DOT 2011: Evaluating alternatives for dealing with associated gas

When operators seek to develop oil reserves in deepwater areas, they often have to address the issue of finding the most cost-effective and environmentally friendly method of disposing and ideally monetizing the associated natural gas.

Offshore staff

NEW ORLEANS – When operators seek to develop oil reserves in deepwater areas, they often have to address the issue of finding the most cost-effective and environmentally friendly method of disposing and ideally monetizing the associated natural gas.

This is especially true in the deepwater developments offshore Brazil, which is committed to reducing its greenhouse gas emission by 33% by 2012.

Daniel A. Nunez of Shell International E&P outlined the comparative advantages of several different approaches to solving this problem Wednesday morning at DOT International in New Orleans. These main methods available today include gas reinjection, gas transfer via third-party, and gas transmission to shore via pipeline.

“Deepwater finds are usually ‘oily’,” said Nunez, “but there is often a problem of ‘what to do’ with the associated gas.” Monetizing marginal volumes of associated gas is challenging, Nunez said, due to the elevated costs of infrastructure requirements. The larger objective of his research, he added, was to enable oil production from smaller oil fields given environmental rules and regulatory constraints.

Gas reinjection is the most common method, Nunez observed, but it is not always feasible. And, the high cost of gas reinjection in the Brazilian pre-salt areas supports the development of other alternatives.

Gas transfer via a third party is preferable, but the required infrastructure is not always available. Gas transmission to shore is a good option if the distance is less than 200 km.

One emerging alternative, said Nunez, is transfer via marine compressed natural gas (CNG). In this alternative, gas could be targeted to dedicated industrial consumers. But this option would require the offshore development facility – in most cases an FPSO – to have processing infrastructure on the vessel. With additional technological advances, the CNG option could become more attractive, even if it is somewhat expensive.

A “micro” gas-to-liquids (GTL) facility could be another feasible alternative, said Nunez, but it would still require a large footprint on an FPSO vessel. In addition, feedstock consistency, fouling and wax deposition are potential concerns with this option.

For developments in post-salt regions offshore Brazil, gas reinjection and transfer to third-parties are the less capital-intensive options, Nunez observed. And, he added that for the GTL option to be viable, high oil prices are needed – in the $90 to $130/bbl range.

10/12/2011

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