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August 2018
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CONTENTS
THIS MONTH'S FRONT COVER
August 2018 Volume 23 Number 08 ISSN 1468-9340
03 Comment
05 World News
10 True north strong and freeGordon Cope, Contributing Editor, looks at the current status of the oil and gas sector in Alaska and Canada.
17 Fast-trackingfirstgasAnkur Jariwala, Schlumberger, USA, reviews how an integrated gas processing facility delivered product to market in record time for an operator in Egypt.
21 Special solutionsAndy Shurtleff and Brandon D. Sumners, Airgas, an Air Liquide company, explain the role of industrial and specialty gases in reducing sulfur emissions.
25 Boosting performance and reliabilityUday Parekh, Blasch Precision Ceramics, USA, discusses how to boost process performance and reliability at hydrogen and sulfur recovery plants using ceramic technologies.
31 GowiththeflowG. Srivardhan, M. Rajasekhar and Vijay D. Thakare, Engineers India Ltd, discuss the application of computational fluid dynamics when troubleshooting a sulfur recovery unit.
38 Looking for light reliefDr Annemarie Ott Weist and Mark J. Roberts, Air Products and Chemicals Inc., along with Laurent M. Brussol, David J. Holzer and Sylvain Vovard, TechnipFMC, discuss a new equipment arrangement and liquefaction process designed to accommodate the emerging need for lighter hydrocarbons.
45 Improved LNG line-upRaymond Bergmann and John Specht, Shell Global Solutions International B.V., and Shelby McFarlin, LNG Canada, explain how LNG Canada enhanced the capital efficiency of its major new proposed LNG export facility.
49 Train to gainBobby Ferrell, Owens Corning, USA, outlines the importance of training programmes for proper insulation installations.
53 YellowflagDaniel Meier and Renate Ruitenberg, Nalco Champion, an Ecolab Company, USA, discuss providing water protection with a new yellow metal corrosion inhibitor.
57 From inspection to monitoringDr Tim Stevenson, Ionix Advanced Technologies Ltd, UK, evaluates the role of installed transducers in refineries, and the challenges from moving from inspection to continuous monitoring.
62 A hybrid approachJason DuBose and Matt Walton, Mitsubishi Heavy Industries Compressor International Corp., USA, shares a case study of how a first generation syngas steam turbine was modified after catastrophic damage.
69 Decoding stall and surgeYousef Jarrah and Sugimoto Kouichi, Nikkiso Cryo, explore how stall and surge occur in rotating equipment.
73 Compressor reviewHydrocarbon Engineering presents a selection of advanced compressor equipment, technology and services that are available in the downstream oil and gas industry.
Mitsubishi Heavy Industries Compressor International’s (MCO-I) Houston-based 'Pearland Works' packaging and servicing facility features High Speed Balancing among many other servicing capabilities. The company's High Speed Balance bunker corrects unbalance and minimises vibration under field-like operating conditions; producing field-ready performance, reducing problems at start-up and helping to avoid costly field balancing. For more information on MCO-I’s capabilities, contact [email protected].
---INTRODUCING--------A----NEW----NAmE------IN---INDUSTRIAL--------PROCESS---------
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Previously operating as Sandvik Process Systems, we are now an independent company within the Wallenberg group, a business with approx. 600 000 employees and in excess of €140 billion in total sales of holdings.
We continue to develop customized solutions for the sulphur industry, with the same people, skills and process systems – including our world-renowned Rotoform® pastillation process – but under a new name and brand.
Read more at ipco.com
IPCO_SPS-IPCO_Hydrocarbon_Engineering_210x297_ART.indd 1 19/03/2018 14:14
CONTACT INFO
MANAGING EDITOR James [email protected]
EDITOR Callum O'[email protected]
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CONTRIBUTING EDITORSNancy Yamaguchi Gordon Cope
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APPLICABLE ONLY TO USA & CANADAHydrocarbon Engineering (ISSN No: 1468-9340, USPS No: 020-998) is published monthly by Palladian Publications Ltd GBR and distributed in the USA by Asendia USA, 17B S Middlesex Ave, Monroe NJ 08831. Periodicals postage paid New Brunswick, NJ and additional mailing offices. POSTMASTER: send address changes to HYDROCARBON ENGINEERING, 701C Ashland Ave, Folcroft PA 19032.
