ABC Oil and Gas. Aug 19 th, Report No: SMP-0002 Budgetary Plant Estimate. Powered by Solaris-MCI

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2 ABC Oil and Gas Aug 19 th, 2016 Report No: SMP-0002 Budgetary Plant Estimate Powered by Solaris-MCI

3 Contents Executive Summary Assumptions Napkin Assumptions Client Discussed Assumptions Ogee Assumptions Scope of Assessment Results Estimate Estimate Basis Project Schedule Additional Considerations Modularized Design Logistics of Personnel Stakeholder Consultation and Regulatory Approvals Availability of Labour Further Assistance 9 Appendix A: Client Supplied Ogee Napkin 11 Appendix B: Process Flow Diagram 12 Appendix C: Plot Plan 14 Appendix D: Plant Process Simulation 16 Powered by Solaris-MCI Page 2

4 Executive Summary ABC Oil and Gas is considering an expansion of its northern development program. The capacity of their existing gas plant is limited; therefore, ABC Oil and Gas is exploring the feasibility of installing a new, green field plant to process 35 MMscf/d of sweet raw gas from the field. The raw gas is expected to contain levels of hydrocarbon liquids and entrained water of upwards of 2500 bbl/d of both hydrocarbon liquids and produced water. Ogee has developed a budgetary estimate of $112,117,800 (-20%/+50%) for a sweet gas processing plant with a capacity of 35 MMscf/d and 2500 bbl/d of hydrocarbon liquids and 2500 bbl/d of produced water, producing pipeline quality sales gas, as well as LPG (C3/C4 mix), stabilized condensate and produced water stored on-site. 1.0 Assumptions 1.1. Napkin Assumptions As per the information submitted through the OGEE Napkin on August 15th, 2016: Assessment Type: Location: Commodity: Sweet/Sour: Gas Processing Plant Northern Shale Region Natural Gas Sweet Conditions: ABC Oil and Gas is considering an expansion of its northern development program. The capacity of their existing gas plant is limited, and therefore ABC Oil and Gas is exploring the feasibility of installing a new, greenfield plant to process 35 MMscf/d of raw gas from the field. The raw gas will contain high levels of hydrocarbon liquids and produced water. A budgetary estimate is required for a processing plant to produce pipeline quality sales gas, as well as LPG (C3/C4 mix), stabilized condensate and produced water stored on site. A copy of the submitted Ogee Napkin is included in Appendix A. Powered by Solaris-MCI Page 3

5 1.2. Client Discussed Assumptions As per the OGEE kick-off call on August 10 th, 2016, the following are the assumptions discussed with the client: Flow Rates and Pressures: 35 MMscf/d Sweet Raw Gas o Inlet Pressure: 5,000 kpag, o Inlet Temperature: 10 o C, o Outlet Pressure: 7,500 kpag bbl/d Hydrocarbon Liquids & 2500 bbl/d Produced water via dedicated inlet liquid pipeline o Inlet Pressure: 2,500 kpag, o Inlet Temperature: 10 o C, Onsite storage capability Ogee Assumptions The following are assumptions Ogee has made to complete this report: Industry standards for sales gas is assumed, Storage for produced water, LPG and stabilized condensate is required. 2.0 Scope of Assessment OGEE has reviewed the general process conditions outlined in Section 2.0 to provide a budgetary estimate (-20%/+50%) for a 35 MMscf/d sweet gas processing plant. See Appendix B to D for preliminary documents included to support the estimate. Process Flow Diagram Plot Plan Plant Process Simulation Powered by Solaris-MCI Page 4

6 3.0 Results 3.1. Estimate Table 1 below is the budgetary estimate for a sweet gas processing plant based on the assumptions of Section 1.2. Major Equipment Table 1: Sweet Gas Processing Plant Budgetary Estimate ITEM QUANTITY UNIT TOTAL COST 1 Inlet Gas Separator, 3 Phase 1 Each $675,000 2 Inlet Liquid Separator, 3 Phase 1 Each $785,000 3 Condensate Stabilizer 1 Each $1,925,000 4 Stabilizer Overhead Compressor 1 Each $1,275,000 5 Inlet Gas Compressor 1 Each $2,625,000 6 Refrigeration Plant 1 Each $3,275,000 7 De-Ethanizer 1 Each $1,950,000 8 De-Butanizer 1 Each $1,950,000 9 Stabilized Condensate Storage Tank 2 Lot $1,800, Produced Water Storage Tank 2 Lot $1,800, LPG Storage Bullet 1 Each $304, HP Flare Knockout Drum 1 Each $235, LP Flare Knockout Drum 1 Each $140, Flare Stack (HP/LP) 1 Each $125, Sales Metering/Fuel Gas Building 1 Each $680, Power Generation (Gas) 2 Lot $3,450, Power Generation (Diesel) 1 Each $1,350, Instrument Air/MCC 1 Each $852, Heat Medium System 2 Lot $1,100, Control Room 1 Each $160, Total Major Equipment $26,456, Construction Material and Labour Costs $40,500, Total Indirect Costs $26,475,000 Subtotal $93,431, Contingency 20 % $18,686,300 TOTAL INSTALLED COST (TIC) $112,117,800 ESTIMATE RANGE (-20% to +50%) $89,694,300 to $168,176,700 Powered by Solaris-MCI Page 5

