understanding oil & gas business

UNIT 20: Case Study

Understanding Oil & Gas Business

MBA (Oil & Gas Management)


Course Design

Advisory Council

Chairman Dr Parag Diwan

Members Dr Shrihari Dean

Dr Anirban Sengupta Dean

Dr Ashish Bhardwaj CIO

Dr Satya Sheet VP – Academic Affairs

Prof I M Mishra Dean – IIT Roorkee

Mr M K Goel Management Consultant

SLM Development Team Wg Cdr P K Gupta Dr Joji Rao Dr Neeraj Anand Dr K K Pandey

Print Production

Mr Kapil Mehra Mr A N Sinha Manager – Material Sr Manager – Printing

Author

Lallon Prasad

All rights reserved. No parts of this work may be reproduced in any form, by mimeograph or any other means, without permission in writing from Hydrocarbon Education Research & Society.

Course Name: Understanding Oil & Gas Business

Version: July 2013

© MPower Applied Learning Enterprise

UNIT 20: Case Study

Contents

Block-I

Unit 1 Basic Concepts ................................................................................................................ 3

Unit 2 Crude Oil and Natural Gas Concepts.......................................................................... 13

Unit 3 The Macro-system......................................................................................................... 29

Unit 4 The Indian Perspective................................................................................................. 41

Unit 5 Case Study .................................................................................................................... 53

Block-II

Unit 6 The Exploration of Oil .................................................................................................. 61

Unit 7 Production Methods...................................................................................................... 77

Unit 8 Onshore Oilfield Processing ......................................................................................... 85

Unit 9 Offshore Oilfield Processing....................................................................................... 101

Unit 10 Case Study .................................................................................................................. 113

Block-III

Unit 11 Gas Processing............................................................................................................ 117

Unit 12 Liquefied Natural Gas (LNG) .................................................................................... 133

Unit 13 Petroleum Refining..................................................................................................... 143

Unit 14 Refinery Requirements............................................................................................... 159

Unit 15 Case Study .................................................................................................................. 171

Block-IV

Unit 16 Distillation in Refineries ............................................................................................ 175

Unit 17 Petrochemical Industry .............................................................................................. 197

Unit 18 Production of Petrochemicals..................................................................................... 211

Unit 19 Transportation of Oil, Gas and Products: Pipelines ................................................. 227

Unit 20 Case Studies................................................................................................................ 251


Block-V

Unit 21 Transportation of Oil, Gas and Products: Other Modes ........................................... 255

Unit 22 Health, Safety and Environment............................................................................... 267

Unit 23 IT Applications in Hydrocarbon Industry ................................................................. 293

Unit 24 Economics and Technology Trends............................................................................ 317

Unit 25 Case Study .................................................................................................................. 337

Glossary ............................................................................................................................................ 341

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UNIT 1: Basic Concepts

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BLOCK-I

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Detailed Contents UNIT 1: BASIC CONCEPTS

Introduction

What is Petroleum

Reservoir, Well and Well Fluid

Crude Oil and Natural Gas

Units Specifically Used in Oil and Gas Industry

UNIT 2: CRUDE OIL AND NATURAL GAS CONCEPTS

Introduction

Various Forms of Natural Gas

Elementary Concepts on Hydrocarbons

Composition of Crude Oil

Some Important Concepts on Crude Oil

Products from Crude Oil

UNIT 3: THE MACRO-SYSTEM

Introduction

From Wellhead to Petrochemicals

History of Oil and Gas Industry

UNIT 4: THE INDIAN PERSPECTIVE

Introduction

The Indian Perspective – Upstream

The Indian Perspective – Downstream

UNIT 5: CASE STUDY

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Unit 1

Basic Concepts

Objectives After completion of this unit, the students will be aware of the following topics:

Concept of petroleum, its constituents and their significance

Common concepts, definitions and terminologies used with respect to oil and gas

Units Specifically used in Oil and Gas Industry

Introduction

Oil industry is perhaps the most exciting industry in the history of civilization. Although the history of oil traces back to seepages of oil as early as 3000 B.C., the real thrill of it started with the oil boom in the USA. When Rockefeller was asked to tell very briefly how people get rich, he replied “Some people find oil, some don’t”.

It’s amazing how much oil and gas has penetrated into our lives today. The toothbrush we use to start the day, the suit we wear, the fuel we use in our cars to drive to office, the car interiors, back home with cozy furniture, tapestry, and mattress of the bed we sleep on – all are petrochemicals i.e. chemicals from petroleum.

Oil business has been responsible for prosperity, war, intrigues and adventure.

Search of oil and gas leads us to some of the most exotic forests, deserts, and ocean. Perhaps some of the most beautiful man made sights in the world are offshore platform in Deep Ocean, array of offshore rigs in a remote desert or jungle or an illuminated petrochemical complex at night.

Let us understand the importance of oil and gas industry by looking at its share in the energy supply to the world. More than 60% of the energy needed in the world is provided by oil and gas.

And it is not really as expensive as it sounds.

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To understand oil and gas business, one needs to understand a whole spectrum of activities from oil well to petrochemicals.

It is also important to understand the trend and future of the industry in terms of technology, economics and pricing of energy resources. Energy price is very important for the economy of any country. As stated earlier, oil and gas provide over sixty percent of the energy requirement of the world. Oil had been the dominant component of the mix. Oil prices have been controlled from time to time to a high level by the petroleum exporting countries (OPEC). It is cleaner, cheaper and new discoveries and reserves of gas field are coming up in many parts of the world including India.

Very often the question comes up how long the hydrocarbon resources (oil and gas) will last. Many predict oil and gas will start depleting in another 20 to 30 years.

But the world is keeping on adding new hydrocarbon finds and developing technology to recover more hydrocarbons from existing oil and gas fields. Also major R&D work is going on to find how to exploit huge reserves of ‘Methane Hydrates’ i.e. an unstable compound of water and methane, lying untapped deep below the ocean in many parts of the world including coastal areas of India.

It is a fact that although the oil and gas industry will continue to dominate for several decades from now, at some point of time other forms of energy will take over. Oil and gas industry generates wealth, and a part of the wealth is being put into R&D to innovate for the future. We shall cover the topic in a later section on future trends. Let us not call the industry just oil and gas industry – it is energy industry.

What is Petroleum?

Petroleum is a word derived from the Latin words Petra (rock) and Oleum (oil). It essentially comprises of naturally occurring hydrocarbons i.e. compounds made of carbon and hydrogen atoms. These hydrocarbons are trapped below the surface of the earth, in porous rocks, in the form of oil and gas.

From where did the hydrocarbons come? There are various theories. The most accepted theory is the organic theory.

Hydrocarbons came from remains of the bodies of pre-historic land based animals, marine organisms (plankton) and vegetation, which

Activity Discuss in groups if oil and gas will truly start depleting in another 20 to 30 years.

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were washed away and buried below the earth during upheavals on the earth’s surface millions of years ago.

In the course of time the buried organic matters decomposed and the carbon and hydrogen present in these reacted under heat and pressure to form various compounds, generally hydrocarbons.

The hydrocarbons got trapped in the porous rocks and were covered by hard sedimentary rocks that formed over it. They acted as “cap” or seal to prevent hydrocarbons from escaping.

As explained later, carbon and hydrogen atoms can join together to form molecules of various sizes and structures. Hydrocarbons could be a small molecule with combination of one or a few carbon atoms with hydrogen (e.g. Methane - CH4, Ethane - C2H6). Or it could be very large molecule by combination of dozens of carbon and hydrogen atoms (e.g. Wax - C20H42) or even thousands of carbon and hydrogen atoms (e.g. Polythene).

Petroleum is essentially composed of hydrocarbons with some other impurities. The words ‘petroleum’, ‘oil and gas’ and ‘hydrocarbon’ are all used synonymously in the oil and gas industry.

Hydrocarbons in petroleum could be in gaseous, liquid or solid form depending on the type and size of hydrocarbon molecule:

It can be in gaseous form as natural gas, which can be associated with oil in an oil field or found free of oil in a gas field.

It can be in liquid form as crude oil (dark and viscous), or condensate (clear and volatile like motor gasoline).

The solid and semi-solid forms of petroleum are called asphalt and tar.

Petroleum as a general term is used for all three mentioned above.

Table 1.1: Light and Heavy Hydrocarbon Molecules

Name Formula Phase

Methane CH4 Gas

Hexane C6 H14 Liquid

Octane C8 H18 Liquid

Wax C20 H42 Solid

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Check Your Progress

State whether the following statementsare true or false:

1. Hydrocarbons in petroleum could be in gaseous, liquid or solid form depending on the type and size of hydrocarbon molecule.

2. Petroleum is a word derived from the Latin words Petra and Oleum.

Reservoir, Well and Well Fluid

Through the burial and decomposition of organic material, huge amount of hydrocarbons are formed below the earth’s surface. Movements and convulsions below the earth’s surface resulted in different types of geological formations, where the hydrocarbons are trapped. In these formations, the hydrocarbons are contained by porous rocks known as source rock, covered with strata of hard sedimentary rocks known as cap rock which settled over them.

When huge quantity of recoverable hydrocarbon is trapped in rock formations below the earth, it is called Reservoir. Figure 1.1 depicts a typical formation of a reservoir. The surface on earth above the reservoir is called oilfield or gas field or condensate field depending on what it produces.

Figure 1.1: Hydrocarbon Formation

It must be noted that the reservoir in an oil field is not like a pool of liquid or a container filled with gas. It is oil or gas trapped in pores of porous sedimentary rocks, covered by impervious cap rock.

Activity Construct a model of the formation of a Reservoir.

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To produce oil from the reservoir, wells are drilled through the surface of the earth. A well is then perforated at right location from where the oil or gas enters the well pipe and rushes out because of high pressure.

What is Well Fluid?

The fluid that comes out of the well in an oilfield or gas field is called well fluid.

Well fluid is a mixture of crude oil, natural gas and saline water along with small amounts of sand and sludge. The water is called formation water or produced water.

If the crude oil had been just made of hydrocarbons, processing to get the final products would have been easy and at low cost. But a number of undesirable components come out with the well fluid, which increases the processing blocks and processing cost.

Other components like sulfur compounds, carbon dioxide, nitrogen, traces of metals are also present. Their removal constitutes part of processing.

Proportion of oil, water and gas may vary widely from one field to other. It changes substantially with time during production.

Normally, well fluid comes out on its own pressure, which depletes with time. Artificial methods of recovery are used in later stages of production.

Check Your Progress

Fill in the blanks:

1. The fluid that comes out of the well in an oilfield or gas field is called …………………. .

2. When huge quantity of recoverable hydrocarbon is trapped in rock formations below the earth, it is called …………………. .

Crude Oil and Natural Gas

The first processing step in an oilfield is separation between crude oil, natural gas and produced water.

Activity State all the components of Crude oil.

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What is Crude Oil?

Crude oil is a mixture of about 500 organic chemicals, predominantly hydrocarbons (molecules made of carbon and hydrogen). It is recovered from underground reservoirs, normally 1000 - 5000 meters down the earth.

Crude oil can be of wide variety and characteristics. It could be very fluid, very viscous or semisolid. The colour could be black, dark brown, amber or light brown.

It is also called Petroleum.

What is Natural Gas?

Natural gas is a mixture of the lightest hydrocarbons like methane, ethane, propane and butane. It also contains water to its saturation limit. It may also contain hydrogen sulphide (H2S), carbon dioxide (CO2), nitrogen (N2) and occasionally small amounts of helium (He).

When natural gas comes out of the well along with crude oil, it is called associated gas. Associated gas is produced along with crude in a field which is essentially an oil producing field.

When the well produces mainly gas with very little liquids, it is called free gas. Free gas production can be shut when we do not want it.

When acid gases like CO2 and H2S are present in substantial quantity, the gas is called sour gas. Otherwise it is called sweet gas.

Check Your Progress

Fill in the blanks:

1. ……………… is also called Petroleum.

2. When natural gas comes out of the well along with crude oil, it is called ……………… .

Units Specifically Used in Oil and Gas Industry

Oil industry uses certain specific units for production rates and volumes which will be bused frequently in our text. Due to past history of oil and gas industry which is predominantly the history

Activity Find out using the Internet how many barrels of oil India imports in a year.

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of exploitation of hydrocarbon resources by the companies of American origin, the American units are more often used in the industry rather than Metric Units. Here are some important units commonly used with which one must get familiar.

Crude-oil volume is usually measured in barrels.

One barrel holds 42 gallons (159 liters).

Weight or mass of crude in India is in metric tons (tonne).

A barrel of average crude oil weighs 0.150 ton, as a thumb rule. It must be remembered that it depends on the density of the crude oil.

Million Barrels of Oil Equivalent (MBOE) means amount of gas or any other fuel whose calorific value or heating value is equivalent of one million barrels of crude oil.

Oil production capacity or refinery capacity are often expressed in Barrels per Day (BPD) or Barrels per Standard Day (BPSD). Roughly 20,000 BPSD is equivalent to 1 Million Tons per year of crude, taking an average density of crude. [Note: It obviously will depend on density of crude oil.]

Some typical conversion figures used in the oil industry are given in Table 1.2.

Table 1.2: Commonly Used Measurement Units in Petroleum Industry

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Check Your Progress

Fill in the blanks:

1. Crude oil volume is usually measured in ……………… .

2. Weight or mass of crude in India is in metric ………… .

Summary

Petroleum is a saying determined from the Latin statements Petra (rock) and Oleum (oil). It basically includes commonly happening hydrocarbons i.e. fuses made of carbon and hydrogen particles. The aforementioned hydrocarbons are trapped beneath the surface of the earth, in permeable shakes, in the manifestation of oil and gas.

Carbon and hydrogen molecules can join together to shape particles of different sizes and structures. Hydrocarbons could be a modest atom with consolidation of one or a couple of carbon particles with hydrogen (e.g. Methane CH4 , Ethane -C2H6). On the other hand it could be extremely huge atom by fusion of portions of carbon and hydrogen iotas (e.g. Wax - C20H42) or even many carbon and hydrogen particles (e.g. Polythene).

Petroleum is basically made out of hydrocarbons with some different pollution. The statements 'petroleum', 'oil and gas' and 'hydrocarbon' are all utilized synonymously as a part of the oil and gas industry.

Lesson End Activity

Write a report on the OPEC oil price controversy.

Keywords

Aromatics: They are compounds having a ring of six carbon atoms with alternating double and single bonds and six hydrogen atoms.

Crude Oil: It is predominantly made of hydrocarbons. It is composed of three main hydrocarbon groups: Paraffins, Naphthenes, and Aromatics.

Well Fluid: It a mixture of crude oil, natural gas and saline water along with small amounts of sand and sludge.

Petroleum: It essentially comprises of naturally occurring hydrocarbons i.e. compounds made of carbon and hydrogen atoms.

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Questions for Discussion

1. Write a short note on Crude oil.

2. Explain the formation of Petroleum.

3. Define Natural Gas. State its various forms.

4. What are the units most commonly used in the Oil and Gas industry?

Further Readings

Books

Vollhardt, K.P.C. & Shore, N., Organic Chemistry (5th Edition), New York: W.H. Freeman, (190-192), 2007.

Shore, N., Study Guide and Solutions Manual for Organic Chemistry (5th Edition), New York: W.H. Freeman, (70-80), 2007

Web Readings

www.need.org/needpdf/infobook_activities/ElemInfo/PetroE.pdf

www.hindustanpetroleum.com

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UNIT 2: Crude Oil and Natural Gas Concepts

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Unit 2

Crude Oil and Natural Gas Concepts


Hydrocarbons



Introduction

Crude oil is a mixture of about 500 organic chemicals, predominantly hydrocarbons (molecules made of carbon and hydrogen). It is recovered from underground reservoirs, normally 1000 - 5000 meters down the earth.

Crude oil can be of wide variety and characteristics. It could be very fluid, very viscous or semisolid. The colour could be black, dark brown, amber or light brown. It is also called Petroleum.

Natural gas is a mixture of the lightest hydrocarbons like methane, ethane, propane and butane. It also contains water to its saturation limit. It may also contain hydrogen sulphide (H2S), carbon dioxide (CO2), nitrogen (N2) and occasionally small amounts of helium (He).

Various Forms of Natural Gas

There often exists a lack of understanding regarding the various terminologies or nomenclature used in the industry in describing components or forms of natural gas. The most commonly used ones are NGL, LPG, LNG and CNG. Let us understand what are these and how do they differ from natural gas.

NGL: During production or transportation of gas, the heavy components such as pentane or hexane, condense due to natural cooling and separate out as liquids. This is called NGL (Natural Gas Liquids).

Activity Find out what basis the colour of Crude oil depends on, using the Internet.

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As the name suggests, this is not really a gaseous component, but volatile liquid.

LPG: The propane/butane component of the natural gas is liquefied under moderate pressures and is supplied as cooking gas fuel.

This is called LPG (Liquefied Petroleum Gas).

LNG: Natural gas in bulk is liquefied under very low (cryogenic) temperature for transportation in large quantities by marine tankers. This is bulk of the natural gas in liquefied form and is re-vaporized after receiving it at its destination from tankers, to be used as natural gas. The objective of converting the gas to LNG is transportation in large quantities or export by marine tankers.

This is called LNG (Liquefied Natural Gas).

CNG: Natural gas is compressed to high pressures for use as automotive fuel or for transportation in small quantities. This is natural gas in highly compressed form but not liquefied.

It is called CNG (Compressed Natural Gas).

Check Your Progress

Fill in the blanks:

1. ……………………. is formed when natural gas is compressed to high pressures for use as automotive fuel or for transportation in small quantities.

2. ……………………. is Natural gas in bulk is liquefied under very low temperature for transportation in large quantities by marine tankers.

Elementary Concepts on Hydrocarbons

Now that we know crude oil is made of around 500 components, mainly hydrocarbons and natural gas is mainly light hydrocarbons, it becomes important to understand a little basic about hydrocarbon molecules.

The whole petroleum and petrochemical industry revolves around:

Starting with the hydrocarbon molecules as produced naturally from the well.

Rebuilding them into valuable products by various types of processing.

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What is Hydrocarbon?

Hydrocarbons are compounds made of carbon and hydrogen. The hydrocarbon molecules are formed by:

Bonding of hydrogen atoms to carbon atoms.

Bonding of a number of carbon atoms to form chain or cycle or a combination of chain and cycle.

The number of carbon atoms bonded together can be a few or many, in various combinations, creating numerous chemicals.

The bonding of carbon atoms could be in the form of a straight chain, branched chain or cyclic manner.

Typical hydrocarbon structures are depicted in Figure 2.1.

Figure 2.1: Hydrocarbon Structure

The phase (solid, liquid or gas) of the hydrocarbon depends on the number of carbon atoms joined together in a chain, for example,

CH4 (METHANE) : GAS

C6H6 (BENZENE) : LIQUID

C20H42 (WAX) : SOLID

Crude oil is made of a mixture of more than 500 components, mainly Hydrocarbons, which are the desired components. Crude oil contains from light components as dissolved gases (LPG), light liquids (Petrol, diesel) to heavy stock like wax, tar and resins.

The more carbon atoms a hydrocarbon molecule has,

the “heavier” it is (the higher is its molecular weight).

and the higher is its boiling point.

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Check Your Progress

Fill in the blanks:

1. Hydrocarbons are compounds made of ………………... .

2. The bonding of carbon atoms could be in the form of a straight chain, ………………... or cyclic manner.


Crude oil is predominantly made of hydrocarbons. It is composed of three main hydrocarbon groups:

Paraffins

Naphthenes

Aromatics

It also contains unstable hydrocarbons called olefin.

Paraffins are straight chain compounds, chemically stable. Lighter ones (CH4, C2H6) are gas. Heavier molecules are liquid (oil) or solid (wax).

Naphthenes consist of carbon rings, with/without side chains. Saturated with hydrogen, naphthenes are also chemically stable. Lighter naphthenes are liquids and heavier ones could be solid.

Aromatics are compounds having a ring of six carbon atoms with alternating double and single bonds and six hydrogen atoms. They are relatively unstable.

Olefins are double bonded hydrocarbon chains, normally produced during high temperature processing of petroleum. Olefins are unstable and polymerize easily i.e. a large number of olefins can combine together easily to form large gummy or plastic molecules.

Activity Conduct further research on Paraffins and make a presentation.

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Figure 2.2: Types of Hydrocarbons

Check Your Progress

Fill in the blanks:

1. ……………… are straight chain compounds, chemically stable.

2. ……………… are double bonded hydrocarbon chains, normally produced during high temperature processing of petroleum.

Some Important Concepts on Crude Oil

Carbon Numbers

The hydrocarbons are often referred in terms of number of carbon atoms rather than whole formula.

Activity What is the boiling point of a mixture of two liquids A and B mixed 50-50, A and B having a boiling points of 70°C and 80°C respectively?

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Example:

C1 = Methane

C4 = Mixture of Butane and hydrocarbons with 4 carbon atoms

C7 = Mixture of all hydrocarbons with 7 carbon atoms.

For further clarity let us put down some of the paraffin hydrocarbons the symbol (-) indicating carbon to carbon bonds:

Methane CH4 CH4 Ethane C2H6 CH3 - CH3 Propane C3H8 CH3CH2CH3 Butane C4H10 CH3 - CH2 - CH2 - CH3

(normal butane or n-butane) Butane structure can also be branched

chain type as given below:

CH3 - CH - CH3

| CH3

(Isobutane or i-butane) Both the structures of butane have same number of carbon atoms and same number of hydrogen atoms i.e. C4H10.

The only difference is how the carbon atoms are bonded with each other. This makes them different chemical entities but with very similar and close physical properties like boiling point and vapour pressure. The branched chain hydrocarbons of same carbon numbers, same number of hydrogen atoms and same chemical formula are called isomers.

Now let us look at Pentane.

Pentane C5H12 CH3 - CH2 - CH2 - CH2 - CH3 (n-pentane)

Pentane can have quite a few isomers:

CH3 - CH - CH2 - CH3 CH3 - CH - CH3 | | CH3 CH2 | CH3

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Thus one can have more and more isomers as the number of carbon atoms in the chain increases.

In addition to the numerous isomers, there are other types of hydrocarbons like olefins (double bonded or triple bonded hydrocarbons). C5 and higher hydrocarbons can have cyclic structures (naphthenes and aromatics) and there could be molecules with combination of cyclic and straight chain hydrocarbons.

For example, C6 hydrocarbon can be compounds of:

Normal paraffinic chain structure (e.g. normal hexane)

Isomers (isohexanes)

Olefinic structures or structures with double bond (hexanes)

Cyclic structure (benzene)

Thus just saying C6 means a number of hydrocarbons with six carbon atoms put together in various forms.

That explains:

How innumerable varieties of hydrocarbon molecules are possible.

How with same number of carbon atoms, say C8, numerous hydrocarbon compounds are possible.

Higher the number of carbon atoms, more numerous is the possible hydrocarbon compounds.

Classification of Crude Oil Various crude oils are often referred by their API Gravity. API Gravity is expressed as (141.5/ Sp. Gravity - 131.5). As specific gravity is in the denominator, API Gravity is higher for lighter crude and lower for heavier crude.

A comparative idea of this gravity unit can be obtained by comparison with water:

Water : 10 API

Typical API Gravity figures for crude oil are:

Mumbai High Crude : 40 API - Light Crude

Arabian Crude : 34 API - Medium Crude

Venezuelan Crude : 15 API - Heavy Crude

There could be sub-categorization as Medium Heavy or Light Medium.

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Another common classification is based on Characterization Factor, which depends on API Gravity and Boiling Point.

The crude oils are also classified in terms of chemical nature, for example:

Paraffinic base Asphaltic base Intermediate base Naphthenic base

Crude oils for which the residue after distillation contains paraffin wax is called paraffinic. If the residue contains asphalt, it is called asphaltic base and so on. Refinery processing scheme and product yields depend on type of crude in terms of chemical nature and gravity. It also indicates the type of product it can yield. As typical example:

Paraffinic base crude do not yield good bitumen (road tar) and is not good for lubricating oil manufacture. But it is good for diesel.

Light crude contains more of gasoline. Medium crude is good for diesel production. Heavy crude may give better bitumen. Naphthenic crudes are good for lubricating oil.

Cut or Fraction

Crude Oil and its products are mixtures of several components. Each component has a boiling point. It is interesting to examine what would be the boiling point of mixture of several liquids.

Thus mixtures do not have a single boiling point; it has a boiling range - from the initial boiling point to the final boiling point.

Liquid mixtures are identified with their boiling range. Crude oil being a mixture, has a boiling range. Each product like gasoline or kerosene is also a mixture and has a boiling range.

Cuts, Fractions and Carbon Numbers

Crude oil is a mixture of over 500 components. It has a boiling range of around 40-600°C. Each product from Crude oil is also mixture of several components (hydrocarbons). The hydrocarbons range from C1 to C65 in terms of carbon numbers.

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Product of a particular boiling range taken out of crude is defined as cut or fractions.

The products are identified as cuts from crude of certain boiling ranges and carbon numbers.

Table 2.1: Petroleum Product Cuts and Carbon Numbers

Product / Cut Boiling Range Carbon Number

Natural Gas <20°C C1- C4

Gasoline 40 - 200°C C5 - C10

Kerosene 180 – 250°C C10 - C15

Diesel (Gas Oil) 240 – 350°C C14 - C20

Jet Fuel (ATF) 170 - 240°C C10 - C15

Lube Oil 350 - 450°C C20 - C30

Bitumen/Tar 450°C+ C30 ++

Petroleum Products Crude oil (Oil) and natural gas (Gas) mixed along with water, comes out of the well as well fluid. Crude oil and natural gas together can be broadly referred as petroleum. Petroleum is just a raw material. Let us see what products we get from oil and gas that comes out from well head.

Well Head to Energy and Petrochemicals

There are two distinct uses of well head oil and natural gas- as fuel and as high value products. Primary use of the petroleum products in the early days of its exploration has been as fuel. But later with the development of petrochemical area (plastics, fibres, etc.), emphasis has shifted to greater valorization of the raw material. Let us look at the table below to understand this.

Table 2.2: Petroleum as Fuel and as Value Products

Fuel and Products Calorific Value (Kcal/Kg)

Price US Dollars/Ton

Coal 6,500 80

Crude Oil 10,400 150

Fuel Oil 10,000 120

Motor Gasoline 11,000 180

Polythene Not fuel 500

Polystyrene Not fuel 550 The high calorific value of the petroleum products, its low cost in the past and its suitability for use as relatively clean fuel created incentive to consume as fuel. But in the current economic scenario, valorization to higher value products has become integral part of oil and gas industry.

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It is important to note that besides producing fuel and automotive products like gasoline or diesel, both crude oil and natural gas provide feed stock for petrochemicals. Feed stocks are component of crude oil and natural gas that are converted into high value petrochemical products like polythene, polyester, synthetic rubber and synthetic fibre, etc. It is apparent from the table above that there is substantial valorization once the oil or gas is converted to petrochemicals.

The macro-system from well head to Petrochemicals has been dealt in detail in the next section. For an initial understanding of the petroleum products let us have a look at the simple block diagram given in Figure 2.3.

Figure 2.3: Petroleum Utilization Blocks

The various blocks in overall system are:

Well fluid is processed at the oilfield first. Oil and gas are separated, made transportable and despatched to the Refinery and Gas Processing Facility respectively.

Refinery produces products like petrol, diesel oil, lubricating oil etc. It also produces feed stock (Naphtha) for petrochemical (plastic, fibre, etc.) manufacture.

Gas Processing Facility purifies the gas from undesirable components and separates feedstock for petrochemical production.

Petrochemical feed stocks from Gas Processing or Refinery or both are sent to a Petrochemical Complex for production of petrochemical.

The balance gas is used as fuel for power generation or as industrial fuel.

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Each individual block in the above diagram could be a separate company. And each of these blocks could be located far away from each other in the same or different countries.

This makes the oil and gas industry a real global industry.

Some important terms often used in oil and gas industry with respect to the block diagram:

Offshore: Oil or gas field situated in the sea/ocean.

Onshore: Land based oil or gas field.

Upstream: The blocks covering reservoir, production, processing and transportation of oil and gas is referred as upstream blocks.

Downstream: Gas Processing, Refinery and Petrochemical Facilities are referred as downstream blocks.

Products from Natural Gas

The natural gas is made mainly of the four lightest hydrocarbons i.e. C1 (Methane), C2 (Ethane), C3 (Propane) and C4 (Butane). As gas separates out of the crude oil, it pulls out a little bit of heavier hydrocarbons like C5, C6, etc.

Table 2.3 shows the typical composition of gas and use of various components towards high value product.

Table 2.3: Gas Composition and Utilization

Component Composition Volume %

Utilization

Methane (C1) 50-96 Fuel, Petrochemical feedstock, power generation

Ethane (C2) 2-15 Petrochemical feedstock

Propane (C3) 1-12 Petrochemical feedstock, LPG

Butane (C4) 0.5-3 Petrochemical feedstock, LPG

Heavies (C5+) (NGL) 0.1-1 Refinery blending stock, petrochemical feedstock

Hydrogen Sulfide (H2S) 0-15 Toxic, corrosive and undesirable component

Carbon Dioxide (CO2) 0-30 No fuel value, corrosive, undesirable component

Nitrogen 0-30 No fuel value, corrosive, undesirable component

Water Saturated Undesirable component

Total 100 The points to note here are that:

There is a wide range of gas composition, varying from field to field and well to well.

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Only consistent trend is the reducing pattern of the hydrocarbon constituents from the lightest to the heavier ones e.g. methane followed by ethane and heavier hydrocarbons.

Utilization of gas as fuel is the easiest but lowest in the value chain.

Utilization of gas to make petrochemicals is the highest in the value chain.

Hence very often the components of the gas are separated by gas processing to be used for manufacture of petrochemicals.

While Table 2.4 gives a range for gas composition; typical gas composition is given in Table 2.3.

Table 2.4: Typical Gas Composition

Component (Volume%)

Methane rich

Sweet Gas

Associated gas

(mildly sour)

Sour gas

Gas with high N2

Methane (C1) 94.5 76.5 71.5 62.5

Ethane (C2) 2.8 12.2 10.2 4.2 Propane (C3) 1.0 6.5 5.7 2.5 Butane (C4) 0.2 1.8 1.0 0.5 Heavies (C5+) Traces 1.0 0.5 0.1 Hydrogen Sulfide Nil Nil 3.5 Nil Carbon Dioxide 1.5 2.0 7.6 5.4 Nitrogen Nil 300 ppm Nil 24.8 Water Saturated Saturated Saturate SaturatedTotal 100.0 100.0 100.0 100.0

Obviously each of these gases will have different processing techniques and problems in the Gas Processing Plant. These will be dealt with later. But let us look at the obvious -

The methane rich gas will have very little feedstock for petrochemicals.

The associated gas is rich in petrochemical feedstock and LPG.

The sour gas will need treatment to remove highly toxic and corrosive Hydrogen Sulfide.

The nitrogen rich gas will have low calorific value.

Check Your Progress

Fill in the blanks:

1. …………………….. Facility purifies the gas from undesirable components and separates feedstock for petrochemical production.

2. The ……………….. rich gas will have low calorific value.

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The five hundred odd components mostly hydrocarbon ranging from C1 to C65 gives wider range of products. Each of the products by itself is a composite of numerous hydrocarbons. The crude oil is processed in the refinery to separate the base stock (raw products) by distillation into ‘cuts’. Then the various product base stocks are processed and treated to meet specifications.

Table 2.5: Products from Crude Oil Refining

The important petroleum products produced in bulk in a refinery are presented in Table 2.6. Each of the products has to meet certain performance specifications. Only one typical specification is stated in the table for a preliminary understanding of its significance with respect to the usage. It must be remembered that besides performance specifications, there are strict specifications to meet environment and emission norms. These are related to polluting components like sulfur, aromatics, etc.

Petrochemical Products/Petrochemicals

What are petrochemicals? Petrochemicals are usually plastic products and chemicals that are derived from petroleum and natural gas and are made on a large scale (approximately >10,000 tons per annum upwards). As indicated in the earlier sections, certain components from gas processing plants and refinery are used as feedstock for manufacture of petrochemicals (e.g. ethane, propane, naphtha).

Activity What is the chemical composition of C7 Hydrocarbon?

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Petroleum products from refinery and natural gas, supply over 50% of the feedstock for the entire chemical industry and more than 50% of organic chemicals.

As you can see in the next table, petrochemical products have permeated into every facet of our lives.

A vast majority of them are polymers, whose molecules are tailored by reaction process to suit specific characteristics or properties.

Table 2.6: Petrochemicals

Check Your Progress

Fill in the blanks:

1. ………………… are usually plastic products and chemicals that are derived from petroleum and natural gas and are made on a large scale.

2. The important petroleum products are produced in bulk in a ………………… .

Summary

Raw petroleum might be of wide mixed bag and aspects. It could be exceptionally liquid, extremely thick or semisolid. The colour could be dark, dim tan, golden or light tan. It is additionally called Petroleum.

Regular gas is a mixture of the lightest hydrocarbons like methane, ethane, propane and butane. It likewise holds water to its immersion limit. It might additionally hold hydrogen sulphide (H2S), carbon dioxide (CO2), nitrogen (N2) and at times minor measures of helium (He).

Hydrocarbons are fuses made of carbon and hydrogen.

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Unrefined petroleum is overwhelmingly made of hydrocarbons. It is made out of three primary hydrocarbon bunches; Paraffins, Naphthenes and Aromatics.

Lesson End Activity

Prepare an assignment on the Gas Composition and Utilization.

Keywords

Natural Gas Liquids (NGL): It is formed during production or transportation of gas, when the heavy components such as pentane or hexane, condense due to natural cooling and separate out as liquids.

Liquefied Petroleum Gas (LPG): It is the propane/butane component of the natural gas is liquefied under moderate pressures and is supplied as cooking gas fuel.

Liquefied Natural Gas (LNG): This is bulk of the natural gas in liquefied form and is re-vaporized after receiving it at its destination from tankers, to be used as natural gas.

Compressed Natural Gas (CNG): This is natural gas in highly compressed form but not liquefied.


1. Give a brief outline of the different forms of Natural gas. 2. What are Hydrocarbons? Explain. 3. Write a short note on the Composition of Crude oil. 4. What are the various products from Crude oil? State them.

Further Readings

Books Vollhardt, K.P.C. & Shore, N., Organic Chemistry (5th Edition), New York: W. H. Freeman, (190-192), 2007 Shore, N., Study Guide and Solutions Manual for Organic Chemistry (5th Edition), New York: W.H. Freeman, (70-80), 2007

Web Readings www.need.org/needpdf/infobook_activities/ElemInfo/PetroE.pdf www.hindustanpetroleum.com

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UNIT 3: The Macro-system

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Unit 3

The Macro-system


Oil and gas chain from oil well down to the petrochemical industry

Overview of business environment in each block of the chain

Overview of the major players in the chain

Introduction

Use of petroleum dates back to 3000 BC. But it was sourced from natural oil seepages that occurred on the earth’s surface. Asphalt from natural oil seeps is known to have been used around 3000 BC in Mesopotamia They used it for construction of roads. Egyptian mummies were known to be wrapped in asphalt-soaked clothing. Application of asphalt was also made for the construction of pyramids.

The oil producing countries are divided into two groups those who are members of Organization of Petroleum Exporting Countries (OPEC) and those who are not.

In India, the oilfield in Digboi was discovered during the later part of nineteenth century. Till 1970, oilfields in Assam and Gujarat were the major producers. In the seventies, Mumbai High was developed into a major producer.

From Wellhead to Petrochemicals

A block diagram representation of the entire industry is given in Figure 3.1.

The first step in the block is oilfield processing. The well fluid is processed in or in the vicinity of the oilfield. The processing steps here are:

Separation of crude oil, natural gas and water which comes as mixture in the form of well fluid.

Oil and gas are treated to meet specifications for transportation and any customer specification. Oil is normally

Activity Make a chart showing the entire Petrochemical industry.

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treated to remove water, and then it is pumped and metered before putting it through pipeline.

Similarly gas is dehydrated, compressed and metered before putting it through pipeline. Separated water (called produced water) is treated to meet environment specifications for discharging it.

Sometimes the produced water is re-injected into the reservoir. In such case it is treated to meet reservoir quality specifications.

Separated gas is sent by pipeline to the gas processing plant, which may be located away from the field.

Transportation of oil and gas, which are raw material, is done by pipeline, marine tankers or rail/road tankers. Transportation by itself is a huge business sector.

The gas is first treated to remove impurities like sulfur. Then cryogenic (low temperature) processing is carried out to liquefy and separate by distillation, the components like ethane, propane and LPG. The separated components are utilized to make higher value products:

Methane, which is bulk of the gas, is a good raw material for manufacture of urea fertilizer, chemicals like methanol or can be used as fuel to generate power.

Ethane and propane are sent to the petrochemical plants as feedstock to crack them into ethylene/propylene, which are polymerized into plastics (polythene, polypropylene).

LPG (propane and butane mix) is bottled in cylinders and sent for domestic consumption.

The heavier hydrocarbons (C5+), which are present in the gas condenses as Natural Gas Liquids (NGL). NGL is sent to the refinery to be processed as blending stock for gasoline or it is sent to a petrochemical complex as feedstock.

If the gas is to be transported to another country by marine tankers, it is liquefied as LNG.

The oil from the oilfield processing block is pumped (or taken by tanker) to the refinery. Oil refining is a composite of several processing steps. The first step is separation of raw products by distillation. There are subsequent process steps to meet certain specification of the products. Then there are processing to meet

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environment related specifications. Also there is processing to crack the heavy part of the crude into lighter products like gasoline, kerosene and diesel. The finished products that we get from the refinery are summarized in Figure 3.1.

Each of the blocks of gas processing and processing of oil in the refinery generates feedstock for Petrochemical Complex.

Figure 3.1: The Oil and Gas Chain

Naphtha is the main feedstock for petrochemical manufacture generated in the refinery. Even the kerosene and gas oil (raw diesel cut) can be used as feedstock. Methane, ethane, propane, butane and the NGL component of the gas can be used as feedstock.

Most of the petrochemical processes are conversion of the molecules of feedstock by:

Cracking the feedstock, i.e. breaking bigger molecules into smaller molecules. In Petrochemical Processes cracking of feedstock like ethane, propane or naphtha is done to generate smaller olefin molecules like ethylene or propylene.

Polymerization of the olefins i.e. joining together of the olefin molecules several thousand fold producing large molecules which are called polymers. Olefins tend to polymerize easily making resinous or plastic material like polythene or polypropylene.

Very often a non-hydrocarbon or inorganic component can be brought into the reaction process to generate other petrochemical products. For example nitrogen becomes an essential raw material besides methane as feedstock, for synthesis of urea fertilizer.

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Similarly for making PVC (polyvinyl chloride), vinyl chloride is first formed by reaction of chlorine with ethylene.

With any of the feedstock mentioned, numerous petrochemical products are made. Starting with ethane as feedstock, configuration of a typical petrochemical complex is shown in Figure 3.2. Ethylene is made by cracking ethane. Vinyl chloride is made by reaction of ethane with chlorine. Plastic end products like Polythene and PVC are made by polymerization of ethylene and vinyl chloride.

Part of the ethylene undergoes processing with benzene (originating from naphtha as feedstock) and produces polystyrene as end product.

Figure 3.3 shows a typical petrochemical complex.

Figure 3.2: Petrochemical Building Blocks

Figure 3.3: View of a Petrochemical Complex

Upstream and Downstream

These two terms are very frequently used in the petroleum industry. Let us look in to the broad category of processing blocks we described:

Oilfield Processing

Transportation of oil and gas

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Gas Processing

Refinery

Petrochemicals

Power Plants and other gas based industries

Of course another large industry not mentioned earlier is the storage, transportation and logistics of numerous products that come out of processing of oil and gas.

The first two businesses i.e. oilfield processing and transportation activities are known as Upstream. The others are referred as Downstream.

Now we shall touch upon brief history of development of oil and gas industry. Then the Indian oil and gas industry with reference to the macro-system, upstream and downstream will be described.

Check Your Progress

Fill in the blanks:

1. Oilfield processing and transportation activities are known as ………………. .

2. For making PVC, ………………. is first formed by reaction of chlorine with ethylene.

History of Oil and Gas Industry

The use of petroleum dates back to more than 3000 BC. But it was sourced from natural oil seepages that occurred on the earth’s surface.

Oil and Gas from Seepages and Brine Wells

Asphalt from natural oil seeps is known to have been used around 3000 BC in Mesopotamia. They used it for construction of roads. Egyptian mummies were known to be wrapped in asphalt-soaked clothing. Application of asphalt was also made for the construction of pyramids.

Natural gas seeps were known in the Baku region of Azerbaijan, Iran, India and other countries. Some of them caught fire and burnt for thousands of years. Use of petroleum as medicine was made in China.

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The first effort for production of petroleum by digging wells were reported in China in the year 600 BC. Crude oil is reported to have been produced during digging of brine wells.

Those days the technique for search of oil was limited to looking for oil or gas seeps and trying to locate an adequate source nearby. The search for oil and gas today is much more complicated. Industrial Revolution and the Search for Oil

During the eighteenth century, the industrial revolution created the demand of lighting, fuel and lubricating oils for the machineries. This intensified the search for oil (exploration) and it resulted in the development of the technology for oil exploration.

In the middle of the nineteenth century oil from coal (named kerosene) was being used to satisfy the demand of lighting oils lamps. Whale oil and coal oil were also used for lubrication of the machines. Kerosene from the petroleum produced from natural seepage started shortly afterwards. During the period 1850 to 1870, drilling of wells to produce oil started the oil boom in the USA. Those days often oil was found at depths of 30 to 100 meters. Today the depth of oil wells are a few thousand meters to several Kilometres. Development of the exploration and drilling technology moved faster with the companies getting cash rich with the oil boom. Some of the largest and financially strong oil companies emerged in the USA. The landmark events in the history of oil and gas industry are:

In 1870, John D. Rockefeller founded the Standard Oil Company, which soon gained a near monopoly on oil production and became one of the largest companies in the world.

Till 1900, fuel oil, kerosene and lubricating oils were the main products from petroleum. Then came the advent of cars and the demand for gasoline. During the early part of the twentieth century, gasoline-fueled cars became popular; locomotive and ship engines were converted from coal to oil; and the airplanes using aviation gasoline started flying. The demand for gasoline went up and with the advent of electric power, the demand for kerosene for lighting went down, bringing change in refinery technology.

Search and production of oil became more technology oriented since early twentieth century. Rotary drills were used to dig wells for oil. The first offshore wells were drilled in California in 1896. In 1948 the first platform was used to drill an offshore well in Louisiana.

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In the first half of the twentieth century, the discovery of large oilfields spread to the other parts of the world. New fields were discovered in erstwhile USSR, the Middle East and other locations. USSR became a major producer of oil under state ownership of the various oil reservoirs. With the participation in major discoveries and ownership worldwide, some of the pioneering American companies like Standard Oil, Texaco, and Mobil became giants.

In India, the oilfield in Digboi was discovered during the later part of nineteenth century. Till 1970, oilfields in Assam and Gujarat were the major producers. In the seventies, Mumbai High was developed into a major producer.

The Middle East came into the picture in the 1930s. In 1932, the first crude oil discovery in Bahrain was made by Standard Oil. In 1936, Standard Oil of California joined with other American majors to form Arabian American Oil Company (ARAMCO). ARAMCO made a major oil discovery in Saudi Arabia in 1938.

North Sea oil field were discovered and developed during the late sixties and seventies. During the eighties and nineties, some of the Latin American countries (Mexico, Venezuela) made major oil field discoveries and development. During the nineties, Asia Pacific countries like China and Indonesia became major producers.

Oil Scenario Worldwide

The regions having the largest proven oil reserves today are given in Figure 3.4 below.

Figure 3.4: Region-wise Hydrocarbon Reserves

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It is important to know that India’s proven reserves are meagre compared to the size and potential of the country.

The oil producing countries are divided into two groups those who are members of Organization of Petroleum Exporting Countries (OPEC) and those who are not.

This post consists of oil producing countries. Total world production of the oil is 12%. The oil of the world will run out in a few years. Every country is trying to discover more reserves of oil. It is known that how far this struggle will succeed. It is the need of the hour that we cut short the need of oil. Anyhow we should try to maximize the oil production.

Following are the list of top ten oil producing countries in which we discuss their production, import and export of the oil.

Figure 3.5: Top 10 Oil Producing Countries in the World

1. Russia: The single largest oil producing country in the world is Russia, with a production of 10,124,000 barrels per day. It shares 12% oil of the world. It has about 60 billion barrels of proven oil reserves or 5% of the world oil reserves.

2. Saudi Arabia: Saudi Arabia is the second largest oil producers. It produces oil less than the Russia. The production of Saudi Arabia is 10,121 million barrels oil per day. It has one-fifth of the world’s proven oil reserves. It is the world’s largest oil exporter.

3. United States: It is the third largest oil producing country and produce large amount of oil in the world. It produces 9.6 million barrel oil per day. It shares about 11% oil of the world. It has 21 billion barrel proven oil reserves.

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4. China: It produces about 4.27 million oil barrels per day. It supplies 5% of the world. It has about 20.3 billion barrels of proven oil reserves. It is the fifth biggest supplier of oil to the US. Iran supplies 11% of China oil imports.

5. Iran: Iran plays a major role in the world oil market because its quality is very good. It produces about 4,172,000 bbl and 4.25 million barrels of oil per day. It supplies 4.95% oil to the world.

6. Canada: It is the major industry in the economy of North America. Its production is 3,289,000 barrels per day. It supplies about 3.90% oil of the world. It is the single largest source of oil imports into the United States.

7. Mexico: It supplies three leading foreign countries to the United States, along with Canada and Saudi Arabia. Its production is 3,001,000 oil of the world. It shares about 3.56% oil to the world.

8. United Arab Emirates: It produces about 2,798,000 oil of the world and exports 3.32% oil of the world. Their oil reserves are ranked as the sixth largest country in the world and possess one of the most developed economies in west Asia.

9. Brazil: It produces 2,572,000 barrel oil the world. It shares about 3.05% oil to the world. It has 8.5 billion of proved oil reserves. In Brazil, Tupi oil field is a large oil field.

10. Kuwait: It produces less than Brazil. The production of oil of Kuwait is 2,494,000. It exports 2.96% oil to the world. It has 104 billion barrel proven oil reserves. Kuwait’s oil reserves are the fourth largest in the world. It is on seventh no. in export.

Some important features of OPEC and non-OPEC countries are:

Proven crude reserves are concentrated in OPEC countries. Out of the world’s 1.0 trillion barrels of proven reserves, 80% is held by OPEC.

80 to 90% of the oil produced by them are exported.

There is very little internal consumption indicating the economy to be oil export dependant.

OPEC countries have very high spare capacity for production. Non-OPEC countries hold approximately a combined 500,000 barrels per day (bbl/d) of spare oil production capacity, while

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OPEC spare production capacity is estimated to be as high as 8 million bbl/d.

The petroleum resources of OPEC countries are mostly owned by the State whereas in non-OPEC countries the ownership is generally in private hands.

Greater OPEC production as a proportion of world production will be seen in the future.

With this kind of profile of OPEC countries, it is apparent that they are in a position to control the oil prices in the world, whenever they are united.

There are a few important points to note in the global production and consumption pattern. There is not a single OPEC country in the top ten oil-consuming countries. This indicates that in terms of industrial development other than oil production, the OPEC countries are lagging behind. The only developing countries in the top ten oil consumers are China, Brazil and India. This indicates a growth of industry and infrastructure driven by oil and gas as sources of energy.

Major Oil Companies

Major oil companies are very large transnational corporations. They rank among the largest corporations in the world. There have been a number of mergers recently to meet the crisis created by slowing down of the economy since the late nineties. As per survey done by Fortune magazine, five oil companies feature among the top fifteen companies in the world in terms of revenues.

There has been a spate of mergers between major oil companies in the recent times. As apparent from the above table, some of the largest companies are result of merger of major oil companies of the world. The merger of Exxon and Mobil, and that of BP, Amoco and Arco happened during the last few years. Some more mergers are in the offing.

The result has been detrimental to the consumers. USA has seen a rise in gasoline prices as a result of the mergers which has lessened competition.

The cartel created by OPEC which is keeping oil prices around 28 to 30 Dollars per barrel and the recent mergers of oil majors has created a situation detrimental to the growth of oil importing countries.

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Figure 3.6: World’s Largest Oil and Gas Companies

Check Your Progress

Fill in the blanks:

1. ………………….. oil companies feature among the top fifteen companies in the world in terms of revenues.

2. In terms of industrial development other than oil production, the ………………….. countries are lagging behind.

Summary

In this unit, the total macro-system from oil well to petrochemicals was explained in the form of block diagram. Flow of various components of gas and oil in to the manufacturing blocks of refinery and petrochemicals leading to final products was highlighted.

