H.O. Vent Gas JIP Introduction Session

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(No Transcript)
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Proposal to develop and document options
forUtilization of Heavy Oil Vent Gases -
StudyMay 10 25, 2000
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Contents

• Making a Change Happen
• About New Paradigm Engineering Ltd.
• Proposal Overview
• Why this proposal now?
• What is needed to make the project happen?
• Project Schedule
• Project Deliverables
• Status as of June, 2000

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The Target for Change
Oil Gas Methane Emissions
Heavy Oil Venting 29
Ref CAPP Pub 1999-0009
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Where Are We Now?

• 50M/yr of methane vented from heavy oil sites
• Equivalent to 5 of OG Industry energy use
• 20-40M/yr of energy purchased for heavy oil
  sites
• GHG emissions from heavy oil wells
• 30 of oil gas industry methane emissions
• 15 of oil gas GHG emissions
• Over 2 of Canadas GHG emissions
• GHG, Flaring and Odour Issues affecting our
  ability to develop new leases

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Where Do We Want To Be?

• Vent gas as a revenue stream
• Minimize purchased energy costs
• No purchased energy for wells that are venting
• Low tech ? low cost operations
• Achieved with minimum of waste

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How Could We Get There?

• Displace purchased energy sources
• Power from vent gases
• Compression for sale or reinjection
• Use gas and/or energy for EOR
• Convert methane to CO2
• Tank vent treatment to eliminate odours

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What Is Stopping Us?

• Venting seen as an environmental problem, not
  economic opportunity
• Capital budget for conversion set on a corporate
  relations basis
• Payouts on systems beyond fuel displacement are
  long
• Vent volumes are variable so tough to do single
  well economics or design facilities
• No one has time to invest in studying potential
  options

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How Can We Make Things Happen?

• Collaborate to define the options and the prize
• Work together to make the case for casing gas
  utilization
• Co-operative and collaborative efforts on the gas
  side of heavy oil
• Joint Industry Project (New Paradigm) to provide
  focus

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About New Paradigm Engineering Ltd.

• Independent consulting company, Inc. 1991
• Engineer new paradigms for industry
• Bruce Peachey, P.Eng. President
• Colin Gosselin, E.I.T. Technology Development
  Engineer
• Focus for last two years on reducing methane
  emissions and developing new technology to
  support conventional heavy oil vent gas
  mitigation.
• Previous work in collaborations
• Downhole oil/water separation (C-FER),
• Novel EOR methods (C-FER and KeyTech),
• Heavy Oil Pipelining Study (C-FER, SRC)
• Climate change (CSChE),
• PERD study on Hydrocarbons RD (K.R. Croasdale
  Associates)

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New Paradigm Bruce Peachey, P.Eng.

• Project Manager and Lead Engineer
• Past Experience
• Principal New Paradigm Engineering (9 yrs),
• Esso Resources (15 yrs)
• Sr. Facilities Engineer
• Technical Services Superintendent
• Project Engineering Section Head
• Project Engineer
• Technology Evaluations Engineer
• Heavy Oil Production Engineer
• Process Design (Gas Production/Compression)
• Expertise Gas Gathering systems/plant design
  Heavy oil production Steam generation
  Operations Project Management RD
  Prioritization Innovation

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Proposed Support for Vent Gas Utilization Study

• EMF Technical Services Inc.
• Holly Miller, P.Eng.
• Marlett Engineering Ltd.
• Jamieson Engineering
• Heavy Oil and Gas Producers
• Vendors (New and existing technologies)
• Extensive contact networks (PTAC, PTRC,
  Universities, ARC/C-FER/PRI, CIM, SPE, CSChE)

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EMF Technical Services Inc. - Calgary

• Electrical Power Generation and Distribution
• Cogeneration facilities (proposals and economics)
• Electrical and control systems design
• Engineering design and construction
• Oil and gas pipelines, compressor stations, pump
  stations and processing
• Motivated and creative solutions

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Holly Miller, P.Eng. - Edmonton

• Contract Engineer Project Development and
  Design
• Past Experience
• Sr. Engineer with Polytubes (West) Inc. 4 yrs,
• Esso Resources/Petroleum/Chemical (14 yrs)
• Sr. Operations Engineer,
• Sr. Process Engineer,
• Development Engineer
• Expertise Refinery energy conservation, heavy
  oil upgrader studies, Cold Lake Phases 1-6
  Debottleneck, gas conservation plant operations
  and facilities upgrades, managed implementation
  of new reactive extrusion pipe manufacturing
  process

