|
|
VALORIZATION OF NATURAL GAS STRANDED RESERVES
IN FORM OF LNG IN POLAND
Andrzej J. Piwowarski
Stanisław Rychlicki
Jakub Siemek
ABSTRACT
Since several years there is an intention in Poland to monetize the natural gas from marginal gas fields which are not connected to the national grid for many reasons especially for small gas deposit or they are geographically isolated or their production is declining. An assessment carried out gives the figure from 0.7 to 0.9 Tcf , including off-shore deposits in Baltic Sea.
Several options of these gas fields utilization were taken into consideration: (i) for LNG production in small scale projects, (ii) for small and medium size CHP generation for local uses, and (iii) for GTL small units producing Diesel Oil.
As it concerns LNG option which has been chosen as priority together with mini CHP option, we consider possible LNG market in the country: (i) to cover short term peakshaving demand in gas distribution networks of LDCŐs or that of industrial consumers, (ii) for anticipated natural gas supply to the remote from gas pipelines localities or to localities waiting for connection, (iii) for the works of maintenance or repairing of gas pipelines to avoid the interruption of gas supply to the customers, and (iv) for NGV (trucks, car, locomotives).
1. INTRODUCTION
With the annual consumption of about 10 bm3 (353 Bcf ) Poland is quite well endowed with natural gas resources. The proven gas reserves represent approx. 110 Bm3 (3.14 Tcf). The gas stranded reserves are estimated at 15 to 20% of this volume i.e. from approximately 17 to 22 Bm3 ; some of them are offshore gas fields in Baltic Sea with 2.3 Bm3 of natural gas containing condensates. The biggest onshore marginal gas field has approx. 3.5 Bm3.
LNG issue in general is only little known in Poland . However, the LNG import project has been envisaged since one decade but never has been completed; several pre-feasibility studies have been carried out. A new LNG terminal in N-W part of the country project has appeared recently but it is still in very initial stage of development.
Nevertheless, the cryogenic technology has been introduced three decades ago a Nitrogen Removal and Helium Recovery Plant using low temperature process has been built in locality Odolanów in S-W of Poland. This plant can treat 2.0 Bm3 of natural gas with high N2 content (average 35%) and recover helium (0.1 to 0.4% of He present in gas). The plant is able to produce without any troubles of the gas processing some 300 tons of LNG per month. Small quantities of LNG were supplied by trucks to Sweden for the testing of bus engines in Watsila manufacturing plant.
The existence of the potential gas stranded reserves has urged toward an idea of their utilization for co-generation of electricity and heat (in small units) and also for production of LNG for the following very small scale projects:
Several conditions shall be accomplished to implement these small LNG projects:
2. REVIEW OF THE MARGINAL GAS FIELDS
For the purposes of this presentation we are taking into consideration the stranded gas reserves located in S-E part of Poland, and offshore gas field in Baltic Sea. These natural gases contain very good quality natural gas more adequate for liquefaction, contrary to gas fields in S-W of the country which have the natural gas with high content of nitrogen.
About 90% of Polish gas reserves are accumulated in Miocene and Permian strata; remaining 10% are shared by the Carpathian flysch the Carpathian basement and by Devonian and Carboniferous reservoirs in the Polish Lowlands.
The envisaged gas fields belong to the Carpathian deposits reservoirs of high-methane natural gases without toxic components and impurities so relatively easy for liquefaction. The recovery of gas reserves is variable and depends on period of exploitation and production rate. In Carpathian and Carpathian Foreland the recovery ratio is approx. 64%.
During the last years approx. a hundred of gas fields were in operation and 74 were non operated. The number of producing wells were approx.1,300 ; Approx. 330 wells were ready for connection to the national grid but not connected due to the low flow rate, significant distances from gas pipelines and high level of impurities. In our envisaged region we have 850 operating wells and more than 200 are planned to come on stream until year 2000. There are 16 marginal gas fields totaling 78 idle wells. The potential reserves of these fields are estimated at 4,800 thousands cu meters. GIP is going from as low as 70 million m3 to more than 3 Bm3.
Well head pressure range is from 5 to 28 MPa (700 to 4,060 psig). Daily possible output is estimated at 1,090 thousands cu meters.
The offshore gas field in Baltic Sea is owned by semi-private company Petrobaltic. The revised recoverable gas reserves are approx. 2.3 Bm3 of rich gas (38 MJ/m3 i.e. 1,020 Btu/cf) containing condensates. The probable reserves located in three blocks in Cambrian formations at 1,450 meters, in shallow water (6o meters) are around 10 Bm3, and the possible reserves of Polish Shelf are evaluated even at 100 Bm3.
The valorization of these gas stranded reserves will need FPSO barge. The distance from seashore for LNG shipping is approx. 90 km.
3. SELECTION THE MOST APPROPRIATE NATURAL GAS LIQUEFACTION SOURCE
For envisaged each LNG utilization we will review available natural gas liquefaction technological processes and used for small scale LNG projects.
As a small source of LNG at least on the first phase of LNG introduction on the market, we will also consider existing Nitrogen Removal from Natural Gas Plant located in S-W part of Poland; another plant of this kind is planned in the same region. The volume of LNG received as the by-product in the installation is evaluated at 300 tons per month.