15 South Street, Farnham, Surrey GU9 7QU, ENGLAND Tel: +44 (0) 1252 718 999Fax: +44 (0) 1252 718 992
COMMENTCALLUM O'REILLYEDITOR
F ollowing the World Gas Conference, which took place recently in Paris, France, a flurry of market reports and global outlooks for the natural gas
industry have been arriving in my inbox. Cedigaz, the International Association for
Natural Gas, is forecasting that natural gas demand will grow by 1.4% per year between 2016 and 2040, as natural gas and renewables play a growing role in the global energy mix.1 The association’s ‘Medium and Long Term Natural Gas Outlook 2018’ suggests that the expansion of natural gas markets is supported by abundant and competitive conventional and unconventional resources, as well as a “very rapid growth of spot and flexible LNG.” China and the Middle East will lead the way in gas demand growth over the forecast period, followed by India, Iran, the US and Saudi Arabia. The outlook also predicts that the share of LNG in net interregional trade will increase from 40% in 2016 to 55% in 2040. Indeed, interregional LNG trade will grow at a rate of 4% per year. China and India alone are set to contribute more than 40% of the growth in international LNG imports, while Cedigaz expects Qatar to remain the world’s top exporter, with 21% of global LNG supply in 2040, followed by the US (19%) and Australia (17%). Cedigaz also notes that recent and future new importers and suppliers in the LNG market are driving the diversification and globalisation of gas markets.
While the International Gas Union’s (IGU) ‘2018 World LNG Report’ focuses on recent historical data rather than providing a forecast for the future, it concurs that LNG is playing an essential role in helping to expand global access to natural gas.2 The IGU notes that global LNG trade in 2017 increased 12% to reach 293.1 million t – the highest annual growth since 2010. This is attributed to increases in LNG supply (primarily as a result of projects in Australia and the US bringing new capacity online), as well as rising demand (particularly in China, which recorded the largest ever annual growth by a single country in 2017; 12.7 million t).
Despite the bright outlook, Cedigaz warns that there is a risk of tighter markets as early as 2022, as a result of higher than expected LNG demand from Asia (propelled by China) and delays in the second wave of liquefaction projects. The association estimates that 56 million t of new capacity (on top of current operating and post-FID projects) will be required to meet global LNG demand in 2025.
In this issue of Hydrocarbon Engineering, Contributing Editor Gordon Cope takes a look at one region that is aiming to bring new LNG capacity to the market: Alaska and Canada. Starting on p. 10, Cope provides a summary of recent developments surrounding the Alaska LNG project, and provides a brief look at Canada’s LNG sector. Meanwhile, starting on p. 45, Shell Global Solutions explains how LNG Canada enhanced the capital efficiency of its major new proposed LNG export facility in Kitimat, British Columbia (B.C.).
1. ‘Medium and Long Term Natural Gas Outlook 2018’, Cedigaz, (July 2018).2. ‘IGU releases 2018 World LNG Report – highlighting growth of LNG in addressing global
energy needs’, International Gas Union, (28 June 2018).
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WORLD NEWS
August 2018HYDROCARBON ENGINEERING
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USA | Bucking Horse gas processing plant set for expansion
W illiams Partners L.P. and Crestwood Equity Partners LP
have announced a major expansion of the Jackalope Gas Gathering System (JGGS) and associated Bucking Horse gas processing facility in the Powder River Basin (PRB) Niobrara Shale play. The expansion will increase processing capacity to 345 million ft3/d by the end of 2019 to meet growing customer demand in the PRB.
As part of the expansion, the Bucking Horse plant in Converse County, Wyoming, will increase its capacity from 120 million ft3/d to 145 million ft3/d by the end of 4Q18. The expansion also includes plans to add a second plant on the current Bucking Horse footprint by the end of 2019 – adding an additional 200 million ft3/d to the JGGS.
The JGGS, which includes the Bucking Horse gas processing plant, is owned through a 50/50 joint venture between Williams Partners and Crestwood Equity Partners. The gathering and processing facilities provide services under an agreement with Chesapeake Energy Corp. that is supported by a 358 000 acre area of dedication from Chesapeake.
Worldwide | BHGE agrees to sell its Natural Gas Solutions business
Baker Hughes, a GE company (BHGE) has announced an
agreement to sell its Natural Gas Solutions (NGS) business to two separate entities for a combined value of US$375 million.
The company has agreed to sell its NGS product line to First Reserve. This transaction
includes the transfer of approximately 450 employees located in eight countries, including three manufacturing sites in North America and the UK.
In a separate transaction, BHGE has agreed to sell the Talamona branch of its NGS product line to Pietro Fiorentini S.p.A.
The transaction includes the transfer of approximately 40 employees and a manufacturing site in Talamona, Italy.
BHGE expects both transactions to close in 2H18, subject to customary closing conditions and appropriate regulatory approvals.
