Internship Report

The aim of this report is to

understand the value chain of City

Gas Distribution.

1

Certificate

This is to certify that MBA Oil and Gas Management candidate Arpit Gour of University of

Petroleum and Energy Studies, Dehradun has successfully completed three weeks

internship in Projects, Operations and Maintenance and Marketing Department of

Aavantika Gas Limited, Indore from 19th Dec 2016 to 7th Jan 2017. His conduct during the

internship was ………………………

2

Acknowledgement

I would like to thank Mr. (MD) of Aavantia Gas Limited for providing us this opportunity to

understand the CGD business. I would also like to thank Mr. Chinmay Kumar Purohit (HR

Officer) whose excellent cooperation made this internship a learning opportunity.

I would like to acknowledge Mr. Manish Gupta (Project Engineer) from projects

department, Mr. Jitendra Bhatt (Deputy Manager), Mr. Akshay (Site Engineer) and Mr.

Ashutosh Yadav (Officer) from operation and maintenance department, Mr. Sanjay Pandey

(Sr. Manager) and Mr. J Prakash from marketing department for proactively sharing their

knowledge and insights.

The working environment in Aavantika Gas Ltd. was highly motivating and inspiring; I am

highly thankful to other staff members who supported during the internship.

I would like to thank Dr. S.K. Pokhrial (HOD) and Dr.Geo Jose Fernandez (Faculty UPES) for

encouraging and motivating to earn this opportunity.

Arpit Gour

MBA (Oil & Gas)

500051101

3

Introduction

Aavantika Gas Limited (AGL) is a Joint Venture company of GAIL (India) Limited and

Hindustan Petroleum Corporation Limited (HPCL), for implementation of City Gas Projects to

supply Piped Natural Gas (PNG) to consumers in domestic, industrial and commercial

sectors and Compressed Natural Gas (CNG) to automobile sector in the cities of Madhya

Pradesh.

AGL was incorporated on 7th June 2006 and it's registered office is located in Indore. Initial

subscription to the Memorandum of Association (MOA) and Articles of Association is made

by GAIL, HPCL, IL&FS, IDFC, IDFCPE and ICICI Ventures. State Govt. of Madhya Pradesh has

been offered 5% equity in the share capital of the Company.

The objective and mission of AGL is to provide safe, convenient and reliable natural gas

supply to various sectors. The single biggest factor in support of natural gas is environmental

advantages and convenience to consumers in terms of un-interrupted gas supply.

PNGRB has authorised AGL to carry out operations in Indore, Ujjain and Gwalior.

Authorised Share Capital – Rs. 100 Crores

Vision and Mission

“Our Vision is to be the Pioneer City Gas Distribution Company in the State of Madhya Pradesh for providing Environmental Friendly Fuel to the Domestic, Commercial, Industrial and Automobile Sectors, in order to help the Residents of M.P. to lead a Healthy & Safe Life”. “Environment can be a Concern for everybody, AGL takes it as a Mission” and while doing so AGL is committed towards –

Uninterrupted Gas Supply to Our Customers

Customer Satisfaction & Delight

Adopting Best Operational Practices

Transparent Processes & Policies

Being the guiding factor towards cleaner & safer Environment

Adherence to Safety Standards of the Industry

Good Corporate Governance The highlights of the company's performance during 2015-16 are as under: The company has registered Profit before Depreciation, Interest and Tax (PBDIT) of Rs. 34.18 Crores and Profit after Tax (PAT) of Rs. 17.15 Crores. The PAT increased by 62% year on year from Rs. 10.56 Crores in 2014-15 to Rs. 17.15 Crores in 2015-16. This increase in profitability is due to increase in margins of Rs. 12.74 Crores & other operating income of Rs. 0.54 Crore, offset by increase in other expenses, depreciation, financial cost, employees benefit expenses and tax of Rs. 6.69 Crores. AGL achieved a gross turnover of Rs. 142.29 Crores in 2015-16 as compared to gross turnover of Rs. 134.37 Crores in 2014-15 representing an increase of 5.89%. This increase was due to growth in sales volumes of CNG by 10.35%. There was an increase in domestic connections which also contributed to the increase in turnover. PNG industrial volumes decreased due to availability of cheaper alternative fuels.

4

City Gas Distribution

Ministry of Petroleum & Natural Gas established the Petroleum and Natural Gas Regulatory

Board (PNGRB) with effect from 01.10.2007, under the Petroleum and Natural Gas

Regulatory Board Act 2006, to regulate the refining, processing, storage, transportation,

distribution, marketing and sale of petroleum, petroleum products and natural gas

excluding production of crude oil and natural gas. The Petroleum & Natural Gas Regulatory

Board Act-2006 provides the legal framework for the development of the natural gas

pipelines and city or local gas distribution networks. With the arrival of the PNGRB the

implementation of PNG in various cities is being taken up in a phased manner as and when

the bids are called for by the Regulator. GAIL is the pioneer of city gas distribution in India.