Indications were given how at each step of processing the oil and gas get valorized in to higher priced products.

Having explained the macro-system, a brief history of oil and gas industry was presented. Major players in the world and specifically in India were identified.

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Lesson End Activity

Prepare a project report on the history of oil and gas industry and their composition worldwide.

Keywords

Organization of Petroleum Exporting Countries (OPEC): It is an organization formed in 1961 to administer a common policy for the sale of petroleum.

Industrial Revolution: The rapid development of industry in Britain in the late 18th and 19th centuries, brought about by the introduction of machinery.

Ethylene: It is made by cracking ethane.

Review Questions

1. Draw a block diagram showing the flow of gas and its components from a gas field offshore to further processing and generation of ethylene based petrochemicals.

2. Name three of the largest oil companies in the world.

3. Give an outline of the Oil and Gas industry worldwide.

4. Explain the Oil and Gas chain with the help of an illustration.

Further Readings

Books

March, J., Advanced Organic Chemistry: Wiley, 4th edition. 1992.

Walber, Richards & Haltiwangler, J. Am.Chem. Society. 1982

Web Readings

www.economywatch.com/world-industries/oil

www.oilmillmachinerysuppliers.com/history.html

www.history.com/topics/oil-industry

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UNIT 4: The Indian Perspective

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Unit 4

The Indian Perspective


Overview of oil and gas business environment in India

The Indian perspective-upstream and Downstream

Major players in the Petrochemical sector

Introduction

Oil exploration and production industry in India dates back to the late nineteenth century. The first commercial oilfield was struck at Digboi in North-Eastern India in the year 1890. Till the 1970s, petroleum production was mainly from oilfields in the North-Eastern region and Gujarat.

In this unit we will study about the Indian Oil and Gas scenario.

The Indian Perspective – Upstream

The government owned companies known as Public Sector Units (PSU) earlier dominated the upstream oil and gas industry. The two companies - Oil and Natural Gas Corporation Ltd (ONGC) and Oil India Ltd (OIL) were the main players. They were responsible for exploration and production. Bombay High (now known as Mumbai High) was discovered in the 1970s and was one of the largest finds in the world at that point of time (albeit not enough for a large country like India). The government felt the need for liberalizing participation of foreign companies for exploration and production. In 1991 various offshore blocks were offered for licensing. The government policy now allows joint as well as private sectors to participate in this sector. The government has leased a number of blocks of potential fields to both Indian and multinational companies.

As a result of these measures the number of players in the upstream industry has gone up substantially. Reliance Petroleum

Activity Starting with Mumbai High oilfield, trace in the form of a block diagram the following:

(a) How oil and gas are transported to shore.

(b) Where do the sub-sea oil and gas pipelines terminate.

(c) To which refineries the oil is transported by pipeline.

(c) What happens to the gas after it reaches shore.

(e) How is the gas distributed.

(f) What are the Petrochemical Complexes and fertilizer plants based on Mumbai High Gas.

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became owner of a few major oilfields in the Mumbai High region. A number of Indian and overseas private operators explored and produced oil from newly developed fields in Krishna Godavari and Kaveri basin. ONGC is still the biggest player upstream due to historical reasons. The proven oil and gas resources are still meagre for India’s size and requirement.

Oil and Gas Field

Figure 4.1 shows the producing and proven oil and gas reservoirs in India.

The locations of the various reservoirs are only indicative. They do not show the map and size of the fields. Some of the major gas and oil pipelines are also shown in Figure 4.1.

Let us understand the oil and gas infrastructure of India by looking into a few of the systems with the macro-system block diagram in mind.

Figure 4.1: Location of Producing and Proven Reservoirs

Mumbai High is the largest oil and gas producer in India. It is located offshore about 200 Km. away from the coast off Mumbai. As seen in the map an oil pipeline and a gas pipeline are laid below the sea reaching landfall point at a place called Uran south of

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Mumbai. Up to this point, it can be called the upstream and is owned by ONGC. The oil is distributed to the refineries (BPCL) near Mumbai. LPG is extracted out of gas at Uran. Also ethane and propane are extracted out of gas in the gas processing facility located at Uran. The balance gas goes to nearby power plant and fertilizer plants at Thal (Maharashtra). The ethane and propane extracted from gas at Uran goes to petrochemical complex at Nagothane (Maharashtra).

Another major pipeline originating from Mumbai High area is a gas pipeline laid below the sea up to landfall point at a place called Hazira. Bulk of the gas comes from a gas field offshore near Mumbai High called South Bassein Field. This gas is sour gas (Hydrogen sulphide bearing).

A major gas processing complex is located at Hazira where sweetening (removal of sulfur from gas) and recovery of LPG are carried out. Hazira is the originating point of India’s longest gas pipeline network called HBJ Pipeline (Hazira Bijapur Jagdishpur pipeline).

HBJ Pipeline is a network of over 2000 Km. of pipeline extending from Hazira to northern part of India. It provides feedstock to numerous fertilizer plants, power plants and petrochemical plants on its route. In addition the balance gas provides fuel to the industries. From Hazira onwards ownership of the pipeline and gas distribution facilities changes from ONGC to Gas Authority of India Ltd. (GAIL).

Figure 4.1 also shows a few major oil pipelines. From the North-Eastern oil fields of India, the first major cross country pipeline was laid starting from Nahorkatiya in Assam to Barauni and Haldia. This pipeline feeds oil to all major refineries in the North-Eastern and eastern India including Barauni refinery and Haldia refinery.

Major Player Upstream

The major players of upstream are given in Table 4.1.

Table 4.1: Major Players Upstream

No. Company Exploration & ProductionAreas

Other activities

1

Oil & Natural Gas Corpn.

Bombay High, SouthBassein, Heera and otherwestern offshore Oilfields,KG basin, Assam, Gujarat,Rajasthan

Oil and Gas Pipeline

Contd…

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2 Reliance India Ltd. Neelam, Panna, Krishna Godavari Basin

Downstream refineries & petrochemicals, Pipeline

3 Oil India ltd. Assam, Rajasthan 4 Cairn Energy India Cauvery Basin 5 Essar Oil Ratna Oilfield Development Downstream

Refinery

6 Gas Authority of India Oil Exploration, Gas Pipeline

Petrochemicals

7 Hindustan Oil Exploration Co.

KG Basin (PY3), Cambay Basin

8 Videocon Petroleum KG Basin (Ravva Offshore)

9 Niko Resources Cambay Basin The domestic oil demand and supply are presented in Table 4.1. It can be seen that we are grossly insufficient in our hydrocarbon resources and dependant on imports of oil and gas.

Figure 4.2: World Oil Supply and Demand

Natural Gas

The demand of gas has been projected by various estimates depending on assumed user pattern at figures between 150 to 200 million SCMD. Major consumption of Natural Gas in India will be in the Power and Fertilizer sectors. Natural Gas consumption in other industries, such as petrochemicals, town gas, or as Compressed Natural Gas (CNG) in the automobile sector, is also considered in the projections.

This leaves a wide gap in the supply demand balance for Natural Gas in the country. The India Hydrocarbon Vision 2025 has projected that the demand for Natural Gas will go up to about 230 million standard cubic meters per day by 2007, to more than 310 million standard cubic meters per day by 2011, finally reaching a

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level of 390 million standard cubic meters per day by 2025. In the long-term policy statement, the Government of India has visualized Hydrate reserves and coal bed methane, as potential indigenous resources.

Earlier plan was to meet the future gas requirements by import of LNG. Recent hydrocarbon discoveries of Reliance and ONGC are expected to bridge the gap to a certain extent.

Future Perspective

The per capita energy consumption in India is very low at the level of 226 Kg of Oil Equivalent compared to 7759 Kg Oil Equivalent in the USA. With a low base, the energy supply in India has been growing @ 6% annually compared to an average of 1.5% worldwide. It is projected that the growth rate of Indian economy may go up to 7-8% in the near future. This will further increase the energy requirement for the future.

Obviously the future energy needs has to be planned keeping hydrocarbon, coal, hydroelectric power, nuclear energy and unconventional sources of energy into consideration. The hydrocarbon resources are expected to be enhanced in the following manners.

Increased search of hydrocarbon resources in India by the policy of liberalization and leasing out prospective hydrocarbon basins.

Prospecting for hydrocarbons overseas by Indian companies (e.g. ONGC investing in Vietnam and other prospective regions).

Import and distribution of LNG. Petronet, a public sector LNG distribution company was set up for this activity.

Linking hydrocarbon resources from countries like Bangladesh, Iran by cross country pipeline to India.

Exploitation of hydrate resources in coastal sea bed.

Exploitation of coal bed methane reserves.

A comprehensive energy study and planning with above resources and other resources like coal, hydroelectric, nuclear and non-conventional energy is needed for long term planning of energy needs.

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Check Your Progress

Fill in the blanks:

1. A major gas processing complex is located at ………………….. where sweetening and recovery of LPG are carried out.

2. The first major cross country pipeline laid in North-Eastern oil fields of India, was from ………………….. in Assam to Barauni and Haldia.

The Indian Perspective – Downstream

The refinery industry also dates back to over one hundred years. India’s first refinery was built at Digboi in 1901 by British Petroleum. In the late ’50s and early ’60s multinational oil companies such as Shell, Caltex and Esso invested in refineries in India. Indian Refineries Ltd., the first state owned (public sector) refinery was built in Guwahati in the early sixties. Later it became Indian Oil Corporation.

India nationalized the refining and product marketing sector in 1976. Regulatory regime was introduced on production, distribution and pricing of crude oil and petroleum products. State owned companies such as Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum were the largest companies in the refinery sector.

The Administered Pricing Mechanism implemented in the seventies subsidized prices for products like kerosene and LPG. Charging higher prices for other products like gasoline and aviation fuel generated part of the subsidy. Diesel prices were kept neutral. The Administered Pricing Mechanism was based on fixed 12% post-tax return on net worth deployed for refining, distribution and marketing.

The Refining Industry

India has one of the largest and fastest expanding Petroleum Refinery Industry in Asia with over 110 Million tons per year installed capacity. The petroleum products’ demand was around 150 Million tons per year in the year 2006-07. The stress will be on revamp, expansion and de-bottlenecking as well as new refineries.

Activity Carry out a similar exercise as the first one for the oil, gas, refinery and petrochemical facilities of Reliance Petroleum.

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With the deregulation of the oil economy initiated in the early nineties, a number of private players emerged. The Reliance refinery at Jamnagar became the biggest refinery in India and one of the biggest in the world. Other players like Mangalore Refineries and Petrochemicals Ltd emerged in the private sector. Privatization of some of the public sector refineries are also on the cards but presently held up in the legalities.

Figure 4.3: Refinery Locations

In the early nineties, India started the process of de-regulation and liberalization of the economy to make the economy market driven. This already has created impact and structural changes in the hydrocarbon sector. In 1997, the Government of India firmed up a plan for deregulations of the oil industry by year 2002, with respect to all aspects of pricing, imports and exports of crude and petroleum products. Generally deregulation has been achieved as per the plan. The private sector can now carry out refining as well as marketing of a limited number of petroleum products e.g. LPG, naphtha, aviation fuel, fuel oil etc., which have been taken out of Administrative Pricing Mechanism. Divestment of some of the State owned companies also has taken place.

Emergence of the Reliance Group has been a major development in the private sector of oil industry. Today Reliance has the largest

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refinery and the largest petrochemical complex in India, which are also among the largest in the world.

The Petrochemical Industry

In the Petrochemical sector also, the initial big players were the multinational companies in the private sector. National Organic Chemical Industries Ltd. (NOCIL) and Union Carbide plant at Mumbai were the first two major petrochemical plants in India. The Indian Petrochemical Corporation Ltd. (IPCL) at Vadodara was the first major petrochemical complex set up under state ownership in the mid ‘70s. This was followed by another major petrochemical complex at Nagothane in Maharashtra under IPCL.

India has also a large and growing Petrochemical industry with one of the largest integrated petrochemical complexes in the world and several other petrochemical complexes. India has the second largest fertilizer production capacity in the world.

There is abundance of small and medium size petrochemical and chemical plants badly needing improvements through revamp for increasing their efficiencies. Many of them are old and revamp of the plants pose a challenging opportunity.

In the Petrochemical Sector, the major players are:

Reliance Industries Ltd (RIL)

National Organic Chemical Industries Ltd (NOCIL)

Indian Petrochemical Corporation Ltd. (IPCL) now acquired by Reliance

Haldia Petrochemicals Ltd. (HPL)

Gas Authority India Ltd. (GAIL)

Except GAIL, which is government owned company (PSU), the rest are private holdings listed in the stock exchange. HPL is held jointly by government and private entities.

Transportation Infrastructure

India has major ports for handling of oil and products (export and import) at Jamnagar, Mumbai, Mangalore, Cochin, Chennai, Vizag and Haldia. Inland transportation of crude from the production sites or ports is primarily undertaken via pipelines.

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Transportation of refined products is carried out through multiple options – pipelines, the rail system, road tankers and coastal shipping using marine tankers. A very broad and approximate distribution of load on various modes of transportation of petroleum products is:

Pipelines: 42%

Marine transportation: 10%

Rail transportation: 38%

Road transportation: 10%

Thus railways carry almost as much load as pipelines as far as product transportation is concerned. With greater investments coming in pipeline, in future the balance will be in favour of pipeline.

Pipelines

A few of the major pipeline systems in the country is shown in the next block. A vast network of oil, gas, LPG and petroleum product pipelines exist all over the country.

Rail System

About 40 Million tons of petroleum products are moved from refineries to storage terminals or depots in other various cities and towns by the railway network.

Check Your Progress

State whether the following statements are true or false:

1. The Reliance refinery at Jamnagar is the biggest refinery in India.

2. India nationalized the refining and product marketing sector in 1967.

Summary

In this unit, the total macro-system from oil well to petrochemicals was explained in the form of block diagram. Flow of various components of gas and oil in to the manufacturing blocks of refinery and petrochemicals leading to final products was highlighted.

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Indications were given how at each step of processing the oil and gas get valorized in to higher priced products.

Having explained the macro-system, a brief history of oil and gas industry was presented. Major players in the world and specifically in India were identified. Hydrocarbon infrastructure in India was presented with maps. The high growth potential of oil and gas business and future opportunities were highlighted.

Lesson End Activity

Prepare an assignment to show the present and future prospects of natural gas in India and worldwide.

Keywords

Oilfield Processing: The well fluid is processed in or in the vicinity of the oilfield.

Upstream: Includes Oilfield Processing and Transportation of oil and gas.

Downstream: Includes Gas Processing, Refinery, Petrochemicals, Power Plants and other gas based industries.

HBJ Pipeline: It provides feedstock to numerous fertilizer plants, power plants and petrochemical plants on its route.


1. Draw a block diagram showing the flow of gas and its components from a gas field offshore to further processing and generation of ethylene based petrochemicals.

2. Name three of the largest oil companies in the world.

3. In a blank map of India, mark the location of major oilfields and major refineries.

4. Name three of the upstream oil companies in India.

5. Name four major refining companies in India with approximate refining capacity owned by them.

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Further Readings

Books

March, J., Advanced Organic Chemistry: Wiley, 4th edition. 1992.

Walber, Richards & Haltiwangler, J. Am.Chem. Society. 1982

Web Readings

www.economywatch.com/world-industries/oil

www.oilmillmachinerysuppliers.com/history.html

www.history.com/topics/oil-industry

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UNIT 5: Case Study

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Unit 5

Case Study

Objectives After analyzing this case, the student will have an appreciation of the concept of topics studied in this Block.

The Changing Environment within the Gas Industry

Gas is the carefully controlled source of nearly half of the country’s energy needs. And most of that gas is transported safely and reliably by a British company - Transco. All day, every day, sophisticated computer-based telemetry watches, records and reports as the gas goes through meters, compressors, valves and governors on its way to more than 20 million homes, factories and businesses. Millions of cubic metres of gas every day are pushed through the system at a steady 10-15 miles an hour.

Transco is the gas transportation arm of BG plc. The top management team comprises a managing director, chief operating officer, finance director, corporate affairs director and strategy & business development director. The business is divided into a number of groups, or directorates - licence to operate, legal, human resources, corporate projects, regulation and reform of gas trading arrangements.

Transco is highly information-rich. Its cutting edge computer systems and technological knowhow run the gas transportation network and underpin the competitive market in domestic, industrial and commercial gas supply. This case study focuses on changes to the gas industry in recent years.

Few organisations exist within a market that changes almost by the hour. Transco is able to cope with changes in demand - and this is largely because its forecasting of gas demand is accurate. It is a complicated process, taking account of all aspects of the weather and the hourly gas demands of consumers. Demand forecasts are made four times a day, but more may be made if the weather forecast or demand changes significantly.

Few organisations exist within a market that changes almost by the hour. Transco is able to cope with changes in demand - and this is largely because its forecasting of gas demand is accurate. It is a complicated process, taking account of all aspects of the

Contd…

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weather and the hourly gas demands of consumers. Demand forecasts are made four times a day, but more may be made if the weather forecast or demand changes significantly.

Safety and security of supply have top priority. Transco monitors the system to maintain a physical balance, making sure that gas is available at the right place at the right time. Thousands of computer simulations are run each year to ensure optimum operation of the network under all operating conditions, including planned maintenance and special operations. It’s not only ensuring security of supply that’s a crucial element of Transco’s business. Making sure that all its operations are carried out safely is vital, too. As part of Transco’s commitment to safety, it operates the national 24-hour freephone gas emergency service. Anyone who smells gas – no matter who their gas supplier is - can contact the freephone service on 0800 111 999 *.

Calls to the helpline are dealt with by trained operators at one of three national centres at Hinckley, Killingworth and Gloucester. Operators can give safety advice and, if the situation warrants it, despatch an engineer to make safe any escaping gas. An engineer has to attend within one hour if the leak is uncontrolled, two hours if controlled. It is estimated that in 1999, the service will receive around five million calls and of these, approximately half will be of an emergency nature.

Source

The gas starts its journey deep beneath the North Sea and is pumped ashore on the mainland of Great Britain at one of the seven terminals - St Fergus (Scotland), Bacton (Norfolk), Barrow (Cumbria), Easington (Yorkshire), Theddlethorpe (Lincolnshire), Burton Point (North Wales), and Teesside. From the terminals, it enters the National Transmission System and eventually arrives at the customer’s meter.

The Bacton-Zeebrugge interconnector links Great Britain with Europe, so during periods when the gas flows into the country rather than out, it is in theory possible that a gas consumer in Scotland could burn gas which started its journey in the Urals. Two other interconnectors supply gas from the mainland to Northern Ireland and the Irish Republic.

Nationalisation to Regulation

In the past the gas industry was owned by Government, within the public sector. In 1986, gas became the first energy source in Great Britain to be regulated, three weeks after the then British Gas was privatised, with the issue of shares on the London Stock Exchange taking it into the private sector.

Contd…

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UNIT 5: Case Study

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Even though gas is in the private sector, it is still heavily regulated. Transco is the country’s near-monopoly gas transporter and the largest of around ten public gas transporters licensed by the regulator, OFGEM (the Office of Gas and Electricity Markets) to move gas around the country. Transco’s pipeline business, because it is a monopoly, is regulated by OFGEM whose staff ensure that Transco works within the requirements of the Gas Acts and its licence conditions.

Pricing and Competition

Transco’s revenues are earned within a price control linked to the rate of inflation and modified by an efficiency factor decided by the regulator who controls Transco’s revenues. The formula - RPI-X - was introduced in the mid-80s. That type of control and the regulation of profits in general was seen as a temporary means of ‘holding the fort’ until competition arrived. Developments in the price controls in both the gas and electricity supply industries - both now regulated by a common regulator - are being looked at.

Full competition in gas supply arrived in 1998, when every domestic consumer was given the opportunity to select a supplier of their choice. There is also competition in the field of gas connections and gas meter reading. OFGEM is proposing that metering will have its own price control, similar to that imposed on Transco.

From a nationalised industry to public gas transporter

1965: In the same year that The Beatles received their MBEs, the nationalised Gas Council rebuilt and modernised the UK’s gas industry. The energy map of Britain was drastically redrawn with the discovery in the North Sea of high quality gas reserves that would provide supplies for the foreseeable future. Coal and oil gasification plants become virtually obsolete.

1967-1977: In the decade that Neil Armstrong landed on the moon, the Gas Council carried out one of the biggest civil and commercial engineering programmes ever undertaken. A ten-year, £1 billion programme converted every gas appliance in the UK to use natural gas and retired existing plants. By the end of the decade, gas usage had tripled.

1971-72: Money went metric and the UK gas industry was transformed from a local manufacturer of gas with a distribution network to a full-scale energy company with operations that extended from exploration to marketing. In 1972, a new Gas Act restructured the Gas Council and regional gas boards into the nationwide British Gas Corporation.

Contd…

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1979: Margaret Thatcher’s first government was elected and, in a programme to be copied around the world, it prepared to privatise national corporations.

1986: The British Gas Corporation was privatised as British Gas plc, with 17 million customers, 4.5 million shareholders, over 89,000 employees and had annual cost operating profits of £688 million. It was granted a 25 year monopoly to supply gas to customers using under 25,000 therms a year and was subject to strict pricing controls by the regulator, the Office of Gas Regulation (Ofgas).

1988: Competition began to be felt. The South Morecambe gas field, British Gas’s first major independent find, was brought into operation. It was one of the largest gas fields on the UK Continental Shelf. The Monopolies and Mergers Commission (MMC) recommended the publication of contract price schedules, allowing competitors to undercut British Gas in the 25,000-plus therms a year business user market.

1989: Ofgas issued direction for the use of common carriage rights, using the British Gas network.

1991: Government proposed a reduction of the monopoly threshold to 2,500 therms a year. British Gas was required to separate its transportation and supply businesses, and agreed to create the conditions to allow competitors to supply 60 percent of the market by 1995.

1993: Boris Yeltsin stopped an attempted coup in Russia. The MMC recommended divestment of British Gas’s gas trading business. It proposed a totally competitive gas market by 2000-2002. British Gas announced a major restructuring into five business divisions to be completed by March 1994. The Government demanded that competition in the domestic market be phased in from 1996-1998, well ahead of the original timetable.

1994: The Channel Tunnel was completed and Transco formally separated as a stand-alone business within BG plc.

1996: Mad cow disease (BSE) and competition in domestic gas supply in the southwest hit the headlines. The Network Code, which governs relationships between gas suppliers, shippers and Transco was published and came into force.

1997: In the UK’s largest demerger, the marketing, sales and retail activities of British Gas separated to become Centrica plc. BG plc was formed and focused on the operation of the gas pipeline (through Transco) and storage systems, gas and oil

Contd…

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UNIT 5: Case Study

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exploration, international gas transportation, distribution and power generation and energy research and technology.

1998: The domestic gas market became fully competitive. Transco spent over 500 man-years to design and build the computer systems that enable the world’s largest competitive market to function.

Controlled all the way to the door

Transco’s national control centre at Hinckley, Leicestershire, monitors and controls the flow of gas through the network, operating compressor stations and flow control valves to ensure the optimum supply of gas to Transco’s local distribution zones, power stations, and other large gas users.

Every minute of every day, 44,000 telemetered items, such as pressures and flow rates, are scanned. The centre uses the demand forecasts produced by the areas, together with nominations from power stations and other large users, to determine the country’s total gas requirements. The centre also monitors the amount of gas which shippers plan to put into the system, and takes steps, including the buying and selling of gas, to ensure that supply and demand remain in balance throughout the day.

Four area control centres – at Killingworth, Hinckley, Dorking and Gloucester - operate the local gas transportation system in their area. Gas from the National Transmission System has to be reduced in pressure several times before it reaches the consumer’s meter. To achieve this, each area control centre monitors and controls up to 600 major pressure reduction stations, as well as local storage installations, which smooth out the variation in demand throughout the day.

A matter of branding

The gas industry has undergone enormous change in recent years. The monopoly of the former British Gas has been broken. Instead of being restricted to one supplier, all gas consumers can choose from a number of companies from whom to buy their gas.

With so much change, there is understandably some confusion in the public mind as to who does what within the industry. Some people find it hard to move on from the idea of ‘the gas board’. Transco is keen for its various audiences to have a clear understanding of the role it plays in helping deliver gas across the country. With that in mind, it launched a £3.75 million nationwide advertising campaign using television, radio and the press.

Contd…

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The theme, ‘Transco, an essential British company, piping gas for you’, continues to be used in company advertising, along with a series of ‘We do, we don’t’ adverts which seek to emphasise that Transco pipes gas and runs the gas emergency service - but doesn’t sell gas, fit cookers, send gas bills or mend boilers. Regular surveys, carried out to track public awareness of Transco as a brand, demonstrate a steady rise.

Question

Critically analyse the case. Source: http://businesscasestudies.co.uk/transco/the-changing-environment-within-the-gas-industry/a-matter-of-branding.html#ixzz2Qj0YNSIv

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UNIT 6: The Exploration of Oil

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BLOCK-II

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Detailed Contents UNIT 6: THE EXPLORATION OF OIL

Introduction

Formation of Oil Traps

Exploration for Oil and Gas

UNIT 7: PRODUCTION METHODS

Introduction

Production – An Overview of Methods

UNIT 8: ONSHORE OILFIELD PROCESSING

Introduction

Typical Field Configuration for Production

Description of Oilfield Processing

UNIT 9: OFFSHORE OILFIELD PROCESSING

Introduction

Offshore Production Facility

Offshore Field Operation and Logistics

UNIT 10: CASE STUDY

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Unit 6

The Exploration of Oil


How hydrocarbons (oil and gas) were formed and trapped below the surface of the earth

How hydrocarbons are explored, located and assessed for commercial viability

Overview of primary production methods and enhanced oil recovery methods.

Introduction

It is important to have an elementary understanding on how hydrocarbon is formed and trapped in the rocks below the earth. It was explained earlier that according to the widely accepted “organic theory”, oil and gas were originated from huge masses of organisms, animals and vegetation that got buried under the earth and were covered by sedimentary rocks. Layers of rock formed over it and the formation and trapping of the hydrocarbons took place in the following stages over millions of years.

Formation of Oil Traps

The following explains the formation of oil traps:

Formation of Hydrocarbons: The hydrocarbon formation took place by decomposition in various layers of rock called source rock. The decomposition took place under high pressure and temperatures between 50°C and 170°C at depths between 1500 meters and 6000 meters. At lower temperatures (normally at lower depths) heavier oil was formed and higher temperatures lighter oil was formed.

Migration of Hydrocarbons: Due to lighter gravity of hydrocarbon formed compared to water which is always present below earth’s surface and due to high pressures below the earth, oil and gas migrated slowly through the gaps in subsurface rocks with high permeability. During the migration, the oil and gas got into

Activity Make a presentation on the formation of Oil traps.

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densely packed sedimentary rocks of very high porosity known as reservoir rocks. Sandstone and limestone are common reservoir rocks. Figure 6.1 shows typical indicative sketch of permeable rocks and Figure 6.2 shows an indicative sketch of porous reservoir rocks.

Figure 6.1: Migration of Hydrocarbons through Rocks

having Permeability

Figure 6.2: Porous Reservoir Rocks

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Formation of Traps: Migration of the oil and gas stopped at traps which were formed due to various reasons like sedimentation and convulsions that took place on earth’s strata. A typical trap is covered with non-permeable hard rock called cap rock.

Traps are formed by deformation of the rocks, deposition of rocks or by creation of faults due to movement of rock strata. The common types of structural traps are anticlines and domes or a fault. Figure 6.3 shows some typical traps.

Figure 6.3: Traps

In the trap, the gas being the lightest rises to the top. The oil settles below the gas, and the water, which is heaviest, settles at the bottom. Due to high pressure, a lot of gas remains dissolved in the oil. A large formation of rocks of this nature bearing hydrocarbons is called reservoir. The earth surface above a reservoir from which commercial exploitation takes place, is called oil, gas or condensate field depending on what it produces.

The term hydrocarbon reserves refers to the estimated amount of oil, gas or condensate that is expected to be produced in the future from wells in known fields.

The search for hydrocarbons is called prospecting or exploration of oil or hydrocarbons.

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Check Your Progress

Fill in the blanks:

1. The hydrocarbon formation took place by decomposition in various layers of rock called ………………….. .

2. During the migration, the oil and gas got into densely packed sedimentary rocks of very high porosity known as …………………...

Exploration for Oil and Gas

As stated in the previous section, early oilfields were discovered through locating seepages. It is said that the first oil field in India, at Digboi was identified after oil was seen on the mud carried with footsteps of elephants in the jungles of Assam. With such easily locatable and shallow oilfields having been exhausted and the demand for energy having gone up by leaps and bounds, the search for oil is a different ball game today. It is very technology-oriented, yet uncertainties and risks are still heavy.

A commonly used terminology in oil companies, Exploration & Production (E&P), comprises of search, discovery and production of oil and gas by undertaking the following activities:

Licensing and agreement from the governments concerned.

Geological surveys including aerial photography, satellite images to examine nature of rocks and soil strata and interpretation of such data.

Geophysical surveys such as seismic surveys.

Interpretation of data and geological modelling.

Identifying hydrocarbon resources and their location based on the interpreted data.

Economic evaluation of the located reserves.

Exploratory drilling to establish commercially viability.

Preparation of field development plan.

Commercially exploiting them by setting up necessary drilling and production infrastructure.

Activity Differentiate between Geologists and Geophysicists according to the nature of their work.

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The range of activities outlined take several years of teamwork between Geologists, Geophysicists, Reservoir Engineers, Chemical Engineers, Petroleum Economists and other disciplines.

Here we shall cover the exploration part.

Licensing and Agreement

The first step in exploration of oil obviously is entering into contract, lease agreement or obtaining licenses from the governments. Normally the government of the country carries out a lot of surveys (see next item) to define a ‘block’ for exploration and invites bids. The selected bidder then enters into agreement with the government. There are two types of arrangements:

Licenses to the exploring company to explore and produce oil and gas with license fees, royalties (per unit production) and taxes payable to the state.

Production sharing contracts, in which the state or a state owned company, is made a partner in the venture. Normally the initial exploration costs are borne by the licensee. Revenues earned on production are first set-off against the costs incurred by the licensee and the balance amount is shared in an agreed percentage.

Once the agreement is reached, the exploration starts.

Geological and Geophysical Surveys

Geologists try to develop a model or a map where hydrocarbon might occur, based on geological principles. The map is based on a wide variety of geological information. They try to locate anticlines and domes by mapping rock layers coming out of earth’s surface. They use very conventional tools like hand-held compass, telescope etc. to determine the orientation of the rock layers. With these instruments geologists generate drawings and maps of the position and size of the rock protrusions.

Other tools used by Geologists are aerial photographs and satellite pictures of the earth’s surface. When exploratory wells are drilled, geologists examine the rock samples and other well data to make subsurface maps of the reservoir rocks. Matching up rock layers between wells allows geologists to draw cross sections in order to find petroleum traps.

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Geophysicists measure the properties and patterns of sub-surface rock strata by three types of surveys. These are explained below:

Magnetic Survey: To determine the strength of the Earth’s magnetic field at a specific location.

Gravity Survey: To determine the strength of the Earth’s gravity at a location.

Seismic Survey: To draw subsurface maps using sound waves.

In seismic survey explosive charges are detonated in holes drilled by truck mounted rigs at specific points in the survey area. This rig is called Thumper Truck. The energy waves are picked up by geophones laid out on the surface and recorded on magnetic tape by seismographs, the same instruments that are used to measure the earthquakes.

By knowing the velocity at which energy travels through rocks of different types, and by measuring the time it takes for the energy to be reflected to the surface, seismologists are able to construct approximate relief maps of deeply buried rock layers. Computers are used to enhance the subsurface picture formed from sound waves.

Figure 6.4 depicts a seismic survey being done with a Thumping Truck and a Recording Truck.

The geo-phonic data is processed by computers into seismic lines. The seismic lines are two-dimensional displays that resemble cross-sections of the rock strata.

The seismic data helps to develop the geometry and size of the “trap” formation, where hydrocarbon exists under the trap and decide whether an exploratory well is to be drilled.

Two-dimensional lines (2-D) are created as seismic data by laying the geophones in single line. Three dimensional seismic lines can be created by collecting geo-phonic data as an intersecting grid of seismic lines. 3-D seismic data can help to create 3-D geometric model of the reservoir.

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Figure 6.4: Seismic Survey

Drilling

After geological and geophysical studies are carried out, the possibility of presence of hydrocarbon deposits worth further exploration is established. Once an exploration target is defined a drilling contractor is hired to drill exploratory wells.

Exploratory well: An exploratory well is required to confirm the existence of oil or gas in a basin identified through geological and geophysical surveys. The first exploratory well drilled in a field is called wildcat. The first successful well showing hydrocarbon presence during wildcat is called discovery well. Points to note are:

It may or may not produce oil and is abandoned if it does not produce oil. The well is called dry hole.

A lot of information is generated by logging some of the properties of the well and analyzing the fluids and rocks that come out during drilling. This data helps in defining the geological history and the properties of the reservoir.

The information interpreted from the well logs is used for decision making on whether the well is to be used for production or is to be abandoned for being not viable economically. The information is also used to update the geological models.

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Drilling is a continuous effort in a field even after discovery and production of hydrocarbons. Drilling of additional well after discovery to define the size of the reservoir is called delineation. Development wells are drilled into a known reservoir to increase production.

Oil wells are being drilled all over the world in diverse geographical areas. Very often they are in remote areas like deserts, forests or oceans (offshore). On land (onshore) the well site must be cleared and access roads are constructed.

A typical drilling rig onshore is shown in Figure 6.5.

Figure 6.5: Drilling Rig

Drilling the Well

Drilling rigs of special design are used to drill wells for exploration. The basic system involves a rotary mechanism, a circulation

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mechanism and a hoisting / lowering mechanism as shown in the Fig. 6.5. The rotary system includes diesel based power and a rotating wheel assembly that causes the drill pipe to turn thus activating the drill in the hole. The hoist is also powered by a diesel engine and is used to raise and lower the drill stem to change the bit.

The circulation system includes a pump to force a mixture of water and mud down the inside of the drill stem to:

keep the drill bit cool

bring fragments of broken rock to the surface

keep the drill bit lubricated

to prevent any accidental “blow-out” meaning sudden eruption of oil and gas through the well pipe.

As the mast is raised, the equipment is placed in position, it is called “Rigging Up”. As the drilling the well is begun, it is known as “Spudding In”.

Drilling is a 24 hours a day operation. Shallow wells on land may be drilled very quickly, e.g. 500 meters in 3 to 4 days. Deep wells (3000-4000 meters) offshore can take several weeks depending on depth of sea, weather etc.

Each time the drilling bit is changed, the entire length of pipe in the hole must be brought up, disconnected and stacked. This is called “Making a Trip”. The mud circulates down the inside of the drill pipe through the bit and up the outside of the pipe. Blow-out Preventers ( B.O.P.) are located at the surface. These are valves which automatically close if a sudden increase in pressure occurs. A blow out can cause explosion and fire with severe loss of life. Getting the fire out and controlling the well is a major problem.

Horizontal Drilling

Horizontal drilling is an important technology which makes oil production more economic. Wells are usually drilled vertically or slanted from a platform. Modern drilling technology can produce a 90 degree turn in a short distance. This is due to methods and tools that control the drill bit, flexible pipe and innovative engineering design. A horizontal well is first drilled vertically to a target then angled to a path parallel to the formation to penetrate the reservoir. This improves recovery and economics.

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Offshore Drilling

Offshore or marine rig is positioned by tugs. The type of rig selected depends on depth of the sea. The different types of offshore rigs are shown in Figure 6.6.

The various types of offshore drilling rigs are:

1. Jack-Up Rig is floated to its well location. At the location huge “legs” are cranked down to reach the sea floor. Then the hull is raised above sea level. It normally stands on four legs resting on the sea bed. Its use is limited to water depths of up to a few hundred meters.

2. A Drill Ship is like any other ship but has a mast located centrally and is therefore a very mobile drilling rig.

3. Submersible Rigs have hulls on which it floats while being towed to the site. On location the hulls are flooded and the hulls come to rest on the bottom. Used for shallow water drilling only.

4. Semi-Submersible Rigs are similar to submersible rigs but when the hulls are flooded they do not sink to the bottom.

Once a reservoir is found to be commercially viable, a development well program is carried out from a platform anchored to the sea bed.

The rigs must not be confused with offshore platforms, which are normally permanently piled in the sea bed.

Figure 6.6: Jack-up and Semi-submersible Rigs

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Field Development Plan

If the results of an exploratory drill indicates the possibility of commercially viable oil or gas find then a field development plan is created and an economic viability report based on the plan is prepared. The field development plan is a project report containing:

Projected production profile based on reservoir simulation

Pressure, temperature and well production data

Recovery techniques

Optimal recovery rate over a period of time

Life of the field

Enhanced Oil Recovery methods needed in future

Number and type of wells proposed and drilling technique

Field layout with location of wells and other facilities

Facilities required for production and processing at oilfield

Transportation and distribution infrastructure

Environmental impact

De-commissioning costs

Logistics support required at the oil or gas field

Total investment, production cost, maintenance cost and cost of material and logistics for production

An economic evaluation is made, based on contractual terms, and taking into account the risks involved. The viability of the project is worked out by discounting the estimated cash flows at suitable discount rates.

De-Commissioning of Wells

In most of the countries, it is mandatory to decommission the wells and bring back the land to its original state after the field is abandoned.

Exploration and Production Costs

The costs incurred for production of oil and gas comprise of the following:

Exploration Costs

Development Costs

Operating Costs

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Exploration costs include the cost of seismic surveys and exploratory drilling and varies between US$ 1 per bbl in prolific oilfields to more than US$ 12 per bbl, where the environment is difficult and production per well is low. The finding costs have reduced significantly over a period of time to US$ 4-6 per bbl on average. This is due to the technological evolutions like:

Developments of 3-D seismic surveys, which give more precise location of wells

Development of horizontal drilling

Development of FPSO

Development of sub-sea production system

Development and operating costs include the cost of production, maintenance, processing, transportation, infrastructure, etc. It varies from US$ 1 per bbl in Middle East to as high as US$ 20 per bbl in certain locations.

On an average, the cost of oil exploration, development and operation comes around US $ 10-12 per bbl.

Oil Industry is a Risk Business

The cost of exploration for hydrocarbon resources is very high. In spite of technological developments in establishing oil finds, the uncertainties involved in finding commercial quantities of oil and gas is large. Several millions of dollars are often spent without discovering a viable field. The successful ventures have to generate sufficient profits for the unsuccessful ones to keep the business going.

The risks exist because:

In spite of high level of technology involved, methods are not precise.

Methods are indirect and they do not indicate the presence of petroleum itself. They only indicate geological situations with probability of oil find.

We can not see what is happening below the earth. We conclude only by interpretation of the data. Variables are numerous and the interpretation may go wrong.

Thus many dry holes are drilled.

Oil companies balance the risk with rewards.

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Oil Production – A Challenging Task

Once the exploration and assessment stage is over and the reservoir is found suitable for commercial exploitation, decision is taken for commercial exploitation. The method of production depends on:

Location of the field

Field life

Size of the field

Quality of oil and gas

Production profile over the field life (for oil, gas and water)

Pressure/Temperature profile over the field life

Use of artificial methods of production

Customer specification of oil and gas, market location and method of transportation.

Location of the Field

Most hydrocarbon deposits today are found in remote areas. For example, they are found more often in the deserts or dense forests (onshore) or below the ocean (offshore). Earlier the hydrocarbon finds and production offshore was limited to shallow or moderate depth locations (a few meters to a few hundred meters). With today’s exploration and production technology, we have shifted to deeper seas (thousand meters water depth).

Field Life

It could be from a few years to a few decades. Fields with low production profile and short life are referred as marginal fields.

Size of the Field

Area over which a field exists (measured over the earth’s surface) could be as small as 50 to 100 square Km to a few thousand square Km.

Quality of Oil and Gas

Oil could be light, medium, heavy or it could be even condensate. It could be sour (high sulfur bearing) or sweet. The gas could be high calorific value (methane rich), low calorific value (carbon dioxide or nitrogen bearing), sweet or sour. Ratio of gas to oil known as Gas

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Oil Ratio (GOR) can vary widely from field to field and over the field life.

Production Profile

Normally the oil production starts at a low level, it increases to a peak level called plateau level and then tapers off. The gas and water production also changes with field life depending on characteristics of the reservoir. Typical production profile of an oilfield is given in Figure 6.7.

Figure 6.7: Production Profile

Check Your Progress

Fill in the blanks:

1. An …………………… well is required to confirm the existence of oil or gas in a basin identified through geological and geophysical surveys.

2. …………………… rigs are similar to submersible rigs but when the hulls are flooded they do not sink to the bottom.

Summary

In this unit, at first the formation of hydrocarbon bearing structures was described. A description of hydrocarbon reservoir comprising of porous rocks containing the hydrocarbon in its pores and covered by a non-permeable cap rock was given.

This was followed by description of the methods of oil exploration, identification of probable hydrocarbon bearing structures and

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drilling of exploratory wells. The risks and costs involved in search for oil was highlighted.

Lesson End Activity

Show digramitically the following on a chart paper:

Porous Reservoir Rocks

Migration of Hydrocarbons through Rocks having Permeability

Drilling Rig

Keywords

Reservoir: A large formation of rocks of bearing hydrocarbons.

Horizontal Drilling: An important technology which makes oil production more economic.

Exploration Costs: It include the cost of seismic surveys and exploratory drilling and varies between US$ 1 per bbl in prolific oilfields to more than US$ 12 per bbl, where the environment is difficult and production per well is low.


1. Describe how oil is formed and how it migrated and got trapped in certain locations below the surface of the earth.

2. Outline the major steps an oil company has to go through starting from the decision to explore for oil in certain area to the decision to start production of oil.

3. List down all the factors that can affect economics of production from an oil field.

4. Explain the Different types of Drilling.

Further Readings

Books

Fundamentals of Oil & Gas Accounting? Charlotte J. Wright, Rebecca A. Gallun - Business & Economics, 2008

Introduction to the Global Oil & Gas Business? -Samuel Van Vactor - Business & Economics

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Web Readings

www.ril.com/html/business/exploration_production.html

www.wikinvest.com/.../Oil_%26_Gas_Drilling_%26_ Exploration

www.satimagingcorp.com › Satellite Imaging Services

www.hoovers.com › Hoover's Directories › Industry Overviews

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UNIT 7: Production Methods

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Unit 7

Production Methods


Overview of Production methods

Various primary production methods

Overview of Enhanced oil recovery methods

Introduction

There are primary, secondary and tertiary methods of recovery of hydrocarbons are used for maximum extraction of hydrocarbons from the reservoir.

A team of reservoir engineers, geologists and geophysicists base the choice of EOR method and its design/operating parameters on a thorough simulation and study of the reservoir.

Production – An Overview of Methods

In the beginning of field life, unless the pressures are very low, the well fluid comes out of the wells on its own pressure. This kind of production of oil on its own pressure is called Primary Production. A primary production facility comprises of:

Manifold on top of the well, called Christmas Tree.

Equipment and systems for separation of oil, gas and water.

Equipment and systems to make the oil and gas as free of water as specified by the customer (dehydration of oil and gas).

Equipment and systems for measurement and transportation of oil and gas to the customer.

Equipment and systems to treat water for disposal.

During primary production, 25-30 percent of the oil in the reservoir can be recovered by the natural reservoir drive. Other techniques are used to recover some of the remaining oil. Secondary and

Activity Make a presentation on Sucker Rod Pumps and how they pump out the oil.

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Tertiary methods of recovery of hydrocarbons are used for maximum extraction of hydrocarbons from the reservoir. These methods are summarized in Table 7.1. These are also known as Enhanced Oil Recovery (EOR) methods.

Sometimes the pressures of the reservoir are low at the early stages of production. In such cases artificial methods are used even during primary production.

A very popular method used for low-pressure shallow wells is Sucker Rod Pumps to pump out the oil (Figure 7.1).

These pumps having huge size of their drive system, which moves up and down, make a magnificent sight in the oilfield, where often an array of such pumps can be seen.

The plunger goes deep down the well moving up and down pumping out the oil.

Figure 7.1: Sucker Rod Pump

Water Injection

Water is first treated to meet reservoir specification for particulate content, dissolved solids content, oxygen content etc. Then it is injected around the periphery of the producing well as shown (Figure 7.2).

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Figure 7.2: Water Injection

Use of water injection can boost the recovery by another 15-20% of the original oil in the reservoir, raising the recovery level to 40-45%. Water Injection is sometimes considered primary production method and falls under the category of artificial lift, meaning lifting the oil out of the well by artificial means rather than its own pressure.

The essential equipments in water injection system are filters, deoxygenating tower and chemical injection system.

Enhanced Oil Recovery (EOR) methods are tried after the water injection. It can further increase the recovery by another 15-20% leading to recovery of around 60% of the oil in the reservoir.

Table 7.1: Secondary and Tertiary Methods of Production

Contd…

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Steam Injection

Steam is injected down injection wells to heat the heavy oil to reduce its viscosity and make it more fluid. The steam also produces drive to push the oil toward producing wells.

Figure 7.3: Steam Injection

Main equipment are water treatment plant (for boiler quality water), and boiler. Rugged types of boilers are used to produce high-pressure steam (above reservoir pressure).

In-situ Combustion

This method of EOR is used for very viscous crude oils. It is also used as primary production method where crude oil is too viscous to flow up through the well on its own.

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In-situ combustion has been effectively used in North Gujarat Oilfield in India to produce very viscous crude oil, which is almost like semi-solid in the ambient temperature.

In this process (Figure7.4), air and water are injected into the oil reservoir in alternate cycles. At first air is injected around the outer layer of the reservoir and the oil is ignited as a result of presence of oxygen (air). The heat generated raises the temperature of oil thus reducing the viscosity.

But due to combustion, there is loss of some amount of crude oil. Once the desired temperature level in the reservoir is reached, air injection is stopped.

Figure 7.4: In-situ Combustion

The flame in the reservoir is quenched with injection of water. Water injection is stopped once the flame is quenched. As the temperature falls, injection of air and ignition of the oil is done again. This cycle goes on repeating according to the time cycle decided by reservoir engineers.

Gas Injection and Gas Lift

It is important to note the difference between the two methods of recovery of hydrocarbons. Gas Lift is injection of gas in the well tubing to make the density of oil column in the well lighter. As a result the hydraulic head of the fluid in the well becomes less and oil flows out more easily.

But Gas Injection involves injection of the gas directly to the reservoir to provide drive to push out oil.

Both processes involve compression of the gas coming out in the field to high enough pressure to be put back either to the well or to the reservoir.

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These are some of the typical EOR processes. A team of reservoir engineers, geologists and geophysicists base the choice of EOR method and its design/operating parameters on a thorough simulation and study of the reservoir.

Check Your Progress

Fill in the blanks:

1. ………………. is injection of gas in the well tubing to make the density of oil column in the well lighter.

2. ………………. involves injection of the gas directly to the reservoir to provide drive to push out oil.

Summary

In this unit, an overview was given on various primary and secondary methods of oil and gas production. This included Water injection, Steam injection, In-situ Combustion and Gas Injection and Gas Lift.

Lesson End Activity

Prepare a presentation on the secondary and tertiary methods of oil and gas production.

Keywords Primary Production: It is the kind of production of oil on its own pressure.

Christmas Tree: It is a primary production facility comprising a Manifold on top of the well.

In-situ Combustion: This method of EOR is used for very viscous crude oils.

Questions for Discussion 1. Give brief description with sketch for Water Injection Process.

2. Give a brief description with sketch for In-situ combustion process.

3. What is the difference between gas injection and gas lift processes?

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Further Readings

Books

Fundamentals of Oil & Gas Accounting, Charlotte J. Wright, Rebecca A. Gallun - Business & Economics, 2008

Introduction to the Global Oil & Gas Business, Samuel Van Vactor - Business & Economics

Web Readings

www.ril.com/html/business/exploration_production.html

www.wikinvest.com/.../Oil_%26_Gas_Drilling_%26_ Exploration

www.satimagingcorp.com › Satellite Imaging Services


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UNIT 8: Onshore Oilfield Processing

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Unit 8

Onshore Oilfield Processing


Overview of the configuration of facilities at the oilfield – offshore and onshore

Why processing of oil and gas is required at the oilfield itself

How oil and gas are gathered from many wells in the oilfield

What kind of processing is required at the oilfield and the technology involved

Introduction

Wellhead fluids must be processed before anything else. So, oil and gas production involves a number of surface unit operations between the wellhead and point of custody transfer. Collectively these operations are called oilfield processing.

This unit talks about Oilfiels processing and its various facets.

