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Can you Afford to Extract your Natural gas Liquids

IP.com Disclosure Number: IPCOM000181724D
Publication Date: 2009-Apr-09
Document File: 23 page(s) / 1M

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The IP.com Prior Art Database

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Presented at the 71st Annual GPA Convention

March 16-18, 1992, Anaheim, California

CAN YOU AFFORD TO EXTRACT YOUR NATURAL GAS LIQUIDS?

Principal Author

Carter C. Tannehill

Purvin & Gertz, Inc., Dallas, Texas

Co-Authors

Linda W. EchterhotT

The M. W. Kellogg Company, Houston, Texas

and Dennis Leppin

Gas Research Institute, Chicago, Dlinois

Prepared For

Gas Research Institute

Contract No. 5088-221-1753

[This page contains 1 picture or other non-text object]

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ABSTRACT

   Not all natural gas requires removal of the heavier hydrocarbons in order to be accepted by a natural gas pipeline. If the gas does not require processing for hydrocarbon dew point or heating value control, the decision to process is not a simple one. The loss in BTU value of the gas due to removal of the liquids plus the fuel consumed in processing is known as the "keep-whole". If the value of the liquids extracted is not greater than the "keep-whole", processing is not economical. The difference between the value of the liquids extracted and sold and the "keep-whole" is the ┬Ěprocessing upgrade". The ┬Ěprocessing upgrade" must cover the operating costs of the plant. If a new plant is to be justified, this upgrade must also be enough to justify the capital expenditure. Capital and operating costs depend on the process selected. The process selection depends on the richness of the gas. the gas sales pipeline pressure and quality specifications, the means available for moving the natural gas liquids to market, etc. To reduce capital cost, use of used and leased equipment should be considered. A month-by-month review of gas processing economics in the major producing regions of the U.S. during 1990 will show the ┬Ěprocess upgrade" achieved by liquid extraction. A look at projected future gas and liquid prices will provide the requirements needed to justify operation of existing plants as well as building of new plants in these same regions.

INTRODUCTION

   From February of 1991 through the summer, a better question might have been, "Can you afford to sell your gas without a processing upgrade?". With natural gas prices in the Rockies dropping to $1.10 per MMBTU in February and then going below $1.00 per MMBTU in the summer of 1991, the increased value of the natural gas liquids (NGLs) could boost the value of this gas, especially in the San Juan Basin. In July it is estimated that processing added 22 cents per MMBTU to the gas value at a hypothetical 140 MMCFID cryogenic plant in the San Juan Basin. For a hypothetical SO MMCFID cryogenic plant in the Permian Basin in July 1991, the upgrade in gas value due to processing is estimated at 41 cents per MMBTU. Gas processing can often increase producer revenue in times of low gas prices. However, if liquid prices are also low, the cost of getting the extracted NGLs to market can be greater than the...