Transcript Methane Vent Mitigation Proposal for Demonstration Projects PTAC TIS

Methane Vent Mitigation
Proposal for Demonstration
Projects
PTAC TIS
November, 2001
New Paradigm Engineering Ltd., Edmonton,
Clearstone Engineering Ltd., Calgary
Areas to Cover
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Introductions
Why focus on Methane Vent Mitigation?
What might be Achieved Economically?
What is Happening Now?
Why isn’t more Happening?
How Are Demonstration Projects Going to Help?
Proposal Details and Process
Next Steps?
About New Paradigm Engineering
Ltd.
 Independent consulting company, Inc. 1991
 Engineer “new paradigms” for industry
 Small but supplement manpower with other
specialists and consultants as needed for the work.
 Last three years spent on assessing existing and
new options for reducing methane emissions,
through a series of Vent Options Studies and other
activities.
• Vent Option Studies Total - $190k (2000-01)
• CHO Audits and Equipment Trials - $75k (19992001)
• New Technology Development - $80k (1998-2001)
About Clearstone Engineering Ltd
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In business since 1989
Process and Environmental Engineering Specialists
Methane Related Experience:
- Quantification of CH4 losses, and evaluation of
control opportunities at gas production,
processing, transmission and distribution facilities
in Canada,
US, Europe and Asia.
- Preparation of CAPP’s control options
document
and emissions inventory for CH4
and VOCs
- Work for IPCC & UNFCCC on fugitive
emissions
Methane from the Upstream
Industry
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Over $400-$800M/yr of methane vented or emitted from
upstream sites (@$3-$6/GJ)
• Equivalent to over 20% of Upstream O&G Industry energy use
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At the same time methane is also being flared.
Methane emissions from Upstream Sources
• Almost 50% of oil & gas GHG emissions
• Over 8% of Canada’s GHG emissions
• Over 30% of Alberta’s emissions
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GHG, Flaring and Odour Issues affecting O&G
Development
Methane emissions have almost doubled since 1990
Methane - An Economic GHG Target
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It has an economic value ($3-$6/GJ)
It can provide the energy to support it’s own use
It has a greater impact; 1 t CH4 = 18-21 tCO2e
Lower cost to convert than to sequester CO2
• Sequestration of CO2 usually in the US$20/tonne
range
• Many methane mitigation options are economic
• <$US1.50/tCO2e to convert methane into CO2
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Many opportunities to use existing technology to
reduce emissions.
• Many designs based on gas at C$0.30/GJ and no
concerns about methane.
What Comes with the Methane
Vents?
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Lost Opportunities to Increase Sales Revenues or
to Reduce Energy Costs
Heavier Hydrocarbons that Could be Recovered
Volatile Organic Compounds (VOC’s), H2S and
BTEX emissions
• Source of Odours, Health Concerns and Public
Resistance to Further Development and Lead to
Flaring
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Regulatory Pressure to Change
What Can Be Economically
Achieved?
 Work by New Paradigm, Clearstone & Others
shows:
 Fuel Displacement
• Vent or flared gas can be used to fuel equipment.
• Small investments and rapid payouts (months)
• No point reducing vent/flare if you can use it as fuel
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Vent Volume Reductions
• Economic at many sites – payouts months to years
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Manage Large Surpluses
• Sell Gas, Power, or Liquids – Payouts 2-4 years
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Methane Conversion to CO2 for Credits
Upstream Oil & Gas Methane
Emission Sources
Other
1%
Gas Processing
6%
Product
Transmission
16%
Heavy Oil
Production
29%
Accidents and
Equipment Failures
5%
Conventional Oil
Production
8%
Ref: CAPP Pub #1999-0009
Gas Production
35%
Conventional Heavy Oil Potential
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Methane Sources – Production Casing (95%),
Tanks (5%)
An estimated 25-50%  Displace fuel on leases
• Payouts can be as short as 1-4 months
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Likely 25-35%  Used for Managed Options
• Compression and Sales
• Power Generation
• Small Scale EOR
• Fuel is essentially FREE!
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Remainder  Convert to CO2 for Credits
Methane Sources – Mainly Gas
Operations
Incomplete
All Other
Combustion
Fugitives
Pumps
Glycol
Dehydration
Instrument
Gas
Example Source – Data from One Producer
Conventional Gas Production
Potential
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Methane Sources – Dehydrators (25%),
Instruments (50%), Pumps (20%), Incomplete
Combustion (5%)
Almost all  Displace fuel on leases with fired
heaters
• In example case – Methane vents could displace up
to 30% of the fuel used by direct fired heaters.
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Sites without fired equipment  Reduce Volume
• Change chemical pumps to drip pots
• Replace instruments to low vent types
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Where it is uneconomic to reduce vents  Convert
Compression and Processing
Potential
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Methane Sources – Fugitives (70%), Incomplete
Combustion (18%), Compressor Ops (12%)
• About 16% of methane Gas Transmission
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Fugitives  Detection, Isolation and Repair of
Leaks
• Most of the emissions are from <0.5% of the fittings
• To be economic – minimize cost of finding the
leakers as the cost to fix usually minimal.
