Salym Petroleum Development N.V. (SPD) developing Salym group of oil fields in Western Siberia has successfully implemented a gas utilization project. This unprecedented example of solving the issue of associated petroleum gas (APG) utilization is based on the mutual partnership between three private companies and on cooperation between business and government.
Gas and Flare
Russia is one of the leading energy suppliers in the world. Over 50% of Russian oil is produced in Khanty-Mansi Autonomous Okrug – Yugra. But every year the production in the region is decreasing, mature oil fields run out of oil, and to develop new ones – for example, in Eastern Siberia or on the shelf – huge investments and state-of-the-art technologies are needed. On the contrary, global energy demand permanently increases and it doubles by 2050. Therefore it is very important to efficiently use of existing energy sources.
One of such energy sources is associated petroleum gas, produced along with oil. It is valuable hydrocarbon resource together, and in the course of separation it is traditionally discharged to flares and flared. According to the Ministry of Natural Resources and Ecology of the Russian Federation annually the country produced 55 bln m3 of APG, and only quarter of it is processed. 47% of this gas are used for the needs of oilfields or written down as technological losses and 27% are flared. Yugra flares 9 bln m3 of APG each year. 100 m3 of APG cost about 45 rubles, i.e. only in Yugra over 4 bln rubles are flared annually. Flaring APG is like burning billions of lost profit.
Rational use of APG is essential part of efficient energy policy, and at once it is also important indicator of industrial development level of the country. “Utilisation of the valuable hydrocarbon resources rather than flaring is an absolute must and has been long overdue, not only in the region of Yugra or Russia, but globally’’, told SPD Commissioning Operations Engineer Watze Tigchelaar. APG is resource for the power and chemical industry. It has high calorific value. It contains ethane and methane that are used to produce plastics and caoutchouc. Heavier fractions in gas are used in production of aromatic hydrocarbons, high-octane additives and liquefied propane and butane that are used as a fuel and for domestic and industrial needs.
Moreover, flaring is not only millions rubles of lost profits, it is also millions of emissions in the air, almost 100 mln tons of CO2 only in Russia. APG flaring results in emissions of carbon dioxide and active soot. Besides, methane, which is a much more active greenhouse gas in comparison with the carbon dioxide, is emitted into the atmosphere. The volume of emissions during APG flaring stands at approximately 0.5 mln ton per year. APG flaring is accompanied by heat pollution of the environment: around the flare the radius of thermal decomposition of soil is within 10-25 meters and decomposition of vegetation is from 50 to 150 meters. This is followed by atmospheric emissions of APG combustion products, including nitrogen oxide, sulphurous anhydride, carbon monoxide and various unburnt hydrocarbons. The problem of APG utilization is particularly relevant for Yugra since the region territory covers the area of south, middle and northern taiga where prevailing forest trees are coniferous – particularly sensitive to pollutions, including atmospheric pollutions.
Flares can be switched off, and the gas can be supplied to gas processing plant. Such project was realized in Salym group of oilfields. This project is a result of unprecedented mutual partnership between Yugra regional government and three private companies: SPD, Blue Line, and Russneft.
The gas processing system historically established in Russia consists of large gas processing facilities (with capacity of over 1 bln m3 per year). The main disadvantage of this system is in being bound to gas pipeline system. The Salym fields as well as Shapsha fields are located far from major gas pipelines; therefore it is not economically feasible to establish a large gas processing facility within their territory.
The uniqueness of SPD gas utilization project is in uniting the efforts of three parties and establishing a small capacity, block-modular type LPG plant. Implementation of the associated gas utilization project in Salym fields is an unprecedented example of efficient collaboration between three companies, and a genuine demonstration of the WIN-WIN principle. Furthermore, due to the triple collaboration in the course of executing this project, the region also becomes a triple winner without investing its funds into this program.
“Since the start of 2012 all oil companies should ensure the associated petroleum gas utilization level reaches 95%. SPD also obliged to do that because it is good for the environment and it is good for the community. For SPD, a relatively small company, this issue presented a major challenge and so we looked at a number of ways to utilize gas” said Simon Durkin, SPD CEO.
Since the very start of the Salym project SPD paid a key attention to gas utilization issue and developed an extensive gas utilisation program. This project covers two projects: 1) construction and start-up of a gas turbine power plant (PGP) which since 2008 has used around 1/3 of the AGP to generate electric power, and 2) construction of liquefied petroleum gas (LPG) plant within the fields to bring utilization gas up to 95%.
