at the plant).
 The glycol units will typically achieve pipeline water
content specification (i.e. 7 lbs./mmscf).
 It is not uncommon for processors to forego glycol
dehydration and utilize a mole sieve system only.
 ONRR’s methodology allows the deduction of
dehydration costs once the MCR has been met.
24
 The linear approach suggested by the ONRR tends to allow relatively
small percentages of dehydration costs to be deducted.
 ONRR’s methodology*:
% =
(Marketable Condition Specification– Outlet Measurement)
(Inlet Measurement)**
 Example:
» 38 lbs. / mmscf inlet
» 0 lbs. / mmscf outlet
»
7 lbs. / mmscf pipeline specification
Allowable Percentage:
(7 - 0)
(38)
= 18.0% Allowed
* From ONRR “How to Calculate a Transportation UCA.”
** The denominator should be ‘(Inlet Measurement – Outlet Measurement)’ to properly allocate.
25
 The ONRR methodology is based on water content and is
not consistent with the relative costs of the dehydration
functions
 Allowable percentages for dehydration costs should be
based on the relative costs to achieve marketable condition
and to facilitate cryogenic processing.
 Allocating based on relative costs results in a more
accurate functional allocation.
26
 Example: Glycol and Molecular Sieve units
– 250 mmscfd
– 38 lbs. / mmscf inlet
– 0 lbs. / mmscf outlet
–
7 lbs. / mmscf pipeline specification
– Estimated capital cost of a glycol unit to reduce the water content
from 38 lbs. / mmscf to 7 lbs. / mmscf:
•
$2,500,000
– Estimated capital cost of a molecular sieve to reduce the water
content from 7 lbs. / mmscf to 0 lbs. / mmscf:
•
$10,000,000
– Allowable Percentage:
(based on relative costs)
– Allowable Percentage:
(based on ONRR methodology)
$10,000,000 x 100% = 80.0%
$12,500,000
(7 – 0)
38
27
x 100% =
18.0%
 For a system without upstream glycol units, the
relative incremental cost to remove 3-10x as much
water should be considered.
 The cost of a molecular sieve system is significant,
even if a glycol unit is installed upstream of the
molecular sieve.
 ONRR’s linear methodology is not reflective of
dehydration costs associated with MCR and for
processing; thus another methodology should be used.
28
 Example: Molecular Sieve Unit Only
– 250 mmscfd
– 38 lbs. / mmscf inlet
– 0 lbs. / mmscf outlet
– 7 lbs. / mmscf pipeline specification
– Actual capital cost of a molecular sieve to reduce the water content from
38 lbs. / mmscf to 0 lbs. / mmscf:
•
$11,300,000
– Estimated capital cost of a molecular sieve to reduce the water content
from 7 lbs. / mmscf to 0 lbs. / mmscf:
•
$10,000,000
– Allowable Percentage:
(based on relative costs)
– Allowable Percentage:
(based on ONRR methodology)
$10,000,000 x 100% = 88.5%
$11,300,000
(7 – 0)
38
29
x 100% =
18.0%
Questions?
30