Since the 1980’s, U.S. production of Natural Gas Liquids has steadily increased. In 2014, production reached 1,081,933 thousands of barrels (source). Production is only increasing to meet hot demand overseas for energy and domestically for petrochemical feedstocks (source)(source).

Signs are pointing toward NGLs being a long-term player on the international scene. According to The Motley Fool, “The petrochemical industry…is planning on investing $125 billion in constructing or updating 148 chemical plants to take advantage of cheap ethane (and other NGLs). In addition, $56 billion will be necessary to invest in midstream NGL infrastructure.”

To take advantage of the low cost of ethane vs. naphtha, India’s Reliance Industries is investing in U.S. ethane. They plan to ship 1.5 million tons per year of ethane from its U.S. shale joint ventures to India to feed ethane plants. (source)

Switzerland’s Ineos Group, Austria’s Borealis AG, and Saudi Basic Industries Corp., are also looking to buy U.S. ethane (source). With high production of natural gas driving prices down, NGLs have become financially attractive (source).

Turning a Regulatory Burden into a Profit Opportunity

As natural gas production increases, so does compliance to regulate emissions. The New Source Performance Standards for the Oil and Natural Gas Industry that began to take effect in April 2012 necessitated Vapor Recovery Units (VRUs).

Often derided as an extra cost and a competitive disadvantage, VRUs have become vital to get full value from gas streams. NGLs are typically double or triple crude value, so a VRU system can add revenue.

Though some view VRUs as a regulatory annoyance, industry experts counter that poor equipment selection or poor packaging gave VRUs a black eye. VRUs were long believed to “suck in air” and put it into a sales line, when, in fact, the problem came from leaking hatches on the tank.

“We have always touted VRUs as a way to make money because venting these valuable vapors into the atmosphere was tantamount to throwing away money,” said James Sidebottom, Senior Vice President of Technical Services at HY-BON Engineering Company, Inc.

With methane at an historically low price, vapor recovery puts heavy hydrocarbons in focus, allowing a handsome ROI on VRU.

For example, HY-BON Engineering Company had a customer in Libya who wanted to recover just the NGLs and flare the residual gas stream since there was no accessible gas line to put it into. HY-BON compressed and cooled the gas, turning it into NGLs.

“The magnitude of recovery was such that the initial equipment costs of $5 million dollars were recovered in slightly over 3 months,” said Sidebottom.

Venting Profits Into the Sky

How much profit is being lost? Average lost profit depends on the amount of vapors being vented.

“We know of cases where producers were losing millions of dollars per year. Even one of the very smallest VRU packages can return tens of thousands of dollars per year in revenue,” said Sidebottom.

“Once you’ve recovered the gas, you’re looking at a higher BTU gap than you would with a gas pipeline, sometimes up to 2.5x more. They can be very profitable,” said Lance Kounce, Senior VP of Operations for Vapor Solutions of Texas.

Sidebottom agrees: “If you have a MMBTU contract where you are paid a multiplier based upon the richness of your vapors, you could get a 2.4 multiple of the natural gas price.”

The Right Compressor for the Worst Gases?

Granted, the NGL sector is tough on compressors. Its high CO2 content and hydrogen sulfide eats away at machinery. That’s where Ro-Flo shines. Rotary vanes can capture these gases better than oil flooded screw equipment.

Oil flooded screws have long been used in clean, dry gas service with the benefit of excellent efficiency, high ratio capability and good scale economy.
More recently, rotary flooded screws have been employed in wet, acidic, sour and heavy hydrocarbon applications in the O&G sector and the results are not always favorable.

“One of the unique advantages Ro-Flo offers the NGL market that no other compressor manufacturer can offer is the ability to work within a sour gas application without excessive wear or tear,” said Kounce. “Ro-Flo technology is a workhorse. It has minimal moving parts. Your maintenance costs go down immensely, and it’ll outlast other machines under similar conditions up to 25 years.”

Wet, acidic and heavy hydrocarbon streams are subject to condensation and may cause lube agglomeration or dilution. The high flow of oil in screws can accelerate degradation of the lube, resulting in accelerated wear and/or frequent lube changes.

“Screw compressors have no place in NGL because they can’t handle mole weight. Their lube becomes its own worst enemy,” said Derek Mackenzie, President of VaporTech Energy Services, Inc. out of Calgary, Alberta.

Most flooded screw suppliers will not recommend applications with mole weights above 35 or H2S above 2-4%, but that makes the assumption that gas streams are stable and don’t contain water or carbonic acid. That is rarely the case in the oil patch.

“When dealing with acid gas or mole weight issues, you’re safe with Ro-Flo. It’s a reliable, simple technology. If its jacket cooling and lube system are maintained, a Ro-Flo compressor can last 10 years without taking it apart,” said Mackenzie.

The best compression technology for wet, acidic, sour or rich streams is that offered by rotary sliding vane compressors. The direct injection lubrication employed in vanes keeps lube fresh, internals protected and unlike impellers which wear out, vanes wear in, improving efficiency over time.

“Ro-Flo compressors are the right technology for the application we put it into VRU. There are very few vapor recovery applications where they’re not the ideal choice,” said Mackenzie.


Prepare to Profit

As NGLs continue to be produced from the U.S.’s huge store of natural gas, there is a prime opportunity to capitalize on it. Ro-Flo provides the right tech to make the most profit from current gas streams.

 

Let’s chat. Contact Ro-Flo for more information about rotary vane capabilities.