Typical Field Configuration for Production

A hydrocarbon producing field can be a few hundred to a few thousand Square Kilometres in area. Several wells need to be drilled in the area for optimal production.

Figure 8.1: A Hydrocarbon Producing Field

Activity Find out which are some Hydrocarbon producing fields in India.

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In a land based field (onshore), the wells could be in short distances (less than a Km) spread over the whole area. The well fluid from the wells is collected into Group Gathering Stations (GGS), where the oil, gas, and water are separated and processed. A typical onshore field configuration is shown.

As shown, the well fluid is collected from the wells by flow lines into a GGS. There could be more than one GGS in an oilfield depending on the area of the field, number of wells and development plan of the field.

After processing in the GGS, oil is stored in tank farms and sent to the consumer (refinery) through pipeline or tankers. The gas is compressed and sent by pipeline to the consumer (power plant or industry) or sent to a gas processing plant to produce LPG and separation of petrochemical feedstock.

Certain other terminologies on gathering and processing/storage of hydrocarbons in the field are commonly used such as:

Gas Collection Station (GCS - applicable for a gas field)

Central Tank Farm (meaning oil storage facilities at the oilfield)

Oil Collection Station (OCS)

In an offshore field, the terminologies as well as the configuration differ from an onshore field.

The wells are normally drilled by Drill Ships of various types and well head may be installed in small fixed platforms called Well Platform.

Well fluid from different well platforms is gathered by sub-sea flow lines into a Production platform or Central Process Platform.

The necessary oilfield processing is done at the Central Process Platform. There are other categories of platforms as well as floating production facilities (FPSO). With exploration and production going deeper into the sea (2000 meters or more), subsea production technology has developed with well and production facilities under water, installed on the sea bed. The configuration of offshore field is discussed later in this section.

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Table 8.1: Oil and Gas as Produced and as Desired

Why Processing at Oilfield?

Oil and gas as produced in the field is not transportable and does not meet customer specification. Before transportation to the buyer by pipeline or tanker, crude oil and natural gas must be separated and treated to meet certain customer specifications. Table 8.1 gives an idea of the quality of oil and gas as it comes out from the oil well and as desired by the customer.

Processing of the well fluid and oil, gas and water is needed before we can bring them to the desired specification for sending to a customer. Thus some amount of processing at the oilfield itself is required, whether offshore or onshore, however remote the location may be.

The configuration of an oil field is presented in Figure 8.2 in block diagram format outlining the gathering scheme and minimum processing at the gathering station.

The block diagram configuration of Group Gathering system (Figure 8.2.) is to be seen in conjunction with oilfield configuration shown in Figure 8.1. Flow lines carrying well fluid from the wells are all taken to a GGS. A Header or a manifold collects all the well fluid. As indicated in Figure 8.2 the main processing blocks are:

Separation of oil, gas and water

Treatment of water before it can be discharged safely meeting environment requirements

Dehydration of oil and gas to remove water

Metering and pumping of oil

Metering and compression of gas

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Figure 8.2: Oilfield Facilities Configuration

Figure 8.3: Separation of Oil, Gas and Water

Check Your Progress

Fill in the blanks:

1. In a ………………….. based field, the wells could be in short distances spread over the whole area.

2. The necessary oilfield processing is done at the ………………….. Platform.

Description of Oilfield Processing

Well fluid is a mixture of oil, gas and water, coming out of well under high pressure. First, we need to separate them. This is done in an equipment called Separator, which is essentially a vessel having some internals to facilitate separation. A schematic diagram of separation and some details of Separator equipment is shown in Figure 8.3.

The separators are of many configuration and types such as horizontal, vertical, spherical, cyclonic type etc. Their selection and sizing part of engineering skill is not covered here.

Oil (in the well fluid), which is at high pressure with dissolved gases, need to be brought to stable atmospheric pressure for

Activity Make a presentation on the topic “Gas Dehydration”.

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storage. This is called Stabilization of oil. Instead of bringing down the pressure abruptly, it is stepped down slowly through a series of separators (Figure 8.4). The simple configuration shows High Pressure (HP), Low Pressure (LP) and Atmospheric Pressure separation.

Figure 8.4: Crude Stabilization

Further removal of water from crude oil is required before we transport the oil to refinery. This process is called crude oil dehydration. This is often carried out in an equipment known as Heater-Treater where heating the crude oil and coalescing the water particles by electrostatic force helps in bringing down the water content (See Figure 8.7).

Figure 8.5 shows the processes mentioned above in the form of a simple flow diagram.

The water that is produced is either discharged or re-injected to the well. We need to treat effluent water to meet certain specifications before discharging or re-injecting. This process is called Water Treatment. A description of a typical facility for treating water is given later.

Like crude oil, the natural gas that is produced also needs to be dried of water before it is put to the pipeline. This is to save the pipeline from corrosion. This process is called Gas Dehydration. A description of a typical facility for dehydration of gas is given in later part of this section.

After processing as described above both oil and gas need to be metered and transported to the customer which could be a refinery or a gas processing plant owner. Often the customer could be several hundred Kilometres away and transportation could be through long distance cross country pipeline or by tanker.

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To meet transportation requirement, compressors are installed to meet pressure requirements in the pipeline and large oil pumps are used to pump the oil into the pipeline or a tanker. Often for greater efficiency of gas dehydration at higher pressures, compressors are placed ahead of the gas dehydration facility.

Two more important items that form essential part of oilfield processing are:

Custody Transfer Meter: Most often the producer of the gas and oil and the customer are different companies or different profit centres under the same company. Accurate metering of oil and gas are required before they are despatched to the customer.

Pig Launcher: An equipment known as Pig, which is spherical or cylindrical objects of diameter close to the pipeline diameter, is pushed into the pipeline at certain intervals by the Pig Launcher. The objective is to clean and monitor inner surface of the pipeline.

Figure 8.5: Flow Diagram of Oilfield Process System

Minimum Processing Requirement in Oilfield

Oilfields being often in remote areas, only the minimum processing which is required for transporting and marketing the oil and gas is carried out in the oilfields. The minimum processing facilities necessary to be installed in an oilfield are:

Separation of oil, gas and water

Separation of sand and sludge

Stabilization of crude oil

Dehydration of crude oil

Dehydration of gas

Treatment of water

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Pumping and metering of oil

Compression and metering of gas

In addition a number of utilities and other facilities are needed like:

Flare System

Chemical Injection System

Control System

Utilities like power generation

Certain other facilities also may need to be installed in the field. These are:

Gas Sweetening: If hydrogen sulfide or carbon dioxide content in the gas is high enough to cause severe corrosion during processing and transportation.

Storage of Oil: It is based on logistics of operation.

Secondary and Tertiary Recovery: Requirement of Enhanced Oil Recovery comes up as the field ages.

Description of Oilfield Processing Equipment

Let us now give a look at all the equipment mentioned in Figure 8.5 with a little more detail. For easier installation at remote oilfields, these are normally combined with necessary piping, instrumentation and control system. The whole equipment system with the ancillaries is mounted on easily transportable skid. These are known as Skid Mounted Oilfield Process Systems.

Separators

These are pressure vessels whose function is to separate oil, gas and water. A simple sketch of a separator was presented earlier. The operating pressure of the separators could be very high (say 50 to 60 atmospheres) or lower depending on the reservoir pressure. Besides the simple design of separator shown, there could be wide variety of designs, some of them of proprietary make:

Horizontal separator

Vertical separator

Cyclone type separator

A skid mounted separation system is shown in Figure 8.6.

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Stabilization system for crude oil is a series of separators in sequence (normally 3 to 4) where pressure of the well fluid is brought down in each stage.

Figure 8.6: Skid Mounted Separators

Dehydration of Crude Oil

The water in oil can be present in two forms:

Free water: It is in droplet form and separates easily.

Emulsion water: It is in emulsion form, often very tight.

Most of the free water comes out of the crude oil in the separators. But the emulsion water remains dispersed in the crude. There can be as high as 30 to 40% emulsion water in some crude oils after the separator. Special equipment called Electrostatic Treater or Heater Treater is used to dehydrate the crude oil to a level of below 0.5% water content. While Electrostatic Treater treats the crude by coalescing the water particles in emulsion by creating an electro static field, the Heater Treater also heats the crude oil in the same equipment reducing the viscosity of crude oil and facilitating dropping down of water particles.

A sketch of Heater-Treater is shown in Figure 8.7. It has two chambers. First crude oil enters the heating chamber where it is heated by a fire tube which is fired with oil or gas burners. Some water droplets settle down in this chamber itself. Then the crude passes through the treater section where an electrostatic field is created by a high voltage transformer. Here the electrically charged emulsion water particles coalesce, settle down at the bottom and drained.

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Figure 8.7: Heater Treater

Dehydration of Gas

There are a number of processes for dehydration of gas as described later. These could be Dry Bed Adsorbent process, where moisture is adsorbed on the porous surface of the drying medium, which are solid particles. For example beads of Silica Gel or Molecular Sieves are used as drying medium. Some of these processes are used to dry the gas to ‘bone dry’ level.

The other type of processes are based on absorption of the moisture from the gas by scrubbing (washing) the gas with a liquid drying agent, which is a good absorbent of moisture. These units are easier to operate but not suitable for getting the gas totally dry (bone dry). In oilfield, absorption type of process is more commonly used. Water is removed from the gas by contacting the wet gas with an absorbent liquid which absorbs the water (Figure 8.8).

Generally Glycols are used as absorbent. Tri-ethylene glycol (TEG) and ethylene glycol (EG) are the two most commonly used glycols in natural gas dehydration.

TEG is used in about 95% of glycol dehydrators. Dehydration with TEG is most widely used in oil/gas field processing.

Dehydration of gas takes place in a column (Absorber Column) with trays or packing inside to facilitate contact between glycol absorbent and the wet gas. The gas fed at the bottom part of the column goes up and the dry glycol (lean glycol) fed at upper part of the column comes down the column absorbing water out of the gas. Absorbent containing water absorbed from gas (rich glycol) is

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regenerated by heating and stripping out the water in the regeneration section of the unit. The regenerated absorbent is circulated back.

Figure 8.8: Gas Dehydration Unit Using Glycol

Such systems are widely used in offshore and onshore fields for dehydration of gas. Gas dehydration unit is also skid-mounted with piping and ancillary equipment for easy installation in the field.

Produced Water Treatment

A simple schematic diagram of produced water treatment is given in Figure 8.9. Produced water is separated from various separators and oil treaters in the oilfield. It has to meet specifications for discharge of water as per environment regulations. It contains oil and sand/silt which need to be removed. The water is taken to an oil skimmer first. Oil from the skimmer is transferred to a slop oil tank, from where it is pumped to the suction of Main Oil Line Pump (refer Figure 8.5). Water passes through Cyclone to separate solid material like sludge. Fine emulsion of oil in water is still left in the produced water. Normally desired specification before discharge of the water is oil concentration of less than 20 ppm. This is achieved by an equipment called Induced Gas Floatation Unit. Low pressure gas is bubbled through a sparger in a floatation cell to separate the emulsion and coalesce the particles. Oil layer comes out from the top.

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Figure 8.9: Produced Water Treatment

Water is taken to a settling tank where the quality is monitored before discharging the water. In offshore platforms water is sent to an equipment called Caisson. It resembles a cylindrical well dipped into the sea. This allows for an additional guard before the water goes into the sea. The last traces of water that separate out at the Caisson are pumped to the slop tank.

Flare System

Flare system is an important facility in any plant processing oil or gas. It is essentially a tall stack made of steel pipe along with a flare tip (burner) at top and ancillary equipment.

It burns out any hydrocarbon released during processing due to overpressure in any of the equipment. Normally, the plant facilities have safety release valves which release the contents of an equipment if the pressure rises beyond a safe operating limit. The flare system prevents such flammable hydrocarbon releases to get into the plant area and surroundings by burning out such releases.

It is also used to burn out any excess gas produced. This situation can occur when a customer downstream suddenly stops taking the gas due to any operating problem in his plant. It may take some time for the oilfield operator to cut down the gas production. During this period the gas is diverted to flare, to avoid any kind of accident.

Also in a field producing crude oil, the associated gas produced may be more than the gas demand in the market. Then the excess gas will need to be flared.

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Elevating the flare can prevent potentially dangerous conditions of high radiation at the operating area of the plant. The height and distance of the flare stack from the plant area is fixed to limit heat radiation within acceptable limits.

Further, the products of combustion can be dispersed above working areas. This helps to reduce the effects of noise, heat, smoke, objectionable odours and limits ground level concentration of pollutants from flare.

In the onshore production facility, a tall flare stack (structurally supported) is provided 50 to 100 meters away from the plant area as shown in Figure 8.10.

In offshore production facility, flare is provided in two possible configurations:

An inclined structure directed away from the platform supports the flare at one edge of the platform. This is called flare boom.

A separate flare tripod structure, away from the platform

Figure 8.10: Onshore Flare Stack Chemical Injection System

Oilfield facilities require a variety of chemicals to be injected to the oil and gas streams in small dozes (20-100 ppm):

Corrosion inhibitors to control corrosion in the equipment and piping.

Defoamers are used to control foam. Some oils have tendency to foam as the gas bubbles through and separates out in the

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gas oil separators. This creates inefficiency in the separation system.

Demulsifier chemicals are used to break emulsions of water in oil or oil in water.

Bactericide is used to prevent growth of bacteria, fungi and sea weeds inside pipeline and equipment.

Oxygen scavenger is used for the same purpose.

Flow improver is used for viscous crude oil to improve transportation efficiency.

Production Configuration for Gas Field

The configuration of a gas field could be different. Here again there will be gathering or collection of gas from various wells to Gas Gathering Station (GGS) or Gas Collection Station (GCS) as the nomenclature may be according to the operating company’s norms. Normally gas is associated with some amount of condensate in the reservoir. The processing done at the GGS (Figure 8.11) are:

The well fluid is gathered from the wells by flow lines into a manifold at GGS.

Condensate (or NGL) is separated in Separator equipment.

Condensate is stabilized, stored and then despatched to the customer.

Gas is dehydrated, compressed and metered before being sent for gas processing.

The gas processing complex could be several hundred Kilometres away from the gas field. The processing facilities at the gas processing plant have been described in detail later. The major units in the gas processing complex are:

Gas Sweetening if there is hydrogen sulfide in the gas. Gas sweetening is normally accompanied with conversion of hydrogen sulfide to sulfur.

Dehydration of gas - this is needed because sweetening process makes the gas wet with moisture again. Sweetening agents are normally in solution with water.

Fractionation of chilled and condensed gas to recover LPG and petrochemical feedstock (ethane and propane).

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Conversion of the gas to LNG if needed for transportation purposes.

Figure 8.11: Gathering and Processing of Gas

Check Your Progress

Fill in the blanks:

1. A ………………….. is essentially a tall stack made of steel pipe along with a flare tip at top and ancillary equipment.

2. ………………….. chemicals are used to break emulsions of water in oil or oil in water.

Summary

Certain amount of processing needs to be done at the oilfield before the oil and gas are transported to refineries or gas processing plants. This unit described what are the processing done, schematics and equipment for such processing.

Typical configuration of an oil field with wells, gathering of well fluid and processing stations were described for both onshore and offshore fields.

Lesson End Activity

Show the gathering and processing of gas diagrammatically on a chart paper.

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Keywords

Separator: It is essentially a vessel having some internals to facilitate separation. Crude Oil Dehydration: The process of removal of water from crude oil is called crude oil dehydration Dry Bed Adsorbent: This is a process, where moisture is absorbed on the porous surface of the drying medium, which are solid particles. Flare System: An important facility plant processing oil or gas. It is essentially a tall stack made of steel pipe along with a flare tip (burner) at top and ancillary equipment. Demulsifier Chemicals: There are used to break emulsions of water in oil or oil in water.


1. Explain the typical Field Configuration for Production of hydrocarbons with the help of a diagram.

2. Why does an oilfield need to be processed? 3. What is the Production configuration for a Gas field? 4. How does a Flare system work?

Further Readings

Books

Maurice Stewart, Ken Arnold, Emulsions and Oil Treating Equipment: Selection, Sizing and Troubleshooting, Technology & Engineering, 2008

Hussein K. Abdel-Aal, Mohamed Aggour, M. A. Fahim, Petroleum and gas field processing, Technology & Engineering, 2003

Maurice Stewart, Ken Arnold, “Gas-liquid and liquid-liquid separators”, Technology & Engineering, 2008

Web Readings

www.pennwellbooks.com › Petroleum Books › Production

hw.tpu.ru/en/short-courses/sc/Sc_PTSF/Oilfield/

www.egpet.net/vb/showthread.php?...Oilfield-Processin... - United States

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www.amazon.com › ... › Engineering › Chemical Engineering

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UNIT 9: Offshore Oilfield Processing

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Unit 9

Offshore Oilfield Processing


Overview of various types of offshore production facilities like platforms, FPSO

Logistics involved in production of oil and gas

Configuration and design of offshore facilities

Introduction

The oilfield facilities are installed in the oilfield whether it is an onshore or offshore field. So far we had focused on the configuration of onshore facilities. We explained how oil and gas are gathered in Group Gathering Stations and processed.

In this unit, we will talk about offshore oilfields.

Offshore Production Facility

The processing requirements and schemes in offshore field are very similar to onshore processing system. But in certain areas, the configuration and design of offshore facilities differ a lot:

Field configuration and terminologies used in offshore facilities are to a certain extent different. For example at onshore one can drill a number of wells spread all around the field. But offshore drilling is expensive. So a number of wells are drilled from a single drilling platform and a number of drilling platforms (also called well platform) are spread around the field. Gathering and processing are done at Production Platform or Central Process Platform.

Construction technology and operating philosophy in offshore facility are also different.

Due to cost of space created at offshore platform and its isolation from infrastructure, the layout (tight and compact) and safety considerations in design of the facilities are different.

Activity Make a presentation on FPSO.

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Both exploration and installation of production/processing facilities are more expensive offshore.

Offshore Facilities Description

Offshore installations could be fixed platform or floating facility (FPSO). Floating productions systems are getting more prevalent due to cost factors under certain conditions. FPSO (Floating Production, Storage and Offloading), generally a large tanker or vessel with production and storage facility, has found wide application today where putting up a platform is uneconomic. A descriptive picture of an offshore platform is given in Figure 9.1.

Figure 9.1: Offshore Platforms

A number of fixed platforms, or floating facilities, subsea installations or a combination of them can make an offshore production complex.

Platforms are named according to the type of processing or function it is meant for. The types of platform normally encountered at offshore are:

Drilling and Well Platform: Normally more than one well is drilled from the well platform. Quite often 4 to 8 wells are drilled from a single platform. All the well heads are manifolded into a single pipe which goes down to the sea bed and leads to a Production Platform or Process Platform.

Production Platform: Production platform contains certain minimum processing facility like separation and stabilization of crude oil.

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Process Platform: Process platforms have the complete process facilities described earlier. They are the biggest platforms in an offshore complex, which is equivalent to a GGS onshore. They are also referred as Central Process Platform.

Utilities Platform: For large facilities the utilities like power generation, instrument air system, etc. are installed in a separate platform.

Living Quarters Platform: The production and maintenance personnel for an offshore facility stay for long periods of shifts (in terms of weeks) in an offshore platform. For safety, the living quarters for personnel are made in a separate platform.

Flare Tripod: If the flare has a large gas flaring capacity, it is installed away from a platform to minimize heat radiation to the operating area of the platforms. It is installed in a tripod structure piled into the sea. Some times flare is put in the platform itself as an inclined flare boom directed away from the platform.

Several other platforms are installed with the requirement of Enhanced Oil Recovery as the reservoir pressure depletes. These could be Water Injection Platforms, Gas Injection Platforms and so on.

Offshore platforms can be rigid structures that extend all the way from above the water surface and piled to the seabed. They can be supported on single leg (Monopod), three legs (Tripod), four legs, eight legs or multiple legs. In a common type of platform, the legs are piled into the sea bed. The platforms can be supported by steel or concrete structure. For a bigger surface area at the top of the platform, more number of legs are provided.

Some designs of the platforms are not fixed into the sea bed. They float near the water surface.

Table 9.1: Types of Platform

Building platforms in sea is very expensive and the well production rate has to be much higher than onshore field for economic

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justification. For example an onshore field can be justified with per well production rate of even a few hundred bbl/day. But in offshore field it has to be in thousands of bbl/day for economic exploitation.

A well platform in Mumbai high costs anything between US$ 20 Million to 50 Million. A process platform costs around few hundreds of Million Dollars. In contrast a GGS onshore (albeit with much lower production) will cost around five Million Dollars only.

Configurations of a Major Offshore Field

Production at offshore requires a fixed or floating facility or a subsea production system and means for transportation of oil and gas to the consumer at shore. The transportation of oil could be by offloading it to an oil tanker or by pipeline. But for gas, pipeline is normally the only option. Another option that has developed now is floating LNG Plants to liquefy and transport the gas directly by tanker from offshore.

The configuration of an offshore facility could be developed based on any of above or a combination depending on the location, water depth and production profile.

Study and decision of the optimum economic configuration is one of the prime skills in developing an offshore production facility.

Figure 9.2 shows a simple configuration of a small offshore production complex. This is a concept based on fixed platforms. It is similar to the concept of development of Mumbai High Field.

In the first phase (Phase-1), when the potential of the field can not be predicted accurately, a few well platforms and a small production platform can be installed just to separate the oil and flare the gas. A storage tanker anchored next to it to store the oil produced. It offloads the oil to another shuttle tanker.

Once the potential of the field is established, the Phase-2 starts. More well platforms and Central Process Platforms are installed for gathering and processing the well fluid. Oil and gas pipelines are laid to the shore to transport them and the tanker becomes a standby option.

Once the pressure of the reservoir drops, to boost production, a number of water injection platforms are installed and water injection well platforms are put around the periphery of the field.

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Later more platforms can crop up due to the changing production profile and EOR requirements.

Figure 9.2: Offshore Field Configuration

FPSO

Floating Production and Storage Offloading (FPSO) is one of the most popular systems for offshore production. The first floating system started production in North Sea in 1975. Its design has been adopted to wide variety of production situations and environment. FPSOs are operating today all over the world. It can operate down to 2000 meters of water depth.

FPSOs have been effectively used in large producing fields, deep sea and marginal fields. Its economic advantage comes because:

It avoids need for large and costly fixed installation and infrastructure. This is particularly advantageous in deep sea, say at 1000 meters depth.

It can be modified easily for different production conditions by bringing it to the yard.

It has the flexibility to move from one field to another, unlike fixed platforms. It can be used for production from a number of marginal fields with short field life.

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Figure 9.3: FPSO

Normally large supertankers are converted to FPSO. The bare surface at the top of the tankers provides space for process equipment system and infrastructure. The storage capacity of the tanker is used to store oil. The oil is offloaded to a shuttle tanker from time to time. The gas can be connected to gas pipeline, sent to another floating unit with gas processing facility or flared.

A typical configuration of an FPSO producing oil in deep sea is given in Figure 9.3. The FPSO anchors in the selected location where, one or more subsea wells are already drilled and vaulved at the bottom of the sea. The well is connected to the production facilities on the deck of the FPSO by flexible well piping called umbilical. The wells are controlled by remote control from the FPSO through control cables going down below the sea to the wells.

Offshore Platform Construction Technology

Offshore construction is a challenging task, quite different from construction of an onshore plant. Let us look into the construction of a typical four legged platform.

Legs can be of tubular structure of large diameter. A construction barge carries pieces of the leg to the selected location in deep sea for installation. The pieces are welded together, lowered till it

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reaches sea bed. Then piles are hammered through it into the sea bed to fix the legs on the sea bed.

Fabrication of rest of the platform is done meanwhile in a shore based construction yard. A rectangular three dimensional piece of steel structure called jacket is fabricated to hold together the four legs. The finished structure is then skidded on to the transportation barge, taken to the location and placed on top of the legs to hold them together. Also the platform decks are fabricated in the yard, brought by the barge to the location and placed on top of the jacket. Process equipment along with piping and ancillaries are also fabricated in different shops on shore as modular skid mounted units. They can be placed on the decks beforehand at the yard itself or brought by barge to the location and placed by crane on top of the decks.

Figure 9.4: Construction Barge Anchored Along Side Platform under Construction

There are several interesting techniques of installation of such facilities. There is a lot of sub-sea construction work including welding under water is involved. An offshore facility requires the services of trained divers for construction as well as maintenance work below the sea.

Concrete platforms are constructed in a different way. Construction is carried out in a dry dock near the sea. The concrete structure (hollow) is built vertically upwards. At a certain point, the dock is flooded, and the structure is floated. Further construction takes place while it is floating. It is then towed to the

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location, and filled with sea water so that it can sink down to its final position on the seabed. Such structures can weigh hundreds of thousand tons.

Figure 9.5: Offshore Construction

Check Your Progress

Fill in the blanks:

1. ………………….. platforms are also referred as Central Process Platform.

2. ………………….. platforms can be rigid structures that extend all the way from above the water surface and piled to the seabed.

Offshore Field Operation and Logistics

With several platforms in a remote offshore field, the operating philosophy and logistics support requirement is quite complex compared to any plant onshore.

Operating Philosophy

Special features of operating philosophy in offshore platform are:

Safety: Being far away in a remote area, operating safety and emergency planning for containment of disaster and evacuation of personnel are important features in design and operation of an offshore platform. This involves:

Special safety instrumentation for safe shutdown of production facilities in case of emergency situation, redundancy of

Activity Discuss how the Logistics of off-shore oilfields is taken care of.

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equipment and instrumentation wherever needed for safety reasons.

Special seaworthy Escape Capsules for operating personnel in case of emergency.

Safety training of the operators for working in marine environment and regular practice drills.

Remote Control and Monitoring: In a large offshore complex, the process platforms may be fully manned but the well platforms are generally unmanned and remote operated. Several wells and other facilities need to be monitored from control room in the Central Process Platform. Also there is need for coordination between offshore facilities, pipeline operation, and onshore facilities like gas processing plant or crude storage terminal at shore. This is done by telemetering and telecontrol system known as Supervisory Control and Data Acquisition (SCADA). This involves remote transmission of operating data and computer based data acquisition and monitoring system by communication with optical fibre cables, microwave or satellite. Such systems will be covered in detail in the section on “IT Applications in Oil and Gas Industry”.

Shift Schedule: Onshore plants normally have three shifts of operators, changing every eight hours a day. In offshore the logistics problem for such rotation will be enormous if people have to be taken every eight hours to remote areas far away from town and brought back.

The shift pattern in offshore vary from seven days to fifteen days in one shift. That means the operators have to live in the offshore platform for shift period of seven to fifteen days depending on the shift cycle decided by the management. After the period, operators for the next shift are flown by helicopter and the operators of the earlier shift return.

That is why the platforms need to have safe and well equipped living quarters.

Logistics Logistics management is very important for successful operation of offshore production facility.

Logistics support requirements are personnel related, maintenance related and equipment related.

Logistics relate to:

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Movement of operators and maintenance personnel Movement of divers for sub-sea maintenance and operation Catering, medical and other services for the personnel Supply of maintenance equipment and spare parts as and

when needed Carrying out work-over operations on the wells in the well

platforms To provide for these, the production companies maintain an offshore supply base at shore and arrange contractors to operate fleet of supply boats and helicopters.

Check Your Progress

Fill in the blanks:

1. …………………. relates to Movement of operators and maintenance personnel.

2. …………………. involves remote transmission of operating data and computer based data acquisition and monitoring system by communication with optical fibre cables, microwave or satellite.

Summary

This unit described what are the processing done, schematics and equipment for such processing. Typical configuration of an oil field with wells, gathering of well fluid and processing stations were described for offshore fields. How the concept of an oilfield at offshore changes and develops with time was described from real life example.

Lesson End Activity

Prepare a presentation to show how the concept of an oilfield at offshore changes and develops with time.

Keywords


Process Platform: Process Platforms are the biggest platforms in an offshore complex, which is equivalent to a GGS onshore.

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Utilities Platform: For large facilities the utilities like power generation, instrument air system etc. are installed in a separate platform called Utilities platforms.

Living Quarters Platform: They are the living quarters for production and maintenance personnel for an offshore facility who stay for long periods of shifts in an offshore platform.

Flare Tripod: If the flare has a large gas flaring capacity, it is installed away from a platform to minimize heat radiation to the operating area of the platforms and is installed in a tripod structure piled into the sea.


1. An offshore field produces sour gas and a large amount of condensate. Draw a block diagram showing different process systems that need to be installed in the platform.

2. Make a list of various types of offshore production installations with brief description of the same.

3. Write a short note on Supervisory Control and Data Acquisition (SCADA).

Further Readings

Books

Maurice Stewart, Ken Arnold, “Emulsions and Oil Treating Equipment: Selection, Sizing and Troubleshooting”, Technology & Engineering, 2008

Hussein K. Abdel-Aal, Mohamed Aggour, M. A. Fahim, “Petroleum and gas field processing”, Technology & Engineering, 2003

Maurice Stewart, Ken Arnold, “Gas-liquid and liquid-liquid separators”, Technology & Engineering, 2008

Web Readings www.pennwellbooks.com › Petroleum Books › Production

hw.tpu.ru/en/short-courses/sc/Sc_PTSF/Oilfield/

www.egpet.net/vb/showthread.php?...Oilfield-Processin... - United States

www.amazon.com › ... › Engineering › Chemical Engineering

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UNIT 5: Case Study

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Unit 10

Case Study


Case Study: Southeast Asia Offshore Oil Drilling Problem

Our client, Petro-Oil, is a mid-sized oil and gas exploration and production company with major areas of exploration located in South America, Gulf of Mexico, Western Africa, China, Eastern Europe, and several other countries.

The Board of Petro-Oil has just set an ambitious goal to be completed in the next five years: To be the largest oil and gas producer in Asia by the end of 2017. A quick market research inquiry shows three major competitor companies (Table 1) that are larger than our client. To support their new aspirations, our client just purchased Ceylon-II, a large deepwater oilfield offshore in the South China Sea.

Table 1: Benchmark Results (million barrels of oil equivalent)

Proven Reserves

Annual Production

Competitor A: PetroChina 15,000 1,500

Competitor B: Petronas 8,000 800

Competitor C: Pertamina 7,500 750

Client: Current Producing Assets

6,000 450

Client: Ceylon-II (newly acquired deepwater asset)

6,000 0

Petro-Oil’s management team has hired your company to do a diagnostic of the company’s current portfolio, operations, and organization to help them understand what they need to do to achieve this goal.

Key Points and Assumptions:

Production is generally correlated with reserves.

Assume the reserves of each of the assets are exactly at the same rate of depletion.

Contd…

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Assume that all competitors continue to seek additional reserves in the Pacific region.

The current existing production rates in the area are significantly higher than the client’s production rate.

Analysis:

The current extraction rate of Competitors A, B and C are much higher than our client and hold, at a minimum, 10% extraction rate. The client’s current production rate needs to increase and the new asset has to meet the current standard of 10% extraction rate.

Further exploration in the area to gain new assets for additional production is key for growth and to increase the extraction rate. Even with these two current assets, the client’s current reserves are still less than the region’s the largest producer.

Questions

1. Develop a strategy for the same.

2. What initial recommendations would you give to the client?

3. What further analysis would you recommend to the client? Source: http://chenected.aiche.org/tools-techniques/management-case-study-southeast-asia-offshore-oil-drilling-problem/

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UNIT 11: Gas Processing

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BLOCK-III

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Detailed Contents UNIT 11: GAS PROCESSING

Introduction

Characteristics of Natural Gas

Overview of Gas Processing

Process Description

UNIT 12: LIQUEFIED NATURAL GAS (LNG)

Introduction

The LNG Cycle

LNG Project Economics

The Indian Scenario

UNIT 13: PETROLEUM REFINING

Introduction

Why Refining

Product Specifications

Refinery Processes Overview and History

UNIT 14: REFINERY REQUIREMENTS

Introduction

Refinery Configurations

Description of Overall Facilities

UNIT 15: CASE STUDY

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Unit 11

Gas Processing


Properties and the characteristics of natural gas

Objectives for processing the gas and configuration of a gas processing complex

Processing schemes for various gas processing units

Introduction

Natural Gas processing is a complex industrial process designed to clean raw natural gas by separating impurities and various non-methane hydrocarbons and fluids to produce what is known as pipeline quality dry natural gas.

Natural Gas processing begins at the well head. The composition of the raw natural gas extracted from producing wells depends on the type, depth, and location of the underground deposit and the geology of the area. Oil and natural gas are often found together in the same reservoir. The natural gas produced from oil wells is generally classified as associated-dissolved, meaning that the natural gas is associated with or dissolved in crude oil. Natural gas production absent any association with crude oil is classified as “non-associated.”

Characteristics of Natural Gas

The following are the characteristics of Natural gas:

Physical Properties

Natural Gas is gaseous at any temperature over –161°C (258°F). Since that is a very cold temperature, we normally consider natural gas as a gas. Natural gas boils at atmospheric pressure and a temperature of –161°C, exactly like water turns into a vapour (steam) at +1000C. Natural gas is handled in a wide range of operating conditions – as a liquid below -161°C (LNG) and also as compressed gas at 200 Bar (3,000 psi) for automobile (CNG).

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In its pure state, natural gas is odourless, colourless, and tasteless. For safety reasons, however, an odorant called Mercaptan is added, so that any leak can be easily detected because of the typical smell.

Concept of Volume and Weight

The volume of natural gas is measured in cubic meters (M3) or cubic feet (cu.ft. or cft).

Its flow in M3/hr or cu.ft./hr or cfh at operating condition.

The production figures are normally given in Standard Cubic Meters per Day (SCMD) or Standard Cubic Feet per Day (SCFD).

Since the quantity of gas per unit volume is highly sensitive to pressure and temperature of the gas, the volumetric capacity is always referred to a standard reference temperature and pressure. In metric unit 1 SCMD means 1 cubic meter of gas at a standard condition of 0°C and 1 atmosphere pressure. Similarly 1 SCFD means 1 cubic foot of gas at 60°F and 1 atmosphere pressure.

One SCMD equals 37.8 SCFD.

One cubic meter (SM3) of natural gas weighs roughly 0.8 Kg. Comparatively one M3 of oil weighs about 800 Kg.

Because of large volume the gas occupies, its transportation is more expensive than oil for equivalent weight.

For transportation across the seas, Natural gas is condensed to LNG and put into marine tankers. This reduces the volume more than 600 times.

That means 600 cubic meters (M3) of gas (which is roughly 480 Kg) is made into 1 cubic meter of LNG.

The Composition of Natural Gas

The composition of natural gas varies widely from one field to the other. The main constituents of natural gas are the lightest hydrocarbons i.e. Methane, ethane, propane, butane, and traces of heavier components like pentane. However, methane is generally the largest component. Methane is normally between 85% to 95% of the total volume. Other components like nitrogen, carbon dioxide, oxygen, hydrogen sulfide and traces of other gases can be present.

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Hydrogen sulfide (H2S) and carbon dioxide (CO2) are often present in the gas. CO2 is corrosive to the pipeline and equipment in presence of water. H2S is both corrosive and very toxic (hazardous to health).

Important Physical Properties of Natural Gas

Calorific value of a hydrocarbon is measure of heat released by burning unit volume or weight of the hydrocarbon. Heavier the gas, lower is the calorific value per unit weight of the gas and higher the calorific value per unit volume of the gas.

Specific gravity of a gas is defined as the weight of a given volume of the gas compared to the weight of the same amount of air at the same temperature and pressure, where air weight is taken as reference (= 1).

Specific gravity of air = 1.00

Specific gravity of methane = 0.55

Specific gravity of natural gas = typically 0.60

Specific gravity of propane = 1.56

Specific gravity of butane = 2.00

This means that natural gas being lighter than air will rise if escaping, thus dissipating from the site of a leak. This important characteristic makes natural gas safer than most fuels.

Natural gas does not contain any toxic component; therefore there is no health hazard in handling of the fuel. Heavy concentrations, however, can cause drowsiness and eventual suffocation.

Chemical Properties

The air-to-fuel ratio (AFR) indicates the amount of air relative to the amount of fuel used in combustion. The minimum amount of air relative to fuel for complete combustion is called the stoichiometric ratio. The stoichiometric ratio for natural gas (and most gaseous fuels) is normally indicated by volume. The air to natural gas (stoichiometric) ratio by volume for complete combustion is 9.5:1 to 10:1. This ratio is approximate only because of the variations in fuel composition.

The Lower Explosive Limit (LEL) and the Upper Explosive Limit (UEL) determine the range of lammability. For natural gas, the

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LEL is 4%, while the UEL is 14%. It means that a natural gas mixture ignites within a range of 25:1 to 7:1 air-to-fuel ratio by volume. By comparison, a propane mixture ignites within a range 2% LEL to 10% UEL. It means a gas leaner or richer outside the explosive limits is not explosive.

Natural gas has a very high octane number, approximately 130. By comparison, propane is approximately 105 and gasoline 92 to 94 at best. This means that a higher compression ratio engine can be used with natural gas than gasoline. Indeed, many racing cars use the high octane rating of natural gas to give them more power.

Processing and Utilization

At the oil/gas fields, a number of processing steps are put in place before the gas is sent to the consumer. These include:

separation to remove liquids (oil or condensate), and water

dehydration to minimize moisture

compression to meet destination pressure and

if necessary Sweetening to remove Hydrogen sulfide and Carbon dioxide

The transportation of natural gas is normally done by long distance cross-country pipeline. When the cost of laying a pipeline is prohibitive or it is not practicable due to technical, socio-political or any other reason, gas is liquefied as LNG and transported over the high seas by LNG tankers.

The further processing of gas for its utilization and valorization is described in this section.

Check Your Progress

Fill in the blanks:

1. Natural gas is gaseous at any temperature over ………………………… °C.

2. The volume of natural gas is measured in ……………… or cubic feet.

Overview of Gas Processing

In this we will get a basic overview of Gas processing.

Activity Make a chart on the process of Gas Processing.

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Why Gas Processing

The purpose of gas processing operation is three fold:

Removal of impurities like moisture, hydrogen sulfide, carbon dioxide etc. to make it suitable for transportation and consumer acceptability.

Liquefaction and recovery of hydrocarbon components like ethane, propane, LPG, generally by low temperature refrigeration or cryogenic processes. These go as feedstock for petrochemical manufacture.

Liquefaction of the entire gas to LNG under cryogenic temperatures (–160°C) for transportation purposes.

A gas processing plant may be built to meet one or more of the above objectives. Now let us get an overview of the gas processing facilities in terms of block diagrams.

Removal of Impurities The main impurities present in the gas are moisture, carbon dioxide, hydrogen sulfide, nitrogen, mercury.

Some of these need to be removed totally (to a few ppm level), while some need to be brought down in concentration.

Gas Dehydration: The gas need to be dehydrated because:

Moisture causes corrosion in the pipeline particularly when carbon dioxide or hydrogen sulfides are present. Also any condensation reduces pipeline efficiency.

Natural gas forms hydrates during low temperature gas processing operations. As explained earlier, hydrates tend to choke or block the equipment.

Gas Sweetening: Removal of carbon dioxide and hydrogen sulfide from gas is called gas sweetening. Gas bearing hydrogen sulfide is called acid gas.

Why carbon dioxide need to be removed:

Carbon dioxide corrodes pipeline and equipment

It forms ice during cryogenic processing

Why hydrogen sulfide need to be removed:

It is very toxic

It is highly corrosive

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Mercury removal: In some of the gas fields, the gases carry mercury. Removal of mercury is necessary as it damages the steel equipment in gas processing.

Recovery of Hydrocarbons

The objective is to recover hydrocarbons like ethane, propane, butane by condensing them at very low temperatures and then purifying by fractionation. The word ‘cryogenic’ is used for low temperature processing.

The operating conditions for recovery of the hydrocarbons in gas are:

Recovery of NGL : +5 to 10°C at high pressure

Recovery of LPG : -35 to -45°C at 12 Kg/cm2

Recovery of Ethane : -65 to -75°C at 30 to 40 Kg/cm2.

Liquefaction of Gas For liquefaction of gas for transportation purpose (LNG), temperature below –160°C is required at atmospheric pressure. During liquefaction normally LPG and ethane are recovered when temperature levels mentioned above are reached. The remaining bulk of the gas, mainly methane, is transported as LNG. As mentioned later, LNG by itself is a large and complex industry.

There could be processing at lower temperatures for helium recovery or nitrogen rejection for gases containing high amount of nitrogen.

Essentially to recover any component, the gas needs to be chilled to a temperature at which the component will condense.

The flow diagram and brief description of the processes are given later.

An overall block diagram of the processing steps in a gas processing plant is given in Figure 11.1.

Gas received from pipeline often comes along with ‘slugs’ of liquid (NGL). This is trapped in ‘Slug catcher’. The liquids are separated in the slug catcher. The gas is first sweetened to remove H2S (if it is a sour gas). Some amount of carbon dioxide also gets removed along with H2S. Normally H2S is not allowed to be discharged into the atmosphere. It is converted to sulfur in a sulfur recovery plant. Sulfur comes out as a by-product.

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Gas is then compressed to the desired pressure and dehydrated to bone dry (below 1 ppm water) state for cryogenic processing. Presence of moisture in the gas can create hydrate formation. If cryogenic processing is not done, dehydration requirement is still there, but less severe.

Cryogenic processing of the gas is then carried out for separation of the hydrocarbons into:

LPG for use as domestic fuel

NGL for sale to refinery or petrochemical plant

Ethane/propane mix as feedstock for petrochemical plant

Methane is used to generate power or make fertilizers and other chemicals.

There are two possible ways the methane rich gas after recovery of heavy hydrocarbons is transported to the user:

Through pipeline

Converting the gas to LNG and exporting by marine tankers

Figure 11.1: Gas Processing

If LNG is to be made, a deeper cryogenic process will be needed to bring the temperature of the gas to –160°C. LNG is normally exported after recovering the LPG out of the gas.

Part or whole of the gas can be sent by pipeline to the consumers if transportation by pipeline is feasible. Before sending to the pipeline, the gas is chilled to the lowest temperature it will face in its route to the destination. This helps to drop out and separate the

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NGL or condensate which would otherwise drop off in the pipeline as liquids, reducing pipeline efficiency and capacity to transport the gas.

This process of chilling the gas to moderately low temperatures to prevent further condensation in the pipeline is called Dew Point Depression or Dew Point Control. Literally, it means processing to prevent formation of hydrocarbon dews in the pipeline due to cooling.

Condensates from various units of gas processing plant (C5+ components) are passed through separators to drop the pressure and stabilize it. Condensate is sold to a refinery or a petrochemical feedstock. The refineries distill it as blending stock for gasoline and kerosene.

Condensate could be a good feedstock for the petrochemical plant also for

cracking to olefins and

polymerization of the olefins to plastics.

Thus gas processing plant essentially prepares the feedstock for further processing at refinery and petrochemical plants.

Check Your Progress

Fill in the blanks:

1. The word ……………… is used for low temperature processing.

2. The process of chilling the gas to moderately low temperatures to prevent further condensation in the pipeline is called ……………… .

Process Description

This section talks about the process of Gas processing.

Gas Dehydration

There are two types of gas dehydration processes:

Adsorption Processes: These are solid bed processes using reagents like Molecular Sieve or Alumina as adsorbents.

Absorption Processes: These use liquid absorbents which absorb the moisture from the gas.

Activity Find out using the Internet why Dry bed processes are more difficult to operate compared to the Glycol Dehydration process.

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Normally Absorption Process using liquid absorbents is used in the oilfield dehydration of natural gas. In the oil/gas field gas is saturated with water vapour. To prevent corrosion in the pipeline caused by moisture in presence of other contaminants like carbon dioxide, the gas need to be dried to a level of moisture content of 7 lbs/Million Standard Cubic Feet (about 120 ppm). This is suitably achieved by Absorption Process using Glycols as the reagent for absorbing moisture from gas. Normally Tri-Ethylene Glycol (TEG) is used as the reagent. A flow diagram of the process is given in Figure 11.2.

Figure 11.2: Gas Dehydration Using TEG (Glycol Dehydration)

Wet natural gas is introduced in the Absorber (also called Contactor) at the bottom and goes up through contactor plates in the column. It contacts lean glycol solution fed at the top of the column and travelling down the column. The moisture from the gas is absorbed by the glycol and the dry gas leaves the absorber for further processing. The rich glycol (glycol with absorbed water) is drawn from the bottom.

The rich glycol (glycol plus water) is then regenerated in a stripping column at near atmospheric pressure using heat to boil off the moisture at around 200°C.

The absorption column operates at high pressure (at pressure of the gas) in the range of 30 ata to 70 ata while the stripper is

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operated at near about atmospheric pressure. There is a heat exchange between rich glycol and hot regenerated lean glycol which reduces the energy requirement in the stripper and cools the lean glycol before it is recirculated to the absorber.

The dry bed processes are not normally used in offshore or onshore oilfield due to more complexity of operation and solid handling requirement.

Dry bed processes using molecular sieve granules as drying agent is used to make the gas bone dry (below 1 ppm moisture) before processing at low temperatures.

Molecular sieves are zeolite granules manufactured under controlled conditions to create microscopic pores at its surface. These pores have affinity for water molecules and moisture gets into the surface of the molecular sieve at its pores. This process is called adsorption.

Complete drying of the gas is necessary because at low sub-zero temperatures, under the pressure of gas, the slightest presence of moisture in the gas can create hydrate formation.

Hydrates are snow like compounds of hydrocarbons and water (e.g. methane hydrate) which choke the equipment and piping during low temperature processing of gas. Once that happens, the hydrates have to be disintegrated by injecting small dozes of methanol into the equipment.

Normally two dryers containing beds of molecular sieve are used. One of the dryers is used for drying and the other is meanwhile regenerated by removing absorbed water from the molecular sieve bed by heating Figure 11.3. The dryers are alternately switched over from drying mode to regeneration mode.

For regeneration, normally dry natural gas heated in a fired heater is passed through the bed of the dryer.

Dry bed processes are more difficult to operate compared to the Glycol Dehydration process.

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Figure 11.3: Dry Bed Gas Dehydration

Normally in oilfields offshore and onshore, where specification of gas for transportation by pipeline is not as stringent, Glycol Dehydration units are used.

Gas Sweetening

Hydrogen sulfide, carbon dioxide and mercaptans can be removed from natural gas by several processes. The various processes for sweetening used are:

Amine as absorbents (shown here) utilizing mono ethanolamine (MEA), diethanolamine (DEA), DGA.

MDEA (methyl diethanolamine) and MDEA based proprietary amines (for all three – effectiveness varies for Mercaptans) as absorbents.

Molecular Sieves (removes H2S and mercaptans only)

Batch processes such as Iron Sponge, Sulfa Check and

Sweet (for H2S removal)

Physical solvents such as Sulfinol and Ifpexol

Membrane process to remove H2S

The choice of sweetening process depends a number of factors such as:

Hydrogen sulfide and carbon dioxide content

Specification of treated gas

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Temperature and pressure of gas

Volume of gas

Requirement of converting the hydrogen sulfide to sulfur

Gas sweetening using an amine solution is among the most widely used method. Figure 11.4 represents a simple amine treating facility. Sour gas is introduced in the absorber at the bottom and goes up through contactor plates in the column. It contacts lean amine solution (amine solution of high concentration, free of H2S and CO2) fed at the top of the column and traveling down the column.

The acid gas components, H2S and CO2, are absorbed by the amine solution and the sweet gas leaves the absorber for further processing. The rich amine (amine with dissolved hydrogen sulfide and carbon dioxide) is drawn from the bottom.

The absorption column operates at high pressure (at pressure of the gas) in the range of 30 ata to 70 ata while the stripper is operated at closer to atmospheric pressure. The temperature at the absorption column is close to the ambient temperature (30-40°C).

Figure 11.4: Amine Sweetening Process

The rich amine is sent to a flash tank to drop the pressure and absorbed hydrocarbons exit as the flash-tank vapour. The rich amine flows through the lean/rich amine heat exchanger increasing the temperature to above 100°C.

Fine particles, resulting from wear and tear of the piping and other equipment, collect in the amine solution, which ultimately lead to blocking and foam generation in the column. So there is a amine filtration step before the regeneration in the stripping column.

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The rich amine (amine with dissolved hydrogen sulfide and carbon dioxide) is separated (regenerated) in a later step using steam in the stripping column. From the top of the regeneration column mainly hydrogen sulfide and carbon dioxide mixture with a little quantity of hydrocarbons absorbed by the amine come out.

The hot rich amine is stripped at low pressure removing the absorbed acid gases, dissolved hydrocarbons, and some water. Considerable amount of energy is required to strip the amine. Heat is supplied by a firetube type reboiler. The temperature at the bottom of the stripping column can be over 200°C.

The stripped or lean amine is sent back through the lean/rich exchanger decreasing its temperature. A pump boosts the pressure such that it is greater than the absorber column. Finally, a heat exchanger cools the lean solution before entering the absorber. The lean amine entering the absorber is usually 40 to 45°C.

