{*o n *J o*.*P2 *'-fucba^t,)' ^ 0 ^r ESSO EASTERN INC'

Z-v"c t -Uuft tW.

P. SKOPP

gCT S t i9ii3

P. o. Box l415 HOUSTON, TEXAS 77OO1

0ctober 27,

NATURAL GAS DEPARTMENT

1 983

G R GERVASI,MANAGEFNATUNA PROJECT OIVISION

GRG: j dh

Attach.

cc: D. F.R. E.

TO: R. G. Downi ng - Exxon CorP. , N- Y.S. l,l. Johnson - Exxon CorP., N. Y.D. S. McCaffrey - Exxon CorP-, N.Y'l. N. Natkin/0.,1. Schumacher - Exxon Corp', N'Y'As*opl" Exxon Engineering, Florham Parktt. a. ttitittingham, Exxon Engineering: F]orham ParkJ: t: wooorvari, Eixon Engin-ering, Flqrham Parkf'f. g. Bienstock, Exxon Engineering, Florham ParkK. l.l. Stei nberg, Exxon Engi neeri ng, fl orham- ParkA. l.|. Ptaki, Reiearch & Environment, East Millstone

The attached background paper is being circulated to all attendees at theItovemner'15 envir6nmentai ileeting on the Natuna Proiect in^an-effort to get.r."i.r. up-to-date on the statui of the proiect-and, particularly' theinuoived environmental issues. The prime task of the meeting !s to agree ona basis for the design of a study pfogramyh'lclr over the next I-2 years willirl-Eiion-in

-i-position to reach- a' final decision on the environmentalaspects of the Proiect.

.%r{*a2-)G. R. Gervasi

GatesSimpson

Environmental Back

FILE: 68-4-4

3890N

I. INTRODUCTIOII

l.l Exxon ls party to a Productlon Sharlng Agreenent (PSC) YlthPertamlna, the state oll company of Indonesla for exploltatlon of alarge gas dlscovery located offshore ln the l{atuna Sea of Indonesla.

'1.2 Exploratory drllllng and geologlcal/geophyslcal assessments haveconflrned the exlstence of about 200 TCF of gas ln place, Ylth.naverage gas coflposltlon of 71.81 Coz, 0.5 - O.1l HzS, 21.21hydrocarbons (mostly nethane) and the remalnder ll'.

1.3 The ear'llest potentlal market for llatuna gas, yet identlfled, ls astean flood project ln the Durl crude fleld of Central Sumatra lnthe early 1990's, rhlch rould be servlced by pipellne from NatunaIsland. Potential exlsts for lncrementa'l plpellne sales to thepover lndustry In Singapore durlng the sane tlme frame, and longterm, an opportunity may develop for additional sales to Sumatra orJava, but speciflc volumes/tlnlng have not been defined. !,The enrllest markets for atuna L G are antlclpated to be in Japanand/or perhaps South Korea or Talran ln the early-to-mid 1990's.Denand ln these countrles ls prolected to gror nodestly for theforeseeable future, and there ls the potentlal ln Japan for addi-tlonal nev volunes as replacement for LI{G nor suppl led undercontracts rhlch ylll explre ln the latter part of the 1990's andnot be extended due to reserve llmltations-

BACKGROUIIO PAPER

ENVIROITI'IEI{TAL ISSUES

TIATUNA GAS PROJECT

The present basls for the t{atuna Prolect assumes sale of 500 ilCfoof plpellne gas to ourl/Slngapore beginning ln mld-1991 and 760MCFD of L G to Japan startlng ln mld-1992. over a nominal 20-y€arllfe the proJect vould consurE only about 301 of the estlnatedrecoverable gas, naklng lt hlEhly llkely that addttlonal proJectsrlll eventually be developed to fully utilize the gas resource.

1.4 Exploltatlon rlll requlre rerbval and dlsposal of the @, andHzS prior to sale of the renalning gas (prlmarlly methane) eltherby plpellne or as LNG.

1.5 Studles have shoyn that reroval of the bulk of the CO,/H,S atthe offshore production slte ls slgnlflcan y loyer ln cost thanbrlnging the rar gas ashore at latuna Island (l40 nlles avay) prlorto removing the off gas.

t

The.ootlmun prpcess fpr lenolral of .the.off-gas hls..been deternlnedto ba-rvoqenlc treatment, ln rhich the mr and Hzs a.-enovedconcuriently as a slngle gaseous mlxture. Separatlon of the C0,and HrS yould lncur substantlal addl tlonal costs but nay benecessary dependlng upon the ultlnate cholce of dlsposal system.

1.5 The most dlrect and loxest cost means of disposal of the CO,/H,S ls by lnclneratlon and dlscharge to the atupsphere. (Slncethe H,s ls toxlc lt must be lnclnerated to convert the H,s toS0, before being released to the atrnosphere. ) Hovever, thlsralses envlronnental questlons concernlng the "greenhouse" effectof the C0, and acldlc deposltlon (or "acld raln") of th€ S0,.