The Philippines | Petron to expand refinery
Petron Corp. will expand and upgrade its Limay, Bataan refinery
with technologies from Honeywell UOP. When the project is completed, the refinery will produce 75 000 bpd of refined fuels and 1 million tpy of aromatics, increasing its capacity by 55%.
Honeywell UOP will provide the basic engineering design, licensing and services for a condensate fractionation unit, naphtha hydrotreater, and UOP CCR PlatformingTM, SulfolaneTM, LPG and kerosene MeroxTM and distillate UnionfiningTM units. These technologies will allow Petron to meet growing domestic demand for
motor fuels by upgrading 100 000 bpd of condensates and light crude oils to aromatics and automotive fuels.
In 2017, the Philippines imported 46% of its gasoline, 59% of its diesel and 69% of its LPG.
“This is a major expansion of refining capacity in the Philippines, and it will help the country satisfy its growing demand for cleaner-burning gasoline and diesel with domestic production,” said John Gugel, President of Honeywell UOP. “The expansion also adds a second aromatics train for Petron so it can better meet the growing demand for those products in the region.”
Saudi Arabia | KBR awarded crude oil to chemicals contract
Saudi Aramco and Saudi Basic Industries Corp. (SABIC) have
awarded a contract to KBR to develop part of a new fully integrated crude oil to chemicals (COTC) complex.
KBR will provide the front-end engineering and design (FEED) for the downstream petrochemicals and chemicals component within the COTC master complex. The scope includes engineering studies, infrastructure planning and development for both of the
polymer and glycol units, along with the aromatics complex, the COTC master plot plan, and offsite utilities.
The KBR project management contract is the second that Saudi Aramco and SABIC have awarded for the COTC project. Wood was granted the first contract to provide engineering and design for the refining components, mixed feed steam cracker, on-site utilities, interface and site integration, and selection of technology providers.
WORLD NEWSIN BRIEF
August 2018 HYDROCARBON ENGINEERING
6
India | Total and Tata create digital innovation centre
Total and Tata Consultancy Services (TCS) have signed a
partnership agreement to create a digital innovation centre in India.
Based in Pune in the State of Maharashtra, the centre will explore disruptive technologies and solutions.
The partnership will initially focus on refining. Thanks to the intensive use of digital technology, the various building blocks of refining will be driven in a wide-ranging way to improve refinery performance. Real time data
analytics, the Internet of Things (IoT), automation, artificial intelligence (AI) and agile methodology will be used to improve industrial efficiency, energy performance and availability rates.
“With the digital innovation centre, we are positioning ourselves as a pioneer working to develop a smart, connected refinery that will allow us to improve our industrial competitiveness. We want to invent the Refinery 4.0,” said Bernard Pinatel, President, Refining & Chemicals at Total.
canadaWorleyParsons has been awarded a new three-year contract by NOVA Chemicals for continued engineering on the Corunna Cracker Expansion Project (phase 3) in Ontario. This follows the successful completion of services to phase 2 of the project. Under the new contract, WorleyParsons will provide engineering, procurement, construction management and project management services.
germanyRosneft Deutschland GmbH has signed contracts with German companies for marketing of its petrochemical products, with production starting in 2019. A contract for marketing propylene produced by Rosneft Deutschland’s PCK, Bayernoil and MiRO refineries was signed with HELM AG. The company also signed a contract with Brenntag International Chemicals GmbH for aromatics and sulfur.
saudi arabiaSaudi Aramco Total Refining and Petrochemicals Co. (SATORP) has selected Axens to evaluate, develop, and implement an Advanced Process Control (APC) system for its aromatics complex ParamaX® producing high purity paraxylene and benzene. The objective of the APC system is to achieve substantial economic benefit by providing extremely precise control of product quality while reducing consumption of utilities.
usaPraxair Inc. has renewed and expanded a long-term contract to supply hydrogen to Marathon Petroleum Corp.’s Galveston Bay Refinery in Texas City, Texas. Praxair has been supplying industrial gases to the Galveston Bay Refinery since 1985.
USA | Halliburton acquires Athlon Solutions
Halliburton Co. has announced the acquisition of Athlon Solutions
LLC.Athlon will become part of the
Halliburton Multi-Chem business line, a provider of specialty oilfield chemicals for stimulation, midstream, and production customers.
Combining the two companies will strengthen Halliburton’s chemicals technology, manufacturing, and supply chain. Additionally, the acquisition
enhances Multi-Chem’s capabilities to deliver innovative technical solutions to its customers and provides Halliburton with its first chemical manufacturing plant with full reaction and blending capabilities.
Athlon is headquartered in Houston, Texas and has 250 employees serving global customers as well as all major refinery and petrochemical areas in the US.
