SPE DISTINGUISHED LECTURER SERIESis funded principally

through a grant of the

SPE FOUNDATIONThe Society gratefully acknowledges

those companies that support the programby allowing their professionals

to participate as Lecturers.

And special thanks to The American Institute of Mining, Metallurgical,and Petroleum Engineers (AIME) for their contribution to the program.

Transforming Stranded Gas Resources

into Profitable Assets Enabling technologies and the status of their

commercialization

By Joe T. VergheseABB Lummus Global Inc.

DC

DC

DC

Gas Field

Power Station

Market 1AC

Market 2AC

Market 3AC

© SPE 2004-05 (3)

Overview� Stranded Gas – The Geography and Key Drivers� Principal Technology Options

� NGLs Extraction� Pipelines� Baseload and Mid-Scale LNG� GTL� CNG� Gas to Wire

� Challenges to Offshore Deployment� Technology Maturity & Delivery to Commercialization� Conclusions

© SPE 2004-05 (4)

80

90

100

110

120

‘90 ‘93 ‘96 ‘99

Coal

Oil

Gas

‘02

The Energy Mix

The Energy Mix is getting lighter

Index

Index

Gas now 25% of Gas now 25% of Primary Energy Primary Energy ConsumptionConsumption

Nuclear8%

Coal25%

Hydro3%

Oil39%

Natural Gas25%

© SPE 2004-05 (5)

Import MarketsImport MarketsStranded GasStranded Gas

Stranded Gas and Target Markets

© SPE 2004-05 (6)

Associated gas flared from mature oil production operations

Gas Produced from existing crude oil production operations but quantities sub-

economic for transport to market

Remote from markets and pipeline infra-structure

Stranded Gas – The ComponentsNon-

Associated Gas Prospects

Associated Gas Produced

Associated Gas Produced

Flared GasFlared Gas

© SPE 2004-05 (7)

Non-Associated Gas Reserves –Barriers to Monetization

Stranded Gas Resource

Lack of Pipeline Infra-

structure

Substantial Contaminants

CO2/H2S

Political Risks to

Development

Geographic Constraints

© SPE 2004-05 (8)

� Sub-Economicproduction volumes

� High Capex for gas capture/export

� Production rateswings

Associated Gas – Barriers to Monetization

© SPE 2004-05 (9)

Gas Value Chain

OPTIONS� Removal/Stabilization of Condensates� Dewpointing/Conditioning of Gas� Removal of Acid Gas & other

contaminants (N2, Hg, etc)� NGL Extraction/ Fractionation

Treating&

ProcessingProduction

& Gathering

� Baseload LNG� Mid-Scale or Niche LNG

� HVDC - Light� GTL� CNG� Hydrates

Gas to Chemicals� MeOH� DME� NH3

Alternative Transportation

Modes

Pipelines

LNG

© SPE 2004-05 (10)

The LPG FPSO Concept

Condensate Stabilisation

ProductSplitter

Export Gascompression

LPG Extraction Flare

Flowlines

Inlet Gascompression

Ancillary Process/ Process Support

UtilitiesPower Generation

Manifolds

NGL EXTRACTION OFFSHORE• Extract Value from:

• Flared Gas• Reinjected Gas

PRODUCTS• NGLs (Propane and Butane)• Mixed LPG• Condensates

© SPE 2004-05 (11)

Pathways to Gas Utilization

CNGCNGPipelinesPipelines

Compressed Gas

Transport

LNGLNG

Liquefaction

MethanolMethanolDMEDMEGTLGTL

ChemicalConversion

© SPE 2004-05 (12)

Stranded Gas – Reserves & Technology Equation

1000

700

5003.34.6

6.6

0.3 50

FIELDRESERVES

TCF

PRODUCTIONRATE

MMscfd

20 YEAR FIELD LIFE

Niche LNG

GTLCNG

DMEMethanol

LNG

© SPE 2004-05 (13)

Gas Transportation Options

GasGasConversionConversion

LNGLNG

OnshoreOnshorePipelinePipeline

OffshoreOffshorePipelinePipeline

1000 2000 3000 4000 5000 6000 7000 8000Distance to eventual markets,Distance to eventual markets, kmskms

CNGCNG

0

© SPE 2004-05 (14)

Phillips Optimized Cascade LNG Process

Gas Conditioning

Gas Conditioning

Propane Refrigeration

System

Propane Refrigeration

SystemEthylene

Refrigeration System

Ethylene Refrigeration

SystemMethane

CompressorMethane

CompressorVapour

RecoveryVapour

Recovery

Fuel Gas DistributionFuel Gas Fuel Gas

DistributionDistribution

LiquefactionLiquefaction

NGL Storage and

Shipment

NGL Storage and

Shipment

NGL Stabilization

NGL Stabilization

LNG Storage and Loading

LNG Storage and Loading

Marine FacilitiesMarine

Facilities

LNG to shipLNG to ship

ShipShipVapoursVapours

Plant fuelPlant fuelFEEDFEEDGASGAS

Reproduced with ConocoPhillips’ Permission

© SPE 2004-05 (15)