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Marlett Engineering Ltd. Edmonton

• Principal Fred Marlett, M.Eng., MBA, P.Eng.
  FCSME
• Specializing in combustion and gas fired
  equipment
• Past Experience
• Enbridge Pipelines Inc. (1 yr)
• Northwestern Utilities Limited (24 yrs)
• Senior Engineer, Utilization and Research
• Assistant Utilization Engineer
• Assistant Transmission Engineer
• Key roles
• APEGGA Rep Gas Technical Council of the Alberta
  Safety Codes Council (1997-Present)
• Secretary, City of Edmonton Gas Approvals Board
  (1974-1978)

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Jamieson Engineering - Edmonton

• Principal Marnie Jamieson, P.Eng.
• Process Control, Materials, Process
  Environmental Engineering
• Past experience
• AT Plastics (2 yrs),
• Syncrude Canada (8 yrs),
• Work terms Dow Chemical (Research), Esso
  Resources (Operator), Environment Canada
  (Engineering Asst.)
• Roles Plant Engineer, Environmental Engineer,
  Applications Engineer, Corrosion/Materials
  Engineer.

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Proposal Overview - Objectives

• Evaluate options to utilize casing gas
• Assess criteria for successful application
• Pros and Cons of the Options
• Technical,
• Financial,
• Operational, and,
• Implementation hurdles
• Overall Facilitate Decision-making leading to
  rapid and economic implementation of systems to
  reduce methane venting from Heavy Oil sites.

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Work Scope Focus Areas

• Displace purchased fuel use 20
• Power generation and sales 25
• Gas collection and sales 30
• Use to Increase Oil Recovery - 10
• Convert methane to CO2 10
• Mitigation of tank odours - 5

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Why this proposal now?

• Expansion of operations generates resistance from
  public
• Pressure mounting to show voluntary progress
• Producers no longer in survival mode
• Options appear to be available and economic
• Producers are busy with producing Oil, not Gas
• Vendors with viable options frustrated
• Appears to be opportunity and interest in
  collaboration

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Benefits to Participants

• Focused effort to quickly identify low cost,
  economic and safe options for use of vent gases
• Reduces workload on in-house staff
• Provides leverage instead of everyone redoing the
  same work
• Allows vendors to easily communicate information
  on the options they can provide
• Helps define what can be achieved now and what
  requires new technology

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What is needed to make the project happen?

• Funding to do the Work
• Support from Producers ? Operating Information
• Support from Vendors ? Product Information
• Others
• Regulators ? Drive to change

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Funding

• Open to any organization on same terms
• Reports to participants only
• Current basis 15,000 per participant (at least 4
  preferred)
• Can proceed with more or less but depth of
  analysis varies
• After study 60 complete, new participants pay a
  premium (20)
• Funding used to monitor developments

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Funding Basis

• Base of 60k at start
• Study as proposed.
• Moderate detail
• Main focus technology assessment
• Plan for two increments of 30k each
• Increment 1 Enhanced Detail Issues and
  Implementation
• Increment 2 Manage Collaborative Piloting
• Separate Thermal Venting Project
• Begin planning in Fall 2000 Report March, 2001

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Key Issues for Heavy Oil Venting Options

• Technology Issues (Base)
• Many options exist now but are not widely used.
• New ones may be developed where needed
• Producer Management Issues (Enhanced)
• Economic Solutions - Why Not Implementing?
• Environmental Solutions Define Priorities and
  Resources
• Government/Regulatory Issues (Enhanced)
• Rules to Level/Define Playing Field
• Barriers to implementation

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Overall Schedule

• Start Planning May 2000
• Initial Funding Committed May 25
• Data Collection June-July
• Displace Purchased Energy Report August
• Flowchart Options Prioritize Focus August
• Sub-contractors carry out independent analysis
  Sept/Oct
• Pull analysis together, address interface issues
  Nov
• Prepare Draft Report and Presentation Dec
• Hold Workshop with Participants Dec
• Final Deliverables - Jan

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Proposed Deliverables

• Interim Report on Options to Displace Purchased
  Energy
• Analysis Powerpoint Summary One Page option
  sheets
• Draft Report
• Powerpoint format and workshop to review
• Main Report
• Full Document (2 copies)
• Powerpoint format (paper and electronic)
• Options (cost recovery basis)
• Field presentations, extra reports