We acknowledge a new planned LNG importing project (3.6 thousands tons of LNG yearly), nevertheless this project cannot be taken into consideration mainly to too high financial risk and uncertainty of its implementation.
For our purposes we have taken into consideration the following natural gas liquefaction processes:
(i) for medium size peakshaving plants of type "mother plant" (used also to supply satellite plants) we envisaged ARC Cycle; the feed gas will be provided from high pressure gas pipeline; this kind of LNG source we think to use for ex. for city of Warsaw. We consider also integral incorporated cascade cycle process of Gaz de France
(ii) for the same peakshaving plant we discussed with Linde company the process using for liquefaction, the cold from Air Separation Plant producing oxygen for steel factory; LNG plant will be in confinement of steel factory and will be feed with gas from medium pressure network; surplus of liquid nitrogen will be used through heat exchanger to liquefy natural gas
(iii) for small localities (in the beginning four small towns in N-E: E3k, Pisz, Olecko, Suwa3ki) using the formula of anticipated gas supply with satellite plant we will envisaged several sources: (a) from existing Nitrogen Removal Plant, (b) from LNG-FPSO barge approach, using a single mixed refrigerant process which is simple but have a lower overall thermal efficiency than other processes; in this case we think to use the gas from marginal offshore fields
(iv) for small localities gas supply and NGV, we think to use if available American Cryenco process TADOPTR ((Thermo Acousticaly Driven Orifice Pulse Tube Refrigerator) representing a new non conventional technology being developed for small LNG production using natural gas from small marginal gas fields. Ity will be interesting to see if outcome can have practical application to the projects we expect to implement. We think that we can offer our marginal fields for testing this technology.
4. ECONOMICS OF SOME SELECTED SOLUTIONS
In our work we have focused on LNG as a tool to develop and aggregate Polish gas market in order to provide market drivers to monetize upstream gas reserves not yet developed for many reasons: lack of economic incentives, administrative hurdles, lack of regulation in LNG field etc.
Analyzing the economics of liquefaction processes we can make a statement that for very small scale LNG projects it becomes quickly apparent that its relative attractiveness is site specific.
In our cases the attractiveness of the projects is principally a function of feed natural gas cost and the distances for LNG shipping to the consumption centers.
In view of being able to determine the viability of our envisaged projects we are trying to find two economic indicators:
(i) if possible the break-even gas values at the liquefaction unit inlet, and
(ii) optimized size of the liquefaction units used for the specific application.
To illustrate the problem we have taken an example of very small scale LNG project and we carried out a rough pro-forma economic analysis using some hypothetical assumptions. The LNG plant is feed with a good quality natural gas from onshore marginal gas field located in S-E part of Poland.
We assumed very simple natural gas liquefaction process i.e. expansion process where the main stream of gas is expanded in a turboexpander to provide refrigeration of the remaining gas.
To achieve a reasonable 15% of Internal Rate of Return feed gas would have to be valued at approximately US$ 20/1000 m3.
A s s u m p t i o n s :
Plant capacity 30 m3 of LNG per day corresponding to 5.5
million m3 of regasified gas per year
Capital cost 10 US$ per 1m3 of LNG
Financing 3 to 1 debt ratio at 12% cost of capital
Target IRR 15%
Tax rate 0% (no taxation)
LNG transportation (up to 500 km) 5US$ per 1m3 of LNG
Break-even gas value at plant inlet 20 US$ per 1000 m3 (0.6 US$/MMBtu).
We should underline that without having a local experience our figures have only demonstrative character based on the foreign examples.
5. REGULATORY AND SAFETY ISSUES
One of the biggest barriers for introduction of LNG in Poland is totally lack of regulation and technical and safety rules. In fact there are not any standards, norms concerning LNG plant and installation siting and design. The Polish legislation and especially the main act, Energy Law from 1997 and secondary legislation i.e. ordinances have any mention and any provision related to LNG. It comes from that nonconformity of Polish legislation with European Gas Directive of European Union.
This situation will have repercussions on the start of LNG operations and will create an urgent need for amendment of the existing regulatory document and for preparation of basic technical rules.
We have already prepared the Polish version of the European Norm EN1473 concerning "Installation and equipment for LNG- Design of onshore installations" from May 1996 and we intend to adapt EN 1160 on " General characteristics of LNG" and "Design of onshore installations with a storage capacity between 5 and 200 tons" related to satellite plants.
The safety elements are closely linked with the introduction of LNG technology.
We are seeing as main specific safety issues to be addressed for envisaged small scale LNG projects:
Safety aspect of LNG is very important for the public in Poland, which generally is relatively negative for the natural gas as a potential danger.
6. CONCLUSIONS
In conclusion we can state that:
After the assessment of viability of envisaged small scale LNG projects we can formulate following main recommendations:
Andrzej J. Piwowarski
Senior Advisor for the Board Polish Oil and Gas Company
Stanisław Rychlicki Professor
Jakub Siemek Dean and Professor
University of Mining & Metallurgy in Cracow
Referat posterowy wygłoszony na 13 światowej Konferencji LNG w Seulu
(Południowa Korea , maj 2001)