Maximizing Oil Production With CNG
A new technology holds promise for existing wells and so-called “stranded” production too.
By Michael J. Economides & Claudio H. Steuer
The time has come for a new era in petroleum production worldwide (particularly in the very promising but remote deepwater and/or pre-salt basins) and, as usual, a crucial component will play a pivotal role. Marine compressed natural gas (CNG) has been considered in the past, primarily as a means of transportation, but proved unattractive for long distances or large volumes when compared with liquefied natural gas (LNG). However, marine CNG still remains economically attractive over shorter voyages (up to ~4,000 km) and medium volumes, and recent advances in containment systems are poised to provide marine CNG with the best opportunity yet to emerge as a major enabler of new and previously stranded hydrocarbons by becoming an important optimization tool to petroleum well performance.
Almost half of offshore natural gas (SEC-type reserves) is considered “stranded” because of the high cost to harness it in remote locations and the lack of a suitable market for the gas. Most such reserves do not contain enough gas to justify their own gas-transmission or LNG solution. Furthermore, inoperable gas affects oil production in many adverse ways, from the logistics of handling and facilities’ capacity to the cost of the treatment itself. Marine CNG used as a wellhead fluid shuttling service can generate significant monetary benefits for an operator attributable directly to the new technology and its innovative application. This technology could enable a higher number of fields to become viable by simply dehydrating the wellhead gas (where carbon dioxide or sulfur are present in relevant quantities) and enabling the centralization of gas treatment plants.
A Revolutionary Containment System
The new technology under development has several components. The main one is the containment system, manufactured with composite materials that are far lighter than metal and yet can withstand the 200-atmosphere pressure and corrosion from hostile raw gas composition straight out of the primary separator. Gas viewed like this is no longer a midstream product in need of further processing prior to sale but a potential upstream, saleable product.
CNG cargo containment systems produced with composite materials can reduce overall steel weight by 50-80 percent and operate with pressures ranging from 150 to 250 bars, sufficient to accommodate a wide range of gas-oil-ratios (GORs) without the need of refrigeration. This enables the monetization of natural gas and well fluids straight from the primary separator.
The systems can operate with temperatures ranging from -60°C to +60°C, suitable for a wide range of upstream production environments. The combined use of refrigeration and pressure enables marine CNG to achieve a significantly higher energy density, approaching ~75 percent of LNG and thereby increasing the economic feasibility of transporting raw gas and associated liquids, as well as natural gas, over longer distances and in larger volumes.
Containment systems combining steel, refrigeration and displacement fluids with inhibitors and pH control to manage corrosion resistance can achieve similar benefits and operate at approximately 130 atmospheres and -30°C. In addition, they provide great control flexibility over pressure and temperature dynamics, minimizing hydrocarbon liquid formation during loading and unloading.
Hull and containment systems and propulsion systems continue to explore new materials and applications in an effort to lower costs. Issues involving energy absorption capacity in the unlikely event of rupture or ship stability during laden and ballast voyages still fuel divergent points of view. But the overall trend is clear: Develop new materials, technologies and applications to increase hydrocarbon production from challenging operating environments and, over time, provide greater transportation capacity for raw or saleable gas at a lower unit cost.
In high GOR wells, an increase in gas production can affect oil production adversely. To accept the increased gas production and still fit within the design and operating envelope of the associated facilities, oil production may have to be reduced. The innovative use of marine CNG technology can complement existing production systems and enable higher oil production.
This ability to handle raw gas can be used to advantage at the bidding process. E&P companies primarily target oil discoveries. A raw gas management and transportation solution would enable increased gas production (irrespective of sulfur or CO2 composition) and be a welcome addition to the value of the upstream asset instead of a complex headache. The creative use of marine CNG in raw gas management and as a production tool becomes a value-enhancing activity in its own right.
Other benefits include:
• The relative ease of handling and construction of loading and offloading facilities allows reduced development time and provides flexibility in adjusting the system to changing production profiles.
• The floating nature of the production and transportation assets makes it easy to redeploy them to other locations when production volumes begin to decrease.
• Accelerated monetization of natural gas during the interim period of construction of LNG production facilities or long-distance gas transmission pipeline systems.
• Because the new-generation containment systems can handle raw gas directly from the wellhead, significant savings can be achieved by avoiding duplication of processing facilities when producing from remote fields and centralizing such facilities on large offshore platforms or on-shore.