Mini/Mid-Scale LNG Technologies

c

c

BAHX

Inlet Gas Stream AfterTreating and Dehydration Expander

Expander Outlet Separator

LNG Production Flash

Propane RefrigerantTo/From

Booster Compressor

Recycle Compressor

Recy

cle S

tream

LNG-Pro SchemeU.S. Patent 5,755,114

This scheme is the intellectualproperty of the Randall Division of

ABB Lummus Global Inc.

BAHX

Methane RecycleCompressor

Nitrogen RecycleCompressor

Methane Expander

Nitrogen Expander

Liquid Expander

U.S.Patent 6,412,302

Methane Expansion + Propane Refrigeration

Dual Expansion Methane / Nitrogen

Propane Pre-Cooled Dual Expansion Methane / Nitrogen

U.S.Patent 6,412,302

BAHXTreated Inlet Gas

Methane RecycleCompressor

Nitrogen RecycleCompressor

HL Chiller

Methane Expander

Nitrogen Expander

Liquid Expander

LL Chiller

© SPE 2004-05 (16)

Dual Expansion Methane / Nitrogen

Methane RecycleCompressor

Nitrogen RecycleCompressor

Methane Expander

Nitrogen Expander

Liquid Expander

BAHX

US Patent 6,412,302

Mini/Mid-Scale LNG Technologies

Suitable for offshore deployment

© SPE 2004-05 (17)

Gas to Liquids Value Chain

GTL CORE PROCESSGTL CORE PROCESS

Asso

ciated

Ga

s

OilProduction

Conditioning

Stranded Gas

Storage/Export

or

Reforming FTConversion Hydrocracking Syncrude

Fractionation

CH4 + H20 = CO+3H22CH4 + O2 = 2CO + 4H2CH4 + 202 = CO2 + 2H20CH4 + CO2 = 2CO + 2H2

CH4 + H20 = CO+3H22CH4 + O2 = 2CO + 4H2CH4 + 202 = CO2 + 2H20CH4 + CO2 = 2CO + 2H2

n CO + 2nH2 = [-CH2-] n +H2On CO + (2n+1) H2 = CnH2n+2+nH20n CO + 2nH2 = [-CH2-] n +H2On CO + (2n+1) H2 = CnH2n+2+nH20

© SPE 2004-05 (18)

Installation

Operator

Age (years)

Capacity

(bpd)

Plant Scale

Sasol 1, Sasolberg (South Africa)

Sasol

47

5,000

Commercial

Sasol II and III, Sasolberg

Sasol

22/20

150,000

(total)

Commercial

Moss Gas, Mossel Bay, South Africa

Mossgas 11 22,700 Commercial

Shell, Bintulu (Sarawak), Malaysia

Shell

9

12,500

Commercial

Rentech

Fuel Processes Development Company

2

275*

Commercial

Baton Rouge

ExxonMobil

9

200

Demonstration

Cherry Point

BP (Arco)

1999-2000

70**

Demonstration

Ponca City

ConocoPhillips Started up

2003

400

Demonstration

Nikiski

BP Started up

2003

300

Demonstration

* Plant decommissioned/redeployed. ** Plant decommissioned/redeployed to Tulsa (DOE’s Ultra-Clean Fuels Project)

Fischer Tropsch Plants

© SPE 2004-05 (19)

$/bpd

1993 1996 19970

10,00020,00030,00040,00050,00060,00070,000

1998

CAPEX TRENDSCAPEX TRENDS

Licensor 1Expectation

Licensor 2Expectation

Installed PlantReference

Licensor 3Expectation

Capex Trends For Fischer Tropsch GTL Technology

2000

Conventional Refinery

Benchmark

Licensor 3Expectation (70,000 BPD)

2002

© SPE 2004-05 (20)

GTL Integrated Oilfield Architecture

Reservoir Wells/Trees

Manifolds & Flowlines

FPSO Oil/Gas

ProcessingOil Export

Risers

GTL FPSOSyncrude or

Product Export

5 km

GTL FPSO

OIL FPSO

© SPE 2004-05 (21)