Liquefaction and Recovery of Hydrocarbon

The objective is to recover hydrocarbons like ethane, propane, butane by condensing them at very low temperatures and then separating by fractionation. As indicated earlier, the temperature to which gas need to be chilled depends on what we are trying to recover. LPG can be recovered by chilling to –15 to –35°C. To make the gas to LNG, chilling is required below –160°C. Condensation of part of the gases takes place at these temperatures. Fractionation of the condensed liquid is carried out to separate the components.

To chill the gas, refrigeration is required. There are three types of processes:

(i) Processes using refrigeration supplied by external refrigeration systems to chill the gas. Normally some component of natural gas itself like ethane or propane is used as refrigerant using conventional compression refrigeration equipment.

(ii) Processes using expansion of the gas itself to attain cooling. Gas chills when its pressure is dropped just as it gets heated when it is compressed. Turbo-expander process is used to expand the gas while doing the work of driving a turbine like equipment called turbo-expander. Thus it attains cooling by losing its internal energy by expansion as well by driving the turbo-expander machine.

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(iii) Processes using a combination of external and internal refrigeration.

A simple conceptual diagram of an external refrigeration process for LPG Recovery is depicted in Figure 11.5. The important steps in the process are:

Natural gas coming from the source at high pressure is first dried in molecular sieve dryers.

It is then chilled by exchanging heat with the chilled gas coming out after LPG Recovery.

The gas is further chilled to around –35°C using external propane refrigeration package.

At each of the two stages of chilling there are separators to collect the condensed liquids from the gas. At –35°C, almost all C4 and C5+, most of C3 and some amount of C2 and C1 components condense.

This liquid need to be fractionated to take the light ends (C1 and C2) out to meet the LPG specifications. LPG and C5 (NGL) are also separated by the fractionation system. Generally this is done in a series of two fractionating columns.

Figure 11.5: External Refrigeration Process for LPG Recovery

When C2 also need to be condensed and separated, lower temperatures (–50 to –60°C) are needed and more than two fractionation steps may become necessary. The lower temperatures are obtained by expanding the gas to lower pressures and by using external ethylene as refrigerant.

Lower temperatures can be achieved by using external ethylene refrigeration cycle or by Turbo-expander process shown in

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Figure 11.6. The diagram actually shows a combination of external refrigeration and turbo-expander. The energy given to the turbo-expander is used to re-compress the outgoing gas. But due to the efficiency factor of turbo-expander process, it can be recompressed to a pressure much lower than its original pressure.

Figure 11.6: Turbo-expander Process for LPG Recovery

By an appropriate combination of external refrigeration and turbo-expander process, very low temperatures can be factors like:

Pressure of the gas

Temperature to which the gas need to be chilled and components to be recovered

Pressure requirement of the outgoing gas by the customer.

Check Your Progress

Fill in the blanks:

1. ………………….. are solid bed processes using reagents like Molecular Sieve or Alumina as adsorbents.

2. ………………….. use liquid absorbents which absorb the moisture from the gas.

Summary

In this unit we learnt about the Physical properties and characteristics of Natural gas. We also learnt about its Chemical properties and its composition. The entire process of Gas Processing is also explained.

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Lesson End Activity

Prepare a chart paper to show the entire process of Gas Processing with the help of Diagrams.

Keywords

Calorific Value of a Hydrocarbon: It is the measure of heat released by burning unit volume or weight of the hydrocarbon.

Dew Point Depression: It is the process of chilling the gas to moderately low temperatures to prevent further condensation in the pipeline.

Adsorption Process: These are solid bed processes using reagents like Molecular Sieve or Alumina as adsorbents.

Absorption Process: These use liquid absorbents which absorb the moisture from the gas.


1. What is Natural Gas? State its physical and Chemical properties.

2. What is the purpose of Gas processing?

3. What is Gas sweetening? Explain.

Further Readings

Books

Arthur J. Kidnay, William R. Parrish, Dan McCartney, Fundamentals of Natural Gas Processing, Second Edition

Dominic C. Y. Foo, Mahmoud M. El-Halwagi, Raymond R. Tan, Recent Advances in Sustainable Process Design and Optimization

Web Readings en.wikipedia.org/wiki/Natural-gas_processing

www.linde-india.com/.../Natural%20Gas%20Processing%20 Plants.pd...

www.bv.com/Downloads/Resources/.../rsrc_ENR_Gas Processing.pdf

ftp://ftp.eia.doe.gov/pub/oil_gas/...gas/.../ngprocess/ngprocess.pdf

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UNIT 12: Liquefied Natural Gas (LNG)

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Unit 12

Liquefied Natural Gas (LNG)


LNG Cycle

Technical aspects of LNG business

Indian Scenario on LNG

Introduction

Natural Gas is a highly desirable energy source: it burns cleanly, with little pollution, it is often inexpensive to produce and can be transported easily through pipeline like any other petroleum product. The demand for natural gas is growing at a fast pace as a source of energy and petrochemicals.

The LNG Cycle

LNG, or liquefied natural gas, consists mostly of methane and is cooled to approximately –256 degrees Fahrenheit so that it can be transported from countries that have more natural gas than they need to countries that use more natural gas than they produce. In its liquefied state, natural gas takes up 1/600th of the space, making it much easier to ship and store when pipeline transport is not feasible. As world energy consumption increases, experts anticipate that the LNG trade will grow in importance.

At present, however, the technology does not exist to build long distance pipelines through the depths of the ocean. So moving natural gas between continents requires an alternative approach.

Conversion of natural gas to Liquefied Natural Gas (LNG) is a proven commercial technology for transporting large volumes of natural gas across oceans by marine tankers. The utility of liquefying Natural Gas is the substantial volume reduction gained by liquefaction (1:620). This volume reduction makes the transportation and storage of the gas much more convenient.

Typical composition and characteristics of LNG is presented in Table 12.1.

Activity With the help of the Internet, list the Chemical components of LNG.

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Table 12.1: LNG Characteristics

LNG Composition (Typical Mol %)

N 01.0 %2 →Methane 85.1 96.7 % (Lean)→Ethane 1.9 8.6 % (Rich)→Propane 0.68 4.1 %→i- Butane, nButane Traces→Mol. Wt. 16.8 19.3 (Rich)→

3Gross Heating Value 10.450 Kcal/NM→S. G. 0.455→

Methane in Natural Gas does not liquefy under pressure. To make LNG Natural Gas must be liquefied through refrigeration.

Becomes liquid at -160 deg C at atmospheric pressure.

Volume reduces by 620 times when liquefied.

Spilled LNG will crack a steel plate like boiling water hitting frozen glass.

LNG Composition (Typical Mol %)

N 01.0 %2 →Methane 85.1 96.7 % (Lean)→Ethane 1.9 8.6 % (Rich)→Propane 0.68 4.1 %→i- Butane, nButane Traces→Mol. Wt. 16.8 19.3 (Rich)→

3Gross Heating Value 10.450 Kcal/NM→S. G. 0.455→

Methane in Natural Gas does not liquefy under pressure. To make LNG Natural Gas must be liquefied through refrigeration.

Becomes liquid at -160 deg C at atmospheric pressure.

Volume reduces by 620 times when liquefied.

Spilled LNG will crack a steel plate like boiling water hitting frozen glass.

The LNG industry is economic when liquefaction and the transportation of LNG are done in very large volumes (say above 5 Million SCMD and above). This involves a number of major investment and contractual activities including:

Liquefaction by the producer of the gas

Storage facilities at producer end

Loading in tankers and Transportation

Receiving/unloading terminal and storage at buyers end

Re-vaporization of LNG to gas, and

Distribution to the consumers with a cross country pipeline network.

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This is depicted in Figure 12.1 and is known in the industry as the LNG Cycle. This was developed for conceptualizing one of the LNG projects planned with the LNG Receiving terminal planned in the eastern coast of India. This would involve buying of LNG from one of the South East Asian countries or Australia Fertilizer plant and power plant, which are large consumers of gas was proposed to be installed near the receiving terminal. The balance gas was proposed to be transported by pipeline with a northern grid of pipeline and a southern grid to various parts of India. The magnitude of investment in such a project is very large.

Figure 12.1: The LNG Cycle

The facilities at the producer end of the cycle is called LNG upstream and the buyer end is called LNG downstream.

LNG upstream comprises of gas treatment and liquefaction steps as explained earlier in this section along with LNG loading facility for loading in marine tankers. This is shown schematically in Figure 12.2.

The down stream section comprises of unloading from tankers, storage, pumping, re-vaporization, and transportation by pipeline. This is shown schematically in Figure 12.3.

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Figure 12.2: LNG Upstream

Figure 12.3: LNG Downstream

Storage of Liquefied Gases

Storage and handling of gases is dealt with in later sections. But it is important to know at this stage that there are two ways liquefied gases are stored;

Pressurized storage where gas is in liquid phase under pressure at ambient temperatures.

Cryogenic or low temperature storage (generally at atmospheric pressure).

LPG is often stored in pressurized containers although it is also stored under cryogenic conditions. Figure 12.4 shows two types of pressurized LPG storages – sphere and bullet.

LNG is always stored under cryogenic conditions (below –160°C) at atmospheric pressures. At such temperatures, steel becomes brittle

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like glass. The storages are made of special nickel steel as normal steel becomes brittle at that low temperature.

They are heavily insulated to minimize heat leakage from the atmosphere into the tank. They are often double walled with concrete outer shells utilized as additional resistance to tank damage and as containment in the unlikely event of tank leakage. This type of tank with containment of leakage is the most costly, and has most often been used for the storage of LNG.

Some leakage of heat does take place from the surrounding atmosphere into the storage tanks. There is some amount of liquid vaporization and boil-off. The vapours are compressed, condensed by refrigeration and put back into the tank.

The tankers carrying LNG also have spherical domed storage tanks along with refrigeration system for boil-off vapours.

LNG tanks could be on ground or mounded under earth. Figure 12.5 depicts an LNG receiving terminal with an LNG tanker, jetty and LNG storage facility.

The LNG tankers can have a carrying capacity from 20,000 cubic metres to 135,000 cubic metres. A large LNG storage tank can be holding around 100,000 cubic meters of LNG. For this capacity, the tank would be about 70 meters in diameter. Japan is the world’s largest importer of LNG and imports 94% of its gas as LNG.

Figure 12.4: LPG Storage

Figure 12.5: LNG Receiving Terminal

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LNG Project Economics

Basic gas price at source for LNG facilities are relatively cheap, based on large and easily produced reserves. Processing (Liquefaction) and transportation equipment is capital intensive and highly specialized, requiring large investment for each new facility. For each million cubic feet of gas delivered to end use, less than 30 percent of the cost is associated with the raw material price (gas price at source). The balance is the cost associated with processing and transportation.

Liquefaction is a very energy-intensive process. Typically, about 8 to 9 percent of the natural gas delivered as raw material at an LNG plant, is used as plant fuel for liquefaction. The number of tankers required is a function of the distance between the export terminal and the import terminal and the number of days it takes to move between the source of gas and destination. The unit cost of marine transport is primarily a function of the capital cost of the tanker, distance, the financing terms and acceptable rate of return for the tanker owners.

Complexity of an LNG Project

The complexity of an LNG project is due to:

Sheer size of the project. Liquefaction, transportation and re-vaporization of LNG can be economic at a very large capacity, at least 5 to 10 Million SCMD. This requires investment on billions of Dollars.

Large number of ‘operations blocks’ or projects of diverse technologies need to be developed simultaneously, integrated and planned together. For example Liquefaction plant, Loading facilities, Unloading facilities and re-vaporization facility along with large consumers have to come up simultaneously.

Numerous locations covering countries and states.

Numerous agencies, consumers involved.

Market Development for the LNG by the buyer.

Strong technology base and support required.

Numerous contract negotiations.

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Long-term Contract between LNG supplier and buyer.

Long-term Contract between LNG buyer and transporter.

Long-term Contracts between LNG buyer and LNG users like Power Plant, Fertilizer Plant, etc.

Because of enormous effort required on planning and development of the project and numerous contracting involved, the gestation period of an LNG based grass-roots project is normally quite long (4 to 6 years).

Due to the immense costs of each link in an LNG cycle, such projects can be undertaken only by large organizations with great financial capacity and project management skills. A successful project requires cooperation and selling of the idea to:

The government of the country having gas source

The company that owns the natural gas

The government in the consuming country

Consuming organizations

Financiers

Check Your Progress

Fill in the blanks:

1. LPG is often stored in ………………… containers.

2. The utility of liquefying Natural Gas is the substantial ………………… gained by liquefaction.

The Indian Scenario

If we consider the Indian scene with respect to LNG, we can see:

Recovery of LPG and Petrochemical Feedstock

Gas processing facilities in India started with the commissioning of ONGC’s Uran gas processing facilities. This was based on gas from Mumbai High as feedstock, Uran at Maharashtra being the first onshore terminal. Later Uran was expanded to more than double the capacity and ethane along with propane was recovered from the gas to provide feedstock for a petrochemical complex (Maharashtra Gas Cracker Complex at Nagothane). Later with a bigger gas processing terminal at Hazira, ONGC became a major

Activity Do further research on the reason for the large gap between demand and supply of gas in India.

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producer of LPG. Currently ONGC is producing over 1.2 million tons per year of LPG. ONGC produces close to 1 million tonnes of LPG at its Uran and Hazira terminals.

Another major player emerged once Gas Authority of India Ltd (GAIL) was formed to transport and distribute the gas. Currently GAIL has extensive network of gas pipeline gas processing complexes to produce LPG, and one to produce propane as feedstock for a petrochemical complex. It also own a petrochemical complex based on feedstock it generates from its own gas.

LNG Facility

There is a large gap between demand and supply of gas in India. In the nineties ambitious plans were drawn out by the government as well as private sector Indian and Multinational companies to import LNG and build LNG terminals in India. The government facilitated formation of Petronet LNG Ltd. in the public sector to lead the drive to import LNG and boost gas supply in the country. Most of the plans have not materialized.

As stated earlier, the success of LNG projects depends on a number of factors: reliable and continuous supply of LNG in large volumes, constant technological support, reliable long-term market demand and ability to finance. Many of the companies who intended to enter into the LNG business, has got into such detailed planning. As a result, most of the LNG projects planned have failed to take off.

The first LNG terminal in India was built by Enron for its Dabhol power plant.

The next LNG projects that are likely to see the light of the day are the projects of Petronet LNG and Shell. Petronet LNG project at Dahej is ahead of another LNG project being implemented by Shell at Hazira.

Dahej LNG import terminal was also completed and Five million tonne gas (20 million metric standard cubic metres) are supplied to users along HBJ Pipeline.

The large discovery of gas in 2002 off Andhra Coast by Reliance and ONGC’s discovery at Vasai and near Surat are expected to give further boost to the gas supply and gas processing industry.

It should be noted that India being LNG importing country, the LNG facilities planned fall under the category of LNG upstream.

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For the import of LNG, the long-term tie-ups are with producers in the Middle East.

Check Your Progress

Fill in the blanks:

1. …………………… was formed to transport and distribute Natural gas.

2. The first LNG terminal in India was built by Enron for its …………………… power plant.

Summary

Basic properties and characteristics of natural gas was described in the beginning. This was followed by highlighting the need or objectives of processing natural gas – namely – removal of impurities and separation of the components of gas. Various processes used in gas purification was described with simple flow diagram. The importance of gas dehydration and gas sweetening was highlighted. Liquefaction of the gas to LNG and separation of various components of gas were described with simple flow diagrams. Various methods of getting low temperatures for condensation of gas was described.

Lesson End Activity

Prepare an assignment on the approximate levels of temperature required to recover ethane, LPG from natural gas. How these temperatures are obtained. Prepare a chart to describe a low temperature LPG Recovery process with flow diagram.

Keywords

Calorific Value: Calorific Value of a hydrocarbon is measure of heat released by burning unit volume or weight of the hydrocarbon. Specific Gravity of a Gas: Specific Gravity of a Gas is defined as the weight of a given volume of the gas compared to the weight of the same amount of air at the same temperature and pressure, where air weight is taken as reference (= 1).

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Gas Sweetening: Removal of carbon dioxide and hydrogen sulfide from gas is called gas sweetening.

Adsorption Processes: These are solid bed processes using reagents like Molecular Sieve or Alumina as adsorbents.

Absorption Processes: These use liquid absorbents which absorb the moisture from the gas.

Molecular Sieves: These are zeolite granules manufactured under controlled conditions to create microscopic pores at its surface.


1. What are the objectives of gas processing? Name the various gas treatment or purification processes.

2. Write down a brief description of gas dehydration process with simple flow diagram.

3. What do you understand by an LNG Cycle? Describe with a schematic diagram.

4. Describe upstream and downstream of LNG facility.

Further Readings

Books



Web Readings

en.wikipedia.org/wiki/Natural-gas_processing

www.linde-india.com/.../Natural%20Gas%20Processing%20 Plants.pd...



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UNIT 13: Petroleum Refining

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Unit 13

Petroleum Refining


Important specifications of petroleum products and their significance

Refinery process configurations used to meet the specifications and market demand

Basic process schematics of important processes used in a refinery

Infrastructure requirement and broad economics of refinery operation

Introduction

What does a petroleum refinery do? Why do we need refining? These are some of the questions that this unit will try to answer. It will also trace the history of development of the various processes in the refining industry.

Why Refining

In a nutshell the main functions of a refinery are:

Primary Separation: Crude oil is a mixture of around 500 components. They need to be separated into useful products. The separation is not done to recover individual components but as products which are mixtures of suitable boiling ranges. This is done by distillation, where various cuts or fractions are taken out as gasoline, kerosene, diesel etc. which are essentially raw material or intermediate products.

Processing to Meet Quality Specifications: Typical examples of this type of processes are those used for improvement of octane number to meet gasoline specification. Raw gasoline cut or naphtha as it comes out of distillation has low octane number (may be around 40 to 60 ON). But for the market we need octane numbers of 87 and above. Processes are used to improve the octane number by converting the low octane components of gasoline to high octane components. For example, Catalytic Reforming process converts straight chain paraffin in the raw gasoline to aromatics

Activity Do further research on Naphtha and its different uses.

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which have high octane number. Similarly isomerisation process converts normal paraffin components of naphtha to iso-paraffins which have higher octane number.

Figure 13.1: Refinery under Construction

Processing to Meet Environment Related Specifications: The most common processes of this type revolve around removal of sulfur. Typical process units are Hydro-desulfurization of kerosene and diesel oil to meet the sulfur related specifications in the product.

Conversion of Residual Products: The residues or heavy cuts from the distillation or other process units of a refinery can not be used as value added product like gasoline or diesel. Molecules of such stocks are broken into lighter molecules to get products like diesel or gasoline by conversion processes called cracking.

Figure 13.2: Refinery Complex from Different Angles

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Finishing and Blending Operations: This step involves getting the product in finished form by treatment to get good marketable colour, blending with intermediate products from the refinery, putting additive to enhance certain properties.

Check Your Progress

Fill in the blanks:

1. Molecules of residual products of refineries are broken into lighter molecules to get products like diesel or gasoline by conversion processes called ………………… .

2. Raw gasoline cut or naphtha as it comes out of distillation has a low ………………… number.


The product specifications for products to be refined in a refinery are as follows:

Quality Related Specifications

Since most of the operations in the refinery are to meet certain specification of products, it is necessary to know of certain important specifications and their significance. Normally each country has its own institutions to define the standards and specifications. There are several items of specifications for each product. The more important heads are stated below. The detailed specification of some of the products as per Indian Standards Institution (ISI) is given in the Annexure. There are standard laboratory procedures and methods under controlled conditions to measure these specifications for a product.

Table 13.1: Important Specifications for Main Refinery Products

Activity Using the Internet, find out more information about the Indian Standards Institute (ISI) and its functions.

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Vapour Pressure: It is a very important property of LPG for safety and handling, particularly as it is handled at home as cooking gas. It restricts maximum pressure a cylinder can develop and helps to set the design pressure for the cylinder. Propane being more volatile of the other constituent (butane) of LPG, it can develop more pressure and hence its content in LPG is limited by specification.

Flash Point: It is the minimum temperature at which the product generates enough vapour to form an explosive mixture with air.

Flash point is significant to the safety during storage. During storage it can form explosive mixture in the empty part of the tank above the liquid surface. It is preferable to store a product below its flash point. Each country has its own specification of flash point depending upon the climatic conditions of the country.

Octane Number (ON or O.N.): This signifies ignition quality of the gasoline in automobile engines. The engine has cylinders with pistons where the fuel (gasoline) and air mixture is injected. The cylinders of an automobile pass through a cycle of expansion, compression and ignition for movement of the pistons, which drive the wheels through a crankshaft. For optimum delivery of power to the engine, the fuel air mixture injected to the engine should ignite at the right timing. Due to heat of compression, the temperature in the cylinder goes high and there could be mistimed ignition of the fuel due to the heat generated by compression. A high octane gasoline is better for ignition. A mistimed ignition creates knocking in the engine and this results in loss of power.

The different hydrocarbon content in gasoline (like in crude oil) are: straight chain paraffin, isoparaffins, naphthenes and aromatics. Normally for the same carbon number and size of the molecule straight chain paraffins have the lowest octane number. Branched chain paraffins (isomers) and naphthenes have the higher octane number. Olefins also have high octane number but they are undesirable in gasoline because they tend to polymerize to form resins or gum in the tank.

Typical octane number of various constituents is given in the table 13.2.

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Table 13.2: Octane Number of Some Hydrocarbons

Octane Number (ON) is defined as the percent volume of iso-octane in a mixture of iso-octane and normal heptane that gives the same knocking as that of the fuel when tested under defined conditions.

Iso-octane is assigned a value of 100 and normal heptane is given the value of zero. Other octane numbers emerge as relative ignition quality or antiknock quality of the component.

Aromatics: Although it has high ON, its content in gasoline is being limited by specification due to its carcinogenic nature.

Pour Point: When heavy petroleum products like fuel oil or diesel containing wax are cooled to certain temperatures, the wax separates out from them making the oil immobile. It becomes difficult to move or pump the oil. The temperature at which the oil becomes immobile is termed as pour point. It happens because separated wax forms honeycomb like structures.

High wax crude oils like Mumbai High have high pour point (30 to 35OC). Many of the South East Asian crude oils have high pour point.

Boiling Range: The volatility of oil is indicated by its boiling range and distillation characteristics. The oil should have suitable boiling range (volatility) so that it can be used in a particular application. For example, Motor Gasoline has certain boiling range specifications.

In case of naphtha, a specific boiling range is chosen for use as feedstock for petrochemical plant. For example aromatics like Benzene, Toluene and Xylene are good feedstock for petrochemical

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manufacture. A boiling range of naphtha is chosen where concentration of these components will be high.

Smoke Point: It is the length of flame in a standard laboratory test, which produces smoke. It is an important property of kerosene. Smoke point depends on the type of hydrocarbon constituents of the fuel. Paraffins have high smoke points followed by naphthenes and then by aromatics. Higher smoke point means less smoky.

Cetane Number: While the octane number indicates ignition quality of engines using spark ignition (gasoline fuelled cars), this test is applicable to diesel fuels which use ignition by compression.

Cetane number is defined as the percent by volume of n-cetane in a mixture of n-cetane and alpha methyl naphthalene that would give the same ignition quality and engine performance as that of the fuel under test.

This test has reverse characteristics of octane number, which gives low value to fuels which self ignite easily. Unlike octane number, normal paraffins have higher cetane number followed by naphthenes, iso-paraffins, olefins and aromatics.

Sulphur: Sulphur is corrosive to the fuel systems and also is a pollutant to the environment. The specifications on sulfur content in petroleum products are becoming more and more stringent world wide. Sulphur specification is applicable to all products. Considerable investments are taking place every year in the refineries to improve sulfur related specifications.

Viscosity: Viscosity is the resistance to flow. It indicates pumpability of the product. Viscosity is an important property for lube oils because higher viscosity is required to prevent wear and tear in the moving parts of a machine. For fuel oils, it gives flow properties which are needed for pump selection for transporting.

Viscosity is measured in several ways. The most common units are centi-stokes (cst), centi-poise (cp) and SSU (Saybolt Seconds Unit).

Viscosity Index: This specification signifies change of viscosity with temperature. This is an important specification for Lubricating oils. In the machinery, friction generates heat. For any petroleum product, viscosity is lower as the temperature increases. The lube oil viscosity should not go down too much with heating as it will lose its lubricating property. Higher the Viscosity Index less is the effect of temperature on viscosity.

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Carbon Residue: Fuel as it burns, forms a carbon deposit. This carbon deposits on burner tips or cylinders reduces efficiency. Carbon residue test gives an indication of the amount of carbon that would form when the oil is cracked and burned.

There are several other specifications like colour, copper corrosion test, bromine number etc. all of which have some significance on the quality of the products.

More details about the specifications are given in the annexure at the end of this volume.

Check Your Progress

Fill in the blanks:

1. …………………. test gives an indication of the amount of carbon that would form when the oil is cracked and burned.

2. Viscosity is the …………………. to flow.

Refinery Processes Overview and History

Types of Processes

Refining comprises of four types of processes:

Primary Separation: The first step in refinery is atmospheric and vacuum distillation of crude oil. Various product cuts or fractions like LPG and gasoline come out of the top of distillation column. The medium heavy liquids like kerosene, ATF and diesel come out next in the lower part of the column. The residue left is vacuum distilled to separate heavier liquids, called gas oils. These products do not meet the specifications. To meet the specifications they require further processing. For example some of the gas oil from vacuum distillation form base stock to make lubricating oil for further processing. Other products are also treated to meet certain specifications. For acceptance as high-value products, such as gasoline, much more additional processing is required as given below.

Conversion Processes: Conversion processes are essentially breaking and rearranging of the molecules of the intermediate products to convert them to high value products meeting specification. We can put such processes in two sub-groups:

Activity Chart out the evolution of the Refinery industry.

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(a) Product upgradation: Certain products like gasoline are processed to meet octane number or other specifications. Examples of such processes are catalytic reforming, isomerisation, etc. These processes are essentially restructuring of molecules to improve the specifications.

(b) Conversion of heavy residues to light products: This is done by cracking of the large heavy molecules into smaller and lighter molecules under high temperature, and pressure with or without a catalyst. The cracking processes covert residues and heavy gas oils to light products like gasoline, kerosene and diesel resulting in value addition.

Treatment Processes: To meet environment related specifications and for giving finish to the products further treatments are required. This is the final step before the products are tested to meet quality and dispatched by tanker or pipeline to the market. Examples of such processes are Hydro-desulfurization of distillation products to remove sulfur, sweetening of gasoline to remove traces of sulfides, Hydro-finishing of lube oil to give right colour with mild hydrogenation.

Processing for Lube Oils: Processes to remove wax, asphalt etc. from the lube oil base stocks to meet the quality requirement of lubricants.

Processes for making lube oil is made into a distinct category because lubricating oils can not be produced from all types of crude oils. When a crude oil is suitable for producing lubricating oil, specific cuts called lube oil base stocks are distilled during primary separation step and passes through a series of processes to make lube oil.

A common terminology used for a refinery, which does not produce lube oils, is Fuels Refinery. One which produces lube oil is called Lube Refinery.

History

Let us trace the history of development of the various processes in the refining industry (Table 13.3).

It can be seen from the table that at first only separation processes were used. Then came gasoline upgradation processes to meet motor gasoline specification and conversion of heavies to lighter

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products like gasoline to meet the increased demand of light products. Finally the drive was environment related specifications – processes to meet strict specification on sulfur, and other specifications like aromatic content and lead removal, etc.

As we can see from Table 13.3, almost all the current processing in the refineries came into existence by the fifties. Later the changes and innovations were related mainly to minimizing residues in the refinery and to meet sulfur and other environment related specifications.

Table 13.3: History of Refining

Figure 13.3: Distillation Columns in a Refinery

Primary Separation

Let us discuss Primary Separation in greater detail. It is done by Atmospheric Distillation and Vacuum Distillation. This is diagrammatically represented in Figure 13.4

Atmospheric Distillation

Atmospheric Distillation is the first step in the refinery processing to separate out the raw products (cuts) by distillation under pressures above atmospheric pressures (Atmospheric Distillation).

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Atmospheric Distillation is done to separate the light cuts by heating the crude oil to 350-370°C at pressures close to atmospheric pressures.

At these temperatures light and white products like motor gasoline, kerosene, Aviation Turbine Fuel (ATF), diesel, etc. are distilled out as raw products for further processing. Residue which is left behind at the bottom of the distillation column after atmospheric distillation is called long residue. The next step in distillation is Vacuum Distillation of the long residue.

Vacuum Distillation

The limitation of distilling at higher temperatures is because deterioration of crude oil starts at temperatures above 350- 370°C. Crude oil starts ‘cracking’ at high temperatures i.e. the heavier molecules start breaking into smaller molecules. Uncontrolled cracking process results in coke formation and production of unstable olefinic (double bonded) hydrocarbon products.

Vacuum distillation unit yields vacuum gas oil as distillate which are used as feedstock for cracking to lighter products. Vacuum gas oil also can form the base oil for processing into lubricating oils.

In vacuum distillation, the residue from atmospheric distillation is heated to around 350-370°C and distilled under vacuum conditions.

With vacuum distillations, cuts like vacuum gas oil (feed for cracking or lube oil manufacture) and bituminous residue etc. are generated as shown in Figure 13.4. One or more gas oil cuts can be drawn out of vacuum distillation. The residue which is left after vacuum distillation is called short residue.

Atmospheric and Vacuum Distillation Cuts

Figure 13.4: Primary Separation

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Conversion Processes

Primary separation processes are essentially physical separation of the raw products by distillation. Conversion process means change of the molecules of the raw products obtained from distillation by reaction process under heat, pressure, along with or without a catalyst, from one type of molecule to another.

As mentioned earlier, there are two types of conversion processes:

Conversion for upgradation of product quality.

Conversion to change heavy residual products into light and high value products like gasoline and diesel. These are called cracking processes.

Discussion on both the types of conversion processes follow.

Gasoline Upgradation Gasoline upgradation is a typical example of conversion process to meet specification of the product. Octane Number of gasoline cut from distillation is low. Octane levels need to be raised to the desired specification for engine performance requirements. In the sixties and seventies, Catalytic Reforming was the most prevalent process to increase Octane Number. The process essentially converted paraffin in the gasoline cut into aromatics, which have high ON. For further boosting the octane number, small dosage of Tetra Ethyl Lead (TEL - Octane Booster) was added. Aromatics generated by reforming process were found to be carcinogenic and Lead was found to be health hazard. With lead addition eliminated, new octane boosters (ethers like MTBE or other oxygenated compounds) were developed. With stricter aromatics specification in gasoline, use of reformate gasoline (product from catalytic reforming) as gasoline blending stock was reduced. New processes were developed for converting naphtha to high-octane gasoline. Some such processes are:

Isomerisation to convert straight chain paraffins to branched chain isomers.

Alkylation to combine paraffin components with butane to form isomers.

Polymerisation to transform some lighter hydrocarbons into high octane gasoline.

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Fluid Catalytic Cracking (FCC) units also became one of the main sources of high-octane gasoline.

Conversion of ‘Heavies’ to ‘Light Oils’

Conversion of heavy cuts (e.g. gas oil from vacuum distillation) and residues which are dark coloured, low value products to light and valuable products are important for refinery economics. This is done by Cracking Processes.

Cracking essentially breaks the large heavy molecules into a number of smaller lighter molecules. The process generates gases and white products by cracking the heavy vacuum distillates and residues.

A typical reaction in cracking process:

Catalyst and heat (450-500 oC)

C16H34 = C8H18 + C8H16

There are several components of the heavy oils undergoing such reactions generating light products as well as gases.

The common cracking processes are thermal cracking, fluid catalytic cracking and hydrocracking.

Thermal Cracking is done with heat alone at high temperatures. Depending upon severity of reaction conditions and nature of feedstock, the thermal cracking processes are named as

Visbreaking

Coking etc.

Fluid Catalytic Cracking (FCC) is carried out with a fluidized bed of catalyst. FCC yields gasoline of higher octane number along with gases, kerosene and diesel fractions. Some heavy oil is also produced from FCC called cycle oil.

Hydrocracking is cracking under heat, pressure and presence of hydrogen. It takes wider variety of feedstock and gives stable, good quality product.

Treatment Processes

Sulfur Removal

Hydro-desulfurization is one of the processes to remove sulfur by reaction of hydrogen with sulfur bearing components of oil. This

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produces hydrogen sulfide, which is also toxic. Hydrogen sulfide is converted to sulfur in the refinery by a process known as Claus Process.

With stringent specifications for sulfur in production, deeper and deeper Hydro-desulfurization is coming into application.

Finishing of Products

The final polishing of products is done to remove traces of contaminants, to have the right colour of products and stability by treating with hydrogen or other reagents. Examples of such processes are Hydrotreating, Hydrofinishing, and Merox Sweetening of LPG and gasoline.

It is important to note that hydrogen finds extensive use in a modern refinery.

In addition to the basic processes mentioned above, there are a few other important operations in the refinery of today:

Petrochemical Feedstock Generation

Propylene, naphtha and aromatics are separated or extracted out of the refinery products as feedstock for production of petrochemicals.

Formulating and Blending

Formulating and blending is the process of:

Mixing and combining the various cuts or fractions from distillation, cracking and other process units. The multiplicity of processing units in a refinery creates a number of intermediate products of the same boiling range which are finally blended to get the right amount of product of right quality.

Dozing of the products with additives (chemicals to give stability, storage life, performance etc.).

Formulating and blending gives the final finished products, which are tested and marketed.

Lube Oil Manufacture

Lubricating oils need to be viscous, have stability during the heat generated by friction of the machine, and the viscosity should not fall sharply with the rise in temperature due to friction. These

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qualities are met by vacuum gas oils i.e. high boiling cuts distilled by vacuum distillation of crude oil. These gas oil cuts are called lubricating oil base stocks.

All crude oils do not give good lube base stock. For example waxy crude oils like Mumbai High or some South East Asian crude oils are not good for lube oil manufacture. Yield of suitable lube base stocks are lower in these cases (as the oil is light) and wax creates a lot of operational problems during lube extraction process. Some of the medium heavy Middle East Crude oils give good quality lube base stocks.

The various processing steps are:

De-asphalting Unit: Here asphalt from the lube base stock is removed by solvent extraction process because asphalt is not good to meet lube oil specifications.

Aromatics Extraction: Aromatic hydrocarbons are removed by solvent extraction process to improve viscosity.

De-waxing: This is another solvent extraction process which removes wax from the lube base stock. This is also solvent extraction process.

Hydro-finishing: After these series of extraction processes, the lube oil base stock is treated with hydrogen (hydro-finishing process) to improve colour and give stability.

Check Your Progress

Fill in the blanks:

1. ………………………. process means change of the molecules of the raw products obtained from distillation by reaction process under heat, pressure, along with or without a catalyst, from one type of molecule to another.

2. Hydrogen sulfide is converted to sulfur in the refinery by a process known as ………………………. .

Summary

Bride oil needs to be separated into useful products. The separation is not done to recover individual components but as products which are mixtures of suitable boiling ranges. This is done by distillation, where various cuts or fractions are taken out

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as gasoline, kerosene, diesel, etc. which are essentially raw material or intermediate products.

Refining comprises of four types of processes: Primary Separation, Conversion Processes, Treatment Processes and Processing for Lube Oils.

Lesson End Activity

Prepare a presentation on the various types of refining processes.

Keywords

Flash Point: It is the minimum temperature at which the product generates enough vapour to form an explosive mixture with air.

Octane Number: This signifies ignition quality of the gasoline in automobile engines.

Octane Number: It is defined as the percent volume of iso-octane in a mixture of iso-octane and normal heptane that gives the same knocking as that of the fuel when tested under defined conditions.

Smoke Point: It is the length of flame in a standard laboratory test, which produces smoke.


1. List out the products produced with petroleum raw materials as the base.

2. Why does Crude oil need to be refined? What does a Refinery do?

3. What are the Product specifications for products to be refined in a refinery?

4. Explain the different treatment processes.

Further Readings

Books



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Web Readings


www.linde-india.com/.../Natural%20Gas%20Processing%20Plants. pd...



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UNIT 14: Refinery Requirements

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Unit 14

Refinery Requirements


Refinery process configurations used to meet the specifications and market demand

Basic process schematics of important processes used in a refinery

Infrastructure requirement and broad economics of refinery operation

Introduction

We will have a look at how the refinery configuration looked in the sixties. There has been other health and environment related specifications like limitation of aromatics in the automotive fuels.

As a result, there have been huge investments to meet the product quality with respect to sulfur and other environment related specifications, lowering the margins.

A modern refinery has a number of process units. A list of various types of process units in a petroleum refinery is given in Table 14.1. The refinery may have various combinations of process units out of the list given here. A detailed description of the process and plants and technologies are given later. At this point it is important to know the description of the overall facility in a refinery complex.

Refinery Configurations

The previous section gave an overview of various types of processes used in the refinery. The process units in the refinery and their capacities are determined by:

Product Demand

Product Prices


Crude Oil Characteristics

Activity Discuss in groups about the differences in the Refinery configuration of the 60’s and that of modern refineries.

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Figure 14.1: Lube Processing Schematic

The investor arrives at optimum selection of process units and their capacities by economic optimization techniques. The techniques as described later are based on investment and operating costs of various units and yield and quality of products from them. The combination of the process units is called refinery configuration.

Configuration of the Sixties

Out of the parameters mentioned above, the product specifications have started changing the refinery configuration a lot since the 1960s.

Let us first have a look at how the refinery configuration looked in the sixties. Figure 14.3 depicts a typical configuration of a refinery in the sixties.

The crude oil was first distilled at pressures close to atmosphere (Atmospheric Distillation) to separate out raw cuts of naphtha, gasoline, kerosene and diesel oil. The residue left was being used as a component of fuel oil.

Gasoline was processed in Catalytic Reforming Unit to boost its Octane Number. Finally Tetra-ethyl Lead was added to the gasoline in small doses as Octane Enhancer.

Sulfur specifications were not very stringent those days. Wherever the sulfur content exceeded the specification (diesel in the flow diagram), Hydro-Desulfurization Unit was used to remove the sulfur.

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Fuel oil always fetched a low value, sometimes lower than the crude oil resulting in negative return. A part or all of it was distilled under vacuum to generate vacuum gas oil cuts, which go as feedstock for lubricating oil manufacture. In the Lube Plant, processes like dewaxing, and other extraction processes like de-asphalting were used to produce lubricating oils meeting specifications. Mild hydrogen treatment of the lube oils in the lube plant was done to meet the final specifications and improve the colour.

Gas oil cuts from vacuum distillation unit were also taken to Fluid Catalytic Cracking Unit (FCC) to produce more of gasoline. FCC unit was designed to produce gasoline as well as kerosene and diesel. Some gases were also produced as a result of cracking.

Residue from vacuum distillation unit was often mildly cracked in a Thermal Cracking Process called Visbreaker for use as fuel oil. These units also produced some gases, gasoline and kerosene.

Gasoline, kerosene and diesel were made by blending the stocks from crude distillation unit, and the various cracking and other conversion units.

This is a typical configuration, simple and without any integration with any other kind of facility.

Figure 14.2: Refinery Complex

Configuration of a Modern Refinery

As stated earlier, strict specifications on sulfur content in finished refinery product resulted in substantial investment in deep desulfurization. Whereas in the sixties 0.5 to 1.0% sulfur was tolerable in some of the products like diesel or gasoline, now the specifications are at the level of 25 to 50 ppm (parts per million)

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sulfur in many parts of the world. Moreover, the desulfurization processes generate hydrogen sulfide (H2S) which is not allowed to be vented as per current environment regulations. This has lead to extensive use of Sulfur Recovery Units in the refineries. Further H2S bearing tail gases from the sulfur recovery units are also treated to remove traces of sulfur before being discharged to atmosphere.

Figure 14.3: Refinery Configuration of the Sixties

There has been other health and environment related specifications like limitation of aromatics in the automotive fuels.

As a result, there have been huge investments to meet the product quality with respect to sulfur and other environment related specifications, lowering the margins.

Lower margins and stricter product specs are changing refinery configuration. Today a stand alone refinery complex is not economically viable. Many of the refineries in the west are shutting down. For survival and profitability, the configuration of today’s refinery has changed.

Low margins call for minimizing fuel oil (residual stock and heavy components) by converting them to high value products. This has given to more extensive use of cracking processes like hydrocracking and coking.

Lowering aromatics specification in gasoline results in addition of units like isomerization to get high octane gasoline. The reforming unit which produces a lot of aromatics serves to act as source for aromatic feedstock for the petrochemical industry.

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Integration of petrochemical plant to increase margin is quite common today.

Lower sulfur specs increases hydrotreating application and generates need for a large hydrogen plant for the refineries.

Integration with a cogeneration power plant with coke and fuel oil produced at the refinery has found favour to increase margin.

A typical configuration of a modern refinery taking into consideration above trends is given in Figure 14.4.

Figure 14.4: Modern Refinery Configuration

The points to note in this configuration are:

Extensive application of hydrogenation processes like Hydrodesulfurization, Hydrotreatment, etc.

Combination of cracking processes by bringing in new units like Hydrocracking.

Use of isomerisation and other processes to get high octane gasoline due to limitation of aromatics blending in gasoline. Use of catalytic reforming products to extract aromatics like Benzene, Toluene and Xylene (BTX) for use as feedstock for petrochemical manufacture. This brings in higher value of the products.

The cracking processes generate propylene and butanes which can be separated and sold as feedstock for petrochemical manufacture.

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It is worth noting that the refinery configuration as shown is still not economically attractive. The trend today is integration with petrochemical manufacture using the aromatics or olefins.

Later we shall show some examples of such integration done in the industry.

Balancing the Gases

Some gases come out of the crude during distillation. These are mainly ethane, propane and butane, a part of which is taken out as LPG. The cracking units generate some olefins like propylene and butylenes which become valuable feedstock for making petrochemicals like polyproylene, polybutylene, etc. So, recovery of the olefins becomes important for value addition to refinery products. The balance of gas is consumed in the refinery as fuel.

Figure 14.5 shows the same configuration as shown in Figure 14.4 without the main liquid streams. It shows the gaseous streams in a refinery. It can be seen that hydrodesulfurization generates some amount of hydrogen sulfide gas (H2S) which is toxic. The H2S bearing gases are sweetened remove H2S, which is finally converted to sulfur. Thus sulfur becomes a product in the refinery by default.

The hydrogenation processes to remove sulfur, other hydrotreating processes and hydrocracking process require a lot of hydrogen. Catalytic Reforming process, which converts paraffins in naphtha to aromatics by de-hydrogenation of paraffins, generates some of the hydrogen required in the refinery.

The balance hydrogen is supplemented by installing a hydrogen plant in the refinery. Thus, the processing requirements of the gaseous streams are met by:

Gas sweetening unit

Sulfur plant

Propylene recovery unit

Hydrogen plant

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Figure 14.5: Balancing the Gases

Check Your Progress

Fill in the blanks:

1. Lowering aromatics specification in gasoline results in addition of units like isomerization to get high …………………. .

2. The hydrogenation processes to remove sulfur, other hydrotreating processes and hydrocracking process require a lot of …………………. .

Description of Overall Facilities

The process plant requires utilities like fuel gas, power, steam, water etc. Also infrastructure is required to provide logistics and other support. It also requires facilities to store the raw materials, QA/QC of products and facilities to handle and transport them by pipeline or tankers. These are known as utilities and offsite facilities.

The facilities of a refinery complex can be categorized into process units, utility blocks, storage and product movement, buildings and waste treatment facilities.

Activity Utility and offsite facilities

may cost more than 50% of the total cost of the project.

Utility and offsite facilities occupy more than 60% of the space in a refinery layout.

Discuss thses two facts, in Groups.

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Table 14.1: Process Units in a Refinery

Utility and Offsite Facilities

Table 14.2 presents a list of utilities and offsite facilities in a refinery complex.

With the process units and other facilities listed above, a refinery is a very huge facility requiring investments in terms of a few billion Dollars. Optimization of the operation of process units and offsite facilities, logistics of product movement is and overall management system in a modern refinery is very important to refinery economics. This has been dealt with in the section on ‘IT Applications in Oil and Gas Industry’.

Table 14.2: Utility and Offsite Facilities

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Utility Facilities

A list of utility facilities is given in Table 14.2. Some of the facilities are relatively small packaged units supplied by the equipment vendors e.g. Instrument Air System comprising of instrument air compressor and dryer to remove moisture from air. But items like power generation, steam system and cooling water system have large equipment system and spread throughout the plant by piping network.

For optimum use of energy, power generation and steam generation are combined together in what is known as combined cycle. For example high pressure steam can be used to drive a steam turbine to generate power and the steam at lower pressure coming out of the turbine can be used as utility steam for heating various process streams. The exhaust from a gas turbine can be used to generate high pressure steam.

Cooling Water System comprises of cooling towers, large cooling water pumps and a network of piping to supply cooling water to product coolers. The products generally come out hot after processes like distillation and the final cooling is done in heat exchangers by the cooling water. In the process, the cooling water gets heated. The hot streams of cooling water are returned to the cooling towers, where they are cooled by air cooling in cooling towers.

Figure 14.6: Utility Facilities

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Storage and Handling of Crude and Products

This is one of the major operations beyond the process units in a refinery. This involves:

Receipt and storage of crude oil

Storage of intermediate products, base oils and blending stocks.

Blending and finishing of products.

Storage and despatch of products.

A refinery is often located in coastal area. It can also be landlocked far beyond coastal areas. In coastal refineries, crude oil is received by marine tankers. Depending on the capacity of the refinery, crude tanker size suitable for draft at the jetty and the size of storage tanks are decided. In landlocked refineries, receipt of crude is normally by pipeline. Road tankers, railway tankers, marine tankers and pipeline are used for transportation of products.

Millions of tons of crude and products as well as blending stocks is handled or transported to several destinations by tankers or pipeline. The storage and product movement area of a refinery presents a major logistics and operations management problem in the refinery.

Figure 14.7: Refinery Storage Facilities

Product Blending Operations

As described earlier, numerous intermediate product streams are formed in the various processing units of a refinery. They are finally blended into finished products. The activities involve:

storage of intermediate products,

analysis of the intermediate products,

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blending operations,

dozing with ‘additive chemicals’ wherever required and

storage and analysis of the final blended products to ensure quality requirements.

Control Room

Each of the refinery processes as well as the utility facilities requires a large number of process parameters to be controlled to meet the quantity and quality of products. Earlier there used to be control room in each process unit with analog controllers. In modern refineries computerized digital control system with dynamic real time process models are quite common.

Typical room of a centralized control room of a refinery is presented in Figure 14.8. A more detailed discussion on the subject is given in the section on IT Applications.

Figure 14.8: Control Room

Check Your Progress

Fill in the blanks:

1. For optimum use of energy, power generation and steam generation are combined together in what is known as ……………………. .

2. In coastal refineries, crude oil is received by …………………… .

Summary

In this unit, the history of development of the refining process and refinery configuration was explained. The process units and utility/offsite facilities required in a refinery was summarized.

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Lesson End Activity

Visit a refinery and find out how Storage and Handling of Crude and Products are done.

Keywords

Utility: It is the state of being useful, profitable, or beneficial.

Control Room: It is a room housing any kind of control equipment.

Catalytic Reforming: It is a chemical process used to convert petroleum refinery naphthas, typically having low octane ratings, into high-octane liquid products called reformates which are components of high-octane gasoline.


1. What do you understand by thermal cracking of petroleum?

2. Define the Octane Number of gasoline. Name the processes that give high octane gasoline.

3. State any two properties of crude oil that decrease the quality and efficiency of the oils. How are they improved?

4. Write a note on the differences in the refineries in the 60s and the modern refineries.

Further Readings

Books



Web Readings en.wikipedia.org/wiki/Natural-gas_processing www.linde-india.com/.../Natural%20Gas%20Processing %20Plants.pd... www.bv.com/Downloads/Resources/.../rsrc_ENR_Gas Processing.pdf ftp://ftp.eia.doe.gov/pub/oil_gas/...gas/.../ngprocess/ngprocess.pdf

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UNIT 5: Case Study

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Unit 15

Case Study


Case Study: Gas Processing at LLC

Leak Imaging, LLC performed a leak detection survey using an optical gas imaging camera for a company in East Texas at one of their gas processing facilities. The company was aware of the new regulations coming and wanted to see what it would entail and what they should do to prepare for it since they have never had any leak detection program in place. The results were amazing.

The gas processing facility was less than a year old and we were assured that there were no gas leaks to be found. The field superintendent explained how all the equipment at the location was new, properly installed and no wearing of the equipment would have taken place in this short period of time. At the time of the study, this facility was processing gas at a spot rate of 12,500 mcf per day. After processing the natural gas, the daily production volume being delivered to market was approximately 95%, with 5% accounted for as line loss and/or fuel use.

