Methane Vent Mitigation Proposal for Demonstration Projects PTAC TIS November, 2001 New Paradigm Eng

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Methane Vent Mitigation Proposal for
Demonstration ProjectsPTAC TIS November,
2001New Paradigm Engineering Ltd.,
Edmonton,Clearstone Engineering Ltd., Calgary
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Areas to Cover

• Introductions
• Why focus on Methane Vent Mitigation?
• What might be Achieved Economically?
• What is Happening Now?
• Why isnt more Happening?
• How Are Demonstration Projects Going to Help?
• Proposal Details and Process
• Next Steps?

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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
  (1999-2001)
• New Technology Development - 80k (1998-2001)

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About Clearstone Engineering Ltd

• 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 CAPPs control options
  document and emissions inventory for CH4 and
  VOCs
• - Work for IPCC UNFCCC on fugitive
  emissions

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Methane from the Upstream Industry

• Over 400-800M/yr of methane vented or emitted
  from upstream sites (_at_3-6/GJ)
• Equivalent to over 20 of Upstream OG Industry
  energy use
• At the same time methane is also being flared.
• Methane emissions from Upstream Sources
• Almost 50 of oil gas GHG emissions
• Over 8 of Canadas GHG emissions
• Over 30 of Albertas emissions
• GHG, Flaring and Odour Issues affecting OG
  Development
• Methane emissions have almost doubled since 1990

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Methane - An Economic GHG Target

• It has an economic value (3-6/GJ)
• It can provide the energy to support its 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 US20/tonne
  range
• Many methane mitigation options are economic
• ltUS1.50/tCO2e to convert methane into CO2
• Many opportunities to use existing technology to
  reduce emissions.
• Many designs based on gas at C0.30/GJ and no
  concerns about methane.

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What Comes with the Methane Vents?

• Lost Opportunities to Increase Sales Revenues or
  to Reduce Energy Costs
• Heavier Hydrocarbons that Could be Recovered
• Volatile Organic Compounds (VOCs), H2S and BTEX
  emissions
• Source of Odours, Health Concerns and Public
  Resistance to Further Development and Lead to
  Flaring
• Regulatory Pressure to Change

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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
• Vent Volume Reductions
• Economic at many sites payouts months to years
• Manage Large Surpluses
• Sell Gas, Power, or Liquids Payouts 2-4 years
• Methane Conversion to CO2 for Credits

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Upstream Oil Gas Methane Emission Sources
Ref CAPP Pub 1999-0009
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Conventional Heavy Oil Potential

• Methane Sources Production Casing (95), Tanks
  (5)
• An estimated 25-50 ? Displace fuel on leases
• Payouts can be as short as 1-4 months
• Likely 25-35 ? Used for Managed Options
• Compression and Sales
• Power Generation
• Small Scale EOR
• Fuel is essentially FREE!
• Remainder ? Convert to CO2 for Credits

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Methane Sources Mainly Gas Operations
Example Source Data from One Producer
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Conventional Gas Production Potential

• 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.
• Sites without fired equipment ? Reduce Volume
• Change chemical pumps to drip pots
• Replace instruments to low vent types
• Where it is uneconomic to reduce vents ? Convert

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Compression and Processing Potential

• Methane Sources Fugitives (70), Incomplete
  Combustion (18), Compressor Ops (12)
• About 16 of methane ?Gas Transmission
• Fugitives ? Detection, Isolation and Repair of
  Leaks
• Most of the emissions are from lt0.5 of the
  fittings
• To be economic minimize cost of finding the
  leakers as the cost to fix usually minimal.
• Compression a Large Fuel Demand
• Improve combustion efficiency
• Conserve starting gas, blowdowns, and seals use
  as fuel

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Summary of THC Emissions by Industry Sector
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Oil Production Potential

• Methane Sources Mainly Tank Vents, Instruments
  and Pumps
• Need better data to breakdown relative shares.
• 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
• Displace Fuel
• Use gas from instruments and chemical pumps for
  building heat and burners.