1.7 other dlsposal alternatlves lnclud. InJection of the off gas lntothe ocean, recovery and sale of the @2 and sulfur, and reinJec-tlon Into the produclng reservolr or a suitable nearby undergroundstructure -

OISPOSAL 8Y INCII{ERAIION ANO ATMOSPHERIC EI'IISSIOI{

2.1 Meetlng the I,260 MCFD of sales assuned ln the tlatuna Prolectrequires productlon of 5.3 GCFD of rax gas and the refloval anddlsposal of 75 MtY of C0, and 440-620 ktY of H,S (equlvalent to830-l , 160 ktY dF-SU,-6'-T;250--T;-I50- TD oF:u-Tfur).If dlscharged to the atnosphere, the CO, volune voulC. be abouttrice that emltted from rhad ls believed 6 be the largl'st, lndus-trlal emlsslon source of Cor, Nantlcoke's 4000 l.ll{ coal-flredporer generatlon plant in ontarlo, Canada. The volume of S0,enltted vould be about the same as that from the largest lndustrlalsource of S0, , rhl ch l s Internatlonal Nl cke l ' s Sudbury sne lteralso in ontario, Canada.

2.2 Asse!sments by a group of promlnent sclentlsts ylth expertlse inthe study of the greenhouse and acld raln phe0omena, supplenentedby state-of-the-art slmulatlon ncd€l predlctlons of acld preclplta-tlon. have concluded that the C0,/S0, enlssions fron the l{atunaProJect rould not produce any signlflcant adverse effects on theenv I ronnent.

These concluslons are felt to be representatlve of the current5tate of sclentlflc knoxledge rnd thE malorlty vley of credlbleexperts; hoyever, ln vley of the substantlal sclentlflc co plexl-tles lnvolved ln both the greenhouse and acld raln phenonena, theresults probably rlll not be unlversally accepted as being fullyconcluslve fron a sclentlflc standpolnt,

'd''-2-3 At present tffi are no regulatlons appllcable to the Natuna areayhlch limlt CO' or S0, enlsslons. Although the outlook onfuture regulations ls uncertaln, glven the lndustrlallzatlonasplratlons of the Indoneslan people, the renoteness of the Natunalocatlon, and the hlgh level of econo lc and soclo-polltlcal lnpor-tance yhlch governnent offlclals attach to the l{atuna ProJect, ltls unllkely that restrl€tlve enlsslon controls yould be imposed onthe proJect by Indonesla, short of any lnternatlonal agreenentsrhlch lnstltute regulatlons on a yorldrlde basls.

2.4 Although emission regulatlons on C0,/S0, at Natuna are Judgedto be unllkely, there ls uncertalnty regardlng Exxon's ultlmateposttlon on the acceptablllty of atmospherlc dlscharge, partlcu-larly S0,. There is a strong oplnlon ylthln the Company thatsulfur emlssion regulatlons yill be lmposed ln the LJnlted States,Europe and possibly other areas rlthout establlshment of a soundsctentlflc basls, and there ls the further vleY that lntenseadverse publlc opinlon could develop against Industrlal concernsthat are perceived to be unresponslve to the acld raln lssue, evenlf emlsslons are in a relatlvely lsolated area of the rorld and arerlthln exlstlng lans appllcable to that area.

Although a flnal posltlon has not been taken by Exxon, there lssufficlent concern to riarrant thorough study and consideratlon ofall aval I abl e alternatlves.

2.5 Prelimlnary assessments indicate that the inclneratioi' operatlonmay produce an extenslve and hiqhly vlsable plune. The presence ofa vlsable plune could provlde a focal polnt for envlronmentalcriticism, and, therefore, xould be a serious drarback for theatnospherlc discharge alternatlve. Further studles are underyay todefine the opaclty and areal extent of the plune but beyond thlseffort, no further ney sclentlflc studles of atmospherlc dlschargeare ludged to be rarranted.

OISPOSAL 8Y SU8-SEA IIIJECTIOII

3.1 The lorest cost alternatlve to atrpspherlc dlsposal ts lnJectlonlnto the ocean at the sea floor. Prellmlnary studles lndlcate aprobable lncrenental lnvestment of $300-400 il (in 1983t), tlth anoverall effect on Eqsors return of less than 11 DCF.

3.2 Nlth thls systen the H,S ls oxidizedcurrents. l,lhlle the C0, ls absorbed, atand di spersed by oceanleast I nl tlal ly, theis uncertaln I react to form caYE6il

af,es - vnl cn Yent Iy absor nlx rlt

aflonsts aDDearresolve thl s questlon.

-3-

attervl ev

s

3.3 Technlcal studles have indicated a good probablllty that the systemls yorkable and safe. Hovever, slnce there ls no knorn operatlonof a slnllar nature, or certalnly of a llke nagnltude, and much ofthe technology is ner, further nore deflnltlve study and experl-nentatlon ylll be requlred before a sultable system can be deslgnedYlth a hlgh degree of confldenc..