In less than 30 minutes, the first leak was detected with several more following. In all, 6 leaks were detected which were inexpensively rectified. Using the criteria and emissions factors from the EPA, they were losing 200 mcf a day in gas. The worst leak detected was coming from the storage tanks where the valve was constantly malfunctioning and releasing gas from the vent stack.

After the repairs were made, the company began seeing an extra $600/day ($219,000/year) at today’s gas prices which they were losing at just one facility.

The leak detection study just goes to show that the industry’s acceptance of 5% for line loss and fuel use just turned the corner with new technology. Line loss doesn’t necessarily tell the whole story. It doesn’t matter whether a facility is old or new there is

Contd…

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always the possibility for fugitive gas leaks and the potential to increase revenues.

Question

Critically analyse the case study Source: http://leakimaging.com/gas-processing-case-study/

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UNIT 16: Distillation in Refineries

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BLOCK-IV

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Detailed Contents UNIT 16: DISTILLATION IN REFINERIES

Introduction

Optimization of Refinery Operations

Description of Process Units

Vacuum Distillation

UNIT 17: PETROCHEMICAL INDUSTRY

Introduction

Polymerization Basics

Some Common Polymer Plastics

Petrochemicals in Our Lives

High Impact Plastics

Types of Plastics

UNIT 18: PRODUCTION OF PETROCHEMICALS

Introduction

Feedstock to Products in Petrochemical Industry

Production of the Base Petrochemicals

Ethylene Production by Steam Cracking

Steam Reforming

Aromatics Production

Intermediate and Derivative Petrochemicals

UNIT 19: TRANSPORTATION OF OIL, GAS AND PRODUCTS: PIPELINES

Introduction

Modes of Transportation

Pipeline Systems

Pipeline Project Implementation

UNIT 20: CASE STUDIES

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Unit 16

Distillation in Refineries


Optimisation of Refinery Operations

Description of Process units

Vacuum Distillation

Introduction

The basic software for optimization is available in the market along with data bank on crude oil, possible refinery configuration, cost data, process models, etc. One needs to define and give input data on the specific problem and define what need to be optimized.

Let us now look into some of the process units in greater detail. We will understand a generic processing system for refineries and petrochemical plants and Vacuum Distillation.

Optimization of Refinery Operations

A refinery is a highly capital intensive plant. High prices of crude oil and low margins on product prices require optimization of the refinery during design stage as well as optimization of its operation.

In the design and conceptual stage, the optimization of a configuration is carried out in order to:

Develop the best possible configurations of process units and their capacities depending on market demand and specification of products. This should meet the market demand pattern at minimum cost.

Select crude oil depending on its price, characteristics and ability to give the desired products at optimum cost.

Let us look at the fixed parameters and variables for optimization as given below. The number of variables like type of process units,

Activity Find out more about LP Modelling and its use in different fields.

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choice of crude, products to be manufactured etc. are very large – may run into hundreds. In this kind of situation, the optimization is carried out by Linear Programming (LP) modelling.

The major input required to develop a LP model and optimize the configuration are:

Crude Assay: Crude characteristics and properties are fixed parameters for crude selected for a refinery. If there is choice of more than one crude, it becomes a variable. Yields of products from distillation and other process units depend on the crude characteristics and properties. An extensive laboratory study report on crude characteristics and properties of various cuts taken out of it is called crude assay. This is fed as data to the optimization model.

Product Demand Pattern: The refinery need to be optimized not to exceed a specific product demand pattern of the market. This is normally a fixed parameter and called ‘constraint’ in LP Modelling.

Product Specification: It is fixed for a particular country or region, depending on the standard specification of salable products in the market. These are also called ‘constraints’ in modelling for optimization.

Selection of Process Units and their Capacity: This gives the largest sets of variables. There is a wide range of choice of the processing units. Each gives a particular yield of products and particular properties of the products to meet the specifications. The final product quantities are arrived at by blending the intermediate products from various process units to meet the product specification.

Investment Costs: It will depend on the selection of process units, as each process unit will have different investment costs proportionate to its capacity.

Operating Costs: This again will depend on the selection of process units, each of which will have different operating cost heads like utility consumption, manning requirement, etc.

LP modelling is carried out in the following manner:

Mass balance equations between process units, overall product balance and heat balance are expressed in linear equations.

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Constraint equations such as product demand and specification by blending of components (intermediate products from the process units) are also used as linear equations. It defines the constraints of which products should be produced in the refinery and in how much quantity.

Process unit models predicting yield and quality of products based on crude oil characteristics, are built into modern LP optimization software.

Equations for capital cost variation with capacity of the process units, cost of operation of each unit.

Overall cost optimization equations form the complete matrix of equations.

Non-linear models of processes (to give yield of products and product properties) and blending correlation for the properties form separate modules.

The parameter to be optimized normally is investment or profit margin.

Versatile LP software with built-in database and process models are available today.

Such models give option to change:

Crude oil and product prices

Product specifications

The quantity of products

Plant sizes and operation modes

Thus a lot of business sensitivity factors can be studied using such models.

LP Models are today used for:

Optimization of configuration of new refineries

Planning daily, weekly, monthly and long-term operation of existing refineries

Optimization of operation of individual units

Evaluation of different types of crude oils

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Check Your Progress

Fill in the blanks:

1. A refinery is a highly …………………. intensive plant.

2. Crude characteristics and properties are …………………. parameters for a crude selected for a refinery.

Description of Process Units

Generic Process Schematic

Having described refinery configuration, let us now look into some of the process units in greater detail. First let us understand a generic processing system for refineries and petrochemical plants.

Figure 16.1: LP Software Structure

A process plant processing liquid and gaseous material (which is commonly done in refineries) would normally have the following components:

Pumping (for liquids) or compression (for gases) of the feed to the processing unit.

Heating to provide energy for the reaction to take place. Some times cooling is needed if the reaction is exothermic i.e. if it generates heat. Heating also includes recovery of heat from the outgoing hot products by heat exchange with incoming cool feedstock or raw material.

Reactor vessel which gives time for the reaction to take place.

Activity Make a chart on the Desalting process.

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Separation and purification of products of reaction. These are physical separation processes like distillation, extraction etc.

The Figure 16.2 depicts the concept in the form of a process where two raw materials (feedstock) A and B are processed to get products C and D. A and B are pumped through heat exchangers which recover heat from outgoing hot products C and D. Then, A and B are mixed and heated in a furnace to the desired temperature. Reaction at high temperature takes place in the reactor producing C and D as products. C and D are separated by distillation and sent out to be stored as product.

Figure 16.2: Generic Diagram of a Process Plant

Most processes will have similar configuration. The physical separation processes like distillation or extraction does not have the reactor part. Most reaction processes have the configuration of Figure 16.2.

The primary separation processes in a refinery, atmospheric and vacuum distillation do not have a reactor. It is a pure physical separation process. Such processes where no reaction is involved and revolve around separation of products are called ‘open art process’ as there is no license involved in the technology, design and operation of such processes. Normally most reaction processes are licensed processes, where one has to pay a fees or royalty for the purchase and use of then technology.

Pictures of the some of the process equipment described here are given in Figure 16.3.

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Heater

Pumps

Heat Exchanger

Hot Fluid

Liquid inlet

Liquid Outlet

Cold Fluid

Out

Out

ShellShellShellShellShellShellShell

Motor

Tubes

Figure 16.3: Process Equipment

With this generic description in mind, let us now get into the flow diagram and description of some of the important processes in the refinery.

Desalting

Crude oil arriving from oilfield generally contains around 1% saline water and organic salts. The salinity of the water could be in the range of 15,000 to 30,000 ppm. In the refinery, the crude oil is heated and distilled. Part of the salts contained in the crude oil, particularly magnesium chloride, tends to undergo hydrolysis at temperatures above 120°C. Upon hydrolysis, the chlorides get converted into hydrochloric acid and corrode the distillation column’s overhead and condenser. A desalter is normally installed in the preheat section of crude distillation unit of a refinery, before the distillation column. Its function is to reduce the salt content to around 20-40 ppm and water content to below 0.1%.

Description

As described in the next section on crude distillation, desalters are normally integral part of distillation plant.

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The desalter is normally installed in between the heat exchangers of the pre-heat section of Crude Distillation Unit to operate at temperatures between 120-150°C. The desalting operation is carried out by flushing the crude with fresh water of low salt content. The desalter carries out dehydration of the crude by use of electrostatic field to facilitate coalescence of charged particles of water into large drops.

Thus it involves the following steps:

Washing of the crude resulting in dilution of saline water present in the crude

Removal of the water under electrostatic field.

Normally saline water is present in emulsion form, so Demulsifier chemicals (20-40 ppm) are also injected in the crude. This aids in breaking the emulsion by changing the surface tension properties of oil-water interface.

Figure 16.4: Desalter

Upstream of the desalter, the crude oil containing around 1% of emulsion water is mixed with a fresh water stream, typically about 4-6% on feed. Intense mixing takes place over a mixing valve where high pressure drop is provided for to give turbulence. The water added to the crude flushes the whole crude and dilutes the concentration of salt in the saline water carried with the crude. The desalter, a large vessel, containing an electrostatic grid, uses an electric field to coalesce the water droplets, which drop at the bottom. It operates between 120-1500C, hence it is conveniently placed somewhere in the middle of the preheat train of the distillation column.

In case of high salt content and viscous crude, often multistage desalters in series are used with water addition and dehydration repeated through two stages.

Desalter can remove over 90% of the salt in raw crude.

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Crude Distillation

Atmospheric Distillation of the crude is the first step in the processing of crude oil in a refinery. It is physical separation of oil components at slightly higher than atmospheric pressure by heating to around 350°C + and subsequently distilling into fractions (raw product cuts).

As crude oil starts cracking at temperatures higher than 370-380°C, the residue from Atmospheric Distillation is subsequently distilled under vacuum at similar temperatures. This is called Vacuum Distillation. Distillation produces some gases (LPG, Fuel Gas) and raw cuts of light products like gasoline, naphtha, kerosene and diesel.

The residue from the bottom of the Atmospheric Distillation Column is vacuum distilled to produce heavy gas oil, which form the base stock to produce lubricants. The gas oil is also sent to Cracking Unit to produce further light products.

Description

The fractionating column where multi-component distillation takes place is the heart of the process. The crude needs to be heated up before entering the fractionation column. This is done at first in a series of heat exchangers where heat is taken from outgoing products from the column, which need to be cooled before being sent to storage. Heat is also exchanged against condensing streams from the top of the column. Optimum design of this heat recovery train or pre-heat train is extremely important for energy efficient operation of the column. Typically, the crude will be heated up in this way up to a temperature of 200-280°C by heat recovery alone, before entering a furnace.

As the raw crude oil received from oilfields contains water and salt, it is normally sent for salt removing first, in a piece of equipment called a desalter. This has been discussed in the preceding section. The desalter is put midway in the pre-heat train at temperature of around 130°C.

Downstream the desalter, crude is further heated up with heat exchangers, and starts vaporizing at about 200-280°C. Then, the crude enters the furnace where it is heated up further to about 330-370°C. The furnace outlet stream is sent directly to the fractionation column. Here, it is separated into a number of fractions, each having a particular boiling range.

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At 350°C, and about 1 barg, crude oil is partly vapourized and the vapours rise up along the column through trays. The vapours come into contact with liquid coming down from the top of the column. The different fractions are gradually separated from each other on the trays of the fractionation column. The heaviest fractions condense on the lower trays and the lighter fractions condense on the trays higher up in the column. At different elevations in the column, with special trays called draw-off trays, fractions are drawn out by gravity through pipes, for further processing in the refinery.

At the top of the column, vapours are routed to an overhead condenser, typically cooled by water or air coolers. At the outlet of overhead condenser, vapours are condensed into liquid (naphtha) and gases are separated in an Accumulator at around 40°C. Gases are routed to a compressor for further recovery of LPG (C3/C4), while the liquids (gasoline or naphtha) are pumped to a stabilizer column. Part of the cold, condensed liquid is put back at the top if the column as reflux.

This method of cooling the top part of the column and providing heat at the bottom creates a temperature gradient along the column. Top temperature remains close to 40°C and the bottom temperature of the column is around 350°C.

The products are also drawn from different trays of the column. These are called side draw-offs. The lightest side draw-off from the fractionating column is a fraction called kerosene, boiling in the range 150-280°C, which flows into a smaller column called side-stripper. The purpose of the side stripper is to remove some light hydrocarbons by using steam injection or an external heater called ‘reboiler’. It essentially helps to meet the properties specified for kerosene, since in a multi-component distillation there is overlap of constituents of various cuts.

The second and third (optional) side draw-offs from the main fractionating column are diesel or gas oil fractions, boiling in the range 200-400°C, which are ultimately used for blending the final diesel product. Similar as with the kerosene product, the gas oil fractions (light and heavy gas oil) are first sent to a side stripper before being routed to further treating units.

At the bottom of the fractionation column a heavy, brown/black coloured residue is drawn off.

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All the top and side draw-offs go for further treatment to meet product specifications. The residue is vacuum distilled (see section on Vacuum Distillation).

Figure 16.5: Flow Diagram of Atmospheric

Distillation Column

Check Your Progress

Fill in the blanks:

1. Crude oil arriving from oilfield generally contains around ……………….% saline water and organic salts.

2. ………………. Distillation of the crude is the first step in the processing of crude oil in a refinery.

Vacuum Distillation

As crude oil cracks above a range of 350-370°C after atmospheric distillation, it is distilled under vacuum to distillation unit recover additional distillates from atmospheric residue (also termed long residue). The objective is to minimize the residual stock and maximize yield of useful products.

Vacuum gas oil cuts are produced in the vacuum distillation unit for use as lubricating oil base stocks and/or feedstock for conversion (cracking). The residue from vacuum distillation (referred as short residue) can be used as feedstock for to produce bitumen or as fuel component. It can also sometimes be cracked further to produce light oils.

Activity Find out about Carbon-to-carbon bonding. In which all areas can you find it?

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Description

The process configuration is somewhat similar to atmospheric distillation. The long residue is first preheated in a heat recovery train to recover heat from the outgoing hot products. Then it is further heated in a furnace before entering the Vacuum Distillation Column. Vacuum Gas oil cuts are taken from top and side of the column and cooled before dispatch to storage.

Vacuum is maintained with vacuum ejectors and sometimes also with liquid ring pumps. Lowest achievable vacuum in lower part of the column is in the order of 10 milli bar.

Wet Vacuum Units use steam in the column to reduce partial pressure of the oil. Dry Vacuum Units use deeper vacuum with less or no steam.

Two types of vacuum units for long residue upgrading are:

(i) Feed Preparation Units: Takes out deep cuts out of long residue for cracking in FCC or Hydrocracker. This is done because most of such cracking units can not take the heaviest residual part of the crude as feedstock.

(ii) Lube Base Stock Units: These are high vacuum units from where heavy gas oil cuts are drawn out as lube base stocks. The lube base stocks are further processed to make lubricating oils. For Bitumen production, the residue from vacuum distillation called short residue, is treated to make bitumen or road tar.

Figure 16.6: Vacuum Distillation Unit

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Catalytic Reforming

Catalytic reforming is a high temperature catalytic process to convert low-octane naphthas into high- octane gasoline blending components called reformates. Most straight run naphthas from primary distillation of crude comprises of a lot of low octane components like normal paraffins and five and six carbon naphthenes. Reforming involves:

Isomerisation of paraffins

Dehydrogenation of naphthenes like cyclohexanes to aromatic hydrocarbons

Dehydrocyclisation of paraffins i.e. making them to cyclic hydrocarbons and dehydrogenating them to aromatics.

This gives high octane gasoline blending stock. Also hydrogen is generated as by-product.

Reforming process is also a source for feedstock for petrochemical plants. Reformates can be produced with very high concentrations of toluene, benzene, xylene, and other aromatics useful both for gasoline blending and petrochemical processing. Hydrogen, produced from dehydrogenation and dehydrocyclisation reactions is separated from reformate for recycling and use in other refinery processes like hydrodesulfurisation.

The typical operating conditions are 500-530°C and 20-25 kg/Sq.cm pressure.

Description

The first step is hydrodesulfurisation of the naphtha feed. Then the actual reforming process starts.

A typical flow diagram is presented in Figure 16.7. The reforming process has three sections:

Reaction section comprising of heat recovery, furnace and reactors

Hydrogen separation and recirculation

Product recovery section (distillation)

In the reaction section, the naphtha feedstock is mixed with hydrogen generated by reaction process itself, vaporized, and passed through a heat recovery train from outgoing reaction products. Then it passes through a series of alternating furnace

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and fixed-bed reactors containing a platinum catalyst or bimetallic (Pt- Rh) catalyst.

The effluent from the last reactor is cooled and sent to a separator to remove the hydrogen-rich gas stream. Hydrogen is recirculated with a compressor and the excess hydrogen product is sent to other users in the refinery.

Figure 16.7: Catalytic Reforming Unit

The liquid product from the bottom of the separator is sent to a fractionator for product recovery. It makes a bottom product called reformate; butanes and lighter hydrocarbons go overhead and are sent to the other users.

The catalysts require regeneration after certain time period. Depending on catalyst type and severity of reaction, the cycle time and method of regeneration varies. Some catalytic reforming systems continuously regenerate the catalyst.

Thermal Cracking

Thermal cracking is used for conversion of residues into more useful products by cracking the large hydrocarbon molecules into smaller ones, at a temperature level of 450-500°C. The degree of cracking can be controlled by controlling temperature and time of reaction (residence time). Long chain paraffinic hydrocarbon molecules break down into a number of smaller ones by rupture of a carbon-to-carbon bond.

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Cracking also generates double bonded hydrocarbons (olefins). Other side reactions like condensation and polymerization reactions of olefins and of the aromatics also take place. Thus thermal cracking process leads to undesirable products like unstable olefins and tar like polymerization products. The type of products depends on severity of cracking.

The olefins tend to polymerize and form gum or resin like polymers due to their unstable double bond structure. That is why gasoline or diesel blend produced from thermal cracking processes need to be treated with hydrogen (Hydrotreating) to make them stable usable product.

The thermal cracking is used either to reduce the viscosity for blending with fuel oil (Visbreaking Process). Visbreaking, though a mild form of thermal cracking, produces some of light liquids like gasoline and gas oil.

There is a more severe cracking to produce coke, as well as useful light products like gasoline called Coking Process. Besides a good yield of light products and gas, it yields good quality coke.

By selection of the type of unit, feedstock and operating conditions, the yields and quality of the various products can meet market requirements, of course .with some limitations.

In modern oil refineries Visbreaking and Coking (Delayed Coking) are extensively used.

Visbreaking

Visbreaking is a mild thermal cracking process. The objective is to reduce the viscosities and pour points of vacuum distillation bottoms to meet fuel oil specifications. Refinery production of heavy oils can be reduced by 30% by Visbreaking. Visbreaker also produces gas, gas oil stock and gasoline which go for further processing.

The principal reactions which occur during the Visbreaking are:

Cracking of the side chains attached to Cycloparaffin and aromatic rings.

Cracking of resins to light hydrocarbons (primarily olefins)

Some cracking of Naphthalene rings under higher temperatures of operation (500°C).

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Description

There are two types of Visbreaking operations:

Coil Cracking

Soaker Cracking

Coil Cracking uses higher furnace outlet temperatures of around 500°C. It uses a reaction time of one to three minutes. All the cracking takes place in a dedicated portion of the coil in the furnace itself. Due to high temperature of operation and avoidance of soaker drum, it offers the advantage of greater ease of operation. The cracked products are separated by fractionation.

Soaker Cracking is a similar process but uses lower furnace outlet temperatures of around 450°C and reaction times of over five minutes. In this case some conversion takes place at the furnace coil but major part of conversion takes place at the soaker drum after the furnace (see flow diagram). Soaker cracking is more often used due to its lower energy consumption as a result of less severe temperatures.

Figure 16.8: Coil Visbreaker

Figure 16.9: Soaker Visbreaker

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Delayed Coking Unit

Delayed coking is a thermal cracking process in which a heavy hydrocarbon feedstock, mainly residue, is converted to lighter and more valuable products and coke.

The main advantage of the process is that it can take residual stock from a wide variety of process units in a refinery. Coking Furnace and Coking Drums are the key elements in the process. Cracking is initiated in the furnace tubes where short residence time is allowed. Coking of the feed material is “delayed” until it reaches large coking drums with longer reaction time, downstream of the heater. Three physical structures of petroleum coke: shot, sponge, or needle coke can be produced by delayed coking. These physical structures and chemical properties of the petroleum coke determine the end use.

Description

The feedstock gets preheated by exchange of heat from outgoing products and is partially vaporized in a specially designed coking furnace. Mild cracking takes place in the furnace where thermal cracking temperatures of 485 to 505°C are reached. From the furnace, the liquid-vapour mixture goes to one of the two coking drums operating in batch. The vapours undergo cracking as they pass through the coke drum. The heavy hydrocarbon liquid trapped in the coke drum is subjected to successive cracking and polymerization until it is converted to vapours and more coke.

The cracked products go to fractionation facilities downstream where cracked gas, naphtha, kerosene and gas oil are separated. The petroleum coke is formed in the drum due to high residence time of cracking in the drum.

The feed stream is regularly switched between drums with one operating and the other under decoking process. Decoking is done using high pressure water jets. This generally follows a 12-16 hour cycle.

Fluid Catalytic Cracking (FCC)

Basic reaction processes are similar to thermal cracking. Normally vacuum gas oil from Vacuum Distillation unit is the feedstock for cracking. The cracking reaction takes place in fluidized catalyst bed. The reactions are directed more towards formation of useful products like gasoline or diesel by suitable choice of the catalyst.

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Figure 16.10: Delayed Coking

Description

Catalytic Reactor and Regeneration systems followed by Distillation to separate cracked products are the key steps. Hot feed, together with some steam, is introduced at the bottom of the reactor via distribution nozzles. Here it meets a stream of hot regenerated catalyst from the regenerator flowing down the inclined regenerator standpipe. The oil is heated and vaporized by the hot catalyst. The cracking reactions take place at 500°C. The vapour, initially formed by vaporization and successively by cracking, carries the catalyst up a riser in the reactor. At the outlet of the riser the catalyst and hydrocarbons are separated. The catalyst, partly deactivated by coke deposit and the vapour enter the reactor. The vapour passes an overhead cyclone separator for removal of entrained catalyst before it enters the fractionators for product separation. The catalyst then descends into the stripper where entrained hydrocarbons are removed by injection of steam.

Figure 16.11: Process

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Air is supplied to the regenerator by an air blower and distributed throughout the catalyst bed. The coke deposited is burnt off and the regenerated catalyst passes down the regenerator standpipe to the bottom of the riser, where it joins the fresh feed and the cycle recommences.

The flue gas leaving the regenerator entrains “fines”, dust formed by mechanical rubbing of catalyst particles taking place in the catalyst bed. Before leaving the regenerator, the flue gas therefore passes through cyclone separators where the bulk of the “fines” are entrained catalyst is collected and returned to the catalyst bed.

Hydrocracking

As the name implies, hydrocracking is cracking in presence of hydrogen. It is a catalytic process at high temperature and high pressure. The initial development of the process had the limitation of operation at very high pressures (above 200 bar). The development of improved catalyst made it possible to operate the process at considerably lower pressure, about 70-150 bar at temperatures of 350 to 430°C.

The main advantages of hydrocracking process are:

Its flexibility with respect to production of gasoline and middle distillates

Quality of its products

Ability to handle a wider range of feedstock like cycle oils from other cracking units

Does not yield any coke as by-product

Better conversion of the gas oil and residues into useful products.

Although more expensive than other cracking processes, it is competitive and often advantageous compared to other cracking processes depending on market parameters.

Hydrocracker Reactions

The main reactions in hydrocracking are:

Cracking

Saturation of aromatics by hydrogenation

And further cracking of it.

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The other reactions occurring are:

Saturation of any olefinic material present in feedstock.

The reaction of desulphurisation, denitrogenation and deoxygenation.

The latter reactions are essentially treating processes, which are used as a separate processing step when other types of cracking units are used. Thus there are two steps of reactions in Hydrocracking: cracking step and treating step. As a result, the product quality is superior.

A combination of catalysts is used. The cracking function is provided by Silica Alumina catalyst or Zeolite catalyst.

Zeolite catalyst permits operation at lower temperatures for the same conversion. Tungsten oxide or nickel oxide catalysts promote hydrogenation reaction.

Description

When the cracking and treating step is combined in one reactor, the process is called a Single-Stage Process.

This simplest of the hydrocracker configuration finds application in cases where only moderate degree of conversion (say 60% or less) is required. The single stage process can also be used for full conversion, but with a limited reduction in molecular weight. An example is the production of middle distillates from heavy distillate oils.

In a multi-stage Process, the cracking reaction mainly takes place in an added reactor. There could be two stage or three stage hydrocracker. These processes were developed to overcome the limitations of single stage process – the limitations of conversion as well as catalyst poisoning by undesirable components. In the two stage process, the undesirable compounds are removed from the unconverted hydrocarbons in the first reactor. In the first reactor, desulphurisation and denitrogenation occurs besides a limited amount of hydrocracking. These are exothermic reactions. The catalyst is arranged in a number of fixed beds. Reaction temperatures are controlled by introducing part of the recycle gas as a quench medium between beds. The liquid from the first reactor is fractionated to remove the product made in the first reactor.

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Unconverted material, with a low nitrogen and sulfur content, is taken out from the bottom of fractionation section. After, heat exchange with reactor effluent and mixing with heated recycle gas, it is sent to the second reactor. Here most of the hydrocracking reactions occur. Effluent from the second reactor is cooled and joins first stage effluent for separation from recycle gas and fractionation. Saturation of any olefinic material is present in feedstock.

Check Your Progress

Fill in the blanks:

1. The objective of ………………. is to minimize the residual stock and maximize yield of useful products.

2. When the cracking and treating step is combined in one reactor, the process is called a ………………. Process.

Summary

In this unit, the process units and utility/offsite facilities required in a refinery was summarized. An overview of application of Linear Programming techniques for refinery optimization was presented. A generic description of typical refinery process was given highlighting the basic system and equipment involved. This was followed by description of some of the important processes used in the refinery along with flow diagram.

Lesson End Activity

Explain the difference between a Single-stage Process and a Multi-stage Process of cracking.

Keywords

Specific Gravity of a Gas: It is defined as the weight of a given volume of the gas compared to the weight of the same amount of air at the same temperature and pressure, where air weight is taken as reference (= 1). Gas Sweetening: Removal of carbon dioxide and hydrogen sulfide from gas is called gas sweetening. Molecular sieves: These are zeolite granules manufactured under controlled conditions to create microscopic pores at its surface.

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1. “Internal Combustion Engines – caused major developments in petroleum refining”, Explain the statement.

2. Explain the term “Fractions”. Give an account on Fractional composition of crude oil.

3. Write a brief note on manufacture of lubricating oils.

4. Discuss the different types of catalytic cracking plants.

5. Draw a neat flow diagram of a fluidized bed Catalytic Cracking Process.

6. Write a note on Catalytic Reforming of Naphtha.

7. What are the petrochemical feedstocks produced in a refinery and what are the process units where they are generated?

Further Readings

Books



Web Readings


www.linde-india.com/.../Natural%20Gas%20Processing %20Plants. pd...



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UNIT 17: Petrochemical Industry

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Unit 17

Petrochemical Industry


What are petrochemicals

What are the various feedstock and products – overall configuration of a petrochemical complex

What are base petrochemicals, intermediates and derivatives

Key elements in planning and integration of a petrochemical complex

Introduction

Petrochemicals are usually plastic products and chemicals that are derived from petroleum or natural gas and are made on a large scale. The petrochemical industry means manufacture, supply and distribution of plastics, fibres and chemicals which are produced from one of the petroleum products as starting material or feedstock. Petroleum products from refinery and natural gas, supply over 50% of the feedstock for the entire chemical industry and more than 50% of organic chemicals.

The petrochemical industry can use other organic or inorganic material as feedstock along with feedstock of petroleum origin. For example polythene is made only with feedstock of petroleum origin (naphtha or ethane as feedstock). But PVC, another petrochemical product, besides having naphtha or ethane as feedstock, also uses chlorine as another raw material in its manufacture.

It is amazing how much oil and gas has penetrated into our lives today. Oil is not just petrol or diesel. The toothbrush we use to start the day, the suit we wear, the fuel we use in our vehicles, the car interiors, back home with cosy furniture, tapestry, and mattress of the bed we sleep on - petrochemicals have got into our lives everywhere.

Petrochemicals consume only a tiny fraction (5 to 6%) of the world’s oil production to give high value products.

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PVC Pipes

Polyester Clothing

Acrylic Carpet

Nylon Can

Figure 17.1: Petrochemicals in Our Lives

As one can see below, petrochemical industry starts with this feedstock of petroleum origin, undergoes processing to generate intermediate chemicals. These intermediate chemicals are further processed mostly through polymerization, but also some times through other synthesis processes to generate finished products.

A vast majority of the petrochemical products are polymers, whose molecular size and structure are tailored by reaction process to suit specific characteristics or properties.

Most of the petrochemical products are polymers, which means molecules formed by combination of several (in thousands) small molecules of olefins called monomers. Polymers are essentially used as plastics or fibres as shown in Table 17.1.

Table 17.1: Polymers in Petrochemical Industry

Plastics FibersPolythene Polyester Polypropylene PolypropylenePolystyrene NylonPVC PolyurethanePolycarbonate CellulosePolyester Polyacrylonitrile

Polymerization Basics

Here we will talk about the basics of Polymerization.

Monomers and Polymers

Some organic molecules with double or triple bond have tendency to join together several times to form a large molecule. Such

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molecules are called monomers. Monomers are tiny molecules e.g. ethylene (mol. wt. 28). The end product is a large molecule called Polymer. A polymer could be of molecular weight of thousands or million.

‘A’ is a monomer that combines to form a polymer.

When another different monomer ‘B’ join the samepolymer chain, the polymer is called co-polymer

A – A – A – A – A – A – A

A – A – A – A – A – A – A

B B B Figure 17.2: Monomers and Polymers

Example: Propylene Polymerization

Monomer in this case is Propylene: CH2 = CH – CH3

A number of propylene molecules chemically combine to form Polypropylene molecule as depicted below:

CH2 – CH – CH2 – CH – CH2 – CH –CH2 – CH

CH3 CH3 CH3 CH3

CH2 – CH – CH2 – CH – CH2 – CH –CH2 – –CH

CH3CH3 CH3CH3 CH3CH3 CH3CH3

CH2 – CH –

CH3

CH2 – CH –

CH3CH3

_

If ‘n’ molecules of propylene combine to form a polymer, its chemical formula is depicted as:

It creates numerous possibilities of molecules of different sizes and configuration. The polymer molecule can be tailor made to suit specific application. By selecting the catalyst and operating conditions for polymerization, one can tailor the size and structure of the polymer molecule.

Co-polymer

When a polymer is made by linking only one type of small molecules or monomers together, it is called a homo-polymer.

When two different types of monomers are joined in the same polymer chain, the polymer is called a co-polymer. Two monomers A and B can join together in different manner to form co-polymers:

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Alternating Co-polymer:

Random Co-polymer:

Block Co-polymer:

Graft Co-polymer:

A

A

A

A

–

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B

A

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B

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B

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B

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B

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–

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B

A

A

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–

–

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A

B

A

B

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–

|B|B|B

|B|B|B

Again it creates numerous possibilities to generate polymers with different characteristics.

Number of molecules of ‘A’ that can be combined together to form various polymers – it can be 2000, 5000, 10,000 or some other number.

Various combinations of copolymers.

Number of molecules of ‘A’ and ‘B’ that can form the co-polymers.

Thus polymer chemists can develop polymers of different molecular sizes with varying properties to suit a particular application. In other words, to a certain extent, the polymers are tailor made.

In the next section, a wide range of polymer products are described. This gives an idea of the wide range of chemicals that are made.

Check Your Progress

Fill in the blanks:

1. ………………….. are organic molecules with double or triple bond that have a tendency to join together several times to form a large molecule.

2. When a polymer is made by linking only one type of small molecules or monomers together, it is called a ………………….. .

Some Common Polymer Plastics

In this section some common polymer plastics are described along with examples of how they are tailored to suit a particular product application.

Activity Find out using the Internet which is the thinnest and thickest form of Polythene in use in our daily lives.

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Polythene

Polythene is among the most widely used polymers. It has simple structure with several ethylene molecules forming a chain. In this case ethane or naphtha is cracked to make ethylene, which is then polymerized.

Examples of polythene products are – grocery bags, shampoo bottles, toys, and even bullet proof vests.

Sometimes some of the carbons, instead of having straight chains of ethane monomers joining together, have branches of a number of monomers together. This is called branched, or low-density polyethylene, or LDPE.

When there is no branching, it is called linear high density polyethylene, or HDPE. HDPE is much stronger than branched polyethylene, but branched polyethylene finds special application for making low cost products (polythene bags) as it is cheaper.

Linear polyethylene is normally produced with molecular weights in the range of 200,000 to 500,000. This means polymer with 7,000 to 17,000 ethylene monomers joining together. Polyethylene with molecular weights of three to six million is referred to as ultra-high molecular weight polyethylene, or UHMWPE. UHMWPE is so strong that it is used for making bullet proof vests.

HDPE Containerand carry bag

LLDPE Film Rolls and Extruder for films

Figure 17.3: Polythene Products

PVC

Polyvinyl chloride is the plastic commonly known as PVC. It finds wide applications in PVC pipes for transportation of water.

PVC is made from vinyl chloride as monomer. Vinyl chloride is a copolymer of acetylene and chlorine. Acetylene is of petroleum origin produced by cracking of ethane or naphtha.

PVC is useful because it resists two things:

It resists water

It resists fire

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It is used for making water resistant such as raincoats, shower curtains, water pipes and floorings etc. It has flame resistance too, because it contains chlorine. When PVC catches fire, chlorine atoms are released, and chlorine atoms inhibit combustion.

Figure 17.4: Vinyl Floorings

Synthetic Rubber

In the middle of nineteenth century, scientists cracked natural rubber molecules into oil, tar and a volatile compound– which they called ‘spirit’. The spirit molecule was identified as C5H8 and named Isoprene.

Manufacture of Synthetic Rubbers is reverse process of above. Synthetic rubbers are polymer products from monomers (e.g. Isoprene) obtained from processing of feedstock from petroleum.

In 1960s, Bayer developed two types of synthetic rubber by polymerizing Butadiene and named ‘Buna’:

Buna S – styrene butadiene rubber, SBR

Buna N – butadiene acrylonitrile rubber, NBR

The other major elastomers (polymers with elastic properties like rubber) developed during mid-twentieth century are poly-chloroprene and butyl rubber (poly isobutylene). Development of new elastomers is taking place continuously.

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TREAD OF TYRE: made of random copolymers of styrene and butadiene. SIDE WALLS: made of polyisoprene.INNER LINER: made of polyisobutylene.

Polyisoprene

Figure 17.5: Automobile Parts

Check Your Progress

Fill in the blanks:

1. ………………. is the plastic commonly known as PVC.

2. Synthetic rubbers are polymer products from …………. .

Petrochemicals in Our Lives

As explained in the beginning, there are numerous plastic polymers of petroleum origin playing major role in our lives. Let us take a quick overview of some more plastics of petrochemical origin.

Automobile Parts

Auto body parts are made of polymer like acrylonitrile-butadiene-styrene plastic, called ABS.

Figure 17.6: Car Body Part Made of ABS Plastic

Electronic Industry Components

Electronics industry is based on materials like copper which are good conductors. For effective functioning, all conductors need good insulators.

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Polymers being good insulators, cables are insulated with polymers like polyethylene and polyisoprene.

For wires that get heated up, insulation made from a fireproof polymer called polyvinylidene fluoride is used.

These are other examples of how polymers are tailor made to suit a particular application.

Figure 17.7: Cables, Wires and Connectors

Fabrics and Fibres

Fibre industry forms another stream of the petrochemical industry. Many of the fibres start with aromatics like Benzene and Xylene extracted from naphtha as the starting material. The aromatics pass through a number of processing and synthesis steps to form plastics like:

Poly-ethylene terepthalate (PET) which are glass like material used to make transparent bottles.

Polyester fibres, Nylon etc. which get into our clothing.

Polycarbonates which are hard and can be used as engineering plastics to make items like gear in our car speedometers.

Socks have same polymers like nylon (and cotton/ cellulose) and a kind spandexof . polyurethane

Sweaters : acrylics, like polyacrylonitrile or rayon

Dresses :polyester

Figure 17.8: Fabrics and Fibres

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Sweaters: Acrylics, like polyacrylonitrile or rayon

Dresses: Polyester

Socks have same polymers like nylon (and cotton/cellulose) and spandex a kind of polyurethane.

Check Your Progress

Fill in the blanks:

1. Auto body parts are made of polymer like ………………. plastic.

2. ………………. are hard fibres and can be used as engineering plastics to make items like gear in car speedometers.

High Impact Plastics

Generally telephone or mobile phone dropping to the ground still works. That is because it is made of plastics which are hard and can take impact. The outside casing is made from a special kind of high-impact polystyrene. It is a copolymer of polystyrene with a rubbery polymer, polybutadiene. It is much less brittle than regular polystyrene.

This again is an example of tailoring a polymer molecule to suit a specific application.

Many of the toys for kids, which have to bear the impact of falling from hands and still work, are made from polystyrene.

Figure 17.9: High Impact Plastic

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Foam

Fast food often comes in boxes made of polystyrene foam.

Napkins are made of paper, which is a form of a polymer called cellulose.

Polystyrene again comes from aromatics as starting material.

Each of such petrochemicals passes through transformation into other intermediate chemicals and then polymerization into final products. Aromatic called ethyl benzene is one of the starting materials to make polystyrene.

Another variety of foam is polyurethane foam. These are commonly used to make mattresses.

Figure 17.10: Foams

Polypropylene

Polypropylene as the name suggests is a polymer of propylene. Propylene is made by cracking petrochemical feedstock like propane, butane or naphtha. The usefulness of propylene comes from its ability to stand rain and humidity.

It is used for carpeting indoor and outdoor, making containers, water pipes, stationary and file covers.

Figure 17.11: Polypropylene Products

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Polymethyl Methacrylate

Blended with aluminium oxides becomes heat resistant – sold as laminating material for furniture

Used as kitchen countertop

Figure 17.12: Kitchen Countertop

Capsule Tray and

Capsules

First Aid Kit

Disposable Surgery Kit

Figure 17.13: Pharmacy Products

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Pharmacy and Cosmetics

Petrochemicals have invaded in this industry also in the form of numerous products like:

Capsule shell

Disposable syringes

Containers for medicines

Packaging for medicines

Check Your Progress

Fill in the blanks:

1. High impact ……………….. is a copolymer of polystyrene with a rubbery polymer, polybutadiene.

2. ……………….. is made by cracking petrochemical feedstock like propane, butane or naphtha.

Types of Plastics

Now having identified plastic materials let us look at broad classification based on its thermal (transformation by heat or moulding) properties:

Thermoplastics

Organic long chain polymers that can be soft when heated are suitable for moulding. As explained earlier, the polymers can have different properties and application by manipulating molecular weight. Typical examples below are of polythene (also called polyethylene):

LLDPE (Linear Low Density Polyethylene): Used to make thin films

LDPE (Low Density Polyethylene): Films, sheets, moulded articles

HDPE (High Density Polyethylene): Bottles, moulded containers, pipes

Polypropylene: Moulded articles, coarse fibres

Polystyrene: Car interiors, disposable food containers

PVC: Table cloth, shower curtain, shoes, auto upholstery

Waste from these can be reclaimed and remolded.

Activity Give some examples of waste from manipulated Polymers being reclaimed and remolded.

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Thermosetting Resins

Plastics of these types undergo changes during processing such that they can not be softened and remolded. Hence it is difficult to reclaim such plastics. Examples of this type are:

Phenol formaldehyde resins: glues, plywood industry,

Urea formaldehyde resins: Storage vessels

Check Your Progress

Fill in the blanks:

1. …………………….. is used to make bottles, moulded containers and pipes.

2. …………………….. is used to make Car interiors and disposable food containers.

Summary

It is amazing how much oil and gas has penetrated into our lives today. Oil is not just petrol or diesel. The toothbrush we use to start the day, the suit we wear, the fuel we use in our vehicles, the car interiors, back home with cosy furniture, tapestry, and mattress of the bed we sleep on - petrochemicals have got into our lives everywhere.

Lesson End Activity

Give the chemical formula for formation of Polythene.

Keywords

Petrochemicals: They are usually plastic products and chemicals that are derived from petroleum or natural gas and are made on a large scale.

Monomers: They are organic molecules with double or triple bond which have a tendency to join together several times to form a large molecule.

Propylene: It is made by cracking petrochemical feedstock like propane, butane or naphtha.

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1. What are Monomers, polymers and Co-polymers?

2. List the different kinds of Polymers in use.

3. What are High impact plastics? Explain the different types.

4. What are the various Thermoplastics in use? Give examples.

Further Readings

Books



Web Readings


www.linde-india.com/.../Natural%20Gas%20Processing%20Plants. pd...



We

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UNIT 18: Production of Petrochemicals

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Unit 18

Production of Petrochemicals


Petrochemicals

The various feedstock and products – overall configuration of a petrochemical complex

Base petrochemicals, intermediates and derivatives

Key elements in planning and integration of a petrochemical complex

Introduction

This unit summarizes various feedstock of petroleum origin, intermediate step of processing the feedstock and the end product. This is further elaborated in the form of a macro-level diagram of the whole petrochemical industry.

Feedstock to Products in Petrochemical Industry

The petrochemical industry comprises of a number of processing steps:

The feedstocks are:

Refinery products such as naphtha, gas oil

Refinery gases containing olefins

Ethane, propane, butane and NGL separated from natural gas. Methane, which forms the bulk of the natural gas, is also a source for petrochemicals.

The first step is to produce the base petrochemicals or primary petrochemicals e.g. olefins (ethylene, propylene) which are monomers, aromatics which are starting point for fibre industry, and synthesis gas (CO and H2) which is the starting point of urea fertilizer and methanol manufacture.

Petrochemical intermediates are generally produced by chemical conversion of base petrochemicals to form more complicated derivative products.

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Table 18.1: Various Feedstock of Petroleum Origin

Figure 18.1: The Petrochemical Industry

Petrochemical derivative products can be made in many ways– directly from base petrochemicals; through intermediate products which are based on only carbon and hydrogen; and through intermediate products which add chlorine, nitrogen or oxygen in the finished derivative.

Some typical petrochemical intermediates are:

Vinyl chloride for polyvinyl chloride (PVC) resin manufacture.

Ethylene glycol for polyester textile fibres.

Styrene which is important in rubber and plastic manufacturing.

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Figure 18.2: Natural Gas to Petrochemicals

Then, there are polymerization and other synthesis processes to make the bulk plastics (polymers), fibres and other bulk petrochemicals.

There are numerous intermediate chemicals and derivatives often needing each other to make final product. Cross flow of chemicals take place to various process units to get into the end products.

Figure 18.3: Naphtha to Petrochemicals

Simple schematic diagram of petrochemical industry based on natural gas route and naphtha route are given in Figure 18.3 and Figure 18.4.

Steam reforming of methane gives intermediates to manufacture urea fertilizer and methanol. Cracking of ethane, propane, LPG

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etc. give olefins as intermediates, which are polymerized into plastics.

The naphtha route has two sub-routes – the cracking route which produces olefins to give polymer plastics and the aromatics route which gives intermediates to produce fibres.

Check Your Progress

Fill in the blanks:

1. Petrochemical intermediates are generally produced by ……………………. of base petrochemicals to form more complicated derivative products.

2. The ……………………. route has two sub-routes: the cracking route and the aromatics route.

Production of the Base Petrochemicals

The three main units to generate the base petrochemicals are:

Steam Cracking of Gases and Naphtha

In this unit, the feedstock is cracked in presence of steam under high temperature. It takes ethane, propane, LPG, NGL, naphtha or gas oil as feedstock and produces olefins such as ethylene, propylene, butylene, butadiene and other intermediates by cracking.

If naphtha is cracked, besides olefins, pyrolysis gasoline containing benzene and other chemicals are formed. Naphtha cracker also has the advantage compared to ethane crackers that due to numerous components of naphtha being cracked, a wider range of olefins are formed as intermediate products. This gives the opportunity to produce a wider range of petrochemicals compared to ethane/propane cracker, which gives mainly ethylene and some propylene as intermediates for making polymers.

On the other hand investment cost for naphtha cracker is higher than that of ethane cracker.

Aromatics Extraction Unit

This unit takes reformate product from the catalytic reforming unit of a refinery and pyrolysis gasoline from Naphtha Cracker as feedstock. The reformate is rich in aromatics. By solvent extraction process, the aromatics are extracted out of the reformate. Then fractionation is done to separate the aromatic components to

Activity Show the chemical reactions taking place in steam processing when natural gas, methane or naphtha is taken as feedstock and synthesis gas (CO+H2) is produced.

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produce BTX (Benzene, Toluene and Xylenes). The BTX forms the intermediate product to manufacture synthetic fibres.

Figure18.4: Production of the Base Petrochemicals

Steam Reforming

Takes natural gas, methane or naphtha as feedstock and produces synthesis gas (CO+H2), which become precursors to urea fertilizers and other petrochemical products. Methanol is an intermediate product from which other petrochemical products like formaldehyde and acetic acid are manufactured.

The next section describes how the base chemicals lead to products.

Check Your Progress

Fill in the blanks:

1. Investment cost for naphtha cracker is higher than that of …………………… cracker.

2. …………………… takes natural gas, methane or naphtha as feedstock and produces synthesis gas, which becomes precursors to urea fertilizers and other petrochemical products.

Ethylene Production by Steam Cracking

Cracking to Produce Olefins A block diagram of the process is presented in Figure 18.5. The feedstock (e.g. ethane, naphtha) is cracked in tubular furnace at

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high temperature (~850°C) in presence of steam. The extent of cracking and product slate depends on operating conditions and feedstock used. Cracking produces olefins and other products. Ethane as feedstock will produce mainly ethylene while naphtha cracking will produce a wide array of olefins like ethylene, propylene, butylene, and butadiene. Some pyrolysis gasoline, rich in aromatics, is formed when naphtha is cracked. At the reaction temperature the products are in gaseous state. Cracked gases are rapidly quenched with water to control the reaction. Further steps are:

Removal of heavy components like pyrolysis gasoline Compression of the gases. Removal of acid gas and bulk water Drying Liquefaction of the gases by cryogenic (sub-zero temperature)

processing. Fractionation of the liquid to separate the olefins.

Thermodynamic and kinetic considerations require following process conditions:

Very short retention time to minimize the development of slower condensation processes.

Effective quench of the reactor effluents to fix the composition and prevent any subsequent reactions.

Figure 18.5: Cracked Gas Processing

Feedstock pricing and product demand determines the selection of feedstock for cracking to olefins.

Effect of Feedstock

The effect of feedstock on the yields of intermediates is shown in Table 18.2. As stated earlier, naphtha and gas oil yield a wider range of intermediates including aromatics compared to ethane.

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Table 18.2: Influence of Feedstock on Steam Cracker Yields (% wt)

Check Your Progress

Fill in the blanks:

1. The extent of cracking and product slate depends on ………………….. and ………………….. .

2. Feedstock pricing and ………………….. determines the selection of feedstock for cracking to olefins.

Steam Reforming

Methane or naphtha is steam reformed to produce synthesis gas, which is essentially a mixture of carbon monoxide, hydrogen and carbon dioxide. CO and H2 form the basic material from which urea fertilizer and methanol are made.

Natural gas is first treated to remove traces of H2S. Then, a mixture of purified natural gas and steam is superheated to 850ºC in a furnace (reformer), where it is converted to synthesis gas consisting of hydrogen, carbon monoxide and carbon dioxide.

The reactions involved in steam reforming are:

CH4 + H2O = CO + 3H2

CO + H2O = CO2 + H2

Activity Find out what the components of urea fertilizer are, with the help of the Internet.

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When hydrogen is the desired product, the reforming reaction is followed by the well-known water gas shift reaction to convert essentially all of CO to CO2. This is done when the process is meant for manufacture of ammonia, which is an intermediate step for making urea fertilizer.

Various steps in the process are:

Methane-rich gas (feed) at around 40 to 50 bar pressure is preheated by reformer flue gas or out going process synthesis gas.

Preheated feed then enters the desulfuriser to ensure removal of H2S and other sulfur compounds to a specification of 0.1 ppm.

Steam is added to desulfurised feed and further heated to 850ºC before entering the primary reformer.