GAIL took many initiatives to introduce PNG for households and CNG for the transport

sector to address the rising pollution levels.

Some major CGD Companies in India are Indraprastha Gas Limited Delhi; Mahanagar Gas

Limited, Mumbai; Bhagyanagar Gas Limited, Andhra Pradesh; Avantika Gas Limited in

Madhya Pradesh; Central U P Gas Limited & Green Gas Limited in Uttar Pradesh;

Maharashtra Natural Gas Limited in Pune Maharashtra and Tripura Natural Gas Company

Limited in Tripura.

Compressed Natural Gas

It is stored on the vehicle in high-pressure tanks - 20 to 25 MPa (200 to 250 bar, or 3,000 to

3,600 psi). Natural gas consists mostly of methane and is drawn from gas wells or in

conjunction with crude oil production. As delivered through the pipeline system, it also

contains hydrocarbons such as ethane and propane as well as other gases such as nitrogen,

helium, carbon dioxide, sulphur compounds, and water vapour. A Methyl Mercaptan

odorant is normally added to CNG to facilitate leak detection. Natural gas is lighter than air

and thus will normally dissipate in the case of a leak.

Pipelined Natural Gas

It is used for Domestic, Commercial and Industrial Consumption. PNG has several

distinctions to its credit-of being a pollution free fuel, economical and safer fuel being few of

them. PNG is being supplied through pipe 24X 7. PNG offers the convenience of ensuring

continuous and adequate supply. PNG, billing is normally after a cycle of fortnightly

/monthly /quarterly after the use by the consumer whereas the consumers pay upfront for

any other fuel used by them. Thus there is savings on account of release of working capital

for the commercial and industrial sector and deferment of expenses for the domestic sector.

PNG is one of the cleanest burning fuels, and helps improve the quality of air.

5

Project Department

The project department is concerned with overlooking the expansion of network in the city.

It consists of pre commissioning processes such as trenching, laying, testing and charging.

Trenching

The process of making pits and right of way for laying network. The standards

followed in the Industry are

As per the guidelines of the local authorities or because of underlying utilities such as

water pipelines, sewage pipelines etc. the depth can be altered as required. If the

terrain does not permit to drill, concrete casing may be used to provide ROW. It is

ensured that the trench base is free from stones, metal, wood, vegetation or other

debris. In case of rocky terrain the trench base is bedded with soft soil.

Laying

Horizontal Directional Drilling ( HDD)

Obstacle Depth (In Meter)

Minor Water Crossing/Canal 2.5

Road Crossing 1.5

Rail Crossing 1.5

Normal Areas 1.2

6

Step I

Entry and exit pits are dug out. The HDD machine generally used can dig upto

length of 290m. To inspect the drilling pits are also dug at distance of 45m.

Step II

The HDD machine can employ water pressure upto 1200 psi (84Kg/cm2) and

thrust upto 3000 psi (210Kg/cm2). The HDD machine starts drilling at desired

depth and direction.

Step III

To guide the drilling a guidance system is employed which continuously

tracks the bit and underlying utilities. It also tells the depth at which the bit is

moving or should move.

7

Step IV

When the desired horizontal drilling is achieved, i.e; the bit makes it to the

end pit, then the MDPE pipe is attached to the bit with the help of a wire

gauze.

Step V

The drill pipes are gradually pulled back laying the pipe in place.

Testing

Flushing

All the ends are temporarily sealed and compressed air is filled. All the ends

are opened one by one to check the presence of water, debris, dirt and

pebbles. If any, are removed by this process.

Testing for Leakages

All the ends are now capped with end caps.

8

Compressed air is filled at a pressure of 6-6.2 bar (1.5 times higher than

normal pressure of 4 bar). This pressure is held for 24 hours and pressure

drop (if any) is checked. If the pressure drops, the line is inspected to

leakages and after repairing the same process is followed again.

Nitrogen filling

Nitrogen is filled in the line to remove water molecules and charging

particles.

Commissioning

The line is now charged, i.e; attached to main network and PNG starts

flowing.

Pipe and Fittings

MDPE Pipe

“MDPE” stands for “Medium-Density Polyethylene.” MDPE falls in the

medium-density category due to its value being in the 0.926-0.940g/cm3

range. MDPE is manufactured by using catalysts like Ziegler-Natta,

chromium/silica catalysts, and metallocene catalysts. MDPE has excellent

chemical resistance and is very stable at room temperature. It does not

dissolve at room temperature. MDPE has very good drop resistance and

shock resistance. The standard pressure in this line is 4 bar.

