The document evaluates innovative solutions for low producing oil and gas facilities when separation equipment fails, analyzing options such as bypassing the separator, replacing it, or using a compressor unit; it develops universal criteria to analyze technical, economic and environmental factors to determine the best solution and estimates $60,000 in savings by avoiding full replacements at two sites and increasing production 10% at another site.

1. INNOVATIVE SOLUTIONS FOR
MARGINAL FACILITIES
Brady Parmenter
Facilities Engineering Intern
Midland Basin (Central)
Midland ClayDesta Office
Saturday, August 22, 2015

2. • Bio
– From Glennallen, Alaska
• Education
– University of Tulsa
– Mechanical Engineering
– Expected Graduation May 2017
• Prior Experience
– Geothermal drill-hand, Goldsby Oklahoma
– Maintenance Tech, Kuparuk Alaska
2
Introduction

3. • Project Scope
• Trial Site
• Possible options
• Economic Analysis
• Universal Applications
• Summary & Future Work
3
Outline

4. • Hundreds of low producing tank batteries in the Permian Basin
• $500,000 replacing pressure vessels in Midland Basin in two years
• Much of operating equipment has passed its designed life
• What options are available when the separator fails?
• Compare these options
– Technically
– Environmentally
– Economically
• Under what criteria should each option be used?
• Design a universal tool using the results of this study
4
Project Scope

5. • Cummins Lease
– Cummins M tank battery
• Two wells
• Facility Production Rates
– 4 BOPD
– 52 Mcf/D Gas
• Equipment
– (1) Vertical Separator
– (1) Vertical Heater Treater not in service
– (2) 500 bbl Steel Oil Tanks
– (1) 300 bbl Fiberglass Water Tank
5
Trial Site

6. • Vertical separator has exceeded its design life
– Identification has rusted away
– Operating pressure of 20 psig
6
Vertical Separator

7. • (2) 500 bbl Steel Oil tanks
• (1) 300 bbl Fiberglass Water tank
7
Tanks

8. Options bypassing separator
1. Produce to tanks and vent
2. Produce to tanks + VRU
3. Produce directly to compressor unit
Options Using Separators
4. Replace Separator
5. Compressor unit with a separator
8
What to Do When the Separator Fails

9. 9
And This Happened An Hour Ago

10. • Reduction of wellhead surface pressure (Casing Pressure)
• Using differential pressures, can estimate % increase in production
Theoretical Site
• 15 BOPD, 30 mcf/D Gas
• Surface pressure of 50 psig
• Pump intake pressure of 500 psig
• Can drop surface pressure from 50 psig to 20 psig
• Potential increase of 6.7%
• About $20,000 more per year!
10
Potential Production Increase
𝑄 𝑖
𝑃−𝑃 𝑖
=
𝑄 𝑓
𝑃−𝑃 𝑓

11. • Pro’s
– Inexpensive to keep battery producing oil
• $13M total cost
– Easy to pipe up
– Zero added maintenance
– Potential production increase
• Con’s
– Lose gas sales
– Environmental/Safety concerns
• Site by site basis especially for this option
11
1. Produce to Tanks + Vent

12. • Pro’s
– Under current EPA (QuadO)
requirements
– Maintain gas sales
– Possibility of increased production
• Con’s
– High initial capital
• $40M for just the unit
– More OPEX
– May need to run electrical lines
– Need good tanks on site
12
2. Produce to Tanks + VRU

13. • Pro’s
– Very easy to pipe up
– Possible production increase
– Equipped with all valves needed
– Good for handling low fluid flow rates
• Con’s
– Only handle about 30 BFD
– Need electricity on pad
– If unit goes down, wells need shut in
– Can’t handle much H2S
– Rental or high initial capital
• Rental $1.7M per month
• Purchase $38M
13
3. Produce Directly to Compressor Unit

14. • Pro’s
– Keep gas sales
– Small separators are inexpensive
• $4M-$20M
• Con’s
– No increase in production
– Holding backpressure on wells
– Valve maintenance
14
4. Replace Separator

15. • Pro’s
– Potential production increase
– More protection from down time
– Can handle much greater than 30 BFD
– Universal application to wide range of sites
• Con’s
– Can’t handle much H2S
– May need to run electrical line
15
5. Replace Separator + Compressor Unit

16. Compare Options
• Initial capital
• Return on investment
– Income per year over the initial capital expressed as a percentage
• Payback period
– How fast the cost of the initial capital can be recovered
• Net Present Value (15%)
– The net value of the project after a period of time expressed with the present
value of money
*Use on Cummins M site, assuming zero production when separator fails
16
Economic Analysis

17. 17
Production Rates
41%
59%
Yearly Revenue
Gas
Oil
Cummins M
Production Rates
for Facility
Maintenance Capital
Cost Estimate
8/22/2015
Quantity/ Year Price Units Total Yearly Sales
Gas 52 Mcf/d 18980 $3.00 $/Mcf $56,940
Oil 4 BOPD 1460 $55.00 $/bbl $80,300
Gas %sales = 41.49%
of total sales
SUM = $137,240
Oil %sales = 58.51%
Production Inrease
Due to Decreased
Surface Pressure =
Production Increase Sales Increase per Year
1.10% $1,510