UAE | Advisian wins pre-FEED contract
Advisian has been awarded the role of preparing the pre-front
end engineering and design (pre-FEED) and licensor evaluation for the latest expansion of Borouge’s petrochemical facility (Borouge-4 plant), part of a major new downstream facility in the UAE.
The award comes as Abu Dhabi National Oil Co. (ADNOC) announces a five-year investment of Dh165 billion (US$45 billion) in downstream operations in
partnership with other global players to build the world’s largest integrated refining and petrochemicals facility in Ruwais. Borouge-4 is a significant element of this investment.
The plant will include the world’s largest single train mixed feed steam cracker and associated petrochemical derivatives. The steam cracker will feed units producing polyethylene and polypropylene product, totalling approximately 2.5 million tpy.
Comprimo® Sulfur Solutions
Whether you are looking for sulfur recovery technology in compliance with your local environmental regulations, the removal of sulfur components from a sour gas stream through amine treating or removal of H2S and NH3 in sour water stripping, Jacobs Comprimo® Sulfur Solutions provides you the necessary technology, expertise and support.
Comprimo® Sulfur Solutions is part of Jacobs, one of the world’s largest and most diverse providers of technical professional and construction services
� Global leader in Gas Treating and Sulfur Recovery Technologies
� More than 500 units licensed during the last 40 years � Customers include major refineries, gas plants, and
coal gasification units, power & chemical plants around the world
� Total Project Solutions: Technology Selection & Licensing, Technical Studies, Basic Design, FEED, Detailed Design, EP, EPCm & Modular Supply
� Centers of Expertise in The Hague (the Netherlands) and Calgary (Canada)
www.jacobs.com/comprimo-sulfur-solutions
Comprimo® Sulfur Solutions
Whether you are looking for sulfur recovery technology in compliance with your local environmental regulations, the removal of sulfur components from a sour gas stream through amine treating or removal of H2S and NH3 in sour water stripping, Jacobs Comprimo® Sulfur Solutions provides you the necessary technology, expertise and support.
Comprimo® Sulfur Solutions is part of Jacobs, one of the world’s largest and most diverse providers of technical professional and construction services
� Global leader in Gas Treating and Sulfur Recovery Technologies
� More than 500 units licensed during the last 40 years � Customers include major refineries, gas plants, and
coal gasification units, power & chemical plants around the world
� Total Project Solutions: Technology Selection & Licensing, Technical Studies, Basic Design, FEED, Detailed Design, EP, EPCm & Modular Supply
� Centers of Expertise in The Hague (the Netherlands) and Calgary (Canada)
www.jacobs.com/comprimo-sulfur-solutions
WORLD NEWS
August 2018 HYDROCARBON ENGINEERING
8
USA | Meridian progresses Davis Refinery construction
Meridian Energy Group Inc. has executed a contract with
SEH Design|Build Inc. (SEH D|B) for the performance of site and civil design and construction services for the Davis Refinery.
This announcement comes after the North Dakota Department of Health – Air Quality Division issued Meridian the permit to construct for the Davis Refinery. SEH D|B will take on a significant portion of the project, executing grading and other
site work activity that is necessary for the refinery.
SEH D|B will lead civil construction activities by refining site grading plans to establish final grades and contours. Initial construction activities will include the installation of erosion control devices, storm water pond development and ditch shaping to establish vegetation and ensure runoff will be addressed before erosive issues develop to protect surrounding areas and existing waterways.
India | TechnipFMC awarded HGU contract
TechnipFMC has been awarded a contract by the state-owned
Hindustan Petroleum Corp. Ltd (HPCL) for a grassroot hydrogen generation unit (HGU). The project is part of the brownfield expansion for HPCL’s Visakh Refinery Modernisation Project located in Visakhapatnam, in the state of Andhra Pradesh.
The contract covers project management, technology licensing, preparation of basic design and engineering package, as well as detailed engineering, procurement,
construction, commissioning, and performance guarantee test run on a licensing, engineering, procurement, construction and commissioning (LEPCC) basis.
This HGU is being installed to cater to the needs of HPCL Visakh Refinery to enhance its refining capacity from 8.33 million tpy to 15 million tpy. TechnipFMC’s scope includes a HGU comprising two trains with a design capacity of 113 000 tpy each and a pressure swing adsorption (PSA) unit of 36 000 tpy hydrogen production.