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Energy Losses from Thermal Heavy Oil Operations
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Thermal Heavy Oil Potential

• Main problem is energy efficiency more than
  methane venting
• Highest per bbl oil energy cost ? low value bbls
• Initial focus of options studies on small thermal
  operations in Lloydminster area
• Greatest challenge as no economies of scale
• Improve Efficiency of Surface Facilities
• Increase Percentage of Energy Going into the
  Reservoir
• Investigate low cost fuel switching

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Methane Conversion Any Sector

• 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
• Dilute Sources Require More Research
• Collection and Concentration of Methane
• Conversion
• Energy Recovery

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Methane Conversion Calculations

• 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
• 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
  tCO2(eq).
• If vent gas displaces fuel gas then 21 tCO2(eq)
  is saved.

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Methane Conversion Economics

• 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.
• Value of GHG credits
• Recent trades US0.50-2/tCO2(eq) to
  C4.50-17.00
• 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 C5k
• Payout in 10 years _at_ C1.50/tCO2e
• Payout in 1 year _at_ C15/tCO2e

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What is Happening Now?

• 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
• Leading Producers are Making Gains in Some
  Sectors
• Other companies or even departments dont hear
  about it.
• Management often assumes that cost is high and
  gains are for public image, not economic
  indicators.

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Real Life Examples CHO Fuel displacement

• 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 more fully.

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Why isnt More Happening?

• 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
• 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

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How Are Demonstration Projects Going to Help?

• 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.

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Demonstration Project Goals

• 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
  band-aids
• Focus on the largest emission areas first
• 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.

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Work Scope Prioritized Target Sectors

• 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

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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
• 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

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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.
• Participants 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.)

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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.
• Team Prepares Follow-up Report
• Compare Plan to Actual
• Demonstrated reductions and economics, etc.
• Takes information on the road to communicate to
  others

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Proposed Deliverables per Sector

• Audit Report on Volumes and Proposed Actions
• Analysis Recommendations to Producer
• Action Plan Preparation
• Producer decides on what emissions to tackle and
  assigns resources. Summary taken to Participant
  Panel
• Follow-up Report
• Full Document with results, technical and
  economic, lessons learned, recommendations for
  others
• Powerpoint format (paper and electronic)
• Presentations (CIM and others), Courses

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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

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Funding

• 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)
• Participating Organizations fund non-economic
  activity
• Prescreening of proposed demo sites
• Preparation of a comprehensive report for each
  demo
• Communication of results by Team
• Min 100k from CAPP, Alta Govt, Federal Govt,
  others

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Agreement Terms

• 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
• 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.
• Funding Agreements (Participants/Team)
• Similar in scope but vary with funding agency.

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Summary of Proposal

• 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
• Demonstrate potential benefits for all
  Conventional Upstream Oil and Gas Sectors

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Next Steps?

• Applications are being submitted to a number of
  potential funding sources (Industry and Govt)
• Seeking upfront commitment to an initial 100k
• Funds only spent if Producers come forward
• PTAC considering administering NRCan funds for
  audits
• Producers Approached by Team to Discuss
• Potential target projects that might serve as
  demos
• Potential concerns with information releases
• Potential agreement terms
• Initiate the first demonstration to serve as a
  model

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Questions and Discussion?

• 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?
• Potential Funders
• Can you allocate funds up front, before Producers
  sign on
• What are your initial concerns?
• Other Stakeholders (Vendors, Researchers, NGOs)
• What are your thoughts and concerns?

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Acknowledgements

• 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)

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Contact Information

• New Paradigm Engineering Ltd.
• C/o Advanced Technology Centre
• 9650-20 Avenue
• Edmonton, Alberta
• Canada T6N 1G1
• tel [phone]
• fax [phone]
• email bruce_at_newparadigm.ab.ca
• web www.newparadigm.ab.ca