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Compression a Large Fuel Demand
• Improve combustion efficiency
• Conserve starting gas, blowdowns, and seals – use
Summary of THC Emissions by
Industry Sector
Crude
Bitumen
Production
Heavy Oil
Production
Gas
Processing
Product
Transmission
Accidents and
Equipment
Failures
Conventional
Oil
Production
Gas
Production
Drilling, Well
Servicing and
Testing
Oil Production Potential
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Methane Sources – Mainly Tank Vents,
Instruments and Pumps
• Need better data to breakdown relative shares.
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Oil Production only 8% of methane but 32% THC
due to product losses from tank vents.
Liquids Recovery
• Use methane in vents to fuel vent condensors to
recover liquids
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Displace Fuel
• Use gas from instruments and chemical pumps for
building heat and burners.
Energy Losses from Thermal
Heavy Oil Operations
To Reservoir
40%
Produced Water
10%
Generator Stack
15%
Other
4%
Flare
5%
Wellbore
26%
Thermal Heavy Oil Potential
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Main problem is energy efficiency more than
methane venting
• Highest per bbl oil energy cost  low value bbls
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Initial focus of options studies on small thermal
operations in Lloydminster area
• Greatest challenge as no economies of scale
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Improve Efficiency of Surface Facilities
Increase Percentage of Energy Going into the
Reservoir
Investigate low cost fuel switching
Methane Conversion Any Sector
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Methane Sources: Small isolated vents; Fugitives
too small to stop; Incomplete Combustion (engines,
burners)
Pressurized Streams Relatively Easy
• Conversion cost is lower than any CO2 reduction
options
• Flares, combustion units and catalytic converters
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Dilute Sources Require More Research:
• Collection and Concentration of Methane
• Conversion
• Energy Recovery
Methane Conversion Calculations
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The “math and science” of converting methane to
CO2
Stoichiometric formula is:
• CH4 + 2O2  CO2 + 2H2O + Energy
• Molar basis – 1 mole methane  1 mole of CO2.
• Mass Basis – 1t CH4 + 4t O2  2.75t CO2 + 2.25t
H2O
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GHG emissions based on mass; 1 t CH4 = 21 t
CO2(eq)
1 t CH4 converted to CO2 forms 2.75 tonnes of
CO2. Emission reduction = 21 – 2.75 = 18.25
Methane Conversion Economics
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GHG credits normally considered as a change from
1990 levels so may have to determine base line
emissions level
• Need someone to test the system.
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Value of GHG credits
• Recent trades US$0.50-$2/tCO2(eq) to C$4.50$17.00
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Some on-line trading going on: GERT, KEFI &
Others
For positive economics conversion of 50 m3/d of
methane cost of system must be about C$5k
• Payout in 10 years @ C$1.50/tCO2e
What is Happening Now?
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Reporting through Voluntary Change Registry
(VCR)
• Not all companies are participating
• Focus is on high-level volumes and not economics
• Often results achieved or hidden by takeovers and
mergers
• Too high a level to help others
• Options good for one situation may not be good for
all
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Leading Producers are Making Gains in Some
Sectors
• Other companies or even departments don’t hear
Real Life Examples
CHO Fuel displacement
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Husky using vent gas at many leases year round
using engine waste heat for tracing lines to stop
freezing.
Devon (Anderson) used basic separators and
methanol on 82 wells and saved $1.6 million/yr and
over 145,000 t CO2(eq)/yr in GHG emissions.
$3000/well & $230/mo.
Others have used small compressors, CaCl dryers,
electric tracing off drive engine to utilize vent gas.
Demonstration Projects would provide
resources to document these successes
Why isn’t More Happening?
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High Demands on Resources
• Exploration, acquisition and asset growth require
money and people. Few people have time to work
on vent issues.
• Focus on own Business Units, rather than Corporate
or Industry Targets
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Economic Value of Vent Gas Not Recognized
Responsibility Passed to Field Staff w/o Resources
It is a change from “Common Practice”
Lower Cost to Change New Sites than Fix up Old
Ones
How Are Demonstration Projects
Going to Help?
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Provide knowledgeable resources to help sort out
what to do and provide assistance.
Method to pass results on to others at no cost to
Producer and no staff time away from everyday
work.
Results and Analysis Reported in a consistent
fashion
Transfer what is learned in one area or sector to
others with similar issues.
Help Leaders improve and get better.
Motivate Followers to learn and get started.
Demonstration Project Goals
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Encourage and support producers (Producer Benefits).
• Audits to highlight and quantify the main sources
• Recommendations to achieve cost effective solutions
• Enable proactive decisions rather than reactive bandaids
• Focus on the largest emission areas first
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Promote communication (Industry & Society Benefits)
• Develop both technical and economic results
• Consistent reporting by a third party
• Provide manpower and funds to communicate widely
• Papers, presentations, web-sites and courses.