Product gas is cooled to 340-455oC and the gas enters high temperature shift reactor containing a catalyst.

Removal of CO2 to get hydrogen.

To make ammonia, nitrogen produced by liquefaction of air and distillation, is reacted with the hydrogen. Further reaction of ammonia with carbon monoxide produces urea.

Methanol Synthesis

There are two main chemical reactions which occur in this process step:

CO + 2H2 = CH3OH

CO2 +3H2 = CH3OH + H2O

These reactions are also carried out over a catalyst at around 130ºC.

The net effect of these reactions is the production of a crude methanol stream which is about 80% methanol and 20% water.

Crude methanol from the reactor is fed to the product purification section. This section consists of a topping column and a refining column. Hot reformer gas provides heat for distillation. The product methanol specification is for a water content of less that 0.10 wt %.

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CH4H O2

CO+H3H2

Purge Gas

CHOH/HO3 2

Methanol/Water

To hydrogenconsumerTo Burner

Methanol

Water

CO+H2 2

Synthesis Gas

SteamNatural GasReformer

MethanolConverter

Distillation

Flue Gas

Figure 18.6: Methanol from Synthesis Gas

Check Your Progress

Fill in the blanks:

1. Methane or naphtha is steam reformed to produce ……………………. .

2. CO and H2 form the basic material from which ……………………. and ……………………. are made.

Aromatics Production

Key Aromatic Intermediates

As described earlier the main products are benzene, toluene and xylenes (BTX), which go as feedstock for manufacture of synthetic fibres like nylon, polyesters, etc.

Figure 18.7: World Consumption of Benzene-2010

Activity Find out what the comsumption of BTX in India is.

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Composition of Reformate and Pyrolysis Gasoline

Pyrolysis gasoline comes from the steam cracking of naphtha for the production of ethylene, propene and higher olefins. As indicated in Table 18.3, pyrolysis gasoline is quite rich in aromatics.

Table 18.3: Composition of Reformate and Pyrolysis Gasoline

Aromatics Recovery Process

The first process unit for production of aromatics is Catalytic Reforming of naphtha. As described earlier, this unit is normally located in a refinery. To produce the key components (BTX), a naphtha cut is prepared in the refinery which is in the boiling range of BTX and then it is sent for reforming process. Reforming converts paraffins and naphthenic components of naphtha to aromatics.

The next step is Aromatics Extraction. Benzene, toluene and xylenes are taken out of the reformer product by solvent extraction process.

A series of distillation columns follow to separate out the benzene, toluene and xylene components.

Benzene and toluene are distilled out in the first three columns. Xylenes fraction, which is a mixture of the isomers ortho-xylene, meta-xylene and para-xylene are sent to the next series of columns to separate them.

Check Your Progress

Fill in the blanks:

1. ……………….. comes from the steam cracking of naphtha for the production of ethylene, propene and higher olefins.

2. The first process unit for production of aromatics is ……………….. .

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Intermediate and Derivative Petrochemicals

The next step is to create a number of other chemicals called derivative chemicals from the base petrochemicals. The idea is to create new products with various permutation and combinations of reaction between the intermediate chemicals. It is like kaleidoscope creating different symmetrical images through combination of bits of glasses of different colour. The intermediates are like the bits of glasses. The finished plastics are the end images. Let us see some typical examples. The ideal example is the ethylene derivatives or intermediate petrochemicals based on ethylene. A simple configuration of petrochemicals based on ethylene is presented in Figure18.7. Here the primary processing of cracking generates the base petrochemical (ethylene). From base petrochemical, the intermediate petrochemicals are synthesized, e.g. Vinyl chloride monomer and styrene. The final products in the block diagram polythene, VCM are ethylene derivatives.

Figure 18.8: Reforming and BTX Production Process

Figure 18.9: Ethylene Chain

Activity Give another example of a derivative chemical formed from its base petrochemical.

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Processing for End Products – Polymerization

So far we looked into the various methods to produce the base petrochemicals. The base petrochemicals pass through a number of processing steps to produce the end products.

The products are numerous. So are the processes. Let us look at a few examples to understand the various steps leading to end products.

Polymerization

Polymerization is the final step in getting commercial grade plastics or fibres. Polymerization processes are carried out in the presence of a catalyst. There are various techniques of initiating and controlling the polymerization reaction. Polymerization could be in vapour phase or liquid phase or with suspension of catalysts in a liquid medium. The operating temperatures and pressures vary widely from process to process.

Generally the reaction is highly exothermic. Hence removal of heat during the reaction is important in controlling the reaction. Polymers are formed as granules in the reactor. They are separated, dried and finally packed as bulk product.

Polythene Production

Ethylene is fed to the reactor bed reactor where polymerization occurs. The temperature is controlled by circulation of the contents of the reactor through a cooler. The polyethylene are withdrawn from the reactor, and treated to stop residual catalyst activity.

Depending on the requirement of the polyethylene grade and end product application, the polyethylene is either conveyed to the extruder systems where additives are combined to produce natural pelletised grades or to the compounding facility, where the product is combined with dedicated colour master batches to form fully formulated compounds.

The resins are then dried, homogenized and bagged for delivery.

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Figure 18.10: Processing for End Products

Polyvinyl Chloride (PVC)

Polyvinyl Chloride is a chlorinated hydrocarbon polymer. It is produced from vinyl chloride monomer (chemical formula CH2=CHCl). The monomer is called VCM.

It is one example where besides feedstock of petroleum origin, an inorganic compound also is one of the raw materials. Vinyl Chloride Monomer (VCM) is produced from the raw materials of ethylene and chlorine.

For the production of PVC, VCM need to be produced first. VCM is produced in three steps in figure 18.11

Direct chlorination: Ethylene and chlorine are combined in a continuous process to form Ethylene Dichloride (EDC).

EDC cracking: EDC is thermally decomposed into VCM and hydrogen chloride.

The hydrogen chloride is recycled as feedstock to a further stage, the oxychlorination. Unconverted EDC is separated and recycled. The VCM is purified for use in PVC production.

Oxychlorination: Recycled hydrogen chloride is reacted with further ethylene feedstock in the presence of copper chloride catalyst and oxygen. This produces further quantities of EDC, while excess hydrogen is oxidized to form water.

VCM thus produced is taken to the next step, which is polymerization to PVC.

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Oxygen Oxychlorination

Ethylene

VCM

Chlorine Direct Chlorination

EthyleneEDC Purification EDC Cracking

WaterBy Product

EDC Recycle

Hydrogen Chloride Recycle

Figure 18.11: Process for VCM

Figure 18.12: PVC Process

Check Your Progress

Fill in the blanks:

1. Polyvinyl Chloride is a chlorinated ………………… polymer.

2. For the production of PVC, ………………… needs to be produced first.

Summary

In this unit, an overview of the processing steps in the petrochemical industry was presented with macro-level block diagram, defining the feedstock and the final products. The steps were further elaborated for each of the major feedstock like naphtha and ethane.

The primary petrochemical units like steam cracker, steam reforming and aromatics unit were described with flow diagram.

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The base petrochemicals produced by the primary units were defined.

The processing steps required converting the base petrochemicals into derivative petrochemicals and final products were described.

Lesson End Activity

Make an integrated block diagram of a petrochemical complex with both naphtha and ethane as feedstock.

Keywords

Petrochemical Industry: Means manufacture, supply and distribution of plastics, fibres and chemicals which are produced from one of the petroleum products as starting material or feedstock.

PVC: Polyvinyl chloride is the plastic commonly known as PVC. It finds wide applications in PVC pipes for transportation of water.

Polyethylene terepthalate (PET): They are glass like material used to make transparent bottles.


1. What is the feedstock for petrochemical production and how is the feedstock generated? Trace from the oil and gas as starting material with block diagram.

2. Identify 10 items of daily use of petrochemical origin and identify the base petrochemical from which they are made.

3. Describe with a block diagram use of methane as feedstock.

4. Describe ethane cracking process with block diagram.

5. Draw a block diagram tracing the origin of polythene from the gas field.

6. What is polymerization? What are copolymers? Describe the process to make PVC.

8. Expand the following:

(a) PVC

(b) VCM

(c) LLDPE

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9. Describe thermoplastic and thermosetting resins with examples.

Further Readings

Books

Albert V. Hahn, Roger Williams, Herman Zabel, “The petrochemical industry: market and economics”, Technology & Engineering, 1970

Alain Chauvel, Gilles Lefebvre, 1989, Petrochemical Processes: Major Oxygenated, Chlorinated and Nitrated

Klaus Weissermel, Hans-Jürgen Arpe, Industrial organic chemistry, Science

Web Readings

en.wikipedia.org/wiki/Petrochemical

www.cci.in/pdf/surveys.../chemical-petrochemical-industry.pdf

www.chemtech-online.com/.../01/indian-petrochemical-industry.php

info.shine.com › Industry Information

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UNIT 19: Transportation of Oil, Gas and Products: Pipelines

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Unit 19

Transportation of Oil, Gas and Products: Pipelines


Basic configuration of pipeline and its hardware components

Special technologies used in pipeline like SCADA, Intelligent Pigging, etc.

Salient features of offshore and on-land pipeline

Introduction

Hydrocarbons need to be transported from the place where it is produced, to the different users. This unit talks about the different forms of transportation of such Hydrocarbons through pipelines.

Modes of Transportation

Hydrocarbons, liquid or gas can be transported from the source of generation to the bulk user in different ways depending on the location of the source and the user; whether they are located at land or sea, the distance and terrain between the two and the quantity to be transported.

Bulk transportation is done by:

Pipeline

Marine Tankers and Barges

Road and Railway Tankers Pipeline

Pipeline is used for transportation on land (onshore pipeline) and also along the bed of sea (subsea or offshore pipeline), up to a few hundred meters of water depth. For bulk movement of hydrocarbon, pipeline is often the most economical way of transportation. Long distance pipeline is also termed as cross country pipeline, since the pipeline crosses through several hundred kilometres of land across the country or covering a number of countries. Land based pipeline

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is far more economic. Subsea pipeline is used where either pipeline has got to cross the sea or the land is inaccessible due to unfriendly terrain or other reasons.

Marine Tankers and Barges

Marine tankers and barges are used for bulk supply across the sea, where for some reason transport by subsea pipeline is either not economical (e.g. due to depth of sea) or technically or politically not feasible. Supply of the cargo is effected in batches and not continuous.

Road and Railway Tankers

Road and railway tankers are used for transport where the bulk quantity of the cargo is comparatively less, transport is on land and the distances are also comparatively less.

Oil and Product Transportation in India A vast network with combination of marine tanker, pipeline, road and rail transportation mode is used:

Crude oil from indigenous sources is brought to the refinery by pipeline. For imported crude oil, import up to the port terminal is by marine tankers and it is taken further by pipeline.

The products distribution network from refineries to depots is by road, railway and also product pipeline. Marine transportation is also used for products.

Transportation to the retail outlets from depots is normally done by road tankers.

Transportation of gas is normally by pipeline. LNG is transported by marine tankers. LPG can be transported by pipeline, marine tankers, road and railway tankers.

Figure 19.1: Modes of Transportation

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Check Your Progress

Fill in the blanks:

1. For bulk movement of hydrocarbon ………………… is often the most economical way of transportation.

2. Long distance pipeline is also termed as ……… pipeline.

Pipeline Systems

Pipeline is the most preferred option to transport oil, gas or products in bulk. It could be thousands of km long, branched and networked. Configuration of both oil and gas pipeline are very similar. A cross country oil or gas pipeline system normally starts with pumping of oil or compression of gas to develop the requisite pressure to travel a long distance. The pressure required for pumping of oil or compression of gas depends on pipeline length, pipe diameter, and destination pressure requirements. For long pipelines (hundreds of km), booster compressors for gas pipeline and booster pumps for oil pipeline are required along the length. Gas or oil (or any other liquid being transported) is distributed along the length to many customers. Normally the following minimum processing facilities are required upstream at the oilfield, which has been described earlier:

Separation of oil, condensate and free water Compression of gas, if necessary to deliver at required

pressure at shore Pumping of oil Dehydration of gas to protect the pipeline from corrosion Sweetening, if necessary, to remove H2S Metering Corrosion inhibitor injection

Configuration of Cross Country Pipeline

A typical cross country pipeline system starting from an offshore field has the following facilities along its route as shown in Figure 19.2:

An offshore platform where the oil or gas is produced.

PLEM near the platform (Pipeline End Manifold) from where the pipeline starts (or a Despatch Terminal on land).

Activity Find out using the Internet which are the Major Gas pipelines in India.

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An SPM (Single Point Mooring) connecting the subsea pipeline to a tanker, if oil is transferred from a tanker instead of platform.

Pig Launcher.

Subsea pipeline reaching shore at what is called Landfall Point.

A Receiving Terminal at the landfall point. It has equipment like pig receiver, filter, storage for oil, pumping for gas, processing of gas, compression and dehydration. The description of the various equipments is given in later part of this unit.

From the receiving terminal oil or gas is sent through cross country pipeline, which could be hundreds of kilometres in length to several customers along the route. There could be several customers along the routes like power stations, fertilizer plants or other industries.

For distribution to each customer, there will be a Distribution Terminal having filter, meter, etc.

Normally, there are booster stations with booster compressors for gas and booster pumps for oil after every few hundred kilometres to compensate for the pressure loss in the pipeline.

The entire facility is monitored and managed by SCADA system. SCADA is a central monitoring system, which monitors the entire pipeline parameters over several hundred kilometres by telemetry and telecontrol.

Normally, LPG and petrochemical feedstock like ethane/propane are taken out before giving the gas to the industrial consumer. The bulk of the remaining gas is mainly methane (above 90% by volume).

Figure 19.2: Pipeline Configuration

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Example of Cross Country Pipeline

There are several pipelines in Europe and the Americas over thousand kilometres long, carrying gas, or oil or products. In India the longest pipeline so far is the HBJ Pipeline (Named after the land route Hazira-Bijapur- Jagdishpur) along with its origin at the offshore fields at the west coast.

The line originates at offshore, carrying associated gas from Mumbai High and free gas from South Bassein fields to Hazira. It is a 36 inch diameter pipeline. It was designed to carry 20MMSCMD of gas, expandable to 30 MMSCMD capacity. After treatment of gas at Hazira, the HBJ pipeline starts with compression of the gas. Its first phase was 1700 KM long, traveling through Gujarat, Rajasthan, Madhya Pradesh to UP and North India. Along its entire route, it provides feedstock to a number of fertilizer plants and power plants at a number of places (Guna, Vijaipur, etc.) LPG plants extract the LPG before the gas is given to the buyer. Also there are six booster stations.

Figure 19.3: HBJ Pipeline

Pipeline Facilities Description

Now let us look at the some of the equipment described in the previous section in order to get a better understanding.

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PLEM and SPM

Figure 19.4 shows offshore platform linked to a PLEM, from where the pipeline starts. PLEM means Pipeline End Manifold, which is essentially a set of valves and flanges along with pipe header supported by steel structure, from where the pipeline carrying oil, gas or any other material starts. Piping from the platform carrying oil or gas is joined at the PLEM, which is fixed at the sea bed by piling.

PLEM also has pig launcher, the function of which will be explained later.

Figure 19.4: Offshore Platform and PLEM

Figure 19.4 also shows a tanker being loaded with the oil produced in the platform. For this a floating manifold called SPM (Single Point Mooring) is utilized. A more detailed picture of an SPM is given in Figure 19.5.

It essentially is a floating manifold in a buoy, connected by flexible hose to the PLEM, and permanently anchored in the seabed. An oil tanker can be anchored near the SPM, get connected to the manifold at the SPM and receive the oil through the PLEM.

Figure 19.5: Tanker Receiving Oil from an SPM

SPM (also known by various trade names like SBM i.e. Single Buoy Mooring) can also be used to unload from a tanker and take

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oil and product to storage terminal at shore. In such cases where product or oil is imported by tanker, the tanker anchors near the shore, as near as it can come with available draft in the sea. An SPM is anchored at that point connected to a PLEM. PLEM has pipeline leading to the shore terminal.

Pigging and Pig Launcher/Pig Receiver

Long distance pipelines need cleaning and monitoring from time to time, which is done by Pigging. A pig is a cylindrical or spherical in shape, made of metal or plastic with or without brushes at the edge and having diameter close to the pipe diameter. It is pushed inside pipeline through a pig launcher normally at the pumping or compression station. Originally it was developed for cleaning and pushing the condensate out of pipelines.

Pigging is primarily the processes or activities of sending a Pig through a pipeline. It may also include defining the purpose of pigging, selection of suitable Pig, launching and receiving the Pig and tracking the Pig as it passes through the pipeline. The main purpose or functions of pigs are:

To clean and remove debris.

For pre-inspection and certification of newly built pipeline.

To maximize efficiency and ensure continuous operation by removing pipeline deposits.

To monitor corrosion and damage on the internal surface of the pipeline.

Today intelligent pigging is an accepted way of pipeline monitoring and maintenance. Intelligent pigs have electronic device that scans and monitors pipeline inner surface and thickness and records the data. They are also known as smart pigs.

Pictures of various types of pigs are presented in Figure 19.6.

Figure 19.6: Pigs of Various Types

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Pig Launcher is used for launching and despatching pigs to the outgoing pipeline. The launching station is located at oil/gas source. The launching station comprises of a pig launcher. After the pig is launched into the pipeline, it is trapped at the other end of the pipeline by Pig Receiver.

Metering and Quality Measurements

Metering is very important equipment in oil and gas pipeline distribution system. They have to be accurate, standardized and calibrated. It has to be certified and accepted by both oil/gas producer and the customers, since the huge financial transaction takes place based on quality and quantity of the oil or gas being distributed.

Along with the meter to measure the quantity of oil or gas being transferred, there has to be an instrument for online measurement of quality. For example, for oil it is important to measure water content. Also temperature and pressure need to be measured for volume standardization.

For gas, the temperature and pressure are measured to quantify the gas under standard conditions. The composition is measured online for the quality of gas in terms of calorific value and contaminants.

Storage and Pumping of Oil

Storage and pumping of oil in the terminals or booster stations in the oil pipeline system is one of the most important facilities. Often a large Storage Terminal is built for the refinery. A typical flow diagram of oil, storage, pumping and pig launcher facility is shown in Figure 19.7. Normally there is a booster station every few hundred kilometres. There are pig receivers and pig launchers besides storage and pumping system.

Gas Compression Facility

As in case of the oil, besides compression at the source, for a cross country gas pipeline, booster stations are required every few hundred kilometres to maintain the pressures in the pipeline. Normally, pipeline pressures are maintained above desired pressure as the additional compression provides some for gas storage in the pipeline.

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Figure 19.7: Oil Storage and Pumping

Filter/Coalescer

In gas pipelines, Gas Filter Coalescer is used for the cleaning of the arriving gas from dust particles and for removal of any entrained liquid from the gas. Normally, there will be two filters arranged in parallel in the system – one in operation and the other in standby condition.

Pressure Reducing Station

Often gas has to be delivered at specific pressures, which may be lower than the pipeline pressure. Pressure Reducing Station is used for reducing the pressure of the incoming upstream gas to the required downstream pressure.

Burial Philosophy – Onshore Pipelines

Onshore pipelines should be buried to protect them from mechanical damage, fires and tampering. A depth cover of 0.8 M to 1 M would be adequate in most cases. The location of buried pipelines should be clearly identified by markers.

In areas where the risk of interference by mechanical excavators is high, a warning tape should be installed in the excavation above the pipeline to further lower the risk.

Burial Philosophy – Offshore Pipelines

The section of the pipeline within the shore approach should be buried to a depth to ensure that it is not exposed due to erosion of sand. There is otherwise no requirement to trench or bury offshore pipelines, unless necessary in order to achieve pipeline stability, mechanical protection or thermal insulation.

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It should be noted that protection against dragging anchors from large ships, particularly in soft soils, requires significant burial depths.

Special Features and Systems for Pipeline Installations

Pipeline Corrosion Control

Pipeline facility requires huge investment and carries large bulk of oil and gas resources vital to the economy of a country. Protection of pipeline from corrosion and corrosion control are vital for preservation of the asset. It should be noted that most pipelines are buried more than 1.5 meters deep for safety and environmental considerations.

There are two types of corrosion in the pipeline:

Internal Corrosion due to chemical reaction of metal with corrosive components of the gas like CO2, H2S.

External Corrosion due to the external environment of the pipeline i.e. soil, water, etc. Caused by electrochemical process.

The internal corrosion (due to the presence of CO2, H2S) is prevented by ensuring that there is no condensation of moisture in the pipeline. Both CO2 and H2S become corrosive when water in liquid form is present. This is generally accomplished by dehydrating gas at supplier’s end and corrosion inhibitors can also be injected in the pipeline.

The external corrosion can be quite severe as shown in Figure 19.8.

Figure 19.8: Corrosion on Unprotected Buried Pipe

External corrosion in a buried pipeline is electrochemical type of corrosion and takes place due to formation of anodic and cathodic

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sites on the body of the pipeline. Anodic and cathodic sites form for many reasons:

Impurities or inclusions in the metal

Localized stresses

Grain size or composition differences

Discontinuities on the surface

Differences in local environments (e.g., temperature, oxygen, or salt concentration)

Cathodic protection is a procedure by which an underground metallic pipe is protected against corrosion. A direct current is impressed onto the pipe by means of either a sacrificial anode or a rectifier (DC Source). Corrosion will be reduced where sufficient current flows onto the pipe.

Pipeline Coating

All buried pipelines are coated externally (Figure 19.9) by a suitable anti-corrosion coating, supplemented by cathodic protection which covers any damaged or deteriorated area of the coating. For each specific pipeline system the selection of the coating material is based on the specific corrosion problems to be encountered. Coating material used for the external protection of oil and gas transmission pipeline systems are:

Hot applied asphalt or coaltar enamels

Polyethylene coatings (PE)

Fusion bonded epoxy coatings (FBE)

Plastic tape wrappings

Asphalt mastic coatings

Cold applied epoxy coal tar coatings.

Figure 19.9: Coating Being Applied on Pipeline

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Flare and Venting

The pipeline system is provided with flare and venting system, which handles the relief and blow-downs of the contained hydrocarbon in the system.

Control and SCADA

Control of pipeline spanning several hundred kilometres poses a difficult challenge. The monitoring and critical control is done from Master Control Station using SCADA System. The SCADA System provides the operational interface to support the operation of natural gas pipeline system. The interface provides the capacity to acquire pipeline and pipeline facilities operation conditions and status.

SCADA stands for Supervisory Control and Data Acquisition. A simple schematic representation of SCADA System is given in Fig. 19.10 and 19.11.

It refers to the combination of the fields of telemetry and data acquisition. SCADA encompasses the collection of the information, the method of transfer from the remote site, the analysis and control of the system and display of the received information.

It is done with measurement of data and parameters at various locations and transmission using communication medium like optical fibre or microwave or satellite communication linked to computers.

Figure 19.10: SCADA System

SCADA facilitates the capability to monitor and control network operations in real time. SCADA systems are distinguished from traditional control systems by their extensive use of telemetry to link physically isolated measurement and control points.

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The use of SCADA system facilitates:

Operation and Maintenance

Planning

Safety Management

Accounting

SCADA is also used for Leak Detection along with flow modelling software. Dynamic Fluid Dynamic models for pipeline flow of oil and gas can monitor the flow measurements at various locations in the pipeline, match them with the supply volumes and consumer withdrawals and predict leakages and approximate location of the leakage.

Figure 19.11: Pipeline Real-Time Telemetry System

Check Your Progress

Fill in the blanks:

1. SCADA facilitates the capability to monitor and control network operations in ……………… time.

2. Cathodic protection is a procedure by which an underground metallic pipe is protected against ……… .

Pipeline Project Implementation

Like any other project, a cross country pipeline project too passes through various phases of implementation from feasibility study to design, construction and operation as shown in Figure 19.12. But

Activity Using the Internet, find out more about Right of Way (ROW).

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like any other industry, there are certain special aspects that need to be taken care of in a pipeline project.

Figure 19.12: Pipeline Project Implementation

Safety and reliability in design and construction is important as pipeline carries a huge reservoir of explosive substance through environmentally sensitive areas.

Also since access is required on the land through which the pipeline passes, legalities involved in getting Right of Way (ROW) is a very important.

Some of these aspects will be discussed in this section.

Pipeline Design Features

Basic Parameters

The pipeline is designed taking into consideration the operating conditions and requirements over its entire projected life cycle including final abandonment, i.e.

The maximum planned throughput and turn-down

The characteristics of the fluids to be transported

The pressure and temperature requirements

The mode of operations

The geographic location, and the environmental conditions.

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Hydraulic Design

In order to determine the possible range of operational parameters of the pipeline, a hydraulic analysis should be performed.

For a given pipe size, fluid properties and flow rate, the hydraulic analysis should provide the pressure and temperature profiles all along the pipeline for steady state and transient conditions.

Full account should be taken of possible changes in flow rates and operational modes, over the complete operational life of the pipeline.

The hydraulic analysis should provide information on: surge pressure during shutdown of a liquid line, turn-down limitations and inhibition or insulation requirements to prevent wax or hydrates deposition, effect of flow conditions on the efficiency of corrosion inhibitors, liquid hold-up and slug control requirements at the downstream end of two phase lines.

Three most important end results of design are:

Material of pipeline

Diameter of the pipeline

Wall thickness

Pipe Material Selection

The selection of the pipeline material type is a fundamental issue to be decided at the conceptual design stage of a pipeline project. The most frequently used pipeline materials are carbon steel. When the fluid is corrosive, due to presence of hydrogen sulfide, carbon dioxide, or oxygen, special steel is used. The potential long-term impact of corrosion has to be considered during design and it can be demonstrated that the pipeline can remain fit-for- purpose throughout its lifetime.

Diameter of the Pipeline

The diameter depends on:

Available pressure drop i.e. the difference between starting pressure (P1) and desired delivery pressure (P2)

Actual pressure drop depends on design flow rate (Q) selected and friction factor.

Static head adds up to pressure differential in case of liquids.

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Actual pressure drop should be less than available pressure drop

Wall Thickness

Wall thickness of the linepipe depends on the strength of pipe material and the internal pressure of the fluid inside the pipeline.

Pipeline Risks

The most common pipeline threats which may lead to the loss of technical integrity are given below:

Internal corrosion and Hydrogen Induced Cracking (HIC)

Internal erosion.

External corrosion and bi-carbonate stress corrosion cracking

Mechanical impact, external interference.

Fatigue, e.g. sudden surges of pressure in the fluid

Hydrodynamic forces

Geo-technical forces

Growth of material defects

Over-pressurization

Thermal expansion forces

Environmental Impact Assessments (EIA)

The factors which are critical to public safety and the protection of the environment should be analysed over the entire life of the pipeline, including abandonment. The risk should be reduced to as low as reasonably practicable, with the definite objective of preventing leaks. The level of risk may change with time, and it is likely to increase to some extent as the pipeline ages.

An environmental impact assessment is carried out for all pipelines or groups of pipelines. EIA is a process for identifying the possible impact of a project on the environment, for determining the significance of those impacts, and for designing strategies and means to eliminate or minimize adverse impacts.

Pipeline Routing

The selection of the route is done by taking full account of the associated risks, particularly safety and environmental risks, the

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accessibility for maintenance and inspection, as well as normal direct cost considerations.

Pipeline Construction

Pipeline construction is performed in accordance with the relevant sections of the ANSI/ASME Codes, and has to comply with any additional criteria resulting from the design. The construction procedures ensures that the pipeline is installed safely, on time and with minimum impact on the environment.

Steps in onshore pipeline construction are:

Survey and Route Selection

Securing Right of Way (ROW)

Site Preparation

Coating and Delivery of Pipe Pieces at Site

Welding and Stringing

Inspection and Testing

Laying of Stringed Pipe

Hydro-testing

Mechanical Completion

Site Restoration

Survey and Route Selection

The selection of the route is done by taking full account of the associated risks, particularly safety and environmental risks, the accessibility for maintenance and inspection, topography, soil data, river crossings, road crossings as well as normal direct cost considerations. This involves a lot of surveys and analysis of possible routes based on maps, aerial surveys, satellite imagery, GPS (Global Positioning System) and other techniques.

Securing Right of Way

For the most part, cross country pipelines are not visible because they are located under the street or are buried in rights-of-way (ROW) secured by an easement. Easement implies right held by one person to make use of the land of another person for a limited purpose, right of way, license or permit.

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Before a pipeline is constructed, ROW is obtained to secure the land rights necessary to construct, operate and maintain the pipeline. The ROW agreement restricts the landowner’s rights within the ROW corridor to uses that are compatible with the operation and maintenance of the pipeline.

The ROW width is normally 30 meters for construction and 15 meters for operation.

Site Preparation

The route is cleared of trees and plant life, the topsoil removed and all material stockpiled for re-instatement (clear and grade). Pipe is delivered by truck and laid along the route (see Figure 19.13 and Figure 19.14).

Coating of Pipeline

Exterior of pipes is generally coated at the shop or site. But at the time of stringing coating may be partly damaged. The coating is repaired and welded joints are freshly coated for corrosion protection.

Stringing

The pipelines themselves are fabricated from 12 metre pipe lengths. They are then welded into 250 metre lengths, known as strings. The pipe is then lowered into the trench. Backfill material is added beneath and around the pipe to secure it in place.

When the pipe is covered to a depth of at least one meter, restoration of the area begins.

If necessary, the pipe is bent to follow the natural contour of the land. Welds are stringently tested to ensure their integrity. This is done while laying the pipeline in a string (see Figure 19.14).

Inspection and Testing

1. Non-Destructive Testing (NDT): Pipelines are tested by NDT methods. The two techniques most used are:

Radiography Testing (RT): X-ray plates are obtained using Gamma isotopes for all weld joints.

Ultrasonic Testing (UT): In this method high-frequency sound waves are used to detect imperfections or changes in a material. Reflections or echoes are returned from

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spots in the material, where the density is lower (weld penetration is inadequate).

Other methods of NDT are:

Magnetic Particle Testing (MPT)

Liquid Penetrant Testing

2. Hydro-Testing: After full length of the pipeline is laid, the Hydrotesting of the pipeline is normally conducted from end to end.

Figure 19.13: Laying of Pipeline

Figure 19.14: Pipeline Right of way

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Operating and Monitoring of Pipeline

There are three important features of operation and monitoring of pipelines:

(1) Overall control and monitoring of pipeline by SCADA system from a Master Control Station (MCS) as described earlier.

The types of instrumentation in a pipeline system can comprise the following:

Flow, pressure, temperature measurements (Flow indicators, Pressure indicators, Temperature indicators)

Quality measurements

Safety systems

Supervisory Control And Data Acquisition (SCADA) systems.

Leak detection systems.

The data is transmitted from various locations in the cross country pipeline system to the MCS from where the whole pipeline operation is monitored.

The SCADA system is also used for leak detection by comparing mass flow rates through the pipeline at various locations along the route. It can detect leak up to 0.5-1.0% of the total flow and locate it .

Other applications of SCADA system are:

Pipeline efficiency monitoring

Monitoring movement of pigs

Pipeline integrity monitoring and leak detection

Gas quality monitoring

Early warning of adverse operating condition

(2) Inspection and Surveillance all along the Route (ROW)

Inspection and maintenance of the pipeline and accessories all along the ROW is carried out at regular intervals.

The pipeline can be swiftly shutdown if control centre operators observe abnormal conditions. Automatic shutdown is also prompted by the SCADA system when preset safety limits are exceeded.

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Surveillance and protection along ROW is carried out by:

Using aircraft, land vehicle or foot patrol, to look for potentially damaging activities such as unauthorized digging and construction.

Using high resolution satellite imagery for outside intervention and sabotage attempts.

Adding traffic barriers to above ground equipment near roadways.

Reviewing locations of, and supplementing where appropriate, to the existing ROW markers.

Increasing ground surveillance of lines in densely populated areas.

(3) Monitor and Protect the Pipeline from Corrosion

Intelligent pigging with sensors in the pig, transmitting data on pipeline inside surface is used for:

Corrosion monitoring – Curvature monitoring – Leak detection

Metal-loss/corrosion detection

Photographic inspection;

Crack detection

The cathodic protection system for the external corrosion of the pipeline also needs regular monitoring.

Cost Comparison of On-Land and Sub-Sea Pipelines

The major cost of on-land pipeline will comprise of:

Survey of Route

Acquiring ROW

Line Pipe

Wrapping and Corrosion Coating

Welding of Line Pipe

Trenching

Laying of Pipes

Backfilling and Restoration

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Cathodic Protection by Impressed Current System

Placement of Route Markers

The major cost of subsea pipeline will comprise of:

Survey of seabed route including measurement of current and wave

Line Pipe

Concrete Coating for Weight Enhancement

Cathodic Protection by Sacrificial Anodes

Laying of Pipes by Laybarge

Welding of Line Pipes (partly on barge)

Installation of Pipe Risers (vertical line from the platform to sea bed)

The cost of line pipe may be almost the same for the same quantity of fluid flow (except in case of subsea pipe line the thickness may be increased for stability and safety). The major difference between on-land pipeline and subsea pipeline is the cost of concrete coating, cathodic protection (sacrificial anode is much costlier than impressed current system), and the pipeline laying method.

The on-land pipeline is laid by side boom tractors, whereas for the subsea pipeline the laying is by lay-barge. The rates for lay-barge is much higher than rates for side-boom tractors.

Check Your Progress

Fill in the blanks:

1. ………………….. is a process for identifying the possible impact of a project on the environment, for determining the significance of those impacts, and for designing strategies and means to eliminate or minimize adverse impacts.

2. The most frequently used pipeline materials are ………………….. .

Summary

In this unit, the various modes for bulk transportation of hydrocarbon resources were described at the beginning. This was

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followed with a detailed description of pipeline transportation facilities. At first a system description of a cross country pipeline starting from an offshore or onshore oilfield was given. Subsequently each component of the system such as terminals, pigging, pumping or compressor stations etc. was described in detail.

A macro-level description of parameters taken into account in design and optimization of a pipeline was given. Also various steps in implementing pipeline projects and construction of cross country pipeline was described. This was elaborated with an example of a cross country pipeline project. Various factors taken into consideration for a grass roots project example (HBJ Pipeline) were elaborated.

Lesson End Activity

Write a short essay on Supervisory Control and Data Acquisition (SCADA) systems.

Keywords

SCADA: It is a central monitoring system, which monitors the entire pipeline parameters over several hundred kilometres by telemetry and telecontrol.

Pipeline End Manifold(PLEM): It is essentially a set of valves and flanges along with pipe header supported by steel structure, from where the pipeline carrying oil, gas or any other material starts.

Pig: A pig is a cylindrical or spherical in shape, made of metal or plastic with or without brushes at the edge and having diameter close to the pipe diameter.

Pigging: It is primarily the processes or activities of sending a Pig through a pipeline.


1. Which are the different modes of transportation of Hydrocarbons?

2. Pipeline is the most preferred option to transport oil, gas or products in bulk. Why?

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3. Explain the configuration of a Cross-country pipeline.

4. Explain the following terms:

(a) SCADA

(b) PLEM

(b) SPM

5. Explain the process of Pigging.

6. What is Pipeline Project Implementation? Explain.

Further Readings

Books

Jean Masseron, “Petroleum Economics”, Technology & Engineering

H. K. Abdel-Aal, Bakr A. Bakr, M. A. Al-Sahlawi, “Petroleum Economics and Engineering”, Technology & Engineering, 1992

Alberto Clô, “Oil Economics and Policy”, Business & Economics, 2000

M.A. Adelman, (1962-1993), “The Economics of Petroleum Supply”, Technology & Engineering - 1962

Ian Lerche, Sheila Noeth, (2004), Economics of Petroleum Production: A Compendium, Volume 2

Web Readings


www.youtube.com/watch?v=AuvvaZrUDe4

reaccess.epu.ntua.gr/LinkClick.aspx?fileticket... tabid=579&mid

www.careersinoilandgas.com › ... › Occupational Summaries

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UNIT 5: Case Study

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Unit 20

Case Studies

Objectives After analyzing these cases, the student will have an appreciation of the concept of topics studied in this Block.

Case Study 1: Loading Arm

As one of the few Australian companies with Loading Arm experience, Camco was contracted by a major gas producer to refurbish their Condensate Loading Arms. The Loading Arms were removed by our team and transported Perth for refurbishment. The overhaul of the Loading Arms required a significant commitment of workshop facilities and available engineering disciplines.

Problem:

The Loading Arms were in poor condition and needed a dedicated team backed by technical support with a specialised facility to repair and manufacture components. Adding to the complexity of the repairs was the difficult task of removing the Loading Arms from the wharf between ship movements whilst unpredictable weather conditions prevailed.

Question

Critically analyse the case. Source:http://www.volunteeringaustralia.org/files/1E8H8EVUL8/Case%20Studies.pdf

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Case Study 2: LNG Unloading Arm Installation at Kochi Seashore

The project site, LNG (Liquefied Natural Gas) receiving and regas (regasify) terminal, is a part of newly created Special Economic Zone located on the sea shore of south-western India. To meet the civil and industrial demand of natural gas in this deficit area where no piped natural gas is available, the first LNG terminal in south India was formed in 2007 using reclaimed land with dimensions of 840 m X 400 m and a 330m long x 5m wide jetty trestle extending from the land at the south side.

At the end of the trestle, a reinforced concrete unloading platform was built to accommodate four sets of Unloading Arms (ULA) which serve to unload the LNG from the cargo ship to the LNG storage tank via cryogenic pipelines. The unloading arms are the most important and critical units installed in the LNG receiving terminal, which require a higher stability for their installation to avoid any potential damages or leakage during the unloading of LNG from ship.

It was planned to finish the unloading arms installation from the landside using a temporary bund before arrival of the summer monsoon, however it didn’t happen due to logistic reasons. To meet the schedule it was decided to install the unloading arms using a floating barge with a mounted crane, trying to finish the installation by the end of May 2011.

However, when the ULA risers were installed on 27 May 2011, the summer monsoon (southwest monsoon) arrived from the Indian Ocean, sweeping the south of India with abundant rainfall and wind. The floating barge was hit by the waves and winds, and the 250 ton crane could not be kept steady to install the ULA main units. To secure the ULA, the management decided to suspend the installation and transport the ULA to the safe place for temporary storage.

Questions

1. Bring out the critical points in this case.

2. Do you think the management’s initial decision was right?

3. What should the management do next? Source: http://www.isope.org/publications/proceedings/ISOPE/ISOPE%202012/data/papers/vol1/2012-LKC-07Khetarp.pdf

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UNIT 21: Transportation of Oil, Gas and Products: Other Modes

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BLOCK-V

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Detailed Contents UNIT 21: TRANSPORTATION OF OIL, GAS AND PRODUCTS: OTHER MODES

Introduction

Transportation by Marine Tankers

Road and Railway Transportation

Storage of Liquids and Gases

UNIT 22: HEALTH, SAFETY AND ENVIRONMENT

Introduction

Hazards – Definitions, Causes and Types

Chemical Hazards

Safety Management Techniques in Plant Life Cycle

UNIT 23: IT APPLICATIONS IN HYDROCARBON INDUSTRY

Introduction

Application of Information Technology

IT Application in Design and Engineering

IT Application in Operation

Maintenance Management Software

Enterprise Resource Planning and Management (ERP)

UNIT 24: ECONOMICS AND TECHNOLOGY TRENDS

Introduction

Natural Gas Trends

Coal vs. Natural Gas

Petrochemical Business Scenario

UNIT 25: CASE STUDY

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Unit 21

Transportation of Oil, Gas and Products: Other Modes


Overview of transportation by road and railways

Overview of Transportation by marine tanker

Methods of storage of Liquids and Gases

Introduction

In the earlier unit, you learnt about transportation of Oil and Gas through pipelines. In this unit, you will learn about transportation through Marine Tankers and by Road and Rail transport.

Transportation by Marine Tankers

The following paragraphs talk about Transportation of Oil and Gas by Marine tankers.

Oil and Product Tankers

Oil tankers come in two basic types, the crude carrier and the clean products carrier. The crude carrier normally carries crude oil and the other type carries the refined products, such as petrol, gasolene, aviation fuel, kerosene and paraffin. Tankers range in all sizes, from the small bunkering tanker (used for refuelling larger vessels) of 1000 DWT (Dead Weight Tons) to the real giants: the VLCC (Very Large Crude Carrier) of between 200,000 to 300,000 DWT and the ULCC (Ultra Large Crude Carrier) of over 300,000 DWT.

Typical sizes for oil carrying tankers are given in Table 21.1.

A picture of an oil tanker is shown in Figure 21.1.

Activity Name one Indian Crude Carrier and one Clean products carrier with the help of the Internet.

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Table 21.1: Oil Tanker Sizes

Figure 21.1: VLCC Tanker

LNG Transportation by Marine Tankers

The shape of the LNG carrier is quite unmistakable, with the spherical thermo-flask like shape of the Moss tanks visible along the deck (Figure 21.2). Although, the carriage of huge quantity of explosive liquefied gas - kept at below freezing temperatures as an unstable liquid appears extremely hazardous, however LNG carriers have the best safety record of all maritime vessels. The vessels themselves are maintained meticulously, and renewed frequently. There have been accidents involving LNG/LPG carriers, but where such events have occurred, so far, they have been successfully managed to vent off the cargo into the atmosphere, thus rendering the lethal cargo harmless.

Figure 21.2: LNG Carrier

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Tanker Loading and Unloading Systems

Oil, LNG and products are normally loaded and unloaded with the tanker berthed alongside a Jetty, having loading arms and unloading arms (Figure 21.3). Once the tanker berths, the loading arm or unloading arm is connected to the tanker. For unloading, a pump in the tanker pumps out the oil or products. A tanker may carry a number of products, which can be pumped out in batches, separated by pigs.

Oil and products are also loaded or unloaded by SPM connected to a pipeline to the shore termina.

Figure 21.3: Loading and Unloading System

Figure 21.4 depicts picture of a tanker unloading at a jetty with blown-up figures of the loading arms.

All large coastal storage and handling terminals have this kind of facility. Where there are limitations of draft for the size of the tanker, use of SPM is made for loading and unloading.

Figure 21.4: Crude Loading and Unloading Facility

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Check Your Progress

Fill in the blanks:

1. Oil, LNG and products are normally loaded and unloaded with the tanker berthed alongside a ………………., having loading arms and unloading arms.

2. Once the tanker berths, the ………………. arm is connected to the tanker.

Road and Railway Transportation

Road Tanker Loading Systems

Two systems exist for the loading of bulk road tanker:

Top Loading: In traditional top loading the product is loaded by inserting a loading arm from the top through the open manhole in the tank compartment of the vehicle.

Bottom Loading: In bottom loading the product is loaded by connecting the loading arm/hose to a dedicated self-sealing coupling at the bottom of the vehicle.

The displaced vapours are evacuated via a second arm/hose connected to the vapour collection coupling at the bottom of the vehicle.

Typical facilities for tanker loading comprise:

Loading pump pumps the product to the gantry to one or more loading arms

Emergency Shut Down (ESD) valve to isolate the system rapidly in an emergency

A filter to ensure product cleanliness and to protect the flow meter

A flow meter

A flow control valve to control the flow

The loading arm connected to a dry-break coupling

The vapour return hose

The overfill protection sensor to give a signal if the road vehicle is overfilled

Activity Make a presentation on Road Transportation of Oil and Gas.

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The earthing connection (combined with overfill protection connection) to discharge the static electricity which is generated during loading

The interlock system in order to check if all conditions for safe operation are fulfilled (e.g. earth connected, no overfill, vapour return hose connected, etc.).

Top loading has been predominant. The system is very flexible; almost any type of vehicle can be loaded through an open manhole and dedicated (often specific) couplings as needed in bottom loading are not required.

The system is also relatively simple; the personnel can follow the loading operation through the open manhole and fill to a level indicator in the tank compartment. For bottom loading, level sensors are necessary.

However, increasingly the trend is towards bottom loading, due to environmental legislation on vapour emissions both at loading terminals and retail outlets. Bottom loading should be employed for solvents and common white oil products from safety considerations.

Figure 21.5: Hose Type Loaders: Examples of Mounting Arrangement to Facilitate Crossovers

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LPG Transportation by Road Tankers

The storage and transportation of LPG (Liquefied Petroleum Gas), imposes stringent technical requirements. The material must be carefully selected, continual quality checks must be performed during manufacturing and comprehensive tests must be performed on completed tanks. The LPG carriers could be truck mounted. Figure 21.6 shows the two types with capacities mentioned.

Figure 21.6: LPG Road Tankers

Railway Tankers

The railway tankers are similar in design as road tankers except that several rakes together form one train. Hence loading or unloading facility should have several loading arms or unloading arms in a row along the railway line inside the battery limit of the plant or storage terminal.

Figure 21.7 (a): Railway Tanker

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Figure 21.7 (b): Railway Tanker

Figure 21.8: Railway Tanker Loading Facility

The railway wagons normally carry 20 to 25 tons of cargo. Size of the wagon is such that it can be fitted on a standard (4 wheel and 8 wheel) railway wagon.

There are 4 wheeler and 8 wheeler tank wagons used to transport LPG all over India. These tank wagons are operational both on broad gauge and meter gauge of Indian Railway.

Several tankers are hauled in tandems are called rakes. The number of tankers in a rake is dependent on the hauling capacity of the engine.

Some of the tankers (handling crude oil, fuel oil) have tank cleaning facility to remove congealing.

Tank wagon loading gantries are available at PSU facilities only. No private marketeer has tank wagon loading gantry facilities. Public sector refineries have large railway yard with loading bays. There are approximately 2600 tank wagons operational. IOC controls maximum number of tank wagons.

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From safety considerations the following rules are followed:

Tank wagon should be loaded and dispatched within one calendar day.

Overnight stay at the depots is generally not permissible by the industry.

The loading system has automation with a lot of system safety features.

There are vapour losses during loading/unloading operations. To minimize such losses modern refineries have got vapour recovery system.

Check Your Progress

Fill in the blanks:

1. Tank wagon loading gantries are available at ……………….. facilities only.

2. Size of the wagon is such that it can be fitted on a standard ……………….. .

Storage of Liquids and Gases

Liquid Storage

Normal liquid petroleum and product storages are made of steel. But depending on the nature, corrosivity and operating conditions, special steel or alloys can be used. Various types of storages used in the petroleum industry are summarized below:

Rectangular Tanks

The rectangular tanks are the simplest tank for atmospheric pressure service of non-hazardous liquids like water.

Cone Roof Tanks

These types of tanks are very widely used for storing oil, products and chemicals at atmospheric pressures. These are designed for low internal pressures as per API 650 code with design pressure of maximum 2.5 psig and normally with a few inches of water as design pressure. These tanks can not tolerate pressure or vacuum. These are normally equipped with pressure-vacuum relief.

Activity Create models of different liquid storage tanks.

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Floating Roof Tanks

These are atmospheric tanks improved over normal cone roof tanks. These are widely used for the storage of many petroleum and chemical products. These tanks may be of an open top (external) design or may include a fixed roof to aid in the protection of the (internal) floating roof. As the roof floats over the liquid, it prevents vapour losses and atmospheric pollution.

Dome Roof Tank

Used for highly volatile liquid, that can boil at normal ambient pressures and temperatures e.g. pentane, Condensate, NGL, etc. Operating pressures of such tanks is slightly higher than conical roof.

Figure 21.9: Liquid Storages

Storage of Gases and Liquefied Gases

Storage of Gas

Gases occupy very large volume and it is uneconomic to build storage for very large volume of gases. Existing caverns or depleted reservoirs are often used as underground storage of gas.

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A long distance pipeline over several hundred kilometres has very large hold-up of gas. Compressing the gas above required pressure along the pipeline can create a large hold-up of gas. This is called packing the line with gas.

In view of the fact that building a gas storage is not economic, normally gas is stored either under high pressure or in liquefied form. For very large volumes, liquefied gas storage is more economic.

Ethane, Propane, Ethylene or LPG can be stored under pressure. The storages are either cylindrical (bullets) or spherical in shape (spheres).

Storage of Liquefied Gas

The same gases mentioned above are also stored in liquefied form. Choice of type of storage is a matter of economic evaluation. As a thumb rule, larger the storage requirement, more economic is the liquefied storage.

As described in Gas Processing, LNG is transported and stored in liquid form at below –160°C. LNG storage is made of special Nickel alloy to withstand such low temperatures where most metals become brittle. Also special insulation and safety features put into an LNG tank makes it very expensive.

Liquefied gas storages are often buried under the ground with just the roof protruding out of the earth for safety reasons. Such buried storages are called mounded tanks. Many operating companies have preference for mounded tanks for liquefied gas storage.

Figure 21.10: Liquefied Gas Storages

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Figure 21.11: Storages and Storage Terminals

Check Your Progress

Fill in the blanks:

1. ………………… are atmospheric tanks improved over normal cone roof tanks.