In January 2008, SPD has completed the construction of a PGP with the capacity of 45 megawatts, and in 2010 it has increased its capacity to 60 megawatts. Concurrently with the PGP construction and start-up, SPD has signed a tripartite memorandum of understanding on APG utilization with Russneft and Blue Line. The companies have declared their intent to build, using the resources of Blue Line, a LPG plant within Salym fields, which would process associated gas from both Salym and Shapsha group of fields, the latter being developed by Russneft. Blue Line will sell liquefied propane and butane produced by LPG plant, whilst the lean gas will return to SPD and Russneft fields as fuel for the existing power plants.
Blue Line has undertaken to build a LPG plant on the West Salym field, a gas piston power (GPP) plant on Shapsha fields (similar to SPD’s PGP), as well as pipelines and power lines. One third of the project was funded from Blue Line’s own funds; two thirds were to be provided by investment banks. In spite of the global economy recession that has broken out in the second half of 2008, the companies have actively commenced the fulfilment of the obligations undertaken for project execution. Up to the summer of 2010, Blue Line had to invest its own funds into the project, since the majority of investment banks scared by the global economy crisis were either experiencing financial problems or not in a hurry to grant loans. With its funds, Blue Line has built two pipelines with a total length of 76 km as well as purchased LPG plant equipment. Blue Line has signed LPG plant equipment delivery contracts with Thermo Design Engineering, a leading Canadian company in the area of oil and gas processing systems, as well as a GPP plant equipment delivery contract with GE Jenbacher (Austria). First six engines were installed on the Shapsha field. In addition to this, Blue Line has signed a design contract with Russian design company Giprong-Ekon. The companies have selected the location for the LPG and GPP plants, and commenced land allocation process. An intermediate result of the gas program implementation was the start-up of the gas piston power plant on Shapsha fields in February 2010.
In July 2010, a statement was made on the agreement with the European Bank for Reconstruction and Development, which has provided investment in the amount of $120 mln. LPG plant construction work on Salym fields was in full swing. As part of the LPG plant construction, in May 2011 SPD has built a booster compressor station as well as a gas pipeline from Central Processing Facility to the LPG plant construction site. In addition to this, SPD has assisted Blue Line in every way to execute LPG plant construction project and its commissioning on schedule. In the middle of December 2011 SPD ensured gas utilization level at 95%. The task was delivered on time.
Watze Tigchelaar recalled: “The most challenging was winter start-ups, particularly when it’s not allowed to use methanol to prevent freezing up and you rely on the process variables still enabling a safe and sustainable start-up. Obviously it has been interesting to see how the Russian commitment to achieve the start-up before the end of 2011. It certainly has been a remarkable achievement under no easy circumstances”.
During all phases of this project implementation – from design to commissioning & operations – priority attention was given to safety and environmental issues. LPG plant has a block-modular construction. This block-modular design is characterized not only by low operational costs but by high reliability, and a possibility to increase power easily. Also a multimodal scheme of transportation of liquefied hydrocarbon gases (LHG) is applied using tank-containers. This provides for zero losses during transportation, preservation of the quality of the product, lack of need in loading/unloading racks and LHG storage farms, and decreased risk of man-made disasters.
SPD is one of the leaders in area of HSSE in the region and Russian one whole. The company has developed a balanced HSSE management system. This system is based on the statutory Russian requirements and international practice. It consists of clear-cut corporate principles, standards, rules and arrangements designed to ensure a safe work place and to reduce to a minimum the risks to a person’s health and safety, and to the environment. SPD also employs best-in-class technologies and equipment to ensure safety to people and the environment. During the plant construction and start-up one of the most challenging tasks was promoting SPD safety culture to Blueline and its contractors. SPD the company helped its partner to develop and implement safety principles and procedures to ensure safe operations of the LPG plant.
The gas processing plant is equipped with the modern fire extinguishing system; most stringent international industrial safety standards of SPD. Companies have been complied with in terms of operation of process plants and transportation of finished products. The use of multimodal scheme of transportation of liquefied hydrocarbon gases using tank-containers made it possible to eliminate the need in construction and operation of loading/unloading racks which, in turn, decreased the production induced risks and risks during transportation caused by product transfer and direct contact with the environment. Blue Line Emercom service operates on SPD basis. SPD has provided advice and assistance to Blue Line in the area of medical support as well. Genuine cooperation of the partners and key attention to safety enabled to realize the project safely.