Work Scope – Prioritized Target Sectors
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Conventional Heavy Oil
Gas Production Facilities
Oil Production Facilities
Thermal Heavy Oil Operations
Gas Processing/Compression Facilities
Methane Conversion – Credit/Offset Trading
Effort varies with the sector, what has already been
done by the Producers and size of the operation
Proposed Process #1 - Producer
Decisions
 Initial audit by team
• Type and volumes of sources
• Identify Local Opportunities
• Highlight best options for the area
• Recommend Implementation Method and estimate
Budget
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Producer reviews audit with team support
• Decides which opportunities to pursue
• Plans project
• Sets budget
• Decides if they want to make results public
• Decides if they want to be named or be anonymous
Proposed Process #2 – Demo
Approval
 Team Prepares summary of demonstration details
• Key emissions targeted, budget and plan
• Assessment of value as a model for the sector
• Prepare plan and budget for detailed case study and
communications.
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Participant’s Panel (funders plus demo hosts)
• Reviews opportunity summary and plan.
• Allocates a percentage of the pre-committed funds to
the demo project.
• Locates additional funding if appropriate ($100k min
assumes $15k/demo and only 6 demos.)
Proposed Process #3 – Demo
Execution
 Producer Proceeds with Project Implementation
• May or may not wait for Demo Approval
• Controls project schedule, cost and scope
• Adjusts as appropriate
• Team provides support as requested and reports on
progress as appropriate.
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Team Prepares Follow-up Report
• Compare Plan to Actual
• Demonstrated reductions and economics, etc.
• Takes information “on the road” to communicate to
others
Proposed Deliverables per Sector
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Audit Report on Volumes and Proposed Actions
• Analysis & Recommendations to Producer
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Action Plan Preparation
• Producer decides on what emissions to tackle and
assigns resources. Summary taken to Participant
Panel
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Follow-up Report
• Full Document with results, technical and economic,
lessons learned, recommendations for others
• Powerpoint format (paper and electronic)
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Presentations (CIM and others), Courses
Demonstration Summaries
 Standard format and contents:
• Site Layout,
• Emission Sources and Volumes
• Potential Options Identified
• Options Selected and Why
• Implementation Plan and Budget
• Project Execution
• Technical and Economic Results,
• Operator Issues,
• Post Project Emissions Audit,
• Implementation/Regulatory Issues
Funding
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Producers fund initial audits and implementation
• Retains control at all times, not committed to do
anything that is uneconomic, unsafe, experimental,
etc.
• Site audits $2k-$25k/each (depends on scope)
• Potential for 50% of audit (up to $5k) paid for NRCan
• Implementation $50k?? (depends on opportunities)
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Participating Organizations fund non-economic
activity
• Prescreening of proposed demo sites
• Preparation of a comprehensive report for each
demo
Agreement Terms
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For Initial Audit and Planning (Producer/Team)
• Standard P.O. or Invoice to either New Paradigm or
Clearstone, based on standard rates & scope set by
Producer
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Agreement to Participate (Producer/Participants)
• Producer agrees to make information available to the
Team that is necessary to complete an analysis.
• May include information exclusions if defined up front.
• Participants - no responsibility for execution, or liability
for releasing information provided by the Producer.
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Funding Agreements (Participants/Team)
• Similar in scope but vary with funding agency.
Summary of Proposal
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Want to develop the project as a Win-Win
• Producers get needed support to achieve economic
results, emissions reductions while retaining control
• Funding Participants get results communicated
widely to stimulate new activity and understanding of
issues; leading to more and accelerated emission
reductions
• Proponents get to apply their knowledge and receive
compensation for analyzing and promoting the
results
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Demonstrate potential benefits for all Conventional
Upstream Oil and Gas Sectors
Next Steps?
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Applications are being submitted to a number of
potential funding sources (Industry and Gov’t)
• Seeking upfront commitment to an initial $100k
• Funds only spent if Producer’s come forward
• PTAC considering administering NRCan funds for
audits
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Producers Approached by Team to Discuss:
• Potential target projects that might serve as demos
• Potential concerns with information releases
• Potential agreement terms
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Initiate the first demonstration to serve as a model
Questions and Discussion?
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Producers:
• Do you believe there are economic solutions?
• Do you want support to assess, implement and report
on your successes?
• What are your initial concerns?
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Potential Funders
• Can you allocate funds up front, before Producers
sign on
• What are your initial concerns?
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Other Stakeholders (Vendors, Researchers, NGO’s)
• What are your thoughts and concerns?
Acknowledgements
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Support of Husky (Ron Schmitz) and Alberta
Environment (Bob Mitchell) for this information
session.
Current Participants for Conventional Heavy Oil –
AEC, Devon, Husky, CNRL, Nexen, Exxon-Mobil,
EnerPlus Group, CAPP, AERI
Current Participants for Thermal Heavy Oil –
Nexen, Husky, CAPP
Current Participants for Conventional Oil and Gas –
BP Energy, Husky, CAPP
Support from the Petroleum Technology Alliance
Canada (www.ptac.org)
Contact Information
New Paradigm Engineering Ltd.
C/o Advanced Technology Centre
9650-20 Avenue
Edmonton, Alberta
Canada T6N 1G1
tel: 780.448.9195
fax: 780.462.7297
email: [email protected]
web: www.newparadigm.ab.ca