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Data Collection

• New Paradigm
• Input from sub-contractors on info needs
• Design and Plan Survey of Producers
• Design and Plan Survey of Vendors
• Interview other stakeholders
• Regulators, power companies, gas suppliers
• Obtain source documents
• Maps (power systems, land plats, gas systems,
  pools)
• Reports (CAPP, SEM, AEUB, others)

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Producers Survey Contents

• Main Operations Dimensions
• single wells vs. pad wells
• Oil, water, gas production averages and range by
  area
• Standard lease layouts
• Costs for pressurized natural gas/propane
• Pumper issues
• Regulatory/business Issues
• Current plans/philosophy/motivation
• Main regulatory issues/concerns
• Main impediments to implementation
• What has been tried already
• Details on where, who, results, photos, reports

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Vendor Survey Contents

• Main Technology Features
• Capacity ranges
• Costs
• Utilities
• Operational Factors
• Business Issues
• Equipment buy/lease or sub-contract options
• Support in area
• Synergies
• Where has technology been used
• Details on where, who, results, photos, reports

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Displace Purchased Energy Options
Winterization
Tracing Dryers Anti-freeze Fuel Heaters
Low Pressure Fuel
Mini-compressors Low Pressure Burners
Increase Efficiency
Improve Tank Heating Combustion Heat
Transfer Co-gen (heat power)
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Displace Purchased Energy Report (20)

• One Page Descriptions of Options(New Paradigm)
• Typical Site Layout,
• Costs vs. Capacity,
• Energy Efficiency or Other Benefits
• Utilities or Maintenance Support,
• Pumper Issues,
• Environmental impacts,
• Implementation/Regulatory Issues
• Potential synergies
• Generic Economics for Fuel Displacement
• Cost to Buy, Install, Operate vs. Savings
• Propane
• Pressurized Natural Gas

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Power from Vent Gas
Easy Sites
Pads with lots of gas Near power lines
Small Sites
Single, high GOR wells Near Power lines
Remote Sites
Small local loads Lights, Remote Control
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Power from Vent Gas (25)

• Subcontractor EMF Technologies
• Technical
• Micro-turbines, gas engines, other
• Characteristics, costs vs. size, fuel efficiency,
  potential for co-generation of heat and power
• Operations issue
• Potential for Mercury Electric Pilot
• Business and Regulatory
• Economics vs. Size and cost to tie-in
• Regulatory constraints (generation, distribution
  or sales)
• Business Structuring Options
• Utility vs. industry/company operated systems
• Key Agreement terms (access, revenue/cost sharing)

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Gas Collection and Sales
Fuel for New Wells
Similar to Winterization Temporary flowlines?
Local Sales
Mini-compressors Mini-dryers Tie-in
to Existing lines
Sales to Pipeline
Low pressure collection Central treating and
Compression facility
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Gas Collection and Sales (30)

• Subcontractor Marlett NPEL
• Technical
• Collection/distribution methods
• Dehydration or freeze protection
• Compression
• Business and Regulatory
• Economics vs. Size and cost to tie-in
• Regulatory constraints (distribution or sales)
• Business Structuring Options
• Gas utility vs. industry/company operated systems
• Key Agreement terms (access, revenue/cost sharing)

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Increase Oil Recovery
Pressure Support
One well per pad takes Compressed Gas
Mini-EOR
Small steam generators Methane cycling
Collect gas for use in other Areas (Royalty Free)
Large Scale EOR
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Increase Oil Recovery (10)

• Subcontractor Miller NPEL
• Technical
• Listing of Options
• Pros cons
• Potential facilities options
• Business and Regulatory
• Economics vs. Size
• Reservoir Factors
• Contacts for further assessment

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Methane Conversion
Flares
Low cost, low liquid Low visibility flares
Catalytic Oxidation
Portable, low visibility, Potential for use of
energy
GHG Credits
Requires auditable Measurement of conversion
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Methane Conversion (10)

• Subcontractors Marlett, Jamieson NPEL
• Technical
• Flare designs for variable rates
• Catalytic oxidation methods
• GHG credit measurement and tracking
• Business and Regulatory
• Economics vs. Size
• Potential for Credits and their value
• Business Structuring Options
• Add on to power/gas options
• Key Agreement terms (access, revenue/cost
  sharing)
• Bulletin Board test with residents