DIARY DATES12 - 13 September 201811th Annual National Aboveground Storage Tank Conference & Trade ShowGalveston, Texas, USAwww.NISTM.org
13 - 14 September 201811th EFRC ConferenceMadrid, Spain www.recip.org
17 - 20 September 2018GastechBarcelona, Spain www.gastechevent.com
18 - 20 September 2018Turbomachinery & Pump SymposiaHouston, Texas, USA tps.tamu.edu
26 - 27 September 2018Tank Storage AsiaSingaporewww.tankstorageasia.com
27 September 2018Tank Storage Conference & ExhibitionCoventry, UKwww.tankstorage.org.uk/conference-exhibition
1 - 3 October 2018AFPM Operations & Process Technology SummitAtlanta, Georgia, USAwww.afpm.org/conferences
22 - 24 October 20186th Opportunity Crudes ConferenceHouston, Texas, USAwww.opportunitycrudes.com/houston2018
5 - 8 November 2018Sulphur 2018Gothenburg, Swedenwww.sulphurconference.com
12 - 15 November 2018ADIPECAbu Dhabi, UAEwww.adipec.com
27 - 30 November 2018ERTCCannes, Franceertc.wraconferences.com
USA | Graham Corp. wins two new orders
Graham Corp. has received two orders totalling approximately
US$6.6 million for the petrochemical industry in the US Gulf Coast.
Equipment delivery for both orders is planned for 1H20 and both will add to fiscal 2019 revenue.
The first order is for a Texas-based ethylene cracking plant within the company’s installed base,
replacing and upgrading steam surface condensers that Graham installed 25 years ago. The new condensers will provide more corrosion resistant material.
The second order is for new petrochemical capacity at a Texas-based plant producing fuel additives that reduce automobile emissions. Graham will provide a process vacuum condenser.
www.CRITERIONCatalysts.com
Leading minds. Advanced technologies.
SOARSTO NEW HEIGHTS
C R I T E R I O N P O R T F O L I O
Innovative, exceptional and thorough. These are a few descriptors for the Criterion Catalyst Portfolio that has been robust for years and continues to evolve. The primary catalyst groups of SENTRYTM, CENTERATM and ASCENTTM work to solve countless hydroprocessing issues. We’ve come to be known for the superior R&D and pilot testing performed by our scientists and technical services team, and our newest products and capabilities have arrived!
Criterion’s solutions improve refining efficiency and cut costs. We pride ourselves on extended customer service and collaboration to build solutions because performance matters. The top scientists, solutions and service lead to the highest quality performance in the industry.
• Next generation Arsenic protection & new MaxTrap capabilities
• Criterion’s highest activity catalysts for maximum volume expansion & sulfur/nitrogen removal DN-3636 & DC-2635
• Extreme stability with improved activity for DN-3552, DN-3532 & DC-2535
www.CRITERIONCatalysts.com
Leading minds. Advanced technologies.
SOARSTO NEW HEIGHTS
C R I T E R I O N P O R T F O L I O
Innovative, exceptional and thorough. These are a few descriptors for the Criterion Catalyst Portfolio that has been robust for years and continues to evolve. The primary catalyst groups of SENTRYTM, CENTERATM and ASCENTTM work to solve countless hydroprocessing issues. We’ve come to be known for the superior R&D and pilot testing performed by our scientists and technical services team, and our newest products and capabilities have arrived!
Criterion’s solutions improve refining efficiency and cut costs. We pride ourselves on extended customer service and collaboration to build solutions because performance matters. The top scientists, solutions and service lead to the highest quality performance in the industry.
• Next generation Arsenic protection & new MaxTrap capabilities
• Criterion’s highest activity catalysts for maximum volume expansion & sulfur/nitrogen removal DN-3636 & DC-2635
• Extreme stability with improved activity for DN-3552, DN-3532 & DC-2535
HYDROCARBON ENGINEERING
10August 2018
Gordon Cope, Contributing Editor, looks at the current status of the oil and gas sector in Alaska and Canada.
August 201811HYDROCARBON ENGINEERING
T he northern portion of North America – Alaska and Canada – is far from the immense energy markets that constitute the Lower 48 states and Mexico. However, the region is rich in oil and gas and represents huge potential.
AlaskaPrudhoe Bay in Alaska is one of the largest conventional oil fields in the world. What is less known about it is the 30 trillion ft3 of associated gas, plus another 16 trillion ft3 in other deposits. For several decades, various LNG plans have been promoted in an effort to monetise that stranded gas. Last year, the state’s Alaska Gasline Development Corp. (AGDC) filed an application with the US Federal Energy Regulatory Commission (FERC) to develop an Alaska LNG project.
The AGDC, in conjunction with Alaska North Slope (ANS) producers BP, ExxonMobil and ConocoPhillips, intend to spend up to US$45 billion on a system that will include a gas processing plant at the Prudhoe Bay field, an 800 mile, 42 in. pipeline capable of carrying up to 2.55 billion ft3/d from Prudhoe Bay to a port on the Kanai Peninsula, eight compression stations, and a liquefaction plant capable of producing up to 20 million tpy of LNG.
