HYDROCARBON
ENGINEERING
18
5.25 million tpy train in Cove Point, and two trains of
4.4 million tpy in Freeport, Texas.
LNG plants do not, generally, have large gas storage tanks
onsite (the gas is taken directly from the pipe, cleaned of
impurities and injected into the cryogenic train), they all have
significant LNG storage. The insulated, aboveground tanks are
designed to hold up to 500 000 m
3
of chilled liquid, enough
to fill two large LNG tankers. While some of the LNG plants
are being built on brownfield regasification facilities and
already have some insulated storage, all of the new builds will
require extensive liquids capacity.
Refined products
Between 4Q14 and 4Q15, the retail price of gasoline fell from
over US$3.00/gal. to under US$1.80, and diesel tracked from
US$2.90 to under US$1.70. Drivers responded with increased
mileage, and gasoline consumption has expanded by slightly
over 2% in the last year, to 9.1 million bpd. Exports have also
grown. In 2010, the US exported 296 000 bpd of gasoline. By
2014, that number had grown to 441 000 bpd. Most of the
gasoline is sold to Mexico; when distillate and liquefied
petroleum gases (LPGs) are included, the US exports over
527 000 bpd to its southern neighbour, an increase of 152% over
the last decade. Most of the fuel is shipped by tankers, but
NuStar recently announced a joint venture with Pemex to build
a pipeline that will transport LPGs and gasoline from the
Houston area to Nuevo Laredo and Burgos-Reynosa, in Mexico.
Refined product demand has had a beneficial effect on
refining. According to the EIA, refinery margins (the price
difference between a barrel of Brent crude and the wholesale
price of gasoline) reached US$0.71/gal. in mid-2015, a spread
not seen since 2007.
Natural gas liquids
Natural gas liquids (NGLs), including ethane, propane and
butane, are stripped from natural gas at processing plants. In
2013, the US produced 2.61 million bpd of NGLs. By 2015,
volumes had climbed to 3.26 million bpd, and the EIA expects
average daily production to hit 3.55 million bpd this year.
NGLs are used in the petrochemical industry to produce
plastics, fibres, resins and a wide range of industrial materials.
Prior to 2014, the US had about 1.1 million bpd processing
capacity; that is expected to expand by 800 000 bpd, to
1.9 million bpd, by 2018.
That leaves a lot of leftover NGLs. Storage capacity has
increased dramatically over the last five years to handle peak
seasonal highs; in September 2011, peak storage for propane
reached 65 million bbls. By September 2015, that number had
climbed to slightly under 100 million bbls.
Exports and terminal capacities have also increased
dramatically. In 2011, NGL exports stood at 200 000 bpd, the
limit of terminal capacity. By 2015, exports had exceeded
700 000 bpd, with terminal capacity expanding to
800 000 bpd.
Several major projects contributed to the terminal
capacity expansion. Targa added 120 000 bpd to its terminal in
Galena Park, Texas. Sunoco commissioned a 200 000 bpd
facility in Nederland, Texas. Occidental added 75 000 bpd to
its Corpus Christi, Texas, terminal, and Enterprise expanded its
Houston Ship Channel plant by 227 000 bpd. Phillips 66
expects its 145 000 bpd Freeport, Texas, terminal to come
onstream in mid-2016.
The future
Stakeholders in the US were pleased that the 40 year old
ban on crude exports was annulled by Congress in late
December (the traditional argument that lifting the export
would result in increased prices at the gas pumps had been
obviated by low retail prices). Its elimination bodes well for
extensive new tidewater storage and export facilities. In
early 2016, Enterprise announced that it had already
contracted for the export of 600 000 bbls of medium light
crude from its Enterprise Hydrocarbon Terminal (EHT) in the
Houston Ship Channel.
The NA glut of gas is eventually going to ease as
production dips and consumption rises. Traditionally, US
electric utilities have used coal to generate power; it
accounted for 49% in 2010. But low oil prices and
environmental restrictions have galvanised a switch to
gas-fired turbines, and gas to power (GTP) has risen from 20%
in 2010 to 31% in mid-2015 (with coal dropping to 30%). As the
oilsands grow, so will gas usage (water is heated to steam and
injected into the ground in order to warm the bitumen
enough to tease it to surface). Several billion cubic feet per
day will be exported as LNG plants come onstream, and plans
are afoot to ship up to 5 billion ft
3
/d from Texas to
energy-hungry Mexico. In addition, petrochemical firms are
investing over US$100 billion to build greenfield plants in
order to use cheap gas as feedstock.
While underground gas storage capacity is not expected
to increase dramatically (the US possesses around 10 trillion ft
3
of space, but only consumes 2.1 trillion ft
3
/y), the way that
storage is operated may evolve. “What is important is not the
physical volume, but the ability to get it out when it is
needed,” said Bill Gwozd, a Senior Vice President at Solomon
Associates. “If you have US$1000 in the bank, but you can only
take out US$200 a day, then its value is limited. It is the same
with gas storage. Most of it is underground, in depleted
reservoirs. It is served by vertical wells, so the ability to put
gas in and draw it out is limited by physical constraints.”
According to Gwozd, there are several ways that gas
storage operators can improve injection and withdrawal,
without major capital expenses. “The upstream oil and gas
sector has developed horizontal well drilling, and the costs
are coming down,” Gwozd noted. “Storage providers can
convert from vertical to horizontal wells. As you draw down a
reservoir, the pressure drops. You can put a compressor on at
the surface to raise the pressure and move more gas.”
Any predictions regarding the future price of oil and gas
are fraught with uncertainty. Thanks to the current crude price
doldrums, the EIA is pointing to a decrease in US shale oil
production throughout 2016, which would significantly ease
upward pressure on storage in the near term. The EIA also
points out that US proven reserves exceeded 40 billion bbls
of oil and 390 trillion ft
3
of gas in 2015. Over the long term, it is
safe to forecast that there will be ongoing demand for new
terminals and storage capacity in North America. Several
billions of dollars will be spent on meeting the storage needs
of new producing regions, new exporting terminals, and
improving environmental safety.
T&T