Natural Gas Reforming Technologies

Effluent Gas

Convective Heat

Recovery

Steam

Fuel

CatalystTubes

Hydrocarbon Feed

FiredHeater

StackBurners

Typical Steam Methane Reforming

Burner

Oxygen

RefractoryLinedVessel

Effluent Gas

HydrocarbonFeed

Typical Partial Oxidation

Typical Gas Heated Reforming / O2 Reforming

Effluentfrom

SecondaryReforming

Natural Gas

Oxygen

RefractoryLinedVessel CatalystCatalyst

Effluent Gas

Burner

Oxygen or Enriched Air

RefractoryLinedVessel

HydrocarbonFeedand Steam

Typical Autothermal Reforming

© SPE 2004-05 (22)

Reforming Technologies Suitable for Offshore Application

Effluent Gas

Convective Heat

Recovery

Steam

Fuel

CatalystTubes

Hydrocarbon Feed

FiredHeater

StackBurners

Typical Steam Methane Reforming

Burner

Oxygen

RefractoryLinedVessel

Effluent Gas

HydrocarbonFeed

Typical Partial Oxidation

Typical Gas Heated Reforming / O2 Reforming

Effluentfrom

SecondaryReforming

Natural Gas

Oxygen

RefractoryLinedVessel CatalystCatalyst

Effluent Gas

Burner

Oxygen or Enriched Air

RefractoryLinedVessel

HydrocarbonFeedand Steam

Typical Autothermal Reforming

© SPE 2004-05 (23)

Critical Offshore Issues

• Layout Intensification• Exothermic Heat

Hazards• Liquids/Gaseous

Emissions• Catalyst

Handling Process Performance

Safety & Environmental

Construction/ Logistics • Significant Point

Loads• Fabrication Yard

Capabilities• Process Piping and

Instrumentation Complexity

• System Performance under motion

• Transient Operations

• Feedstock Variability

• Advanced ProcessControl

© SPE 2004-05 (24)

Layout Intensification FPSO vs Onshore

625 m

320 m

65 m

65 m

415 m415 m

FPSO FPSO -- ULCCULCC

GTL Onshore LayoutGTL Onshore Layout

Basis: Notional 20,000 BPD Facility

Comparison of Onshore & FPSO Deck Layout

© SPE 2004-05 (25)

Vessel Motion Impact:

Floater Based GTL Process SchemesOffshore Design Issues

� Flexing of Vessel Deck and Stresses on Equipment/Piping Systems

� Large Number and Complexity of Equipment in Intensified Layout� High Equipment Weight, Weight Distribution and Point Loads

Pitch Yaw RollHeave

� Process System Performance

Other Issues:

© SPE 2004-05 (26)

Comm

ercia

lizati

on Tr

ajecto

ry

Time

Pilot PlantOnshore

Demonstration Unit

GTL Commercialization

Onshore Commercial Scale

20-80,000 BPD

Offshore Commercial Scale 15-30,000 BPD

(Benign Environment)

Onshore Commercial Scale 80-150,000 BPD

Offshore Commercial Scale 15-30,000 BPD

(Severe Environment)Project Learnings

Technology Development

© SPE 2004-05 (27)

� Gas Transport in CNG Carriers� Concepts offered by:

� Coselle – Cran and Stenning, Calgary� Votrans – Enersea Transport, Houston� GTM – Transcanada Pipelines, Calgary

� CNG Containment Pressure Range:� 1500 – 3500 psig

� Target Market Opportunities:� Gas Volume Rates of 200 - 500 MMScfd� Distances of 500 – 3000 kms

� Modest Infrastructure at Production and Market Delivery Point

� Not commercialized to date

Marine Transportation of CNG

CNG Fleet Size & Vessel Capacity =

ƒ (Gas Rate, Distance to Market)

Gas Field

Onshore Reception Facilities

10 –30 kms

500 – 3000 kms

CNG Unloading

CNG Loading

© SPE 2004-05 (28)

Gas (Energy) Transportation by HVDC

DC

DC

DC AC

AC

AC Market 3

Market 2

Market 1

Gas FieldGas Field Power StationPower Station

•• 0 500 1000 1500

SCALE

Converter StationConverter Station

•

(kilometres)

© SPE 2004-05 (29)

DME

Direct Methane Oxidation to DistillatesR an

d DPi

lot S

cale

Plan

tsCo

mmer

cial

Scale

Unit

s

Commercial ViabilityCommercial Viability

LNGShell ‘MDS’Sasol ‘Synthol’Rentech

Tech

nolog

y Matu

rity D

omain

s

Ionic Transport (Ceramic) Membranes

Methanol

Fisch

erFis

cher

Trop

sch

Trop

sch

BPExxon AGC-21SyntroleumConocoPhillips

CNG

Hydrates

Technology Delivery to Commercialization

© SPE 2004-05 (30)

Conclusions

TechnologyTechnology

PortfolioPortfolio

Exploitation of Stranded Gas

Stranded Gas

ResourcesGas

Markets

PipelinesGas by WireLNGGTLCNGHydrates

Delivered $/MMBTU