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UNBUNDLING - A CLOSER LOOK AT COMPRESSION &
DEHYDRATIONFebruary 11, 2015
Mark R. Lambert&
John W. Emory
2
Agenda
Introduction
An Alternative Perspective of Compression
Recycling of Residue Gas
Relative Costs of Dehydration
Q&A
3
Functional Allocation of Compression
An Alternative Perspective of Compression
4
Transportation & Processing Compression
BOOSTING COMPRESSI
ON
CRYO UNIT
ARMS-LENGTH THIRD PARTY TRANSPORTATION
100 psig
400 psig
375 psig
750 psig
PLANT INLET COMPRESSION
RESIDUE COMPRESSOR
700 psig
900 psig
700 psig
(Royalty Measurement
CDP Point)
COMPRESSOR TWO
COMPRESSOR ONE
700 psig7# H2O2% CO2
300 psig
COMPRESSOR FOUR
100 psig
600 psi processing25 psi tran
COMPRESSOR THREE
50 psi tran
GAS PLANT PROCESSING
GAS MAINLINE TRANSPORTATION
FIELD GATHERING SYSTEM
Transportation and Processing Example
5
RoyaltyMeasurement
Point(ie. WH or CDP)
Compressor One
TransportLosses
CompressorTwo
TransportLosses
CompressorThree
ProcessingLosses
CompressorFour
0
100
200
300
400
500
600
700
800
900
1,000
Pres
sure
, psig
Mainline Pressure Requirement
Transport Losses
Transport Losses
Processing Losses
Pipeline (Transportation) Plant (Processing)
Compression:From Wellhead to Mainline
6
ONRR Application of MCR For Compression
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)
7
Compression:From Wellhead to Mainline
RoyaltyMeasurement
Point(ie. WH or CDP)
Compressor One
TransportLosses
CompressorTwo
TransportLosses
CompressorThree
ProcessingLosses
CompressorFour
0
100
200
300
400
500
600
700
800
900
1,000
Pres
sure
, psi
g
Mainline Pressure Requirement
Transport Losses
Transport Losses
Not Allowed:Below Mainline
PressureNot Allowed:
“Boosting”
Pipeline (Transportation) Plant (Processing)
Processing Losses
Allowable Compression Per ONRR Methodology
8
Functional Allocation of Compression
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.
RoyaltyMeasurement
Point(ie. WH or CDP)
Compressor One
TransportLosses
CompressorTwo
TransportLosses
CompressorThree
ProcessingLosses
CompressorFour
0
100
200
300
400
500
600
700
800
900
1,000
Pres
sure
, psig
Not Allowed:Below Mainline Pressure
Pipeline (Transportation) Plant (Processing)
Mainline Pressure Requirement
Transport Losses
Transport Losses
Processing Losses
Not Allowed:Below Mainline Pressure
Allowed: Compression for Transportation & Processing
9
Allowable Compression – Functional Allocation
Compression:From Wellhead to Mainline
10
Methodology Comparison
COMPRESSION
CompressorNumber
SuctionPressure
(psig)
DischargePressure
(psig)
PressureDifference
(psi)
One 100 400 300
Two 375 750 375
Three 700 900 200
Four 300 700 400
Total 1175
PER ONRR
Allowable Calculation
Allowed %
Not MC 0%
(750 – 700)750 6.67%
Processing 100%
“Boosting” 0%
225
FUNCTIONAL ALLOCATION
AllowableCalculation Allowed %
(400 – 300)(400 – 100) 33.33%
(750 – 375)(750 – 375) 100%
Processing 100%
“Boosting” 0%
675
11
Allocation of Residue Gas Recompression
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 turbo-expand 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.
12
Allowable Percentage Formula
ONRR’s formula for compressors underestimates allowable percentage.
ONRR Formula*:
Compressor Two: (750 – 700) = 6.67% 750
Allowable percentage should be based on pressure
differential.
Compressor Two: (750 – 700) = 13.33%(750 – 375)
(Discharge Pressure of Unit – Marketable Condition Pressure)(Discharge Pressure of Unit)*% =
* From ONRR “How to Calculate a Transportation UCA.”
(Discharge Pressure of Unit – Marketable Condition Pressure)(Discharge Pressure of Unit – Suction Pressure of Unit)% =
13
Allowable Percentage Formula Comparison
PER ONRR
Formula Percentage
Allowable (750 – 700)750 6.67%
Non-Allowable
(700 – 375)750 43.33%
Total 50%
PRESSURE DIFFERENTIAL
AllowableCalculation Percentage
Allowable (750 – 700)(750 – 375) 13.33%
Non-Allowable
(700 – 375)(750 – 375) 86.67%
Total 100%
Results from a comparison of the two methodologies supports the approach of basing the allowable percentage on the pressure differential.
14
Functional Allocation of Compression
Questions?
15
Residue Recycle
Recycling of Residue Gas
16
Residue Recycle
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.
17
Residue Recycle
Relative Recovery Ethane Recovery *
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
Maximum Ethane Recovery
Conventional 80%
Residue Recycle 95%
Gas Subcooled Process 93%
Cold Residue Recycle 98%
18
Residue Recycle
Conventional turbo-expander flow diagram*:
* Figure 16-19 from Section 16 “Hydrocarbon Recovery” of the Gas Processors Supplier Association Engineering Data Book, 12 th Edition (with PWM adjustments).
Residue
Compression
19
Residue Recycle
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
20
Residue Recycle
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.
21
Residue Recycle
Questions?
22
Dehydration
Relative Costs of Dehydration
23
Dehydration
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).
24
Dehydration
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.
25
Dehydration Allowable Percentage
The linear approach suggested by the ONRR tends to allow relatively small percentages of dehydration costs to be deducted.
ONRR’s methodology*:
Example: » 38 lbs. / mmscf inlet » 0 lbs. / mmscf outlet
» 7 lbs. / mmscf pipeline specification
Allowable Percentage:
(Marketable Condition Specification– Outlet Measurement)(Inlet Measurement)**% =
(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.
26
Dehydration
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.
27
Dehydration Allowable Percentage: Example
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: $10,000,000 x 100% = 80.0% (based on relative costs) $12,500,000
– Allowable Percentage: (7 – 0) x 100% = 18.0%
(based on ONRR methodology) 38
New slide
28
Dehydration
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.
29
Dehydration Allowable Percentage: Example
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: $10,000,000 x 100% = 88.5% (based on relative costs) $11,300,000
– Allowable Percentage: (7 – 0) x 100% = 18.0% (based on ONRR methodology) 38
30
Dehydration
Questions?
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