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Mitigation of Tank Odours
Micro-incineration
Use casing gas Incinerate tank vents
Catalytic Oxidation
Low cost, low maintenance
Other Options
Absorption Adsorption Active Dispersion
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Mitigation of Tank Odours (5)

• Subcontractor Marlett, Jamieson NPEL
• Technical
• Factors resulting in odours
• Sampling and neighbour issues
• Assessment of low cost options
• Business and Regulatory
• Costs vs. Size
• Safety and Operability Issues
• Business Issues
• Odour emissions philosophy
• Proactive or reactive

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Flowchart Options

• New Paradigm and sub-contractors
• Lay-out options in a flowchart(s)
• Show
• Interactions
• Synergies
• Relative Value (starting assumptions on payout)
• Application Based
• Lease types single, multi-well
• Back-up energy type gas, propane, power, other
• Pumping equipment
• Energy Demand Ranges
• Casing Gas Ranges
• Sub-charts by technology issues

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Technical Option Summary Sheets

• Standard format summaries for each option
• One Page Descriptions of Options(NPEL)
• Typical Site Layout,
• Costs vs. Capacity,
• Energy Efficiency or Other Benefits
• Utilities or Maintenance Support,
• Pumper Issues,
• Environmental impacts,
• Implementation/Regulatory Issues
• Potential synergies
• List of Vendors

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Technology Assessment Tools

• Flow Charts, Decision Trees and Scoping Economics
• Inputs
• Site characteristics layout, volumes, proximity
  to power lines, pipelines, residences, other
  factors
• Budget Constraints
• Outputs
• Technically viable options
• Economic Indicators
• Option Potential to build a spreadsheet tool
  (Enhanced)

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Contract Deliverables

• Interim Report on Options to Displace Purchased
  Energy
• Analysis Powerpoint Summary One Page option
  sheets
• Draft Report
• Powerpoint format and workshop to review
• Draft Option Assessment Tools
• Draft Option summary sheets
• Main Report
• Full Document (2 copies)
• Powerpoint format (paper and electronic)
• Tools (paper minimum)
• Options (cost recovery basis)
• Field presentations, extra reports

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Interim Reporting

• All contractors will progress invoice New
  Paradigm and report progress
• One page status reports will be e-mailed to
  participant contacts on a monthly basis,
  including
• Progress Status
• Project Cost Status
• Decision items for participants

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Funding Proposed

• Open to any organization on similar terms
• Reports to participants only
• Current basis 15,000 GST per participant
• Can proceed with more or less but depth of
  analysis varies
• Need to decide on piloting
• After study 60 complete, new participants pay a
  premium (20)
• Funding used to monitor developments or pilots
• Option for pilot management
• Option to expand to thermal heavy oil venting

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Agreement Terms

• Purchase/service order basis
• New Paradigm invoice for fee plus GST. Options
• One invoice for 15,000 (June)
• Progress Invoicing
• June 1 - 5,000 August 1 - 8,500 Final
  Report Issue - 1,500
• One page statement of deliverables and Memorandum
  of Understanding (MOU), principles
• No confidential information to be communicated
• Participants will only distribute reports
  internally
• Participants to respond to surveys or requests
  for information
• NPEL to ensure work is completed on a timely
  basis
• Arbitration for dispute resolution

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Optional Items

• Piloting
• Separate Agreements/MOUs for vendors
  contributing in kind
• Review plans and budgets with participants
• Site Selection from Participant Wells
• Separate deliverables
• Thermal Venting
• Separate Agreements/MOUs
• Discount for participants in both
• To be determined

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Summary as of June 20, 2000

• Project has been launched
• Agreements in Place
• Ranger Oil
• Husky Oil
• Obtaining Approvals
• Mobil Oil
• CanOxy/Wascana
• AEC Oil and Gas
• Open to more participants. Prefer decision as
  soon as possible to assist with project planning.
• Obtain copy of one page agreement from New
  Paradigm.

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Contact Information

• Advanced Technology Centre
• 9650-20 Avenue
• Edmonton, Alberta
• Canada T6N 1G1
• tel [phone]
• fax [phone]
• email info_at_newparadigm.ab.ca
• web www.newparadigm.ab.ca