Companies ensured a high level of safety by using also advanced technologies and recent developments corresponding to all requirements of the present high environmental standards; low energy consumption; high level of automation and safety; reliability of consumer supply. Besides, the state-of-the-art process equipment of Thermo Design Engineering Ltd. and GE Jenbacher was used during construction along with the experience and reputation of grantors of license and suppliers of major process equipment.
The success of the efficient and fruitful collaboration between the companies lies first and foremost in their ability to listen to and hear each other. The parties conduct monthly meeting at the level of management teams, whilst both companies’ project custodians arrange for working meetings on weekly basis. Three small companies execute a project which becomes an excellent catalyst for a further socio-economic development of the region in three directions. The synergy of three companies yields a triple effect by creating new jobs, reducing the amount of emissions, and increasing tax revenue of the regional budget.
The gas utilization program is also in line with Russian federal program of energy efficiency. SPD gas utilization project enables to set up a new market of gas liquids that could be used for fueling cars on gas, heating, air conditioning and BBQ as well.
“It is an interesting story that required 4 parties to play a key role to bring it all together: Yugra government in terms of facilitating it and helping the parties to come together, Russneft, SPD and Blue Line that built and now operates the LPG plant”, summarized Simon Durkin.
During the project implementation local companies were actively contracted to perform different types of work and provide relevant services and equipment. Local companies SibKomplektMontazh and Megiontruboprovodmontazh were responsible for plant assembly, and the regional one called UralKhimmash produced and delivered tank containers. Overall over 30 regional contractors and suppliers of equipment and materials participated in the project realization.
The project enables the region to solve energy generation issue. Implementation of the project reduces the volume of polluting emissions and improving the ecological situation in the region. Reduction of emission is over 460,000 ton per year (in СО2 equivalent).
This project on gas utilization in Salym fields is a genuine example of cooperation of three small private companies, the project that enables big changes in the social and economic development of the region.
LPG plant is situated at the distance of 65 kilometres from the nearest railway station Salym. Its capacity is 360 mln m3 per year. At the plant APG is separated into the following components: dry gas (220 mln m3), natural gasoline (up to 30,000 ton) and propane-butane (up to 110 000 ton). Technology of production and utilization of APG is based on separation of the gas at low temperatures to light (dry gas) and heavy (gasoline, propane, butane) fractions. During gas separation three process solutions are used: APG compression; APG drying and gas fractionation. APG of Shapsha field leaves the gas treatment facility under the pressure of 30 kPa. At the booster compression station it is compressed to 110 kPA to be transported to LPG plant. At theplant the gas is mixed with the Salym field APG supplied to LPG plant under the pressure of 4-5.6 kPa. Gas mixture under the pressure of 50 kPa goes through additional low-pressure compression and up to 4 000 kPa in the system of high-pressure compression. Temperature of the mixture at this moment is 44°С. At the APG drying process water, liquid admixtures and solid particles are removed from the gas mixture by means of filtration and passing through molecular sieves. Centrifuging technology is used in the process.
The technology requires the use of parallel columns, one of which is operating in the cleaning mode and another in the regeneration mode. Lean gas is heated to 285°С and used for regeneration of molecular sieves. Gas fractionation process has several stages. At low temperature separation module gas mixture is cooled to -26°C. Hydrocarbon liquid is separated from gas by the condensation method. At absorber/deethanizer (113°C at the bottom, -13°C at the top) liquid hydrocarbons go to the bottom of the column and gas is collected at the top. The function of the column is to separate C1/C2 fractions from the flow of liquid hydrocarbons and C3 fractions from the flow of gas. LG gathers at the top of the column. At the bottom of the column there is absorbent. Then there is a column of saturated absorbent (1270 kPA, 252°C at the bottom). The function of the column is to obtain a high purity mixture of С3+ fractions at the bottom of the column and its use for the subsequent product fractionation. And in the end of the process chain there is product fractionation with depropanizer (1400 kPa, 104°C at the bottom, 44°C at the top). Propane gathers at the top of the column. At the bottom of the column there is a mixture of С4+ fractions which is sent to debutanizer. Debutanizer (525 kPa, 112°C at the bottom, 57°C at the top). Butane gathers at the top of the column. At the bottom of the column there is a mixture of С5+ fractions.