18. 18
Initial Total Capital
$14M
$115M
$49M
$22M
$66M
$0
$20
$40
$60
$80
$100
$120
$140
1.) Produce to
Tanks + Vent
2.) Produce to
Tanks + VRU
3.) Produce to
Compressor Unit
4.) Replacement 5.) Compressor
Unit + Separator
THOUSANDS(M)
Initial Capital

19. 19
Return On Investment
600%
120%
260%
630%
190%
0%
100%
200%
300%
400%
500%
600%
700%
1.) Produce to
Tanks + Vent
2.) Produce to
Tanks + VRU
3.) Produce to
Compressor Unit
4.) Replacement 5.) Compressor
Unit + Separator
ROI Analysis

20. 20
Payback Period
2
10
5
2
6
0
2
4
6
8
10
12
1.) Produce to
Tanks + Vent
2.) Produce to
Tanks + VRU
3.) Produce to
Compressor Unit
4.) Replacement 5.) Compressor
Unit + Separator
Months
PBP Analysis

21. 21
Net Present Value (15%)
$170M
$190M
$240M
$290M
$210M
$260M
$330M
$370M
$430M
$350M
$390M
$550M
$580M
$660M
$550M
$0
$100
$200
$300
$400
$500
$600
$700
1.) Produce to
Tanks + Vent
2.) Produce to
Tanks + VRU
3.) Produce to
Compressor Unit
4.) Replacement 5.) Compressor
Unit + Separator
Thousands(M)
NPV15
3 Year 5 Year 10 Year

22. • Gas is equivalent to 42% of total sales
– Need to keep gas sales
• Minimal production increase at this site
– Very low surface pressure to begin with
– High PIP for these wells
• Most of initial capital is electrical
– If electricity is on pad, initial capital is drastically reduced
• VRU is not economic if site is already below QuadO emission limits
• Recommendation for this site: Replace Separator
22
Cummins M Conclusions

23. Environmental
•EPA (QuadO) VOC emissions
• 6 tons/year
Economic
•Yearly sales increase
•Initial costs
• Equipment
• Electrical
• Tank Replacements
Technical
•Gas Oil Ratio
•H2S content
•Barrels of Fluid
•Number of tanks
•Tank Condition
23
Universal Applications
• Develop universal criteria
• Create computer code to step through procedure
based on these criteria
• Flowchart gives visual step through of
procedure
• Validates computer program
• Allows double check of all options
• Determines best options based on specific inputs

24. 24
Facility Inputs

25. • Find information in LOWIS
• Gives estimated sales increase
25
Well Inputs

26. 26
Outputs

27. • Found options to deal with separator failures at marginal batteries
– Initial cost savings
– Potential increases in production
• Developed criteria to compare options
– Economic
– Environmental
– Technical
• Created templates to easily analyze specific sites
– Field Sheet/Inputs
– Outputs
27
Summary

28. • 5 sites next year that have separator/HT fail
• Previous cost of replacing averaged about $40,000
• $200,000 total spent on 5 sites
– Replacing exactly what is there now
• Using this study
– (2) need replacements
• Get small inexpensive separator instead of just replacing
• $30,000 a piece for those 2 sites
– (2) we can just produce to tanks and vent
• About $15,000 a piece and less maintenance costs
• Low pressures on site so no production increase
– (1) we can produce directly to compressor unit ($50,000 total)
• Get a 10% increase in production at this site
• Saved $60,000 and increased a site’s production by 10%
28
Example

29. • Apply this study to the hundreds of low producing tank
batteries in the Permian Basin
– Lead to major initial cost savings
– Increases in production
– Bring old sites under current environmental regulations
– Extend the economic feasibility of sites
29
Future Work

30. Mentor: Colyn Jurek
Manager: Del Oliver
Stephanie Arriola
Brandon Merrill
Walter Fults
Kyle Richter
Jennifer James
Brent Corwin
Eric Wooten
Joshua West
Corey Payne
Larry Sammons
30
Acknowledgements

31. Questions?

32. THANK YOU

33. • Arnold, Ken, and Maurice Stewart. "4/Two-Phase Oil and Gas
Separation, 5/Three-Phase Oil an Gas Separation." Surface Production
Operations. Amsterdam: Elsevier, 2008. 150-310. Print.
• El-Halwagi, Mahmoud M. "2/Overview of Process Economics."
Sustainable Design Through Process Integration. Amsterdam: Elsevier,
2012. 15-62. Print.
• Huvard, Gary S., Richard M. Felder, and Ronald W. Rousseau.
Elementary Principles of Chemical Processes. New York: Wiley, 2005.
Print.
• OXY Petroleum Inc., Oil and Gas Exploration and Production. A Guide
for Selecting Production Equipment. Tulsa: Crest Engineering, 1983.
Print.
33
References

34. • LOW PRODUCING BATTERY TOOL.xlsm
• Procedure Flowchart.xlsx
34
Tools

35. 35
Production vs. Pump Intake Pressure

36. 36
Production Increase Graph
14.50
15.00
15.50
16.00
16.50
17.00
17.50
18.00
18.50
0 200 400 600 800 1000 1200
BOPD
Pumping Pressure (psi)
New Oil Production vs. Pumping Pressure
New Oil Production
Original Oil Production

37. • Pro’s
– Under environmental regulations
• Con’s
– Lose gas sales
– More expensive than tiny separator
– Needs backpressure to operate
*Operationally will not work
37
Produce to Tanks + VCU