Nominal Outer Diameter (in mm) SDR 11 ( Thickness)

180 16.4

125 11.4 63 5.8

32 3 20 3

*SDR- Standard Dimension Ratio

HDPE Pipe

“HDPE” stands for “High-Density Polyethylene.” HDPE falls into the high-

density category due to its value being either 0.941g/cm3 or greater than

that. HDPE has strong intermolecular forces and high-tensile strength

because of its lower degree of branching. It is mainly manufactured by using

catalysts like silica or chromium, metallocene, or Ziegler-Natta catalysts.

HDPE has excellent chemical resistance. It has highly crystalline and thus does

not dissolve easily. It is resistant to dissolving at room temperature. HDPE has

great inertness so it is easy to assemble and has excellent strength when

used in manufacturing water and pressure pipe systems. It is generally used

for crossing canals and metaled roads.

9

GI Pipe

“GI” stands for “Galvanized Iron”. They are used to connect the MDPE line to

the end users. The pressure for household users is 21 milli bar and for

commercial and industrial it is 300 milli bar. The PNGRB standards for GI pipe

in CGD are as follow:

NOMINAL BORE

15 mm 25 mm 50 mm 80 mm

GRADE HEAVY ('C' CLASS)

HEAVY ('C' CLASS) HEAVY ('C' CLASS)

HEAVY ('C' CLASS)

O.D. mm max. Min.

21.0

33.3

59.7

88.0

THICKNESS mm

3.2 for C Glass

4.0 for C Glass

4.5 for C Glass

4.8 for C Glass

NOMINAL WEIGHT Kg / mtr.

1.44 for C Glass

2.93 for C Glass

6.19 for C Glass

9.90 for C Glass

10

Fittings

Straight Coupling Coupler

Tee Elbow

Reducer

11

Electro Fusion

An Electrical resistance element is incorporated in the socket of the fitting

which, when connected to an appropriate power supply, melts and fuses the

material of the pipe and fitting together.

The maximum gap between eccentrically located pipe and fitting i.e. Pipe

touching fitting at one point, must not exceed 2% of the pipe OD.

12

Moling

Moling is the trenchless operation of pipe laying. During moling process pits are

made at small distance and the mole is entered in the earth surface in horizontal

face from the bottom of the pit. The mole is hammered inside the soil till it

reaches other pit. The size of the drilled hole should not me more than 20% of

the carrier pipe. The MDPE pipe is attached to the mole and pulled back.

Backfilling

The pits dug out for laying pipes need to backfilled. First the base of pit is filled

with sand then a warning wire mat is placed. The purpose of warning mat is to

protect the pipe network any unauthorised digging.

13

Operation and Maintenance Department

The department is responsible for inspection and regular maintenance of pipeline network

and associated equipment. The work profile also includes DPR and monthly reports to keep

an account of gas purchased from GAIL. These reports also assist in minimising the losses.

GAIL Network

The source of gas to AGL is Hazira-Bijapur-Jagdishpur pipeline which passes

through Jagoti. From Jagoti GAIL has has laid another subsidiary pipeline Jagoti-

Indore-Pithampur to supply natural gas to this region.

A regasification terminal is located in Hazira owned by Shell and Total. The major

source of gas is Qatar.

14

Aavantika Mother Station Mother station consists of a skid (which is a tapping on GAIL pipeline to AGL

Network), 2 compressors, an odorising unit, a storage cascade unit, an Light

Commercial Vehicle (LCV) filling point and a clubbed CNG filling station which has

2 dispensers.

Cascade Cascade refers to storage in the form of batch of cylinders laid parallel to each

other. The mother station has a cascade of 45 cylinders, each with capacity of 75

Water litres.

Light Commercial Vehicle (LCV)

Light Commercial Vehicle is a carrier vehicle which has cascading storage. This is

used to transfer CNG to daughter Station. The LCV is filled directly from the

compressor at a pressure of 250 bar.

Compressor

A compressor is a mechanical device which increases the pressure of gas by

reducing its volume. The compressors used in CGD industry are 3 stage

reciprocating compressor which can be either motor driven or engine driven. It

compresses 600SCMH of gas and motor is of 110KW.

15

Compressor Setup at Mother Station

Inside view showing compression unit and vibration sensor

16

Priority Panel

Gas Detector

Smoke Detector

CO2 Ejector

17

Previously shown images depict locations of various safety devices like smoke

detectors, flame detector and gas detector.

The priority panel plays a very vital role in automatically switching supply of the

compressed gas towards dispensers, Cascade and LCV filling point. The

compressor has 7 outlets of compressed gas, 4 dedicated to 2 dispensers, 2

dedicated to LCV filling point and 1 for storage cascade.

Types of Station

There are 4 types of stations-

Mother Station- Mother station is the source station from where the Natural

Gas is taken to DPRS and then further distributed throughout the CGD Network.

