Post on 25-Jan-2017
© 2012 Chevron U.S.A. Inc.
Commercialization Considerations
for Gas Conversion Technology
Development
Rob Motal, Staff Consultant Department of Energy – Advanced Research Projects Agency workshop Houston, Texas 13 January, 2012
© 2012 Chevron U.S.A. Inc.
Disclaimer
•This presentation is for discussion purposes only. Neither Chevron Energy
Technology Company., nor any of its affiliates (collectively, “Chevron”) makes any
representations or warranties (either express or implied) as to the accuracy or
completeness of the information, the text, graphics or other items contained herein
or with respect to the suitability, feasibility, merchantability, title or condition of any
information contained herein. To the extent the presentation contains forward
looking statements by Chevron, such statements are made based on Chevron’s
current assessment, and future events may change the basis for such statements.
To the extent the presentation contains forward looking statements from sources
other than Chevron, such statements do not necessarily reflect Chevron’s own
views with respect to such information and are not endorsed by Chevron.
Recipients’ use of the information contained in this presentation is at their own risk,
and Chevron expressly disclaims any liability for any errors or omissions and for
the use or interpretation hereof by others. No grant of any IP rights by Chevron,
either express or implied, accompanies this presentation.
© 2012 Chevron U.S.A. Inc.
Content
Background
Economic Sensitivities
Associated gas does not drive field economics
Commercialization will only occur if technology is proven prior to
project need
Market Size
Sector opportunities for gas technology development
3
© 2012 Chevron U.S.A. Inc.
Comparing Crude-derived with Fischer-Tropsch
Product Cost Buildup*
4
Illu
str
ative
Co
st B
rea
kd
ow
n
Fischer-Tropsch
product * For illustration purposes only. Not
meant to represent Chevron view.
Crude-derived
product
Product Premium
Feedstock
Operations
Capital Recovery
Shipping
Refining
© 2012 Chevron U.S.A. Inc.
Recent Oil and Gas Price History
Shift in Oil/Gas Ratio is Recent
5
1990
1995
2000
2005
2010
2011
0
2
4
6
8
10
12
14
16
0 20 40 60 80 100 120 140
Hen
ry H
ub
Ga
s (
$/m
mb
tu)
Brent Oil ($/bbl)
Historical Prices (1990 to 2011) in real 2011 $
GTL favored
•Current prices make domestic and remote GTL plants
economic using existing technology.
© 2012 Chevron U.S.A. Inc.
Economic Sensitivity*
GTL plants have risks beyond control that significantly factor in investment decisions.
Technology can improve economics through reductions in capital cost, catalyst cost and operating cost.
Larger plants benefit from economies of scale
Net Present Value
GTL Product Price, $/bbl
Feed Gas Price, $/MSCF
Capital Cost, K$/DB
Design Capacity, MMSCFD
Catalyst Cost, $/bbl
10
90 80
7 3
140 70
3
1,600 325
* For illustration purposes only. Not
meant to represent Chevron view.
1,000
0 Base
© 2012 Chevron U.S.A. Inc.
Global Gas Pricing Disequilibria
$15/MSCF
$10/MSCF
$3-4/MSCF
•Will the Middle East/Australia/Africa price North American LNG out of the Far East?
•Will Middle East LNG put a cap on North American gas prices?
•Will Russian gas move beyond Europe?
© 2012 Chevron U.S.A. Inc.
Gas/Oil Fields
8
Oil
Gas
Water
Seal Rock
Oil Water
Oil
Gas
Coal
Water
Bacteria
Burial
Heat
Pressure
Time
Industry terms:
– Proved Gas
– Gas cap gas
– Dissolved gas
– Associated gas
– Geopressured gas
– Gas-condensate reservoir
– Dry gas
– Rich gas
© 2012 Chevron U.S.A. Inc.
Approximate Gas Content in Hydrocarbon Resources
9
Description GOR*, SCF/bbl
“Dead Oil” <200
“Typical” crude oil 500-2,000
“Gassy” Oil 2,000-4,000
Gas Condensate 3,000-5,000
Rich Gas 10,000-30,000
Dry Gas >100,000
* GOR = gas oil ratio, values shown are for discussion
purposes only; they are not meant as definitions
© 2012 Chevron U.S.A. Inc.