In 2017, Chinese President Xi Jinping met with President Donald Trump, Alaska Governor Bill Walker and AGDC President Keith Meyer in Anchorage to discuss the potential sale of LNG to China.
Skyline of Toronto, Canada.
August 2018 HYDROCARBON ENGINEERING
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In May 2018, AGDC and BP signed a gas sales agreement. The latter owns 26% of the Prudhoe Bay gas deposits and 32% of the nearby Point Thomson field. “We are very pleased to be part of the state’s vision to bring Alaskan natural gas to new and expanding markets globally,” said Bob Dudley, BP Chief Executive. “We think this is good for the state, good for BP and good for the environment.” If all goes according to plan, first shipments are expected to take place in 2023 – 2025.
Alaska, which has seen oil production in the Prudhoe Bay area drop from 2 million bpd in 1989 to under 500 000 bpd in 2018, has been heartened by significant discoveries in recent years.
Caelus Energy, a private exploration firm, announced in autumn 2016 that it had made one of the largest crude discoveries on Alaska’s North Slope. The company used two exploration wells and 126 km2 of 3D seismic to delineate a submarine fan complex beneath the shallow waters of Smith Bay, approximately 150 km west of Prudhoe Bay. The company estimates that the reservoir could hold 6 billion bbl of 45˚ API crude in place.
Repsol and Armstrong Energy have been exploring the Nanushuk play located 150 km southwest of Prudhoe Bay. Two exploration wells have encountered more than 50 m of oil in several reservoirs. They estimate that the onshore field could contain 1.4 billion bbl of light crude. Oil Search Ltd recently purchased a 26% stake in the play for US$400 million. Plans are to bring the reservoir onstream by 2021, with a peak production rate of 125 000 bpd.
ConocoPhillips added a sixth well to its winter drilling campaign at its Willow discovery on Alaska’s western North Slope. The first two explorations wells drilled in 2017 encountered 72 ft and 42 ft of net crude pay in the Brookian Nanushuk formation. The company has estimated that the discovery held at least 300 million bbls of recoverable oil.
CanadaAlthough it is at the end of a very long supply chain, operators have been able to find, drill, process and deliver 13 billion ft3/d of gas to markets in eastern Canada and the US.
The majority of gas has been from conventional shallow fields in southern Alberta, but unconventional discoveries have opened up a competitive source of gas. The Montney shale formation in northwest Alberta and northeast British Columbia (B.C.) holds 282 trillion ft3 of gas and 12.8 billion bbl of crude. Production has risen dramatically over the last several years, and now stands at 5 billion ft3/d, more than one-third of Canada’s total production. Veresen is currently building a 1.5 billion ft3/d (gross) network of gas processing and related compression, gathering and liquids handling network in the Montney play.
The Montney also has significant liquids production. In May 2018, Delphi Energy reported that a horizontal well in its Bigstone play in north central Alberta flowed at an initial restricted rate of 2.7 million ft3/d raw gas. The well also produced 608 bbls per million ft3 of sales gas of
Other major projectsOver the last several years, investment in oilsands has fallen dramatically, from CAN$30 billion in 2014 to CAN$10 billion in 2017, with little prospect of recovery this year or next. Despite the fall in investment, production is still expected to rise from 2.6 million bpd in early 2018 to approximately 4 million bpd in 2030. The increases will be due to 400 000 bpd capacity already nearing completion or under construction, as well as new projects that include Cenovus’s Telephone Lake (US$6.3 billion), Imperial Oil’s Kearl Oil Sands Phase 3 (US$5.9 billion) and Kearl Oil Sands Debottleneck (US$3.3 billion). Analysts note that reduced operation costs and consolidation make the oilsands production viable even in a low-price environment.
The vast majority of oilsands and conventional Canadian output (approximately 4 million bpd) is exported south, to the US. The multi-year delay in the building of the Keystone XL pipeline has resulted in export bottlenecks, causing heavy discounts to Canadian crude. The lack of a pipeline to tidewater makes the issue worse; efforts to expand the federally-approved Trans Mountain pipeline to the port of Burnaby, B.C., have been delayed by opposition from the B.C. provincial government.
In order to create value and partially alleviate the pipeline bottleneck, the province of Alberta is investing up to CAN$1 billion in order to persuade operators to partially upgrade more bitumen in the province. The money, in the form of loan guarantees and grants, will attract up to CAN$5 billion for the construction of up to five partial-upgrading facilities. The programme will begin in 2019 and last up to eight years. The Alberta government notes that the programme will increase the value of exports and free up as much as 30% of pipeline capacity. The latter is due to the fact that bitumen is mixed with diluent in order to make it flow; upgraded crude does not need it.