It is also responsible for filling up mobile cascade.

Online Station- The CNG station which takes its input from the 19 bar pipeline

and compresses it to 250 and delivers it to customers via dispensers.

Daughter Station- A daughter station is one which does have the direct

connectivity of natural gas via pipeline. The gas is distributed through cascade.

Daughter Booster Station- It is similar to daughter station but is equipped with a

booster compressor between cascade and dispenser which increases the

pressure above 200 bar (which is the optimum required pressure).

18

District Regulatory System (DRS)

District Regulatory System is also known as Distribution Pressure Regulation

Station (DPRS). It is a set of valves, reducer, filters and metering equipment

which distributes the gas received from GAIL via skid to the rest of the network.

It also has overpressure protection devices. One offshoot of DPRS is directed

towards CGD in which 19 bar pressure reduced to 4 bar, another offshoot is

directed towards compressor units to increase pressure from 19 bar to 250 bar

for CNG filling.

19

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.66

AM

7A

M

8A

M

9A

M

10

AM

11

AM

12

PM

1P

M

2P

M

3P

M

4P

M

5P

M

6P

M

7P

M

8P

M

9P

M

10

PM

11

PM

12

AM

1A

M

2A

M

3A

M

4A

M

5A

M

Co

nsu

mp

tio

n in

SC

M

Time

Hourly Consumption Pattern on Non Working Day

Consumption

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Co

nsu

mp

tio

n in

SC

M

Time

Hourly Consumption Pattern on Working Day

Consumption

20

Marketing Department

It is concerned with business expansion, billing, installation and sales.

The customers can be classified as follows-

Industrial Customers- These are consumers which use PNG for heating

purposes like dryers, gas oven etc. The pressure delivered to them varies

as per demand. Some consumers which consume upto 3000 SCM also

have 4 bar pressure supply (no pressure regulation). The security deposit

varies as per consumption. The billing is done fortnightly. The rate per

unit is Rs. 40+ VAT (almost twice of domestic consumers). The

consumption for a new connection is calculated as per industry standard

or by net calorific value of previously used fuel (wood, coal, diesel, FO).

Setup at a Dal Mill

Commercial Customers

These customers use PNG for economic activity but are usually in service

industry like restaurants. The rate charged to them is same as industrial

customers.

Regulator

Isolation Valve

Isolation Valve

Meter

21

Domestic Customers

Leaflet for Domestic PNG advertisement

The domestic PNG users are households, which consume about

15-20 SCM per month. They get 21 mili bar supply and are billed on a

monthly basis. The charge per unit is Rs.22 (including Taxes). The charges

for connection are

Security Deposit (Refundable) 4500 Consumption Charges (Refundable) 1000 Registration Charges 500 Total Rs 6000

22

Conclusion

The natural gas which arrives in the form of LNG at terminals are re-gasified and transported

using pipelines. The pipeline network is operated by GAIL. GAIL has also laid a subsidiary

pipeline connecting the Major HVJ pipeline at Jagoti. This pipeline extends from Jagoti to

Pithampur. The PSUs HPCL and GAIL has formed a JV company named Aavantika Gas Ltd

(which is currently not a PSU) for city gas distribution in Madhya Pradesh. The Natural Gas

is converted to PNG and CNG by changing its pressure using reducers and compressors. The

CNG is used for vehicles and PNG is consumed by commercial, industrial and domestic users

at different pressures.

The projects department is concerned with laying of pipeline network throughout the city.

The same is contracted and overlooked by the project department. MDPE, HDPE and steel

pipes are laid in the network. The methods used for drilling are HDD, moling and trenching.

The laid pipeline is then tested using compressed air, cleaned using nitrogen and then

charged.

The Operations and Maintenance department maintains the network and take care of the

faults and uncertainties. The maintenance of compressors and functioning of the dispensers

at various stations (Mother, daughter and online) is overlooked by this department. The

maintenance of the compressor and dispensers is also subcontracted. The DRS or the

district regulatory system also comes under O&M department. The total billed Natural gas

and supplied natural gas are not equal as the network incurs losses in the form of leakages

because of improper commissioning of joints, MDPE losses and unauthorised construction

activities.

The marketing department links customers and potential customers with the company. It

takes care of the expansion of business, billing and installation. The department deals with

domestic, commercial and Industrial accordingly and has separate approaches and

guidelines to convert a potential customer to customer.

The CNG is the cash cow for the company, Industrial and commercial PNG customers also

breakeven early and start generating significant revenue. But domestic PNG customers are

necessary evil, it is good for the nation but not good for a company as they take 12-15 years

to breakeven but consuming LPG for domestic purposes is even worse. Thus GOI pushes to

expand PNG among domestic customers.