Gas Value Contribution
10
fra
ction o
f valu
e p
rovid
ed b
y g
as
gas content, SCF/bbl
BTU price parity $16
Europe $10
deepwater $2?
U.S. onshore $4
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
100 1000 10000 100000
typical for
shale gas
© 2012 Chevron U.S.A. Inc.
New Technology Startups
11
Delays and extended
periods of
underperformance are not
unexpected.
But it still hurts project
economics!
This study was based on
detailed information on 44
process plants conceived
and built during the
Synthetic Fuels era.
Understanding Cost Growth and
Performance Shortfalls in Pioneer Process
Plants, pg 68, 1981, RAND Merrow, Phillips,
Myers. Prepared for the Dept. of Energy.
© 2012 Chevron U.S.A. Inc.
New Technology Startups
12
Oryx Gas-to-Liquids
Understanding the Outcomes of
Megaprojects: A Quantitative
Analysis of Very Large Civilian
Projects, pg 57, 1988, RAND
Merrow. Used by permission.
© 2012 Chevron U.S.A. Inc.
Hypothetical Gas Development
13
Design
and
Construct
Process
Facilities
Develop
Production
Facilities
Final
Investment
Decision
Appraise
Field/
Establish
Drill
Protocol
Drill
Exploratory
Wells
Acquire
Additional
Seismic
Acquire
Lease/
Conces-
sion
Acquire
Pre-Bid
Package
Total
Cost
Success Rate <100% <100% <100% <100% <100%
Risked Cost
© 2012 Chevron U.S.A. Inc.
Hypothetical Shale Gas Production Profiles
14
A typical shale gas well has high production
at the start as the gas close to the fractures
flows easily to the well
Once this gas is produced, production drops
significantly as the gas further from the
fractures must permeate through very low
permeability rock.
Process facilities designed to meet peak
production will be limited to <15% utilization
for the rest of the time.
A staged drilling program is often used for
shale gas to level out peaks reducing the
size of the processing plant.
A “drill all immediately” campaign requires a
process plant sized to handle 35% of total
field recoverable reserves per year.
Drilling at a constant rate for 10 years
reduces the peak to less than 10% of
recoverable reserves/year. Utilization
increases to 65%.
10 year staged drilling
0 5 10 15 20 25
year
year 1 vs 10 yr staged drilling
0
20
40
60
80
100
120
0 5 10 15 20 25
% o
f year
1 p
rod
ucti
on
year
shale gas production profile shale gas production profile
An
nu
al p
rod
uction
© 2012 Chevron U.S.A. Inc.
Impact of Technology Delays/Failure
10 yr
rampup
5 yr
rampup
Maximum
at startup
Performs as
Designed
85% of
base
~base base
FOAK *
rampup, 5 yr
to design
70% of
base
~80% of
base
80% of
base
Failure 0 0 0
10 year staged drilling
0
50
100
150
200
250
300
350
400
0 5 10 15 20 25
an
nu
al g
as s
ale
s,
BC
F
year
production profile
Accelerating production development increases discounted
revenues but at higher capital cost to handle higher peak
production.
Failure or delays of the process plant to perform at design
negatively impacts project viability.
Discounted Revenue
*FOAK = first of a kind
© 2012 Chevron U.S.A. Inc.
Associated Gas Production
0
10
20
30
40
50
60
70
0 5 10 15 20 25
an
nu
al g
as s
ale
s, B
CF
(o
ran
ge
) an
nu
al o
il s
ale
s, M
Mb
bl (b
lue
)
year
associated gas field
0
10
20
30
40
50
60
70
0 5 10 15 20 25
an
nu
al g
as s
ale
s,
BC
F (
ora
ng
e)
an
nu
al o
il s
ale
s,
MM
bb
l (b
lue
)
year
associated gas field
produce
reinject
Associated gas (solution gas) is dissolved in
the oil and separates out from the oil at the
surface.