2. LNG is transported and stored in liquid form at below …………………°C.

Summary

The unit included description of transportation system by marine tankers and brief description of road and railway wagon as means of transportation.

Also, the various types of storages used for petroleum and products, both liquid and gas were described.

Lesson End Activity

Make small models of Liquefied Gas Storages.

Keywords SCADA: Supervisory Control and Data Acquisition

Bottom Loading: In bottom loading the product is loaded by connecting the loading arm/hose to a dedicated self-sealing coupling at the bottom of the vehicle.

Cone Roof Tanks: These types of tanks are very widely used for storing oil, products and chemicals at atmospheric pressures.


1. Which are the different marine tankers used for transportation of oil and gas?

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2. What are road tanker loading systems?

3. How are gases and liquids stored?

Further Readings

Books

Petroleum economics, Jean Masseron, Technology & Engineering

Petroleum economics and engineering, H. K. Abdel-Aal, Bakr A. Bakr, M. A. Al-Sahlawi – Technology & Engineering – 1992

Oil economics and policy, Alberto Clô – Business & Economics – 2000

The economics of petroleum supply: Papers by M.A. Adelman, 1962-1993 Morris Albert Adelman – Technology & Engineering – 1962

Economics of petroleum production: A compendium, Volume Ian Lerche, Sheila Noeth – 2004

Web Readings


www.youtube.com/watch?v=AuvvaZrUDe4

reaccess.epu.ntua.gr/LinkClick.aspx?fileticket... tabid=579&mid

www.careersinoilandgas.com › ... › Occupational Summaries

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UNIT 22: Health, Safety and Environment

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Unit 22

Health, Safety and Environment


Health and environment hazards involved in the industry

What is hazard and how to identify and minimize risks

Causes of accident

Sources of environment pollution and method to treat them

Introduction

Hydrocarbon (oil and gas) and petrochemical products pose hazard to the environment if not handled in a safe manner. Health, safety and environment considerations start from conceptual stage of a project to operation and abandonment stage.

Oil and gas are highly flammable material that can cause explosion if not handled properly. Also a lot of toxic chemicals are handled during processing, particularly in the downstream facilities.

That is why a lot of importance is given today on learning and implementing methods to take care of Health, Safety and Environment (HSE) all over the hydrocarbon industry. HSE norms and practices are followed at every stage of the plant life cycle. A lot of investment in hardware and services is essential today to take care of HSE.

Hazards – Definitions, Causes and Types

Definitions of Hazards

Dictionary meaning of hazard is danger, risk or peril either to health, safety or to environment. In the process industries, the following terms are used:

Hazards: These are defined as having the potential to cause harm, including ill health and injury, damage to property, products or the environment, production losses or increased liabilities.

Activity Make a presentation on the different kinds of hazards in Hydrocarbon processing.

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Threats: These are possible causes that could potentially release the hazard and produce an incident.

Incidents: These are defined as an unplanned event or chain of events, which have caused or could have caused injury, illness and or damage (loss), to assets, the environment, or third parties.

Causes and Types of Hazards

The hazards encountered in a hydrocarbon process plant are primarily due to loss in containment (i.e. leakage) of the hazardous material, which may then lead to hazard. Resulting hazard can be divided into three categories:

Hazards resulting in fire and explosion,

Hazards resulting from the toxic properties of materials handled (chemical hazard), and

Hazards associated with the physical operations in the plant (unsafe operations).

The Fire Triangle

For fire or explosion to take place, the presence of all the three items mentioned below simultaneously is essential:

Flammable material

Air or oxygen

Source of ignition

The presence of the three together makes what is called fire triangle.

Large storage tanks present one of the potential threats of fire and explosion (Figure 22.1). If a flammable mixture of vapour and air exists inside a storage tank and a source of ignition is also available, a fire and/or explosion may result. It is the vapours left behind after liquid removal or those rising from the surface of a flammable liquid which ignite and burn. Static electricity accumulated could be a source of ignition, causing spark.

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Figure 22.1: Refinery Tank Fire

Obviously the methods of prevention of fire and explosion hazard is elimination of one or two of the items in the fire triangle or preventing all the three being present together. For example, if a source of ignition can be excluded or oxygen levels surrounding can be kept below certain limits as explained below, a fire or explosion cannot occur.

Flammable Material

Mixtures of hydrocarbon vapours and air will ignite only if the hydrocarbon to air ratio is within certain limits. If the mixture is too lean (too low concentration of hydrocarbon) nor too rich (too high concentration of hydrocarbon and shortage of air), then the ignition does not occur. The Lower Flammable Limit (LFL) and the Upper Flammable Limit (UFL) for most hydrocarbon mixtures are typically at about 1% and 10% by volume hydrocarbon vapour in air respectively. However, ‘rich mixtures’ (above the UFL) may be locally diluted to within the flammable limits by air entering the tank at tank openings, such as manways, hatches, vents, etc. Similarly, lean mixtures may be enriched locally due to a pocket of hydrocarbons, or application of heat. If a source of ignition is present in such areas, explosion and/or fire is likely to occur.

Check Your Progress

Fill in the blanks:

1. …………………. are defined as having the potential to cause harm, including ill health and injury, damage to property, products or the environment, production losses or increased liabilities.

2. …………………. are possible causes that could potentially release the hazard and produce an incident.

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Chemical Hazards

Major Chemical Hazards

Chemical hazards can arise from:

Skin contact with the hydrocarbon liquid.

Inhalation of hydrocarbon vapours.

Accidental swallowing of liquids or solids.

A number of chemically hazardous substances are handled in the hydrocarbon industry. Hydrogen Sulfide and sulfur dioxide are more common in the oil production and refining industry. In the petrochemical industry, there are numerous hazardous chemicals handled due to the multiplicity of raw materials and products. Examples of some of the toxic chemicals handled are given below:

Hydrogen Sulfide (H2S): is a highly toxic gas. At low concentrations it has the odour of rotten eggs, although this can be masked by the presence of other vapours. H2S quickly deadens the smell at about 100 ppm and higher and this may lead to a false sense of security, since the disappearance of the smell after it has been first recognized may be due to an increase, rather than a decrease in the atmospheric concentration. All petroleum products and crude oils contain sulfur in varying amounts, usually combined with hydrogen and/or carbon. Some crude oils contain free sulfur and H2S. Sulfur is an undesirable element in petroleum products and various processes exist to remove it, whereby H2S is often formed during intermediate stages. Whilst the H2S is subsequently removed, certain amounts may still be present in the product.

Polycyclic Aromatic Hydrocarbons: Some heavy refinery streams or products may contain small amounts of polycyclic aromatic hydrocarbons (PCAs). Typical streams are gas oils, fuel oils, catalytic cracker recycle oils and vacuum distillation residue. The toxicity of PCAs will differ, depending on the structure. Frequent and prolonged contact with these can lead to a variety of skin disorders.

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Table 22.1: Effect of Hydrogen Sulfide Concentration

Benzene: Benzene is an aromatic hydrocarbon, which can be present in very low concentrations in some crude oils. It is often produced in certain refinery processes. It is also manufactured as a finished product in the petroleum industry. The chief route of entry by benzene into the body is by inhalation of the vapour. Whether as the pure compound or as part of a mixture such as gasoline, benzene may give rise to the following health hazards:

Inhalation of high concentrations of benzene vapour (above 700 ppm) can lead to loss of consciousness and, if allowed to continue, respiratory failure and death will result.

It may also cause bone marrow damage, leading to blood disorders of varying severity which are usually reversible after removal from exposure, and,

More rarely, leukaemia (cancer of the blood), which may occur long after exposure has ceased.

Other Toxic Chemicals

Numerous other toxic chemicals are handled in the oil, gas and petrochemical industry. Some examples are:

Chlorine for manufacture of PVC

Methanol

Hydrogen Cyanide in the manufacture of acrylates, etc.

Causes of Accidents

The various causes of accidents are: Defect in Design Defect in Construction Defect in Material of Equipment Faulty Operation or Maintenance

Lack of Monitoring

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Defect in Design: Sometimes adequate design factors have not been provided while doing the design. Design factors are essential component in order to give a margin of safety in the design. Design factors may be appropriate in either the mechanical engineering design or in the process design where factors are often added to allow some flexibility in process operation. For mechanical and structural design the magnitude of design factors should allow for uncertainties in material properties, corrosion, design methods, fabrication and operating loads. It is also possible that appropriate material for equipment and piping has not been specified leading equipment failure or piping failure resulting in the release of hazardous or flammable or toxic material.

Defect in Construction: Defect in material for equipment and piping, defect in manufacturing, fabrication and defect in construction or installation including improper inspection and testing may lead to equipment or piping failure. Release of hazardous or flammable or toxic material can occur as a result.

The “Sinking of P-36 Platform”, depicted in Figure 22.2 is one of the examples which could be due to defects both in the design and installation. Considerable cost reduction was done for P-36 during design and construction stage.

Figure 22.2: P-36 Disaster

Faulty Operation and Maintenance: Erroneous operation and maintenance like not following correct procedure may lead to accident. Inadequate maintenance also can be cause of accident, for example:

Failure to interchange operating and standby equipment as and when required.

Lack of attention to the special instrument like vibration monitor, corrosion monitors, gas humidity analyzer, etc.

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An example of accident due to not following the procedure during maintenance is the collapse of a storage tank shown in Figure 22.3. The tank collapsed because a plastic bag with which the tank vent was covered during painting of the tank was not removed before operation. When the product was pumped out of the tank during operation, vacuum was created as the vent was blocked with the plastic bag. The steel tank collapsed but the plastic bag did not break.

Covering of the vent valve during tank painting is fairly standard practice. Unfortunately leaving it covered when drawing out of the tank is very non-standard practice. This was an expensive, embarrassing mistake that could be entirely preventable. For some, it is hard to believe that the plastic over the vent valve is stronger than the steel tank under the vacuum conditions that are created when drawing product out of the tank.

Figure 22.3: The Power of the Plastic Bag

Another common example of accident due to faulty maintenance procedure is explosion due to pyrophoric deposits in distillation columns (Figure 22.4). These are highly explosive deposits that take place in the column during periods of operation with crude oil. Once the unit is shut down for maintenance and the column manholes are open, pyrophoric deposits, which are highly flammable, come into contact with air and catch fire immediately. Again there are procedures that need to be followed to prevent such accidents.

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Figure 22.4: Destruction by Pyrophoric Fires

Human Error: Human error, often due to inadequate training causes accident. For example:

Opening or closing wrong valves without fully understanding operating instructions, may lead to rise in pressure, temperature or flow in the system and resulting in the release of hazardous or toxic material.

Operator taking wrong reading of parameter indicators (pressure, temperature, flow etc) and taking wrong actions which may lead to accident.

Adjusting the set point of a control to a wrong value, thus leading to accident.

There could be several other causes of accidents:

Natural calamities like earth quake.

Lack of monitoring.

Lack of training.

It is difficult to avoid accidents due to natural calamities, unless the impact of natural calamities has been considered during selection of the site and designing of the facilities to withstand the impact. Even then unforeseen events may occur. It is very

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important to have an Emergency Response Plan and mitigation plan for such contingencies.

Lack of monitoring as per operating and maintenance procedures are often cause of accidents. As a simple instance, let us take the case of a long distance cross country pipeline carrying hydrocarbons. Regular surveillance of the pipeline is very important to avoid unauthorized work along the pipeline route, digging, sabotage etc. Normally this is done by use of helicopters, automobiles, satellite images etc. Still a surprisingly high number of accidents occur in gas pipelines due to unauthorized digging.

Training is a very important aspect for minimizing the risk of accidents. Training is needed for all disciplines and levels and for all aspects of management and operation of the facilities. While developed countries pay a lot of attention to it, in developing countries like India it is often ignored and overlooked. In case of an accident, cost of loss in assets and human lives can be so large that expenditure on training can always be justified.

Drill also forms part of training. An emergency response plan can fail totally if drill is not carried out at regular intervals. In the developed countries, even in commercial office buildings, a fire incident drill is carried out at regular intervals by sounding fire alarms to ensure that:

All equipment and facilities for fire fighting are working,

People know how to use them, and

People are aware of building evacuation plan.

Safety Management Techniques in Plant Life Cycle

In the entire life cycle of a process plant, starting with the project conceptual and engineering design phase, there is considerable scope to remove or minimize hazards. It is during this phase that provision can be made to reduce the risks associated with a process, system or facility to a level that is as low as reasonably practical (ALARP).

This can be achieved in a number of ways. In order of preference these are:

Removal of hazards in design phase.

Reducing the probability of hazardous events occurring.

Activity Using the Internet, find out more about ALARP.

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Minimizing the risk of escalation in case a hazardous event occurs.

Once the hardware has been installed, retroactive implementation becomes relatively more difficult and considerably more expensive. It is crucial therefore that the opportunities available for minimizing risk in the design and engineering phase are not lost.

Concept Development

It is during this phase that most of the major hazards and effects will be identified and an initial assessment of their importance will take place. In this phase there is considerable scope for removing potential hazards. As an example, even site selection is important for HSE.

HSE Aspects of Site Selection

The importance and vulnerability of various components in the existing environment should be assessed. These include:

People living in the vicinity who could be exposed to noise, vibrations, dust and gaseous contaminants, or other health effects associated with water and food contamination.

The potential consequences of accidents (fire, explosion, escape of toxic materials) must be considered.

Wildlife and natural habitats which could be damaged during the clearance and construction stages or later when the project is operational. Examples are forest damage by air pollution and death of fish or other aquatic organisms by effluents. A key component is consideration of the amount of damage that may be tolerated by the habitats and species concerned.

Resources (agricultural and others) which may be susceptible to damage from the project in a similar manner to natural habitats.

It is necessary to use environmental specialists to conduct a baseline study to describe the physical and biological status of environmental components which are likely to be affected.

In less industrialized areas, where local restrictions may still be limited, it is important to be aware of potential future developments. In industrialized areas, local regulations determined by authorities often define the environmental conditions for the project during construction and operations.

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The project should consider various operations and the predicted flow rates of pollutants in gaseous emissions and aqueous discharges, together with physical nuisances such as noise and its impact on health, safety and environment in the neighbourhood.

The selection of site should also include consideration of wastes. These include industrial waste, in particular hazardous waste in the form of liquids, solids and semisolid materials. The manner in which these wastes are handled could be a significant factor in the overall impact of the operational activities on the environment.

The tragedy at Bhopal due to toxic gas leakage from Union Carbide plant is an example of tragedy due to faulty site selection for a plant handling lethal chemicals.

Techniques of Hazard Identification (HAZID)

What is HAZID?

HAZID (HAZard IDentification) is a technique for early identification of potential hazards and threats. The technique has two styles, Conceptual and Detailed and should be applied at the very outset of a new venture or during the early stages of the project. It is therefore likely to be the first formal HSE related study for any new project. The major benefit of HAZID is that early identification and assessment of the critical HSE hazards provides essential input to project development decisions. This will lead to safer and more cost-effective design options being adopted with a minimum cost of change penalty.

HAZID study addresses the layout and operation of the entire system under review. A HAZID study uses a guideword driven methodology based on a comprehensive list of typical hazards. The installation or subject of review is divided into areas of a similar nature (e.g. process area, utilities) based on the location of these areas and their function. The broad nature of the guide words help in the identification of the hazard. For each identified hazard the potential consequences are described and the control/mitigation measures are listed.

Why Use HAZID

HAZID has been developed specifically to reflect the importance of HSE issues on the fundamental (and often non-HSE-related) decisions that are made at the inception of all development projects

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(e.g. design concept and location). HAZID is the first opportunity to collect experienced line and HSE staff together to address, in a short time frame, the issues surrounding a new venture or development.

The benefits of using HAZID include:

Full recognition of the importance and interdependence of all HSE aspects at the outset of the development.

Identification of specific hazards and threats within a project life-cycle phase or during operation.

Identification of all the intended continuous emissions from the facility. This will focus design effort on the minimization of such emissions as well as compliance with company and third party requirements.

When to Use HAZID

Normally HAZID is carried out during conceptual and development phase of the project. There are two types of HAZID – Conceptual and Detailed. Conceptual HAZID

The optimum (early) timing of a conceptual HAZID study inevitably means that the formal documentation available to the team will be minimal and at conceptual or policy level. Some of the key documents or information used for conceptual HAZID are:

Project Initiation Notes

Policy Statements

Feasibility Studies

Key (development) Discussion Papers

Project Development Plans

Relevant Company Group Standards

Project Design Basis

Description of Operational Environment

Key Legislative Documents

Key Philosophy Documents (e.g. Operations Philosophy, Safety Logic, etc.)

Environmental Regulations

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Detailed HAZID

The detailed study is conducted later in the engineering design process, once design options have been identified but before any final decisions have been made. A significant number of additional documents and drawings will be available. The additional documents would include, for each design option, preliminary issues of:

Process Flow Schemes (PFS) – with possibly Process Engineering Flow Schemes (PEFS) at block diagram level with mass balance information (for each competing design option)

Plot Plan and Layouts

Process description including all planned operating cases

Project description including all options, life cycle issues and planned plant flexibility

Safety philosophy

Operating philosophy

Raw material and product handling

Environmental assessment

HAZOP and Fault Tree

Special techniques like HAZOP, Fault Tree Analysis, FMEA, What If are used at this stage.

Figure 22.5: Hazard Identification at Design Stage

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They show outcomes in all possible situations and tell how likely they are to occur. What this means for the decision makers is that they finally have, if not perfect information, the most complete picture possible. They could see what could happen, how likely it is to happen, and therefore be able to judge accordingly which risks to take and which ones to avoid. Design need to be modified as per outcome of the process (Figure 22.5).

The essential features of a HAZOP study are:

It is systematic and detailed. A series of guide words is repeatedly used to ensure consistency and repeatability.

It is conducted by a team who know most about the project or facility, typically those who designed and those who must operate it.

It concentrates on exploring the consequences of deviations from the usual operating conditions.

It is an audit of the completed part of a design.

Traditionally the HAZOP procedure examines process equipment on a system by system basis, reviewing the process parameters using a checklist of guide words, which suggest deviations from the normal operating conditions.

Safety Audit – A Key to Safe Operation

Safety Audit is the act of verifying the existence and implementation of elements of safety and health system and for verifying the system’s ability to achieve defined safety objectives. It checks the design, selection/construction and maintenance of premises, plant, equipment and substances. It monitors performance of the system and compares actual performance with the standards or appropriate performance indicators. It performs quality management and environment management. It identifies data critical to the management of health and safety. It is periodic in nature.

Objectives of the safety audit are to identify:

Design deficiencies

Weaknesses which might have cropped up during modifications /additions

Fire protection arrangements and safety systems

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Operating /maintenance procedures-degraded with time

Training methods, adequacy and implementation

Preparedness for handling emergencies

In summary, safety audit is a systematic independent review to verify conformance with established guide lines or standards. It employs well defined review process to ensure consistence and to allow the auditor to reach conclusions.

Due to complexity of a large plant, use of IT is made for implementing such an audit.

Safety Facilities in Process Plant For safe operation and control of a plant a number of safety features are put in the design stage. Some examples of typical systems for safe management of the production process are:

The Process Control System (PCS) – which maintains the process within defined operating limits of flow, temperature, level and pressure. Completely computerized digital systems with graphics of the plant is used for process plants.

Process Shutdown System (PSD) – designed to shutting down of selected equipment and control devices on the platform that will stop production totally but will not blow down the hydrocarbon contents of the equipment. This shutdown is initiated either automatically or manually through field instrumentation, for conditions like gas detection, or any unusual operating situation.

Emergency Shutdown System (ESD) – designed to shutting down of all process facilities and utilities (except emergency facilities such as firewater system) accompanied by blow down of hydrocarbon/chemicals contained in all process facilities. This type of shutdown is initiated automatically through detection devices upon detection of fire or smoke. It can also be manually activated through shutdown hand stations (push buttons).

Pressure Safety Valves mounted on equipment, which will relieve over pressure, letting the released process fluid to go to the flare.

Temporary Shutdown (TSD) – which will occur on a limited number of process inputs and will cause production to stop, but will leave the systems in such a state as to facilitate a prompt restart.

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Gas Detection, Smoke Detection and Fire Detection Systems are installed which can not only detect but also trigger alarm system or shutdown system as per design specifications of the plant.

Fire Fighting Facilities are provided which include Fire Water System, Foam Tenders, Halon System, etc.

It is imperative that an operating company develop its own safety philosophy, which can form the basis of safety considerations in the design stage itself.

Construction Safety The duration of the construction phase for a typical process plant such as oil, gas processing or refinery complex is much shorter than the facility’s subsequent operational life. But the nature of the activities involved and the total manhours spent in a typical construction project can expose the construction workforce to a level of risk higher than that of the personnel involved in the subsequent, longer operational phase. In addition a high proportion of construction activities take place on ‘brown field’ sites (meaning sites where plant is already operating), where hydrocarbons are likely to be present, thus increasing the potential consequences of incidents.

The difficulty in implementing HSE norms in construction phase is due to the nature of the circumstances under which construction contracting is carried out:

High turnover of personnel, often new to the country and not familiar with the work culture.

Communication difficulties between people from countries with language and cultural differences.

Pressure to work in short time horizons and comply with the “fast-track” approach.

Diversity of parties involved (contractors) and resultant long communication lines and frequent use of subcontractors.

This in turn can result in the following effects:

Low priority on construction planning at an early enough stage: There is often a perception that all construction activities are similar. There is therefore a tendency to believe that the next project can be treated like the last one with much of the planning work done once contracts are awarded and site work commences.

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Use of inappropriately qualified contractors: Often this is caused by a change to the management and/or workforce of a previously acceptable contractor.

Inadequate training (e.g. workers unaware of hazards): Sometimes by external pressures to accept locally resourced contractors who may not have the highest levels of training and expertise. This is because of low priority on training, mobilization of construction workers at a short time span and lack of in-house expertise on HSE with the contractor.

Short-cuts in order to meet ambitious schedules

Hazardous nature of construction sites

The potential for the occurrence of injuries and fatalities can be high due to:

The close proximity of large numbers of personnel to heavy equipment and movement of materials.

Need to carry out activities in arduous weather conditions.

Long working hours, particularly when trying to meet ambitious deadlines.

Working in locations that present extra risk (e.g. at height, over water, underwater, in confined spaces etc.).

Handling of toxic and hazardous substances.

Perception by the workforce of it being satisfactory to ‘bend the rules’ to achieve faster progress with little risk of incidents in ‘routine’ tasks and operations.

Surveys of incidents in the construction industry generally show that a large proportion of injuries and fatalities occur, during the performance of normal, routine general workplace practices (e.g. scaffolding, welding, use of power tools), This is purely due to lack of HSE System.

Thus induction of contractors having a sound HSE Policy or training the contractors on owners HSE Policy is of paramount importance. HSE policy is now rigorously implemented in most developed countries. It has not yet come in a big way in India.

Safety Layers in a Plant

It must be remembered at this stage that the plant is designed with safety in mind. As the final layer of design safety, Safety

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Instrumented Systems (SIS) are built in which cause shut down of the plant in unsafe situations.

SIS is a system composed of sensors, logic solvers, and final control elements for the purpose of taking the process to a safe state when predetermined conditions are violated.

But 100% safety is not possible and failures do occur. There are multiple independent safety layers and SIS in the plant as shown in Figure 22.6.

Figure 22.6: Safety Layers

As shown in the figure, the final layer is that of emergency response. Every major hydrocarbon facility must have an Emergency Response Plan.

Elements of an Emergency Response Plan The Owner must develop an emergency response plan for emergencies which must address the following as a minimum:

Pre-emergency planning and coordination with outside parties. Emergency Command System Personnel roles, lines of authority, training, and

communication in the command system. Emergency recognition and prevention. Safe distances identification. Site security and control. Emergency medical treatment and first aid. Emergency alerting and response procedures. List of emergency equipment and their location Emergency response organizations may use the local

emergency response plan or the state emergency response plan or both, as part of their emergency response plan to avoid duplication.

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Environmental Aspects

The environmental aspects can be stated as follows:

Sources of Pollution

The overall block diagram from oil well to petrochemical is presented in Figure 22.7. The effluent or pollutant it generates is presented alongside in Figure 22.8.

Figure 22.7: The Oil and Gas Chain

Hazardous waste is a waste which because of its physical, chemical or infectious characteristics has the potential to cause harm to human health or the environment when handled, stored, transported, treated or disposed of.

The gaseous emissions, aqueous and gaseous effluents and discharges of hazardous waste materials from operating units are the major sources of pollution are known to have a negative impact on the environment.

The effluents could be solid, liquid or gaseous. Some of the major sources of effluent are summarized in the table below.

The effluents are emitted in three ways:

(a) during the processing of oil and gas

(b) when we consume them as fuel

(c) when we consume the end products

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Table 22.2: Solid, Liquid and Gaseous Effluent

The hydrocarbon industry is thus a major source of pollution in the world. The three parties involved – the industry, the government and the consumers have to partner together to control the effects of pollution. What the governments are doing:

Stringent product specifications for reducing environment impact by consumption of the product.

Setting of stringent effluent discharge specifications Enacting environment related laws and enforcement

What the industry is doing: Investing in technology and treatment plants to meet the

specifications Improving the processing scheme to reduce pollutant

generation Developing new technologies to treat the effluents

What the consumers can do: Reduce wasteful consumption of products Reduce wasteful consumption of energy

In the next section we shall cover some major sources of pollutants in the industry, the technologies for treatment of waste.

Figure 22.8: The Effluents – Oil Well to Petrochemicals

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Waste from Oil Production

Produced water accounts for about 98% of the total waste in the oilfield. The water coming out with the oil can be as high as 60-70% of oil in a depleted field. Hence the volume of produced water to be treated can be very large. For example in the USA, about 21 billion barrels per year of produced water has to be treated.

The other waste in oilfield is mainly drilling waste i.e. wastes that come out of the well during drilling before completion of well. The drilling waste is mainly mud with oil and chemicals used during drilling. These are often discharged in a pit at the well site.

Toxic drilling wastes fill an open reserve pit is shown in Figure 22.9. Such pits are often abandoned by oil companies without treating or cleaning it.

Figure 22.9: Drilling Waste

The major contaminants in the produced water are:

Dissolved solids (primarily salt and heavy metals)

Suspended and dissolved organic materials (hydrocarbons, oil)

Hydrogen Sulfide/ Carbon Dioxide

The produced water is treated in the following step:

Removal of oil by skimming and use of floatation cells, where oil particles are moved to surface by dispersing gas through the produced water.

Removal of dissolved hydrocarbons by biological process, precipitation, ultraviolet irradiation and oxidation.

Removal of suspended solids by gravity separation, filtration and coagulation.

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Removal of dissolved solids by ion exchange, precipitation, reverse osmosis, evaporation and biological process.

Pollutants during Transportation

One of the biggest pollution hazards facing the world today is oil spill from large oil tankers carrying crude oil. Oil spillage occurs when the ship leaks due to crashing in a reef or rock, any other type of accident with the ship. Leakage can also occur during loading/unloading and normal movement of the ship.

Oil spills cause enormous damage to ecosystem and marine life.

There are two stages of dealing with an oil spill – containment and recovery.

Containment is done by containment booms, which could be of floating type or inflatable type. These are laid around the spill area by high speed boats (Figure 22.10).

Figure 22.10: Containment Boom

Once contained, the oil layer is recovered by skimmers (Figure 22.11) or by adsorbents or by using microorganisms for biodegradation of the hydrocarbons. The skimmed oil is put in a temporary storage and treated for reuse.

For oil coming over to the beaches other methods including vacuum cleaning is used.

Figure 22.11: Recovery of Oil Spill by Skimmer

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Wastes from refinery include free and emulsified oil from leaks, spills, waste caustic, caustic and acid sludge, tank bottom sludge, acid water, waste catalyst etc.

Crude oil storage tanks also are a large contributor to refinery waste. It includes oily water, organic sulfur compounds, suspended matter, insoluble and soluble salts, asphaltic compounds, H2S and Co2.

Most of the refinery waste come into the drainage headers along with the waste water in various parts of the refinery and are collected for treatment in the effluent treatment plant.

Petrochemical plant wastes are more complex due to wide range of raw materials, intermediate chemicals and products. The design of the Effluent Treatment Plant has to tailor made to suit the effluent characteristics and discharge specifications. Wide range of effluent processes are available to treat different types of effluents.

Waste Water Treatment

In this section, the discussion will be limited to normal waste water treatment facility.

A typical generic schematic diagram for waste water treatment is shown in Figure 22.12. Of course the specific treatment method will vary depending on the characteristics of the effluent. Some of the equipment needed for the treatment are shown in Figure 22.13.

The major steps are:

Removal of free oil particles by skimming

Removal of emulsion particles by floatation of oil particles aided by purging with gas or air bubbled from the bottom of floatation cell.

Oxidation of the organic material by aeration and bacterial method using activated sludge.

Finally filtration to remove suspended solids.

Figure 22.12: Treatment of Waste Water

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Figure 22.13: Waste Water Treatment Equipments

Check Your Progress

Fill in the blanks:

1. Oil spills cause enormous damage to ecosystem and ……………… life.

2. ……………… is a system composed of sensors, logic solvers, and final control elements for the purpose of taking the process to a safe state when predetermined conditions are violated.

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Summary

Health, Safety and Environment aspects have gained tremendous importance in the entire plant life cycle. A plant can be made safe if safety aspects are looked into and managed from conceptual stage to operation and dismantling.

In this unit, at first the types of hazards, both fire/explosion and release of toxic material were identified. Some accident cases were presented to highlight the importance of management of safety at all stages of plant life cycle.

This was followed by hazard identification techniques. Overview of techniques like HAZOP were presented.

Safety aspects during plant operation and maintenance were highlighted.

Lastly various sources of pollution and release of hazardous material in the hydrocarbon industry were identified. Some major pollutants were described and a few generic methods of combating pollution were described.

Lesson End Activity

Make a presentation on HSE System.

Keywords


Threats: These are possible causes that could potentially release the hazard and produce an incident.

Incidents: These are defined as an unplanned event or chain of events, which have caused or could have caused injury, illness and or damage (loss), to assets, the environment, or third parties.

Benzene: Benzene is an aromatic hydrocarbon, which can be present in very low concentrations in some crude oils.

HAZID (HAZard IDentification): It is a technique for early identification of potential hazards and threats.

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1. List the various causes of accident in a hydrocarbon processing facility.

2. What is a fire triangle? Give example from an actual plant.

3. Name two very toxic chemicals that oil and gas processing industry has to handle and identify with block diagram at what stages of processing there are likelihood of hazard from these chemicals.

4. What is HAZOP? For what purpose it is used? Briefly describe the technique.

5. Explain with block diagram various sources of solid, liquid and gaseous pollutants from the entire chain of hydrocarbon industry from oil field to petrochemicals.

Further Readings

Books

Fundamentals of Oil & Gas Accounting, Charlotte J. Wright, Rebecca A. Gallun – Business & Economics – 2008

Introduction to the Global Oil & Gas Business, Samuel Van Vactor – Business & Economics

Oil and gas production in non-technical language, Martin Raymond, William L. Leffler – Technology & Engineering – 2005

Web Readings

ww.api.org/ehs/

www.touchoilandgas.com/health-safety-c7.html

www.ogp.org.uk/pubs/254.pdf

www.ogj.com/blogs/health-safety-and-environmental.html

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UNIT 23: IT Applications in Hydrocarbon Industry

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Unit 23

IT Applications in Hydrocarbon Industry


Plant life cycle in the Oil and Gas Industry

Overview of the application of Information Technology during various phases of project

Types of software used and their capabilities

Introduction

Like most of the other industries, the hydrocarbon industry is also facing the pressure and challenges from expanding global competition. Further, there have been huge investments and expenditure arising out of the stringent environment and pollution regulatory controls and greater concerns for safety. This is driving the hydrocarbon industry towards more consistent higher quality products involving stricter requirements on the traditional plant operation.

Application of Information Technology

To be profitable in the venture, every industry is looking for cost effectiveness in the total life cycle of the process plant in all business sectors and professional disciplines. In order to achieve these objectives and meet the challenge, the Process Industry in Hydrocarbon area is endeavouring to reap the benefits of computing technology. In that respect the role of software programs can never be over emphasized.

Plant Life Cycle

The Plant Life Cycle (Figure 23.1) starts with exploration for oil, and its production. This is followed by development of numerous

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downstream plants. The life cycle comprises of their design, operation, production, maintenance, safety, profitability, revamp and expansion. It is a complex series of technical, commercial and management activities, requiring high level of technological skills, improvement of operating efficiency, information generation, information management and overall management skills. Information technology and use of computers plays an extensive role in the design, operation and management of hydrocarbon industry.

Substantial developments have taken place in the application of IT in Process Industries, due to the collaborative efforts from process engineers, professionals from all engineering disciplines and software program developers. Use of IT during various phases of plant life cycle is summarized in Figure 23.1.

Project Cost Estimation and Feasibility Study

Cost estimate is an assessment of the cost of a project based on the facts available on the project and historical records of similar projects. The better and more precise the facts, the more accurate is the estimate.

Cost estimates of progressively increasing accuracy are required at every stage of project since they provide the basis for economic analysis, management decisions, approval of budgets and cost control.

With larger projects, it is common to ask for phased approval of expenditure because of the limited technical definition against which preliminary estimates are often prepared. At first a ball-perk type or order of magnitude type of estimate may be required. For budgetary approval to pursue the project, a feasibility study is required. If the preliminary estimate (feasibility report) looks attractive, funds may be sanctioned to allow Front End Engineering Design (FEED) to take place. A more definitive estimate is based on FEED.

FEED allows for accurate sizing and layout of the equipment and facilities in the plant and get more accurate and detailed cost estimate from past data on similar equipment or fresh quotations on the equipment and facilities.

Activity Make a presentation on FEED.

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Figure 23.1: IT Application during Plant Life Cycle

The final approval for a project to proceed is usually given on the basis of this detailed estimate.

In short, there are two types of estimate done before start of a project:

Feasibility Study

Detailed Feasibility Report (Also called Detailed Project Report or Definition of Facilities).

In feasibility study stage often the accuracy is defined as ±25 or ±30% estimate. In such cases factored cost figures are used. In Detailed Feasibility Report or Project Definition Report a more definitive cost (±10% accuracy) is required and more accurate estimation of hardware and services are required and factoring is minimized.

Key Features of Cost Estimate Software Programs

Software programs are available where estimates are broken down and structured in such a way that they reflect the project organization, the requirements of any applicable budgetary control, accounting requirements and agreements. The structure of such a software is given in Figure 23.2. The programs generally have the following features:

Breakdown the project into cost heads (Table 23.1) and to a level of detail appropriate for the type of estimate required.

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For example these could be equipment cost, hardware or bulk material (piping, cables etc.) cost, services cost, financial cost etc.

Further breakdown of each cost head into discrete project activities, unit rates for each activity covering the entire project span and scope.

One of the key elements is to estimate the equipment and hardware cost as accurately as possible. Depending on the accuracy required, it could be taken from an existing cost data base, related to specification of the major equipments. Again depending on the accuracy of the equipment required, approximate sizing or engineered specification of equipment is done.

Cost database in the software contains collection of data obtained from records of plants built earlier. Data base are correlated and updated from time to time. Usually the input data is cost of equipment and major items obtained from quotations or records.

Major equipment cost forms the base cost for various types of estimates. For feasibility study estimates, other cost heads are often factored. It estimates cost of erection, piping, instrumentation, electrical items, civil etc. by adding a series of factors over the equipment cost. Inflation indices are introduced.

When an engineered detailing of the plant is done, often for the sake of accuracy, current quotations and rates are taken from vendors as input to the software database.

Add appropriate allowances and contingencies to the individual estimates at Hardware Item or Project Function level.

Phase the components of the total cost estimate to obtain expenditure profile which reflects the project schedule.

Develop the complete estimate by adding up all the cost heads from the definition of scope, through the definition of quantities/services and the application of unit cost rates to the final estimated-cost of the project.

Most of the software have additional features like carrying out cash flow calculations, financial analysis and profitability based on the estimates made and inputs on financial cost and operational cost.

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It is possible to use these programs along with design or flow-sheet simulation programs to optimize and estimate. Thus by use of modern cost estimate software, design and costing can be brought together. There is an immediate feedback on information on improved design and lower costs.

Table 23.1: Major Cost Heads for Process Plant

Some of the major cost heads for capital cost are: Equipment and Material Cost Land Development Cost Infrastructure Cost Construction Cost Commissioning Cost Project Management Cost Engineering and Design Cost Cost of Financing Contingency Allowance

Some of the cost heads can be factored based on equipment cost.

Linear Programming Applications in Process Plant

Linear Programming (LP) application software is used for process plant cost optimization or optimization of production plan. It is designed to provide plants with an economic advantage in today’s highly competitive environment. This system uses feedstock properties, plant models, and economic considerations to help planners maximize profitability over a broad operating range–both in conceptual and design stage as well as to optimize the operation. It takes into consideration of all the constraints and variables expressed in the form of linear equations. The ideal application of LP model is where:

There are many potential solution

Certain objectives to be optimized

Interconnectedness between the variable elements of the system.

Oil refineries face an enormous number of options in their operations:

Which crude oils to refine

What processing conditions to use

Which products to sell

How to blend them from the intermediate components

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There is a straightforward objective to arrive at optimized solutions: the profit. The operations of the refinery are intrinsically interconnected: it is a sequential process with one decision affecting the other; for example, choosing to process one crude means that you have less processing capacity available for others. Thus the problems which a refinery faces have the characteristics of a LP solution.

A typical structure of LP software for optimization of a refinery (conceptual stage) as well as optimization of operation of existing refinery is shown in Figure 23.2.

Figure 23.2: LP Software Structure

Check Your Progress

Fill in the blanks:

1. ……………….. is an assessment of the cost of a project based on the facts available on the project and historical records of similar projects.

2. ……………….. application software is used for process plant cost optimization or optimization of production plan.

IT Application in Design and Engineering

Process Design and Engineering

In the process industry, the design phase starts with the Process Design and followed by Engineering Design for other disciplines.

Activity Write a report on Autocad Software.

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Two of the most important drawing documents in this stage are:

A Process Flow Diagram (PFD) shows all equipment in the process scheme like pumps, compressors, heater, reactor and distillation column that is required for processing, and links them up in the form of a flow diagram showing materials flow and heat flow through each of the equipment.

Simulation and optimization of the flow diagram is carried out by making use of process simulation software available from reputed software companies like SimSci, Aspentech, Hyprotech and others. These enable the Process engineers to design new processes, evaluate alternative plant configurations and arrive at the optimum design.

The other most important drawing is Piping and Instrumentation Diagrams (P&IDs) showing all interconnecting pipe sizes, pipe specifications, control systems and control instrument specifications. It also gives major equipment sizes and performance specification.

In earlier days, P&IDs were being conceived and drafted totally manually. Now P&ID software programs provide the capability to build schematics intelligently as well as perform design checks for consistency and compatibility of components. Once the process simulation is done, the actual drafting works are carried out by software programs like AutoCAD, Microstation and other software.

A typical P&ID generated by process design and drafted by Autocad software is given in Figure23.3.

Figure 23.3: A Typical P&ID

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Detailed Engineering Using 3-D Model

Once the process design is over, a multi-disciplinary engineering team starts what is known as detailed engineering. While mechanical engineers carry out the mechanical design and drawings of the equipment, electrical engineers estimate the power requirement in the plant and start making drawings for cable layout and power distribution. Similarly piping engineers make piping layout drawings and civil engineers start foundation and structural drawings. For each discipline, there are specific design tools (software).

The drawings were generally done earlier using 2-Dimension drafting software like AutoCAD, Microstation, etc.

With the complexity of integrating multi-disciplinary designs and drawings, 2-D systems for drafting and modeling had become inadequate. A number of good 3-D modeling for engineering design of process plants along with data management and a lot of other options are available now. Examples of such software are PDMS, PDS, AUTOPLANT, etc. Some of the features in these software are described below.

The 3-D software allows interaction between all disciplines in the 3D design workflow by allowing a comprehensive set of integrated applications covering all engineering disciplines at its core. Through the design, standard and automated deliverables can be generated directly from the model. The in-built linkages within the software allows for updating of sequential designs or drawings for any changes in the input, minimizing the possibility of errors, when a series of drawings are generated.

Typical 3-D model generated by such software is shown in Figure 23.4. Such software allows the projects to be executed within an unlimited, multi-user, multi-site access environment globally using low bandwidth technology on multiple platforms.

The major advantages of the 3-D software provides over conventional 2-D software are:

Saving in time

Saving in material as the impact on bill of material for changes in design is taken care of more effectively by this kind of software.

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Visualization of the 3-D model, which helps in better judgement in design and operability. In the specialized world of plant design, it is called “immersive group visualization”– a theatre style system enabling a group of engineers and their customers to take a big-screen ride through a proposed new plant.

Figure 23.4 presents typical networking for a global engineering design operation.

With the improvements in software system and communication, engineering services outsourcing is gradually getting as common as outsourcing in the IT industry.

Figure 23.4: Typical Networking for a Global Engineering Design

Operation

Check Your Progress

Fill in the blanks:

1. ……………………… show all interconnecting pipe sizes, pipe specifications, control systems and control instrument specifications.

2. Piping engineers make ……………………… drawings.

IT Application in Operation

Nowadays computer and software application are extensively used for operation, control and monitoring of a process plant.

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First let us understand what kinds of functions are required for optimum and safe operation of a plant. The main functions to be carried out in a plant are:

Local plant control and management

Plant optimization functions.

Communication system between plants and between plant and a central control station and management of the communication

Plant maintenance functions

Overall production planning, monitoring and control

Management functions.

To do all these functions a lot of plant operating data and other parameters need to be collected and processed. Let us understand what kind of data is collected:

Normally, an oil gas related plant is a complex of several process units spread over a large area.

In each process unit, there are numerous measurements of operating conditions in various equipments which affect the plant operation. Some of the parameters are pressure, temperature, flow rate, level of liquid, composition of feedstock, composition of products, properties of feed and products and numerous other information.

For optimum and safe operation of the plant many of the above parameters need to be monitored and controlled.

Also in each plant numerous equipment oriented data are collected such as:

Equipment status (on-off, in line, isolated, on maintenance)

Equipment health parameters (vibration, bearing temperature, corrosion status)

For all these functions to be effectively done a lot of measurement and recording of data, data processing, optimization and control of operating conditions to meet the production are required. Till 1960 it was done either manually or through local control. Later with increasing computer application, a completely centralized control system was developed. But after mid-seventies, with the development of powerful micro-processors, Process Control System

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(PCS) and software technology, modern distributed control system (DCS) gained ground. Now Advanced Process Control System are used, which combines DCS with process dynamic model and management information system into one.

Notes: APC: Advance Process Control DCS / DDCS: Distributed Control System / Digital Distributed Control System

Figure 23.5: Advanced Process Control Hierarchy

Figure 23.5 depicts visualization of a typical control of a petroleum product storage and despatch system. Here a large number of parameters and logistics are to be managed and controlled:

Filling of the tanks by products from the plant or raw material from external sources,

Emptying the tanks during loading in tankers or pumping to pipeline,

Measuring and monitoring the material received and despatched,

Quality of the various products and raw material are to be maintained.

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In a large storage terminal with a number of storages, pumps, loading racks, tanker movements, it becomes a complex operation and may have logistics problems. Today the whole operation is carried out by DCS system using software to manage the logistics.

Figure 23.6: Automation of Storage and Handling of Products

For monitoring and control of facilities laid over long distances and integrated together (e.g. pipeline) SCADA system was developed. Enterprise Resource Planning software (ERP) now sits above DCS and other software for overall planning and asset management.

Description of some of these IT applications is given below.

Distributed Control System (DCS) in Process Plant

Distributed Control System for plant operation and management is very popular nowadays. It is so called, because in a large complex of plant facilities the data is stored where they have been created and where they will be needed. Similar principles hold for the control and operating functions also. But certain information and functions are centralized. Typically:

Local control and supervision of plant is located next to the plant instrumentation.

Processing of data for higher purposes (optimization, calculations of set point value, etc.) is allocated in central control room.

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Production planning and plant management is located closer to the relevant plant management staff.

As shown in Figure 23.7, the operator’s console in the control room is connected through a shared communication facility to several distributed local control units.

Figure 23.7: DCS System

DCS has three essential features:

1. DCS distributes its functions into smaller sets of semi-autonomous sub-systems covering specific process or geographic areas of the plant complex.

The functions generally are:

Data Collection

Process Control

Process Analysis and Supervision

Storage and Retrieval of Information

Presentation of Information and Reports

2. The second is to automate the manufacturing process by integrating advanced regulatory control logic and procedural languages with advanced application packages, expert systems, including information to support such manufacturing enterprise application as:

Production scheduling and dispatching

Preventive and predictive maintenance scheduling

Information exchanges with business and logistics application

3. The third characteristic is the system aspect of the DCS, which organizes information flow between the constituent parts so

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that a single automation system unifying the semi-autonomous sub-systems is created.

DCS has been used extensively for all round application in operation, process control, maintenance, equipment availability etc. A typical imprint from the monitor of a control room with DCS is shown in Figure 23.8.

Figure 23.8: Monitor Imprint from Control Room

Dynamic Simulation Model and Advanced Process Control (APC)

Building the system model involves entering the details about each item in the process system. Much of the information needed to build the model is obtained during the design stage. It is always best to create the model during the design stage and keep the model current through start-up and operation.

Dynamic model predicts responses of various equipment and process parameters due to any change in:

Feedstock quality or quantity

Operating conditions

Utility parameters (e.g. fuel gas quality for the furnace)

Price of products.

The software can have in built process optimization system. It calculates the new sets of operating conditions required for each part of the flow system to get the requisite yield and quality of products in the most economic way.

The program allows the operator to calculate new control set points to achieve optimum performance, carry out studies and determine where problems are occurring and what the reasons are.

In Advanced Process Control System, the model transmits the corrective actions required to the plant control system, which automatically resets the plant operating parameters.

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Training Simulators

Plant operating personnel need to know how the plant will operate during a variety of conditions. They can either gain that experience by actually putting the plant into that condition, or they can simulate the operation using training simulators. Using software, an operator can safely simulate the operation of the process system in these infrequent or potentially dangerous system-operating conditions. Thus a plant operator gains experience in system operation without affecting the operation of the physical plant.

The program allows the operator to determine optimum product distributions based on current economic conditions, calculate new control set points to achieve optimum performance, carry out studies and determine where problems are occurring and why.

SCADA System

SCADA stands for Supervisory Control and Data Acquisition. It refers to the combination of the fields of telemetry and data acquisition. It is extensively used in facilities covering very large area (e.g. cross country pipeline or a complex of offshore platforms) monitoring, control, operations, maintenance and management.

SCADA encompasses the following:

Collection of the information

The method of measurement and transfer of the information from the remote site by telemetry and telecommunication.

The analysis and control of the system and display of the received information. SCADA facilitates the capability to monitor and control network operations in real time.

SCADA systems are distinguished from traditional control systems by their extensive use of telemetry to link physically isolated measurement and control points. SCADA systems are predominantly used in Oil, Gas and Petrochemical Processing and pipeline industries. Basic SCADA structure comprises:

Master Terminal Unit (MTU) or Master Control Station (MCS) for processing of the data and presenting it to console operators.

Communication System for transmitting remote data to the MTU and control commands to the remote sight for device controlling.

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Remote Terminal Unit (RTU) for acquisition of device status and data at remote sites.

The communication could be through optical fibres, radio, cable or satellite. But for its functioning extensive range of software are used. Besides Operating System Software, the following are essential for SCADA system:

Application software related to a specific application. For example, for a typical pipeline SCADA system, the application software will be transient model of pipeline dynamic flow operations including real-time leak detection and location software.

The modules to be included are:

Flow measurement

Meter proving

Batch tracking

Interface detection/composition tracking

Pig tracking

Over or under pressure protection module

Pipeline efficiency module

Predictive module

SCADA software comprises System and database configuration:

Generation of current raw database and processed data base (telemetered information)

Generation of historic data for trending and archival

Alarm handling including information display and print out

Generation, storage, presentation of mimic diagrams with dynamic information (presented on VDUs)

Display management for alarm, mimic diagrams, analog and digital values, trend graphs, bar charts in high resolution colour graphic modes

The calculation software package

Free format report generation storage and print out

Transmission of control commands and configuration parameters to out stations in system with fast update of related information on Man Machine Interface (MMI).

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Check Your Progress

Fill in the blanks:

1. ………………… Unit in SCADA is for acquisition of device status and data at remote sites.

2. ………………… Unit is for processing of the data and presenting it to console operators.