• In case of failure, hybrid metal/composite and all-composite structures may allow leakage but will not collapse or burst, therefore avoiding gas containment explosion.
• New-generation gas containment systems are light, have higher specific properties and can weigh as much as 20 percent less than metal-based containment systems, thereby increasing transportation capacity and energy density and lowering the unit cost of transported gas.
Shuttling of raw gas is the only process to have a positive economic effect on overall production. Gas flaring and treated gas reinjection are techniques that enable sustainable oil production but at a loss of profit due to the high cost of the solution. The alternative to gas flaring is lower oil production and, in worst-case scenarios, shut-in production. With this new technology it is possible to deploy solutions in shorter time frames to complement existing production systems or form part of new production systems.
• Enabling Higher Oil Production – Consider an offshore oil production facility with a maximum production capacity of 200,000 barrels/day with 1.5 Bcf/day (GOR 7,500 scf/stb). After three years, and unexpectedly, the producing GOR increases to 10,000 scf/stb, enabling only 150,000 barrels/day to be produced. The lack of gas-handling capacity effectively shuts in the equivalent of $1.8 billion/year in revenue. Shuttling the excess raw gas and associated liquids can increase production by 50,000 barrels/day with minimal difficulty. Benefits: $5 million/day.
• Putting a Gas-Rich Well on Production – A new well is drilled on an existing offshore platform. Although it can deliver 15,000 barrels per day, a high GOR (e.g., 10,000 scf/stb) may preclude its inclusion in production if the gas treatment facilities or the gas transmission systems are maxed out or near capacity. Benefits from wellhead-shuttling services: $1.5 million/day.
• Standardization of Production – In the future, production systems for natural gas would be standardized long before drilling, discovery, and well completions. Ordinarily, the discovery fluids would dictate the size and complexity of surface facilities such as separation processes, dehydration, and sweetening. The exact volume requirements and impurities to be treated are not known at this stage. The new technology enables the acceptance of raw gas in all cases irrespective of its composition, thereby simplifying the production and commercialization phases and saving time and money. It is not uncommon, for example, for scheduling delays, cost overruns and additional fluid-processing requirements to almost double the original budget estimate.
• Offshore Gas Gathering and Transmission System – Deepwater and pre-salt basin exploration and production are extremely capital-intensive projects. Marine CNG can provide production flexibility where gas transmission systems may be operating close to capacity and further expansion is very expensive. Marine CNG enables sustainable production (no routine flaring) from remote fields by creating a flexible and dynamic floating system where the raw gas is taken from the satellite fields to the nearest platform with gas-injection facilities or with access to gas transmission systems or taken directly to shore. It is also feasible to utilize such a “hub and spoke” configuration to connect satellite fields with an offshore floating LNG production system. This application is extremely attractive from an economic viewpoint as it enables a greater volume of oil to be produced and unlocks gas production in a technical and commercially viable manner while meeting all applicable safety and environmental requirements.
• Alternative to Submarine Sour Gas Transportation Systems – Sour gas production systems must be designed to operate with a significant safety margin to accommodate uncertainty on the gas specification over time. As such systems are costly to deploy and maintain, they are designed to handle “worst case scenarios” and be virtually maintenance-free. They normally require the use of exotic materials and expensive internal cladding and external coating. A marine CNG alternative can provide scalability and significant schedule and capital savings.
The Golden Era of Natural Gas
As we enter “the golden era of natural gas,” economies throughout the world will seek to enjoy the many benefits afforded by this most environmentally friendly of fuels for power generation and as a viable alternative to liquid transportation fuels. Regional natural gas markets will continue to grow in size and importance, providing E&P companies the opportunity to connect new or previously stranded reserves to growing gas markets and generating higher value for all stakeholders.
As this is an important new area of high value-added activity for E&P companies, entrepreneurial and strategically focused players are likely to seek direct or indirect control of such technologies to benefit from the competitive advantage provided. Precedents exist in the leveraging of LNG, FLNG and GTL technologies, which are far more challenging, complex and capital-intensive. Stay tuned for a new era of upstream gas development and an avalanche of new applications, which in a reasonably short period of time should provide you with an opportunity to see a marine CNG carrier coming to a field or receiving facility near you. – MarEx
Michael Economides is a Professor at the University of Houston. Claudio Steuer is a Principal with SyEnergy Limited, an energy consultancy firm.
The opinions expressed herein are the author's and not necessarily those of The Maritime Executive.