– Often these fields are developed with a flat
production plateau for a number of years
before decline sets in.
– This limits the size of the topside production
facilities and results in a higher utilization
rate.
The gas conversion facilities can be further
downsized by reinjecting a portion of the
produced gas in the early years and then
use the injected gas to supplement the
declining associated gas production.
© 2012 Chevron U.S.A. Inc.
Non-Fuel Products/Byproducts
MeOH synthesis
MTO olefins
purification hydrogen
methanol
ammonia
ammonia
synthesis urea synthesis urea
CO2
reforming FischerTropsch product
workup
air separation air
natural gas oxygen
diesel
naphtha
LPG
lube base oils
“Gas-to-Liquids”
MTG gasoline
DME dimethyl
ether
syngas
© 2012 Chevron U.S.A. Inc.
Global Market Size
Product 2010 Demand Forecast
Demand
Growth, 2020-
2021
Feed Gas
Needed for
Demand
Growth, 2020-
2021
Gasoline 7.5bn bbl 182 MM bbl 5.5 BCFD/yr
Diesel 8.9 bn bbl 217 MM bbl
Naphtha 2.1 bn bbl 52 MM bbl
LPG 2.7 bn bbl 66 MM bbl
Ammonia 130 MM tonnes 3.2 MM tonnes 0.3 BCFD/yr
Methanol 48 MM tonnes 1.2 MM tonnes 0.1 BCFD/yr
DME ~3 MM tonnes ~0.2 MM tonnes <<0.1 BCFD/yr
8.1 BCFD/yr
* Assuming 2%/yr annual growth; 5%/yr for DME. These are FOR
ILLUSTRATION ONLY; they are not meant to represent Chevron
forecasts
** Assuming all growth met with gas-fed conversion units
© 2012 Chevron U.S.A. Inc.
Sector Gas Conversion Technology Challenges
•Evolutionary/Revolutionary (Conventional Shore-
Based Fischer-Tropsch GTL)
•Non-Constant Feed (Shale Gas)
•Low Temperature/Lack of Infrastructure (Arctic)
•Safety/Motion Sensitivity/Footprint (Offshore)
•Once-Through, Confined Space (Downhole)
© 2012 Chevron U.S.A. Inc.
Technology Challenges – Conventional Fischer-
Tropsch
Revolutionary
Non syngas approaches
Direct Conversion
Biological analogues
Evolutionary
Catalytic membranes
Small channel reactors
Water removal membranes in FT reactors
Process optimization
Power coproduction, gas turbine-based processes
Catalyst Improvements (materials, manufacture, molecular understanding)
Reforming burner improvements
Computer-aided hydrodynamic reaction modeling
© 2012 Chevron U.S.A. Inc.
Technology Challenges
Non-constant production
•Transportable modular mass-produced components
•Minimizing byproducts
•Minimizing offsite utility requirements
•Reducing visibility/environmental impact
•Carbon dioxide in feed gas
© 2012 Chevron U.S.A. Inc.
Technology Challenges
Arctic
•Permafrost
•Arctic temperatures (carbon steel fracture, liquid solidification)
•Startup and restart difficulties
•Lack of infrastructure
•Mobility
•Human Issues
•Product transport
© 2012 Chevron U.S.A. Inc.
Technology Challenges
Safety/Motion/Footprint
•Safety
•High pressure hydrogen
•Equipment placement
•Adequate ventilation
•Limited egress
•Motion
•Medium-duration wave effects
•Longer-duration tilting
•Motion magnification at height
•Extreme motion operability
•Motion-induced fatigue/wear
•Footprint
•Expensive real estate
•Center-of-gravity issues
© 2012 Chevron U.S.A. Inc.
Technology Challenges
Downhole
•Diameter limitations (5-10”)
•Once-through
•200-400F
•50-15,000 psi
•Varying pressure/feedrate
•Contaminants (H2S, CO2, mercury, salty
water, sand, production fluids, diamondoids,
higher hydrocarbons)