3.4 Th€ environmental effects of Cor/HrS on narine llfe are notxell knovn. Some evidence exlsts to lndlcate that any lmpacts vlllbe minlmal; hoyever, studles are requlred to better deflne theeffects at condltlons expected to exlst ln the effluent plume.

3.5 Even should the preponderance of sclentlflc data lndlcate thatocean dlsposal does not present any slgnlflcant deleterlous envl-ronnental effects, there ls alxays some rlsk that dlsposal oflndustrlal effluents ln the ocean rlll develop lnto the sane hlghlyelotlonal and controverslal lssue as has happened vlth acld rain,and, accordlngly, that ocean dlsposal nlght eventually b€ JudgedenvIronnentalIy unacceptable regardless of scientlfic merlts.

4, DISPOSAL BY RECOVERY AND SALES

4.1 One method of dlsposing of the CO, and H:S ls recovery and sale.4.2 There ls no obvibus lray of chenlcally treating C0, to make a rbre

salable proJect anq- there ls no present cormerclal narkiqt for C0,in the volumes available from the ltatuna ProJect.

There is a llkellhood use of C02 for enhanced crude recovery rlllgror ln the future and eventually represent a sizeable narket-Holever, there are no exlstlng crude fields serviceable by plpelinefrom I'latuna that are both susceptable to enhanced recovery by C0,and requlre slgnlflcant volunes of C0'. Thus, even assumingsufficlent outlets could be found for C0, to enhance cruderecovery proJects ln other parts of the rcr'ld, the C0, yould haveto be supplled from Natuna by tankers in llqutd form. Studles haveshorn that supplylng C0, ln thts nanner ls extrenely costly andclearly unconpetltlve rlth alternatlve sources of @z that cou'ldbe oade avallable locally, lncludlng recovery from fossll fuelcombustlon effluents. Hence, recovery and sale of CO, .ls not afeas I bl e dlsposal alternative.

4.3 The conventlonal manner of disposlng of ti,S xhere atmosph€r.lcenlsslon is unacceptable 15 to convert the HrS to sulfur, xhlchl s then sol d.

-4-

I Screenlng studles have shorn that a market till probably be avall-/ able to accommodate the sulfur recoverable from the l{atuna ProJect,although the cost vould be hlgh because of {@d to-l4glgt-e-the.-:-small-quautltJ of ll"s rlqnJheJarqe voTttttn of C0'. Relatlve

i- to atmospherl-i--Efrfi-s s I on ttre t ncremEntlT-TilEsTffit-Ts rough I y' estlmated to be $l .3-l .4G (ln 1983$) r,hlch Yould reduce Exxon'sr return by about 24A OCF. Further study ls planned to better'I define the costs related to thls alternative, which could become anI ultlmate fallback for sulfur dlsposal lf both atmospherlc dl scharge

and subsea lnJectlon are not acceptable.

5. DISPOSAL 8Y UNDERGROTJND INJECTION

vla

5.1

5.2

The only effectlve dlsposal route for both COz and HzS thatellmlnates dlscharge to the atmosphere or ocean ls undergroundlnJectlon, elther lnto the produclng formatlon or a sultable nearbyreservol r.Prel lminary geologlcal examlnations have falled to show anysultable formatlons for lnjectlng gas anyuhere in the viclnity viththe exceptlon of the producing reservolr, and reservoir model ingstudles to date have indicated that reservolr lnJectlon does notappear to be practlcal .

tlork conducted to date implies that even if a feaslble reinjectionoperation ls tdentified, the resultant cost ls llk.ely to beextremely hlgh, both in terms of higher investment and' operatingcosts and losses in ultimate hydrocarbon recovery. Further studiesare needed to confirm relnjection ls not a viable alternatlve.

Cor* Ar-s # 5J t c-o-*t{ro

6. FUTURE EFFORTS

6.1 Plans are to design and carry out an environmental study programover the next l-2 years, with partlclpation from all approprlatefunctlons, to be ln a posltion to reach a flnal declslon on theenvlronmental aspects of the proJect sometime tn 1985.

GRG: Jdh10t27 t83

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Stolc StolcLb-rnof/d Lb/d Lb CO2ld Lb N2ld Lb H2Old Lb SO2,/d Lb Oz/d IHV Btu/d Btu,/Ft3 % tHv

PAGE OOI

INPUTCorpon€nt %

co2cH4H2Sc2t€c3H8tc4HioncaH 10t c5Ht2nc5H t 2c€H r4N2

SubtotalAlrN202Aco2

TotalAl r/FuelOUTPUTFlue Grs

co2H20N202ASO2(Cont )SO2 ( iroct )

Total (Ct )

OUT.IN

7l .8 10487684 a.6lE8 4.6058E826. 46 3857589 .5 6. r787 1 .6973E8 8 . O53E8 1 . 3887E8

.5a 78726.318 2.88E8 '.|.233E7 1417071

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