Maintenance Management Software

The following are the different Maintenance Management Software available:

Computerized Maintenance Management System (CMMS)

CMMS integrates routine maintenance, preventive maintenance, work orders, inventory and purchasing in an intuitive interface. Specifically designed to be easy and powerful, minimizing operator input during startup and normal operations.

Planned as well as Preventive Maintenance Tasks are scheduled by Days, Shifts or Meter readings. Any maintenance tasks that are not completed are rescheduled for the next week. A critical preventive maintenance work order is never missed because they are automatically regenerated until completed.

Field condition and process information data are accumulated and passed on to Computerized Maintenance Management System (CMMS) software for analysis. However, this information can’t tell the user what actually went wrong or how severe the problem is. Specialized condition-monitoring equipment e.g. corrosion monitoring to identify corrosion problems in piping and vessels, vibration monitoring to identify rotor dynamic and bearing faults, and performance monitoring to identify performance degradations, are needed.

Condition Monitored Maintenance Software

Intelligent field devices and smart chips combined with maintenance management software are now helping process industry companies move toward predictive maintenance in their plants.

It collects data generated by “smart” field instruments, organizes this data for various maintenance functions, and monitors for early warning signs of field device stress or deterioration so that corrective action can be taken before a serious equipment failure

Activity Make a presentation on the different Maintenance Management Software available.

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occurs. There are diagnostic software to actually carry out the diagnosis of the problem and recommend preventive actions.

The program reduces overall maintenance costs and increases process uptime by providing advanced warning about potential equipment failures. Automating work order creation and eliminating manual data entry further reduce the chance for human error in handling maintenance information. By combining these important maintenance tools, the user can establish a predictive maintenance environment to keep the plant running at top efficiency. Potential problems are corrected before serious damage occurs, and the cost of maintenance is reduced significantly.

Direct interfaces between the Computerized Maintenance Management System (CMMS) and other diagnostic and monitoring systems such as compressor and pump automation, predictive maintenance, and product quality testing equipment can assist greatly in streamlining the maintenance process. It allows maintenance personnel to respond to early warning signals before they escalate into critical repair problems. CMMS build upon these types of interfaces to automatically create work orders and update equipment histories based upon alarms and test results received through these interfaces.

CMMS provides maintenance professionals with:

An easy-to-use library of possible problems for major capital expenditure assets and critical patient care items

Problem diagnosis techniques

A recommendation to repair the cause of the problem and avoid repeated wasting of money treating its symptoms rather than the actual cause.

Check Your Progress

Fill in the blanks:

1. ………………….. integrates routine maintenance, preventive maintenance, work orders, inventory and purchasing in an intuitive interface.

2. Field condition and process information data are accumulated and passed on to ………………….. software for analysis.

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Enterprise Resource Planning and Management (ERP)

What is ERP?

Earlier, most of the large process plant complex used to maintain independent information centre/databank for individual functions like Planning, Operation, Maintenance Management, Finance and Marketing. However, now software programs integrate information from those activities. But modern Enterprise Resource Planning software (ERP) combines information, data and reports from all departments together into a single, integrated software program with a single data base, from which all can share information and communicate with each other.

Members of staff of different departments see the same information and can update it. Accountability, responsibility and communication are the major benefit of the ERP.

In short, ERP consists of the following modules:

Asset Management,

Controlling,

Financial Accounting,

Human Resources,

Industry Specific Solutions,

Plant Maintenance,

Production Planning,

Project System,

Quality Management,

Sales and Distribution,

Materials Management,

Business Work Flow.

Major Benefits of ERP

ERP consists of the following benefits:

Integration of financial information: ERP integrates and creates a single version of format that cannot be questioned because everyone is using the same system.

Activity Write a report stating the different uses of ERP in any two sectors, along with examples.

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Integration of customer order information: ERP systems manages all information from enquiry to ordering, shipping, delivery and payment. By having this information in one software system, rather than scattered among many different systems, companies can keep track of orders more easily, and coordinate production, inventory and shipping. It helps in reducing inventory.

Standardize HR information: Especially in companies with multiple business units, ERP can provide a unified, simple method for tracking employees’ time, utilization, and communicating with them about benefits and services.

Integration with Operation: ERP systems provide a platform that links sales, inventory and quality with the production data, operation and production planning. The inter-phasing with the plant operation is done by interaction with DCS system by transmitting key production and operating information for the management.

By providing the link between ERP and plant operation, the program enables true plant optimization.

Integration with Maintenance: Like integration with operation, ERP can sit over and inter-phase with the maintenance software also.

Essentially through modern ERP system, all departments covering management functions, production functions, maintenance functions, marketing functions and safety functions are managed and monitored.

Project Management

Discussion on IT application is incomplete without mention of project management software like Primavera, MS Project etc. Such software are extensively used to meet specific objectives to make the project on time, within budgeted cost and meeting quality. Such software have both text and graphic interfaces to carry out functions like:

Planning and scheduling: Gantt Chart, PERT Chart, Bar Chart

Cost control: Ordering, purchase order, budget vs. actual

Resource Management

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Progress Monitoring: Engineering progress, ordering progress, vendor shop status, delivery schedules, construction progress, projected and actual progress curves (S-Curves).

Such software have the capability of integrating the project related activities of the entire company (Figure 23.9)

Figure 23.9: Enterprise Project Management

Check Your Progress

Fill in the blanks:

1. ……………………. integrates and creates a single version of format that cannot be questioned because everyone is using the same system.

2. ……………………. software combines information, data and reports from all departments together into a single, integrated software program with a single data base, from which all can share information and communicate with each other.

Summary

This unit gave a complete overview of IT application in the hydrocarbon industry. The entire operation in a project life cycle from conceptualization of the project to the project feasibility study, design, construction, operation, maintenance and management has extensive application of IT.

The project life cycle and application of IT in various phases of plant life was at first identified. This was followed by description of software application in each of the above phases. Examples of IT application in design, operation and maintenance were explained

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in detail. Capabilities and uses of modern ERP software were explained.

Lesson End Activity

Using the Internet, find out more information on Gantt Chart, PERT Chart and Bar Chart.

Keywords

SCADA: It stands for Supervisory Control and Data Acquisition. It refers to the combination of the fields of telemetry and data acquisition.

Computerized Maintenance Management System (CMMS): CMMS integrates routine maintenance, preventive maintenance, work orders, inventory and purchasing in an intuitive interface.

Enterprise Resource Planning-software (ERP): It combines information, data and reports from all departments together into a single, integrated software program with a single data base, from which all can share information and communicate with each other.


1. What are the various phases in plant life cycle where IT application is commonly used?

2. Explain the extent of integration in IT application for management, operation and maintenance in the hydrocarbon industry.

3. Expand the following terminologies:

(a) ERPLP

(b) P&ID

(c) PFD

(d) DCSAPC

(e) SCADA

(f) FEED

(g) DFRDPR

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4. What is Condition Monitored Maintenance (CMM) and how is it used for the purpose?

5. What is SCADA? Explain a SCADA system for a cross country pipeline.

Further Readings

Books

Applied homogeneous catalysis with organometallic compounds: A ..., Volume 1 Boy Cornils, Wolfgang A. Herrmann - Science – 1996

Handbook of Industrial Hydrocarbon Processes James G. Speight – Technology & Engineering – 2010

Classics in hydrocarbon chemistry: Syntheses, concepts, perspectives Henning Hopf – Science – 2000

Organic electrochemistry Henning Lund, Ole Hammerich – Science – 2001

Web Readings

www.geosocindia.org/Goldenjubilee/lucknowseminar.pdf

vinci.celuga.net/images/contenu/documents/Rock%20Eval% 206.pdf

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UNIT 24: Economics and Technology Trends

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Unit 24

Economics and Technology Trends


Trends on prices and business cycles

Strategies being adopted by major companies for competitiveness and to overcome Troughs in the business cycles

Trends on innovation and emerging technologies

Introduction

Oil and natural gas dominate as main source of energy due to low cost and ease of handling compared to other commercially viable energy sources.

Coal is cheaper as raw material but more difficult to transport. Coal has lower calorific value, lower efficiency of combustion and greater environment pollution problem.

Technology of non-conventional sources of energy like solar energy, wind energy, ocean energy or fuel cells are getting more attractive but still a far cry for bulk production. At currently prevailing prices of oil and gas, any major shift towards other sources of energy is not expected in the near future.

Between oil and natural gas, the latter is cleaner and more efficient fuel. But it is difficult to transport, difficult to store and to fill in automobiles. Till now gas played second fiddle to oil as a resource. Natural gas being a clean and efficient fuel and due to improvements in the economics of liquefaction and re-gasification technology, natural gas is gradually increasing its share in the world energy supply.

Price fluctuation, competitiveness and changing business cycles are characteristics of hydrocarbon industry. The huge turnovers often in billions of dollars by major players and large profits during

Activity Make a presentation on FEED.

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upswing period of business cycle, generates enough funds to innovate and improve technology to remain competitive.

To get the feel of business in hydrocarbon area, it is necessary to know the various trends in pricing, business trends, economic trends and technological changes. Some of these aspects are highlighted in this unit.

Natural Gas Trends

The emergence of natural gas as fuel had been slow mainly due to transportation costs. For example gas pipelines are 3 to 4 times more expensive than oil. Improvements in economics of liquefaction and transportation have created large market for LNG. Also very large reserves of gas have been discovered in places like Qatar, Indonesia and elsewhere, substantially enhancing the availability of gas. Also stricter environmental regulation both for product specification and effluent discharge has made use of gas more attractive.

The price of gas, availability of gas, environmental regulations and efficiency of gas as fuel makes natural gas fuel for the immediate future.

The price of gas at the source varies from place to place. Earlier the stress was on exploration of oil. The gas fields found in course of exploration were capped and not exploited. These are called stranded gas in the USA. Such gases are often given negligible value at source. The netback or profit comes after the gas is exploited and distributed to the consumer through pipeline network. As a result, gas has always been valued at a price much lower than crude oil for equivalent amount of energy value.

Natural gas price unlike oil is expressed traditionally in terms of calorific value as US$ per Million BTU or in short US$ per MMBTU. One million BTU equivalent of gas is roughly equal to 0.182 barrels of crude (thumb rule conversion). That means to convert US$/MMBTU to US$ per barrel, the conversion factor will be roughly 1.0 divided by 0.182 or 5.5. Thus we can use a factor of 5.5 to multiply US$ per MMBTU to get equivalent US$ per Bbl price for natural gas for comparison to oil price.

Activity Make a presentation on the International Gas price scenario.

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International Gas Price Scenario

It is interesting to note that, the USA in spite of having large resources of gas available at a low price is looking into supplementing its gas requirement by import of LNG.

In the early nineties, the price of LNG has been high compared to the price of gas in the United States. Costs of delivery were around $2.50 to 3.00 per MMBTU (not including the netback price to the owner of the stranded gas reserves). Assuming a US$ 1.00/MMBTU netback to the producer, a total deliverable gas price of around $3.50 to $4.00/MMBTU could possibly be attained on a cost basis.

Now due to competition and improvements in technology, the total cost of LNG production and re-gasification has been reduced.

This LNG price is almost $1.00/MMBTU less than a decade ago. This is a thumb-rule price, which will actually depend on the price at source, distance of transportation, volume of supply and type of contract.

Relationship between Oil Price and Gas Price

The price of gas has some effect on the change in the price of oil. Only around 5 to 10% of the gas comprising of ethane, propane and some of the methane goes into production of petrochemicals. Most of the gas is used for generation of power and for heating in the developed countries.

The other fuel used for these purposes are fuel oil and naphtha from the crude. There are impacts of crude price variation on the naphtha and fuel price. Natural gas for power plant needs to be priced so that it is competitive with the naphtha price.

It is important to understand that there has to be a link between oil price and LNG price. Japan, which is one of the largest buyers of crude oil as well as LNG, has a definite correlation between the two. This is presented in Table 24.1

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Figure 24.1: Relationship – LNG Price and Oil Price at Japan

One of the biggest anomalies in the North American natural gas market over the past year has been how disconnected natural gas prices have become from those of its close substitutes – oil and coal. The historical relationship between the price of natural gas and oil, which has averaged 10:1 over the past two decades, has now moved to approximately 20:1.

Changes in environmental regulations that favour use of natural gas over coal as feedstock for electricity generation facilities coupled with a spike in coal prices, have caused natural gas to trade below the “coal floor” for more than a year. The coal floor is the price at which electrical utilities shut down coal plants and increase use of natural gas fired power plants.

In this section you will examine the connection between natural gas prices and those of oil and coal from a variety of angles. Also, it will show that while a number of factors may move prices beyond historical norms in the short-run, there still exist powerful forces that will revert these relationships back to the mean in the long-term. A reversion to historical pricing norms is strongly bullish for natural gas prices.

It provides several ways to profit from this trend. While there has been much written about the correlation between gas and oil prices over the years, no authors have presented the relationship more succinctly than Stephen Brown and Mine Yucel, two researchers at the Federal Reserve Bank of Dallas. In their 2007 white paper/presentation entitled, “What Drive Natural Gas Prices?” the

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authors present a very thorough review of three of the most commonly used rules of thumb when comparing oil and gas prices. They are as follows:

10-to-1 rule: Under the 10-to-1 rule, the natural gas price is one-tenth the price of oil. For example, a $50 price for a barrel of WTI crude oil would indicate that natural gas should trade at $5.00 per million BTU at Henry Hub. The 10-to-1 gas/oil relationship has been the most accurate rule of thumb over the past 10 years as evidenced by the below figure:

Figure 24.1: The 10-to-1 gas/oil relationship

6-to-1 rule: Another common rule of thumb for the relationship between gas and oil prices reflects the energy content of the two commodities. Since one barrel of oil contains the energy equivalent of the 5.825 million BTU of natural gas, the 6-to-1 rule was developed. Applying this rule, should oil prices trade at $50 per barrel of WTI, natural gas should trade at $8.58. Brown and Yucel observed that although the 6-to-1 rule is less accurate than the 10-to-1 rule over long observation periods, in times of rising gas prices, the 6-to-1 rule is a more accurate predictor of natural gas prices. In periods of declining natural gas prices however, the 10-to-1 rule is a more accurate predictor.

Burner Tip Parity: The burner tip party rule is more complex than either of the two previously discussed rules in that it takes into account the relationship between natural gas and the petroleum production with which it competes at the burner tip. According to Brown and Yucel, the burner tip parity rule “shows

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natural gas pricing yielding parity with residual fuel at the burner tip, and the price at Henry Hub adjusting to whatever is necessary to achieve burner-tip parity.” Since a barrel of residual fuel has an energy content of 6.287 BTU, and historically residual fuel is priced at 95% of WTI, the burner tip parity rule would suggest that a $50 price per barrel of WTI would result in a $7.06 per million BTU price for natural gas.

In addition to the above three rules for describing the correlation between oil and natural gas prices, Brown and Yucel also discuss other factors that impact the oil-gas price relationship. One little discussed influence on U.S. natural gas prices is the worldwide price of petrochemical products. The authors point out that since the U.S. petrochemical industry relies heavily on natural gas as a feedstock, while a significant portion of the international petrochemical industry uses oil as a feedstock in its manufacturing processes, a pricing arbitrage exists during periods of low gas prices in the U.S. Therefore, should U.S. natural gas prices remain below their historical norms for an extended period, petrochemical imports into the U.S. will decline and domestic manufacturing will expand and increase demand for natural gas.

Another factor influencing the oil to gas price relationship in the U.S. is the price of Liquefied Natural Gas (LNG). With an increasing percentage of the world LNG pricing linked to world oil prices (exporters are now demanding oil linked pricing), LNG imports into the U.S. will remain at very depressed levels unless natural gas prices rise substantially. Imports into the U.S. are currently approximately 1 billion cubic feet per day (bcf/d) despite approximately 12 bcf/d of import capacity. However, if we look at gas prices in the U.K., a country which has seen domestic gas production fall and now relies more heavily on LNG imports, we see a much closer link between oil and gas prices. On 1/26/2011 spot natural gas in the U.K. was priced at $8.64 per million BTUs and Brent crude priced at approximately $95. Therefore, the current gas-to-oil ratio in the U.K. is approximately 11:1. Since the U.S. imports virtually no natural gas via LNG on a long-term fixed contract basis and the UK will likely continue to offer the best terms for spot cargoes in the Atlantic Basin due to further declines in domestic production, there will be no increase in LNG imports into the U.S. until spot prices are well over $8.00US per million BTUs.

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Brown and Yucel’s final reason oil prices drive natural gas prices is the reallocation of drilling funds by natural gas producers away from natural gas projects and towards oil projects. In today’s world of approximately $89US per barrel WTI oil prices and $4.35US per thousand cubic feet (mcf) natural gas prices, operators are aggressively redirecting funds towards oil projects. It comes as no surprise that most independent operators are now concentrating on their oil projects given that oil and gas wells cost about the same to drill and oil wells generate nearly three times the revenue on a barrel of energy equivalent basis. The focus on oil projects and liquid rich natural gas projects has led to a drop off in the natural gas directed rig count in recent months and a concurrent increase in the oil directed rig count. We see the preference for oil drilling over natural gas drilling displayed very clearly in the weekly Baker Hughes rig counts. The below graph shows the large upswing in both gas and oil directed drilling over the past two years as well as the recent fall off in natural gas directed drilling:

There are two important reasons oil directed drilling will continue to rise and natural gas directed drilling should continue to fall. First, a significant portion of today’s natural gas directed drilling, as much as 25%, is being conducted to hold soon to be expiring leases. Many leases in the Haynesville and Fayetteville shale were signed with terms stipulating that to maintain the lease in good standing; a well must be drilled within three years of lease signing. With much of the prospective acreage already held by production (HBP) in these two shale plays, operators have begun reducing operations in these areas until economics improve. According to Baker Hughes, Louisiana and Arkansas, home to the Haynesville and Fayetteville shale plays, have fewer rigs operating than at the same time last year due to declines in shale directed drilling. While rig efficiency gains, such as pad drilling will reduce drilling time per well and will certainly offset fewer rigs active in natural gas shale plays, drilling more shale wells closer together will not grow shale gas production enough to offset an expected 10% decline in conventional US natural gas production this year.

A final reason oil prices are now driving natural gas prices is that inflation in oilfield services, especially pressure pumping, have driven up drilling costs to the point where most natural gas wells are uneconomic at today’s prices. Pressure pumping is the

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pumping of water and sand into a wellbore that has been perforated to prop open fractures to allow hydrocarbons to flow to the wellbore. With new unconventional oil plays coming online in the past year and operators drilling more and longer lateral wells requiring more fracture stimulation jobs than ever before, demand for pressure pumping services has risen dramatically.

Check Your Progress

Fill in the blanks:

1. The …………………. rule shows natural gas pricing yielding parity with residual fuel at the burner tip, and the price at Henry Hub adjusting to whatever is necessary to achieve burner-tip parity.

2. Under the …………………. rule, the natural gas price is one-tenth the price of oil.

Coal vs. Natural Gas

A number of factors have distorted the traditional relationship between coal and natural gas prices to unsustainable levels. Since most of America’s utilities have the ability to employ natural gas fired power plants in lieu of coal fired power plants when natural gas is priced advantageously, utilities have been ramping up natural gas consumption and reducing their usage of coal. With the price of Central Appalachian (CAPP) coal currently trading at $73 per ton, up from $60 per ton for much of last year, a recent study by Credit Suisse (CS) indicates that natural gas prices would need to rise to approximately $6.30 per mcf before coal and natural gas trade at parity for electricity generation. As you can see from the below graphic, natural gas is well below parity for not just 2011 but also for the next several years:

With such a large gap between coal and gas pricing parity, we have already seen a substantial amount of switching by utilities from coal to natural gas. According to CS, in October 2010, natural gas usage for electricity generation was up 6% year over year while consumption of coal for electricity generation was down 4% year over year. More importantly, CS sees even more switching to natural gas in the months and years ahead as tighter environmental rules make coal usage increasingly expensive. For

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example, CS sees natural gas demand increasing 5 bcf/d should new EPA rules regarding release of nitrogen oxides, sulfur oxides and mercury by coal fired power force the closure of all small coal fired power plants without environmental controls (60 GW of 340 GW total) by 2017 and a potential 10.2 bcf/d should all small and large dirty coal plants (100 GW total) be closed by 2017.

Despite the all of the evidence that today’s natural gas prices are unsustainable in relation to oil or coal, many of today’s biggest gas traders are still betting big that the recent jump in prices to $4.75 per mcf on the NYMEX was just a fluke. No natural gas futures contract on the NYMEX trades over $5.00 until January 2012. While shorting natural gas has been a very profitable strategy over the past two years, and a very popular one as well, the fundamentals of natural gas will soon get the long Awaited rally in natural gas started. When shorts start covering we will see a spectacular rally in natural gas. There are many great ways to participate in the bull market for natural gas such as the several gas-weighted equities in my newsletter Model Portfolio as well as several commodity ETFs.

As a result of all this the following changes have taken place in LNG trade:

LNG contracts in the eighties were very rigid with stringent penalty clauses for failure to supply as well as failure to lift agreed quantities. They were also long term contracts so that huge investment needed for production (seller) and utilization of LNG (buyer) get paid out. LNG contracts are now gradually becoming less rigid and more flexible.

New long term contracts between seller and buyer specify a relatively smaller commitment of supply which can be later supplemented by short term contracts for additional requirements. Thus it is more flexible.

Short term contracts as a result have grown from 1% in the early nineties to around 10%.

The future is going to see increased activity in LNG trading to satisfy the increasing energy needs of some countries. There are today 150 LNG tankers with another 50 plus tankers under construction to be added in near future.

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India and China are going to become major buyers of LNG. European countries which do not have major gas resources and USA will also be the major players in LNG downstream.

Indian Scenario

Gas Demand and Supply

The demand of gas has been projected by various estimates depending on assumed user pattern at figures between 150 to 200 million SCMD. Major consumption of Natural Gas in India will be in the Power and Fertilizer sectors. Thus there is a large gap to be filled.

A major part of the gap is expected to be filled by LNG. Petronet LNG Ltd. was formed by participation of PSUs. Petronet has entered into agreement with Ras Gas (Qatar) for import of LNG. Their terminal at Dahej is nearing completion and another will come up at Kochi. Shell is constructing a LNG Terminal at Hazira with Shell Oman as supplier of LNG. A number of other projects are expected to come up.

Other possibility of gas import is directly by pipeline from Iran, Turkmeinistan, Bangladesh or Myanmar and connecting them to existing gas grid like HBJ Pipeline.

Indian Pricing Scenario

The pricing of natural gas in India is currently based on a pooling concept, with the consumer price being fixed by the Government.

The consumer price of natural gas is currently subsidized, with the subsidy being borne entirely by the nationalized oil companies, which receive sub-optimal prices for their production of natural gas. The private sector joint ventures receive international prices for the natural gas they produce.

This was feasible as long as the gas ownership and distribution was by public sector companies. However, this pricing mechanism is set to change due to:

The recent gas finds in the Krishna-Godavari Basin by Reliance

Commencement of LNG imports.

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Natural gas from these two sources would have cost structures quite different from that for the existing sources of supply. The supply from these sources would also be of substantial volume exceeding the current availability of gas. This would lessen government control on gas pricing and would force changes in the pricing mechanism.

Perhaps in the long run, the market forces will settle the gas price in India.

Energy Source – Trends

Hydrocarbon will continue to maintain its base as prime energy source for at least the next 20 years. Between oil and gas, their will be substantially increased share of gas as energy source for two reasons:

Natural gas is clean and environment friendly fuel

There have been very large finds of natural gas in recent times (e.g. Qatar, Indonesia). In future too greater proportion of gas finds (compared to oil) are expected.

Dominance of natural gas as fuel had been slow mainly due to transportation costs. For example gas pipelines are 3 to 4 times more expensive than oil. Improvements in economics of liquefaction and transportation have created large market for LNG. Price of gas, availability of gas, environmental regulations and efficiency of gas as fuel makes it fuel for the immediate future.

Synfuel as Alternative to LNG

The key thing is to solve the transportation aspect by converting gas to liquids. There are choices now for conversion liquid – Convert it to methanol, LNG or Synfuel. With oil price crossing US$ 30 per barrel, two important sources of energy may start gaining ground:

Synfuel - It is essentially natural gas converted to light oil by reaction processes with gasoline and diesel as products.

Fuel cell - Which converts fossil fuel directly to power.

Synfuel technology is also called GTL (Gas to Liquid). A number of technologies are available such as Fischer Tropsch technology, Mobil, Haldor Topsoe, etc. The Fischer Tropsch route has the steps:

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Steam reforming at 800°C: CH4 +H2O = CO + 3H2

Conversion of CO and H2 to long chain hydrocarbons by reaction between the carbon atom of CO and H2.

Fuel Cell

A fuel cell is an electrochemical energy conversion device, similar to a battery.

It provides continuous DC power, which converts the chemical energy from a fuel directly into electricity and heat.

When operated directly on hydrogen, the fuel cell produces this energy with clean water as the only by-product.

Unlike a battery, which is limited to the stored energy within, a fuel cell is capable of generating power as long as fuel is supplied.

Hydrogen is the primary fuel source for fuel cells. Reforming process is used for the extraction of hydrogen from more widely available fuels such as natural gas and propane or any other hydrogen containing fuel. There is R&D effort going on to extract hydrogen from water.

Fuel cell systems offer the potential for reliable, efficient, and cost-effective energy generation. Capable of operating on multiple fuels, such as natural gas, propane and hydrogen, fuel cell systems can be deployed to operate in parallel with the grid, as independent energy sources or to complement solar and wind power generating systems.

With a higher efficiency than conventional power generation, little or no pollution and greater flexibility in installation and operation, they will offer commercially viable alternatives to existing power sources.

Check Your Progress

Fill in the blanks:

1. Major consumption of Natural Gas in India will be in the ……………….. and ……………….. sectors.

2. ……………….. is the primary fuel source for fuel cells.

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Petrochemical Business Scenario

In the paragraphs given below we will learn about the Pertrochemical business scenario right now.

Petrochemical Business Cycle

It has been noticed that the petrochemical business follows a definite business cycle. These cycles follow a span of around 7 to 10 years.

There is a set pattern. Most operating companies in the hydrocarbon process industry study the business cycle and trends thoroughly and expand the petrochemical business, matching the construction of new facilities during the lean period. As a result, the new projects start-up during peak period. This results in over saturation. Consequently, supply exceeds demands resulting in dropping of margins after a period. Other sectors of the industry too undergo difficult times. The industry had been through the lean period till 2003 and upswing is expected now. But many large naphtha/ethane/propane crackers are in the offing and the political scenario is changing. These too affect the cycle.

This has lead to a situation where companies have evolved strategies to survive the lean period and make profits in the up-swing period.

The Ethylene Based Petrochemical Industry

Ethylene is called the king of petrochemicals. Ethylene based petrochemicals have the largest share of the petrochemical industry. Ethylene demand determines the petrochemical business cycle.

Polythene, Ethylbenzene (EB- goes to make Polystyrene), Ethylene Oxide (EO- leads to Ethylene Glycol), Ethylene Dichloride (EDC), PVC and many other useful petrochemical are ethylene derivatives. Polythene takes the major share of ethylene based petrochemicals and is perhaps the most important petrochemical.

The growing economies of China and India still have relatively small share and is expected to determine the growth of the industry.

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Global Trend

Earlier the ethylene business was more regional limited to trade within European region, the Americas and the Asia Pacific region. Now global players are emerging in the ethylene and derivative market. The Middle East is emerging as large manufacturing base to supply globally. China is emerging as a major producer.

However, most of the big players are still making a profit, just not as big as the profits they made over the past two or three boom years. Other positive factors include lower oil prices meaning lower feedstock prices and the drop in the cost of raw materials has meant that many companies have been able to trim billions of dollars from major projects.

Planning for Competitive Edge

Business Strategy

With the low margins in the refining industry and fluctuation of fortunes in the petrochemical industry, the major investors and companies have adopted strategies to make the industry attractive using the well known principles:

Economy of scale

Integration under same ownership

Mergers

Proximity of raw material provider, and user

Shared infrastructure and shared utilities

Shared effluent treatment

Technological innovation and energy audit

Integrated Refinery and Petrochemical Complex

In the 1970s and 80s, the oil companies were mainly in the refinery business besides oil production. With the low margins in the refinery industry, integration with petrochemicals has become one of the key strategies for major companies. One tries to integrate as much as the business environment permits and availability of funds and market.

One of the best examples of integration is Reliance Industries, who started as a fabric company. Later they step by step integrated vertically to fibres, then to petrochemicals to make the fibres,

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refinery to make the petrochemicals and then to oil and gas production. In India the PSUs also are trying to integrate into their non-traditional areas. For example, companies like IOCL and BPCL are planning to get into both petrochemicals and oil/gas exploration. Similarly, ONGC is investing in refineries.

Mergers and Acquisitions

Integration of operation between upstream and downstream and mergers have been the major consolidation done by many major organizations in order to get a competitive edge. Some examples of merger are:

Exxon and Mobil- merged to form ExxonMobil

BP/Amoco/Arco merged. BP acquired other companies like Erdoel Chemie

Total/Fina/Elf Aquitaine merged to form TotalFinaElf

Chevron/Texaco

Dow/UCC

Montell/Targor/Elenac merged to form Basell

Chevron/Phillips merged chemical interests

Dow/UCC merged

Each of them has a wide portfolio of a range of oil, gas, petrochemical and chemical business areas. One can see that oil companies have integrated their business into refinery and petrochemicals.

Check Your Progress

Fill in the blanks:

1. Exxon and Mobil merged to form ................. .

2. Total, Fina and Elf Aquitaine merged to form ............... .

Future Developments

Given below are the future developments that have been planned in this area.

Hydrates as Energy Source

Hydrates are unstable compounds of hydrocarbons like methane and water. They are solid and look like ice. In natural gas, the

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saturation level moisture contained forms hydrates at moderate temperatures (5 to 20°C) at high pressure.

In many parts of the world huge deposits of hydrates have been identified below the sea. Natural gas that seeped out of the deposits below the earth, under pressure of water at certain depths of sea, at the prevailing temperature formed hydrates. The quantities are huge and research is going on how to mine them from sea bed.

Another application of hydrates could be in the transportation of natural gas by converting gas to hydrates in stead of liquefying to LNG.

Norwegian University of Science and Technology has carried out R&D in this area and found that:

1. Large-scale and long-distance transport of natural gas at atmospheric pressure in hydrate form is feasible.

2. Experimental studies in Norway and Russia have shown that natural gas hydrates are stable for up to two years when stored at -15 to -5°C at atmospheric pressure, compared to LNG at -160°C.

3. The estimated total capital cost of hydrate production and melting processes was approximately one-quarter less than LNG’s equivalent liquefaction and re-gasification processes.

4. For the same natural gas carrying capacity, the capital cost of seven Natural Gas Hydrate ships was also estimated at approximately one-quarter less than that of three LNG ships.

Gasification of Refinery Residues

Refineries always look for elimination of the residues which are difficult to dispose off as fuel due to environmental regulations. Integrated Gasification Combined Cycle (IGCC) is gaining ground for the utilization of refinery residues to generate power. Refineries in the USA and Europe have taken lead in the IGCC projects. The IGCC process essentially converts the residue into synthesis gas (mixture of carbon monoxide and hydrogen) by reaction with steam at high temperatures. The acid gas bearing sulfur is removed to purify the synthesis gas.

Synthesis gas generated through the gasification of refinery offers scope to manufacture chemicals like methanol as co-production and get further downstream into petrochemicals. Larsen and

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Toubro has carried out some work in this direction and proposed integrated approach for co-production of methanol and acetic acid along with power generation.

Smart Chips

Use of microchips for equipment conditions and health is expected to find widespread application. There could be smart chips embedded in various parts of equipment conveying many aspects of equipment status, health, functioning, warnings and even diagnosis of problems.

Business Diplomacy to Overcome Politics

Till the recent past, oil and gas have generated politics, power struggle and war. But in South Asia, diplomatic moves are on to overcome the politics that divides the subcontinent with gas as the driving force behind it.

India is hungry for energy supply, with current annual average growth, expected to go up. Turkmenistan and Iran have huge reserves of gas, which they want to transmit to India by pipeline through Pakistan. But 50 years of quarrel and suspicion is the obstacle towards its implementation.

Bangladesh and Myanmar have gas and India is their nearest market. But politics in Bangladesh is trying to prevent sale of gas to India. A pipeline from Myanmar through Assam (a gas rich state) makes good business sense.

Major multinationals have their eyes on these potential mega-projects. They are also beneficial to each of the participating countries. To quote “The Times of India”, “The great game– or the potent mix of oil, gas and diplomacy in Central Asia – has reached India. ......The three pipelines have the potential to metamorphose the geopolitical and economic topography of Central and South Asia...”

The economic need of the countries involved, pressure from the multinationals and vested interest of some major countries is generating business diplomacy, which could spur growth in Central and South Asia and give peace a chance in the Indian sub-continent.

South East Asia had set the trend of looking into business as the driving force giving politics a back seat. China is following the same path. Could the Indian subcontinent be the next?

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Check Your Progress

Fill in the blanks:

1. ………….. are unstable compounds of hydrocarbons like methane and water.

2. Experimental studies in Norway and Russia have shown that natural gas hydrates are stable for up to two years when stored at …………..°C at atmospheric pressure.

Summary

We started with the description of history and trends in the prices of oil and natural gas. Emergence of natural gas as a source of energy in the immediate future was noted. The growth in LNG trade for supply of natural gas to both developed countries and emergent economies of China and India was described.

Hydrocarbon resources being limited, major companies are working towards developing new sources of energy. Gas to Liquid technology, Hydrates and Fuel cells as a future source of energy was identified.

The economics of the refining industry was discussed and low margins in the industry were identified. This was followed with description of the business cycle in the petrochemical industry was described.

The strategies adopted by major companies to be competitive and overcome the low periods of business cycle were stated with examples.

Lesson End Activity

Using the Internet, write a short note on Brown and Yucel.

Keywords

Synfuel: It is essentially natural gas converted to light oil by reaction processes with gasoline and diesel as products.

Fuel Cell: It is an electrochemical energy conversion device, similar to a battery

Personal Protection Equipment (PPE): Equipment/clothing which offers protection against risks to health and safety.

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Integrated Gasification Combined Cycle (IGCC): It is gaining ground for the utilization of refinery residues to generate power.

Injury Frequency (IF): Number of injuries per million man hours worked.

Injury Rate (IR): Number of injuries per one hundred employees.


1. What are the factors that affect crude oil price?

2. Why is natural gas emerging as major source of energy supply?

3. What are hydrates? What are the new ideas coming up with respect to the hydrates?

4. Describe the principles of fuel cells. Explain with sketch.

5. What are the principles adopted to make oil, gas and petrochemical business competitive? Explain with examples.

6. Name five petrochemical products based on ethylene.

Further Readings

Books

May 2003 An Outlook for Natural Gas Market in the APEC Region - Symposium on Pacific Energy Cooperation(SPEC) 2003, Tokyo, Yonghun Jung, Ph.D, Vice President, Asia Pacific Energy Research Centre,

LNG Projects & Gas Transportation Infrastructure in India- Dr U D Choubey, General Manager, Gas Authority Of India Ltd. , Indo-US Conference, April 17th2002

Web Readings

www.plugpower.com

www.indialpg.com

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UNIT 25: Case Study

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Unit 25

Case Study


Case Study: BP Oil Spill

The Gulf of Mexico is bordered by five of the United States: Florida, Alabama, Mississippi, Louisiana, and Texas. It is also bordered by Mexico and is the location of Cuba. The gulf itself covers an expanse of 600,000 square miles and has a developed a circulation pattern for the waters (General Facts about the Gulf of Mexico, 2011). Water enters the Yucatan Strait, flows through the Loop Current, and exits through the Florida Strait (2011). The way in which the water flows creates the well-known current, the Gulf Stream. The Gulf Coast acts as a major drainage pool for the thirty-three major rivers and two-hundred and twenty-seven estuaries from the United States alone (2011).

The states that line the Gulf have excellent opportunities to take advantage of the resources the gulf has to offer. With 16,000 miles of coast in the United States alone, the Gulf provides easy access to fishing, natural resources, and recreation opportunities (2011). The population of the Gulf is expected to hit 61.4 million by 2025 with Florida and Texas expected to house most of the new population (2011). Tourism boosts the economy by $20 billion each year and seven of the top-ten seaports are located along the Gulf Coast (2011). The Gulf “yields more finfish, shrimp, and shellfish annually than the south and mid-Atlantic, Chesapeake, and New England areas combined,” and is home to about 45,000 bottlenose dolphins (2011).

About the Oil Spill

On April 20, 2010, a tragic disaster hit the Gulf Coast. British Petroleum’s (BP) Deepwater Horizon rig exploded spewing crude oil into the ocean from the three major cracks in the rig. It rivaled the 1989 Exxon Valdez spill within days of exploding (Gerstein, 2010). A few years earlier, BP was fined $20 million for neglecting to prevent leaks in a pipeline in Alaska’s Prudhoe Bay (2010). From June 5, 2010 to June 14, 2010, BP had collected 127,000

Contd…

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barrels of oil in their containment cap alone; while it is believed that a total 60,000 barrels of oil a day are gushing into the Gulf (Gerstein, 2010). The oil slick can be seen from space and covers an area of 130 miles by 70 miles even though BP has dumped 50,000 barrels of heavy mud on the leaks to help stop the flow of oil (2010). After the insistence from government officials, BP began drilling a relief well that will intersect with the original well and will pull up oil so that BP can dump more mud and concrete into the old well and retire it for good (Walsh, 2010). During the period between the explosion and BP’s decision to drill the relief well, they had attempted to use a variety of tactics to quell the leaks.

How the Spill has Affected the Gulf

“‘I’m not too worried about oil on the surface,’ says one scientist. ‘It’s the things we don’t see that worry me the most’” (Begley, 2010). The oil that has been leaking from the well has done more than float to the surface and become an eyesore; it has also been trapped beneath the surface of the waves and carried methane to other parts of the Gulf (2010). At first officials (both for the government and BP) attempted to dispel these finding, however, the independent scientists who boldly made these claims have been proven correct (2010). Not only has the oil spill affected the shorelines and marshes, it has also seeped into unexplored ocean and could possibly disrupt the natural ecosystems that thrived there before the spill (2010). Louisiana State 2 University chemist, Ed Overton, said, “‘It's [the oil spill] going to cause very substantial and noticeable damage–marsh loss and coastal erosion and impact on fisheries, dead birds, dead turtles–but we'll know what that is. It's the things we don't see that worry me the most. What happens if you wipe out all those jellyfish down there? We don't know what their role is in the environment. But Mother Nature put them there for a reason,’” (2010). The dispersants that are used to help break up oil spills are making the environment under water even worse by “‘changing the chemistry and physics of the oil,’ says biological oceanographer Ajit Subramaniam of Columbia University's Lamont-Doherty Earth Observatory. ‘They are creating micro layers of oil that are being carried by the deep currents.’ Even without dispersants, the crude gets broken into zillions of droplets suspended in the water column and corralled there, prevented from rising to the surface” (2010). Two main plumes of the oil and methane mix have been found and the largest is 22 miles long, 6 miles wide, and 3,000 miles thick (2010). Not only do the plumes deprive the areas of oxygen but they also suffocate marine-life by clogging up their respiratory systems with oil (2010).

Contd…

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If large marine animals are not affected directly as a result of the oil spill, their dietary needs will eventually harm them as an indirect consequence of the oil spill. Plankton will likely ingest the oil and as one of the lowest organisms on the food chain, the oil they ingest will find its way up to the top of the food chain; and linchpins (organisms that act as the garbage collectors underwater) will fail to clean up the dead organisms that will pile up on the ocean floor, therefore, depriving other creatures of nutrients that are by-products of the disposal of the dead organisms (2010). The list of marine-life that could potentially be affected by the oil spill goes on and on, anything from coral reefs to fish to crustaceans to tube worms (2010).

The costs of the spill are overwhelming: 12,000 people from Louisiana alone have applied for unemployment since the spill, most from the southern part of the state; the cost of the spill for BP as of June 14, 2010 was $1.6 billion; it is estimated that the spill will cost taxpayers $1.5billion because the government had put a $75 million cap on oil company liability for oil spills (though this cap may be raised to $10 billion); and as of June 14, 2010, 26,500 Gulf residents have been paid $62 million in tax claims due to the oil spill (Gerstein, 2010). It is estimated that four hundred species are going to be affected by the spill; at least thirty species of birds will be affected due to the spill also coinciding with breeding season; 25 million migrating birds could potentially be scarred by the spill (2010).

It is not just wildlife being affected by the spill. The tourism industry has also been pummeled. Oil coming onto shores has caused authorities to advise people against going to the beaches for swimming and people have been cancelling their trips to the Gulf. For Mississippi, it could mean a loss of $120 million in revenue from tourism (Jervis, 2010). A big fear for tourism agencies in the Gulf is that previous repeat tourists who were forced to travel somewhere new for the summer will continue to go to new places in future years (2010). This in turn will continue to decrease revenue brought in by tourism.

Questions

1. For the states affected by the oil spills, what would be some ideas on how to invigorate their tourism numbers? What types of strategies could be employed?

2. Has BP done enough to help the Gulf Coast? Why or why not? Source: http://www.castonline.ilstu.edu/hurd/KNR378/Articles/BP%20Oil%20Spill%20case_class.pdf

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Glossary

Absorption Process: These use liquid absorbents which absorb the moisture from the gas.

Adsorption Process: These are solid bed processes using reagents like Molecular Sieve or Alumina as adsorbents.

Aromatics: They are compounds having a ring of six carbon atoms with alternating double and single bonds and six hydrogen atoms.

Benzene: Benzene is an aromatic hydrocarbon, which can be present in very low concentrations in some crude oils. Bottom Loading: In bottom loading the product is loaded by connecting the loading arm/hose to a dedicated self-sealing coupling at the bottom of the vehicle.

Calorific Value of a hydrocarbon is measure of heat released by burning unit volume or weight of the hydrocarbon.

Calorific Value of a Hydrocarbon: It is the measure of heat released by burning unit volume or weight of the hydrocarbon.

Catalytic Reforming: It is a chemical process used to convert petroleum refinery naphthas, typically having low octane ratings, into high-octane liquid products called reformates which are components of high-octane gasoline.

Christmas Tree: It is a primary production facility comprising a Manifold on top of the well.

Compressed Natural Gas (CNG): This is natural gas in highly compressed form but not liquefied.

Computerized Maintenance Management System (CMMS): CMMS integrates routine maintenance, preventive maintenance, work orders, inventory and purchasing in an intuitive interface.

Cone Roof Tanks: These types of tanks are very widely used for storing oil, products and chemicals at atmospheric pressures.

Control Room: It is a room housing any kind of control equipment.

Crude Oil Dehydration: Removal of water from crude oil. This process is called crude oil dehydration

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Crude Oil: It is predominantly made of hydrocarbons. It is composed of three main hydrocarbon groups: Paraffins, Naphthenes, and Aromatics.

Demulsifier Chemicals: Are used to break emulsions of water in oil or oil in water.

Dew Point Depression: It is the process of chilling the gas to moderately low temperatures to prevent further condensation in the pipeline.

Downstream: Includes Gas Processing, Refinery, Petrochemicals, Power Plants and other gas based industries

Dry Bed Adsorbent: is a process, where moisture is adsorbed on the porous surface of the drying medium, which are solid particles.

Enterprise Resource Planning-software (ERP): It combines information, data and reports from all departments together into a single, integrated software program with a single data base, from which all can share information and communicate with each other.

Ethylene: It is made by cracking ethane.

Exploration Costs: include the cost of seismic surveys and exploratory drilling and varies between US$ 1 per bbl in prolific oilfields to more than US$ 12 per bbl, where the environment is difficult and production per well is low.

Flare System: An important facility plant processing oil or gas. It is essentially a tall stack made of steel pipe along with a flare tip (burner) at top and ancillary equipment.

Flare Tripod: If the flare has a large gas flaring capacity, it is installed away from a platform to minimize heat radiation to the operating area of the platforms and is installed in a tripod structure piled into the sea.

Flash Point: It is the minimum temperature at which the product generates enough vapour to form an explosive mixture with air

Fuel Cell: is an electrochemical energy conversion device, similar to a battery

Gas Sweetening: Removal of carbon dioxide and hydrogen sulfide from gas is called gas sweetening

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HAZID (HAZard IDentification) is a technique for early identification of potential hazards and threats. HBJ Pipeline: It provides feedstock to numerous fertilizer plants, power plants and petrochemical plants on its route.

Horizontal Drilling: An important technology which makes oil production more economic.

In Situ Combustion: This method of EOR is used for very viscous crude oils.

Incidents: These are defined as an unplanned event or chain of events, which have caused or could have caused injury, illness and or damage (loss), to assets, the environment, or third parties. Industrial Revolution: The rapid development of industry in Britain in the late 18th and 19th centuries, brought about by the introduction of machinery.

Injury Frequency (IF): Number of injuries per million man hours worked.

Injury Rate (IR): Number of injuries per one hundred employees.

Integrated Gasification Combined Cycle (IGCC) is gaining ground for the utilization of refinery residues to generate power

Liquefied Natural Gas (LNG): This is bulk of the natural gas in liquefied form and is re-vaporized after receiving it at its destination from tankers, to be used as natural gas.

Liquefied Petroleum Gas (LPG): It is the propane/ butane component of the natural gas is liquefied under moderate pressures and is supplied as cooking gas fuel.

Living Quarters Platform: They are the living quarters for production and maintenance personnel for an offshore facility who stay for long periods of shifts in an offshore platform.

Molecular Sieves are zeolite granules manufactured under controlled conditions to create microscopic pores at its surface.

Monomers: They are organic molecules with double or triple bond which have a tendency to join together several times to form a large molecule.

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Natural Gas Liquids (NGL): It is formed during production or transportation of gas, when the heavy components such as pentane or hexane, condense due to natural cooling and separate out as liquids.

Octane Number: It is defined as the percent volume of iso-octane in a mixture of iso-octane and normal heptane that gives the same knocking as that of the fuel when tested under defined conditions. This signifies ignition quality of the gasoline in automobile engines.

Oilfield Processing: The well fluid is processed in or in the vicinity of the oilfield.

Organization of Petroleum Exporting Countries (OPEC): It is an organization formed in 1961 to administer a common policy for the sale of petroleum.

Personal Protection Equipment (PPE): Equipment / clothing which offers protection against risks to health and safety.

Petrochemical Industry: means manufacture, supply and distribution of plastics, fibres and chemicals which are produced from one of the petroleum products as starting material or feedstock.

Petrochemicals: They are usually plastic products and chemicals that are derived from petroleum or natural gas and are made on a large scale.

Petroleum: It essentially comprises of naturally occurring hydrocarbons i.e. compounds made of carbon and hydrogen atoms.

Pig: A pig is a cylindrical or spherical in shape, made of metal or plastic with or without brushes at the edge and having diameter close to the pipe diameter.

Pigging: It is primarily the processes or activities of sending a Pig through a pipeline.

Pipeline End Manifold (PLEM): It is essentially a set of valves and flanges along with pipe header supported by steel structure, from where the pipeline carrying oil, gas or any other material starts.

Polyethylene terepthalate (PET): They are glass like material used to make transparent bottles.

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Glossary

Notes

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Primary Production: It is the kind of production of oil on its own pressure.

Process Platform: Process Platforms are the biggest platforms in an offshore complex, which is equivalent to a GGS onshore.


Propylene: It is made by cracking petrochemical feedstock like propane, butane or naphtha.

PVC: Polyvinyl chloride is the plastic commonly known as PVC. It finds wide applications in PVC pipes for transportation of water.

Reservoir: A large formation of rocks of bearing hydrocarbons

SCADA: It stands for Supervisory Control and Data Acquisition. It is a central monitoring system, which monitors the entire pipeline parameters over several hundred kilometres by telemetry and tele-control.

Separator: is essentially a vessel having some internals to facilitate separation.

Smoke Point: It is the length of flame in a standard laboratory test, which produces smoke.

Specific Gravity of a Gas is defined as the weight of a given volume of the gas compared to the weight of the same amount of air at the same temperature and pressure, where air weight is taken as reference (= 1).

Synfuel: It is essentially natural gas converted to light oil by reaction processes with gasoline and diesel as products.

Threats: These are possible causes that could potentially release the hazard and produce an incident. Upstream: Includes Oilfield Processing and Transportation of oil and gas

Utilities Platform: For large facilities the utilities like power generation, instrument air system etc. are installed in a separate platform called Utilities platforms.

Utility: It is the state of being useful, profit-able, or beneficial.

Well Fluid: It a mixture of crude oil, natural gas and saline water along with small amounts of sand and sludge.

understanding oil & gas business

Documents

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oil gas business version

case study contents

natural gas concepts

crude oil

exploration of oil

liquefied natural gas