Newfoundland & Labrador’s Hebron offshore oilfield platform, at the cost of CAN$14 billion, was the largest hydrocarbon project to come onstream in 2017. The Hebron field holds approximately 700 million bbls of recoverable oil, and the platform is designed to produce 150 000 bpd.
The new field is good news for the province. Offshore production peaked at 360 000 bpd in 2007 at the Hibernia, Terra Nova and White Rose fields, but has since tapered off to 235 000 bpd. In addition to Hebron, long-term prospects look bright for the region. Recent exploration drilling in the Flemish Pass (located 150 km from Hibernia), indicate a resource potential of 12 billion bbls of oil and 113 trillion ft3 of gas. In the West Orphan Basin (located near Flemish Pass), resource potential is estimated at over 25 billion bbls of oil and 20 trillion ft3 of gas. The provincial government envisions offshore production of 650 000 bpd by 2030.
Introducing FFC Plus, the next generation of FIBER FILM® Contactor technology. Merichem Company’s advanced FIBER FILM technology with an integrated coalescer and treater pushes the boundaries of extractive technologies. With this latest innovations, hydrocarbon treating rates can be increased by up to 150% through increased mercaptan extraction efficiency. The integrated coalescing and treating device offers a simple installation, reduced chemical use, and reduced service and maintenance complexity.
FFC Plus truly is mercaptan treating made better.
August 2018 HYDROCARBON ENGINEERING
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44˚ API field condensate (1437 bpd), and over 100 bpd of NGLs.
The Duvernay shale, which underlies central Alberta, holds promise as an unconventional play. According to the latest figures from the National Energy Board (NEB), the Duvernay contains 76.6 trillion ft3 of marketable gas, 6.3 billion bbls of marketable NGLs, and 3.4 billion bbls of marketable oil. Over 500 wells have been drilled into the Devonian formation, sufficient to allow operators to both reduce well costs and high-grade sweet spots. The wet-gas region surrounding the Kaybob field in central Alberta is especially promising; operators are breaking even at CAN$40/bbl. Production from the Duvernay stands at 70 000 boe/d.
Gas processingWestern Canada’s raw gas production is a mix of methane, CO2, hydrogen sulfide, water and NGLs. In order to transport natural gas to market, the majority of impurities need to be removed by a gas processing facility.
Gas processing in Canada is dominated by several midstream firms that focus on gathering, processing, transportation and distribution.
TransCanada transports 75% of the natural gas produced in the Western Canadian Sedimentary Basin. The company recently spent CAN$1.3 billion to expand its NOVA gas transportation line (NGTL) system. The project included five pipeline sections, totalling 230 km, and the addition of two compression units. When finished, the NGTL system will have a capacity exceeding 11.3 billion ft3/d.
Pembina pipeline operates over 10 000 km of crude, gas and NGL pipelines, primarily in Alberta. Since 2017, the company has spent CAN$1.7 billion on CAPEX. Part of the funds were directed toward the commissioning of RFS III, the third new NGL fractionator in its giant Redwater facility. The 55 000 bpd unit makes Redwater the largest fractionation facility in Canada, with a nameplate capacity of 200 000 bpd.
AltaGas, based in Calgary, has CAN$22 billion in energy assets, including 1.6 billion ft3/d of extraction and separation facilities. It is in the process of adding another 100 million ft3/d of processing capacity in B.C., and two separation NGL trains with a capacity of 20 000 bpd.
Inter Pipeline has assets of CAN$22 billion, primarily in Alberta. It operates an extensive NGL processing business, including three major straddle plants, two off-gas processing plants, an off-gas liquids pipeline and a liquids fractionator. Input gas exceeds 3.1 billion ft3/d, and NGL output reached 113 000 bpd in late 2016.
In 2016, Inter Pipeline bought the Canadian assets of Williams Pipeline for CAN$1.35 billion, including two NGL plants near Fort McMurray. The plants remove NGLs and olefins from off-gas, a byproduct of bitumen upgrading.
NGLs can make up almost 10% of raw natural gas. They are recovered using cryogenic low-temperature distillation process (involving expansion through a turboexpander followed by distillation in a de-methanising column). The NGLs are then fractioned into ethane and propane using distillation towers.
The production of propane in western Canada has been rising at over 10% per year, to over 200 000 bpd in 2018. About 40 000 bpd is consumed by petrochemical facilities locally, with the rest being shipped to Ontario and the US.
