What's new in production

May 2002 Vol. 223 No. 5  What's New in Production

Perry A. Fischer,  Engineering Editor

GTL startup. BP Exploration Alaska says it will produce the first barrels of synthetic oil by May from its new $86-million gas-to-liquids test plant now completed in Nikiski, near Kenai. "Things are getting tight, but we’re still holding within budget," said Steve Fortune, BP’s engineering manager for the project. The plant is 93% complete, and final work is focused on sophisticated instrumentation and electronics. The plant will test a new Fischer-Tropsch, GTL-process technology BP has developed. Construction started last January on the test plant. Twenty operations workers will be needed once the test plant goes into production.

While the plant is now planned to operate for five years to complete commercial tests of a new compact gas-reformer design, its operating life may be extended if new gas-related research projects can be attracted. An example of a related technology test already planned, in addition to the compact reformer, is a new solid-oxide fuel cell developed by Siemens-Westinghouse that runs on natural gas. The $6.5-million fuel cell project will produce 250 kW of electricity, using 150 kW to power the GTL plant, with the remaining 100 kW going to the regional electric power grid.

If the commercial tests of the compact reformer are positive, BP has an agreement with Data Process Technology to market the technology. The new compact reformer design is about one-fortieth the size of reformers now being used on GTL plants, Fortune said. The smaller size means more compact module plant units, which will be important if GTL plants are built on the North Slope, he said. Typically, the reformer is 60% of the capital costs of a GTL plant. Collectively, all of the innovations in the pilot GTL process could reduce overall project costs by about 25%, the company said. This translates to about $20,000/bbl of daily production capacity. If further improvements can lower costs to about $17,000/bbl of capacity, ". . . we can compete head-on with new LNG projects. Further in the future, if we can reduce costs to around $11,000/bbl, we can compete with new crude oil refineries," Fortune said.

Nearly every major integrated oil company is involved in GTL research and development, especially Shell and Sasol Chevron. ExxonMobil and Conoco have recently made substantial investments in GTL R&D; they have test plants in Baton Rouge, Louisiana, and Ponca City, Oklahoma, respectively.

Much of this is a prelude to – among other projects – ascertaining the feasibility of a GTL plant on the Alaskan North Slope, which could further the life span of the Trans-Alaska Pipeline.

LNG lands in Mexico. Royal Dutch / Shell intends to build its first wholly owned LNG regasification terminal in the Americas, on the West Coast of Mexico in Baja California. The initial LNG supply of 7.5 million t annually has been contracted from projects in the Asia-Pacific region, specifically the Greater Sunrise gas fields in the Australian part of the Timor Sea, in which it is a partner. The supply contract is conditional on Shell’s partners – Phillips Petroleum and Woodside Petroleum – agreeing to Shell’s proposal to build the world’s first floating LNG production vessel. Woodside has already backed the plan, but Phillips seems unconvinced.

The terminal will have an output capacity of up to 1.3 Bcfgd and is expected onstream in 2006. Associated investment costs are estimated to be about $500 million. Shell proposes locating the terminal in Costa Azul, municipality of Ensenada. Shell intends to market gas to power plants and other potential customers in Baja California, where demand is expected to grow by 75% in the next eight years, and to sell surplus gas into the Southern California market.

Shell has 3.55 Bcfgd of LNG capacity on the eastern U.S. coast through contract agreements with the Elba Island and Cove Point import terminals. It recently announced plans to build a further 1.3 Bcfgd of capacity on the East Coast of Mexico through a 50/50 joint venture with U.S.-based El Paso.

Pemex production raise. Mexico’s state firm Pemex said it plans to increase light crude production by 42%, to 1.6-million bpd by 2006. The company plans to invest $42 billion during that time to reverse declining light-crude reserves and boost production at new fields.

Production of light and superlight crudes averaged 1.13 million bpd in 2001. Along with continued increases in heavy-crude production, Pemex said it expects to be producing 4-million bopd by 2006. Current production is at 3.2 million bpd, of which nearly two-thirds is heavy. Delays in Pemex’s Strategic Gas Program mean that natural gas production – about 4.5 Bcfgd in 2001 – will fall 1.6% this year. However, the company remained optimistic that it could meet 5.9 Bcfgd by 2006, not including planned multiple-service contracts that could add another 1 Bcfgd or more to production.

White Rose development. Husky Oil, operator (72.5% stake) of the White Rose oilfield project, and its partner, Petro-Canada, announced their decision to proceed with development of the field, which is located offshore the East Coast of Newfoundland and Labrador, Canada. The field is located on the Grand Banks, roughly 220 mi east of St. John’s, Newfoundland.

White Rose development plans will use an FPSO vessel that can handle peak production of about 92,000 bopd, sustained for roughly four years. Samsung Heavy Industries will build the $140-million, 133,000-t vessel. Plans call for 19 to 21 wells to recover between 200 and 250 million bbl of oil over a 10 to 15 year period. First oil is expected by year-end 2005.

Development costs are estimated at US $1.48 billion, with costs to first oil being less than $1.25 billion. Moreover, field operating costs are expected to be near $1.25 billion over the 15-year life of the field. During peak production years, operating costs are expected to average approximately $2.70/bbl.

The partners signed an agreement with Aker Kværner and its partner, Peter Kiewit & Sons Co., for construction of the topside facilities for the field. Excavation of the subsea glory holes is scheduled to begin in the field in the third quarter, 2002, while development drilling should begin in the first half of 2003. White Rose joins Hibernia and Terra Nova – now both in production – as the third major development offshore Newfoundland.

Comments? Write: fischerp@gulfpub.com