Several steps are underway to find new export destinations. AltaGas Ltd, of Calgary, is building a propane export terminal in the Pacific port of Prince Rupert, B.C. The CAN$500 million project, which is located on a brownfield site on Ridley Island, includes a deepwater marine jetty capable of handling very large gas carriers (VLGCs) and sufficient storage to handle 40 000 bpd export capacity. AltaGas expects the terminal to be operational by 1Q19. The company recently announced that 50% of the exports will be purchased under long-term agreement by Atromos Energy, of Japan. Although the capacity represents a small fraction of the exports from the US Gulf Coast (USGC), it has the advantage of 10 day shipping to Asia vs 25 days from the USGC.
Pembina Pipeline has also announced plans to build its own propane export terminal near AltaGas’s facility. The Prince Rupert Terminal will have a capacity of approximately 25 000 bpd and be in operation by 2020. The CAN$270 million project will be supplied with train-loads from Pembina’s Redwater fractionation complex in Alberta.
Alberta is a prominent petrochemical manufacturing province, with four major ethylene plants having a combined production capacity of almost 4 million tpy. Two of these plants – at Joffre and Fort Saskatchewan – are among the world’s largest. In order to stimulate further added-value products in the province, the Alberta government announced the Petrochemical Diversification Programme (PDP) in early 2016.
The programme will commit up to CAN$500 million in royalty credits to encourage companies to spend up to CAN$5 billion to build facilities that use ethane or propane to produce polyethylene and related products. According to the government, the royalty credits will be assigned through a competitive application process and awarded on project start-up. The credits can then be traded or sold to oil and gas producers, who would then use them to reduce their royalty payments to government.
The programme is proving successful. Pembina and its partner, Petrochemical Industries Co., are planning to construct new propane dehydrogenation (PDH) and polypropylene (PP) plants in Sturgeon County, east of Edmonton. Recently, Pembina announced they were selected as recipients of CAN$300 million in royalty credits from the programme. The CAN$4.2 billion facility will use 22 000 bpd of propane when it enters service in 2021.
Inter Pipeline is building the Heartland Petrochemical Complex that will convert propane into 525 000 tpy of PP. The CAN$3.5 billion facility is located northeast of Edmonton. “We believe our integrated facility will be the lowest cost producer in North America,” said Christian Bayle, President and CEO of Inter Pipeline, “Because of the low cost propane feedstock, relatively
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low cost utilities and its transportation advantage in shipping the polypropylene to the major consuming areas, mostly in the US in and around the Chicago, Illinois area.”
In all, the two petrochemical (Inter Pipeline and Pembina) and two West Coast LPG export projects (AltaGas and Pembina) are expected to consume up to 110 000 bpd within five years.
Canada LNGOver 50 million tpy of LNG exports have been approved by the NEB for almost two dozen projects situated on B.C.’s Pacific Coast, but none have reached final investment decision (FID).
The closest to FID is LNG Canada, led by Royal Dutch Shell, which plans to build an LNG export facility in Kitimat, B.C. that will initially consist of two trains, with the option to expand to four trains. The project recently selected JGC Corp. and Fluor to do the final engineering, procurement and construction. The CAN$40 billion project would also include an export terminal and a 670 km gas pipeline.
The futureClearly, the future of the gas processing sector in Alaska depends on the development of the AGDC LNG. Current market prices for LNG have risen, and proponents see a potential supply squeeze developing in the next few years. Raising capital for the massive private sector
project will be a challenge, but the recent expression of interest from China, now the world’s largest LNG consumer, may help to underpin financing.
In early 2018, a government advisory committee issued a report recommending that the Alberta government take steps to help industry extract more NGLs (specifically ethane) from gas produced in the province.
The Energy Diversification Advisory Committee (EDAC), noted that infrastructure that straddles pipelines and strips ethane from raw gas was built several decades ago and is now in the wrong location to access new production. Although the Alberta Ethane Gathering system is sufficient to meet current needs, new facilities are necessary to meet growing needs. Approximately 100 000 bpd of ethane is being exported from the province by the Alliance gas pipeline alone (which does not have a straddle plant). A new straddle plant and associated facilities to handle 100 000 bpd would be costly. However, the EDAC recommends an incentive programme to facilitate greenfield ethane extraction facilities.
In conclusion, both Alaska and Canada sit at the end of a long supply chain. They must compete with huge unconventional gas resources in the Lower 48, where drilling and transportation costs are appreciably cheaper. The immense resources within this region are too valuable to ignore. However, with ingenuity and perseverance, operators have been able to not only compete, but prosper. The prospects for the region remain bright.
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