7 3.2. Estimate Basis The Major Equipment Cost Estimate (Line Item 21 of Table 1) is based on the actual purchase price of the equipment by Solaris-MCI for projects of similar scope. The Construction Material and Labour Costs Estimate (Line Item 22 of Table 1) and the Total Indirect Costs Estimate (Line Item 23 of Table 1) are based on the experience of Solaris-MCI with this type of installation. Total Indirect Costs include estimates for the following: Contractor Indirect Field, Construction Management, Material Related Costs, Camp, Housing, Craft Transportation, Engineering and Professional Services, Start-Up and Owners Costs Project Schedule It is estimated that the project timeline, from project initiation to commissioning and startup is approximately 29 months. A breakdown of major project milestones is provided in the table and figure below. Table 2: Major Project Milestones PROJECT MILESTONE DURATION 1 Front End Engineering and Design (FEED) 6 months 2 Detailed Design/Long Lead Equipment 11 months 3 Procurement * 5 months 4 Regulatory Consultation/Notification and Approvals * 6 months 5 Construction 10 months 6 Commissioning and Startup 2 months *concurrent with line item 2 of schedule Powered by Solaris-MCI Page 6

8 Figure 1: Major Project Milestones PROJECT MILESTONES 29 MONTH DURATION Additional Considerations The following items should be considered as the project progresses into more detailed phases, as they can impart significant risk to the total cost and schedule Modularized Design A modularized design approach should be considered and incorporated at the project initiation stage. Current industry practices suggest that it is more cost effective to build equipment skids and pipe rack modules in fabrication yards transported to site as opposed to field erection for most cases. Applying actual value regarding costs savings is difficult to determine in the feasibility stage of a project; however, industry experience suggests cost reduction in the order of 25%. Benefits: Risks: Quicker site erection and ease of constructability, Better quality control in a shop environment, Reduced safety risk associated with personnel, Lower transportation costs of modules vs. multiple materials, Reduced site manpower and camp/subsistence cost. More stringent piping design and constraints, Less flexibility for scope changes and adjustments, Powered by Solaris-MCI Page 7

9 Less time for design input from stakeholders Logistics of Personnel When considering the logistics of personnel, the location of the plant in relation to existing municipal infrastructure or camp facilities and various modes of transportation for labour to/from site should be investigated, with each option evaluated on the following factors: Safety: Safety of personnel should be of the utmost importance as one accident could prove detrimental to the project. An in depth analysis should be performed at a later date to determine the risk tolerance of each option per the company s risk matrix. Cost: Cost varies with the method of travel. Capital cost invested up front, such as the construction of camp facilities or subsidized housing, may minimize the cost of travel throughout the life of the project. Capital projects that to pertain to the movement of personnel may also be shared with operators in the area. Social impact: Generally when travel durations are shortened, either by locating the facility to existing municipalities with a pool of labour or through efficient modes of transportation to/from site, produces higher moral which results in overall cost savings Stakeholder Consultation and Regulatory Approvals This project is regulated under the Oil and Gas Commission (OGC) and the Oil and Gas Activities Act (OGAA) of British Columbia. Based on the scope provided for this project, an Environmental Assessment Certificate will not be required; however, a new facility permit is necessary prior to commencing construction. While not expressly required, guidelines for BC recommend an assessment of resources and environment surrounding the development. Potential impacts include: fish and wildlife habitats and movement patterns, soil and permafrost disturbances, erosion and sand control, surface water quality and waste material management. While completed facility permits generally take 4-6 weeks for the OGC to approve, the timeframe for the regulatory process is much more subject to consultation with Powered by Solaris-MCI Page 8

10 community stakeholders and First Nations groups, sometimes prolonging the process months beyond schedule. As a result, proactive engagement with all stakeholders as early as possible is recommended to remedy any concerns and mitigate possible setbacks Availability of Labour The availability of labour resources will be affected by competing projects in the region and more generally by the skilled labour pool in Western Canada. Additionally, as opportunities arise in sectors that are not oil and gas related closer to large municipal centers, attracting a qualified workforce to remote areas may prove difficult. When the project schedule is established, competing projects and the labour pool should be investigated and monitored to ensure project milestones coincide with the availability of the personnel forecasted for that timeframe. 5.0 Further Assistance In the event that you require this project to be carried to the detailed engineering phase, OGEE will connect you with Solaris-MCI, our fully-integrated, multi-discipline engineering firm, to discuss options. Powered by Solaris-MCI Page 9

11 Note: This document is not an engineering or design document. This document is provided for general information purposes only and does not replace the requirements and details in the acts, regulations, standards and other applicable documentation, including any amendments, updates, revisions, etc. The user is still responsible for ensuring that the facility or pipeline complies with all requirements, irrespective of the information provided in this document. Powered by Solaris-MCI Page 10

12 Appendix A: Client Supplied Ogee Napkin Powered by Solaris-MCI Page 11

13 Appendix B: Process Flow Diagram Powered by Solaris-MCI Page 12

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15 Appendix C: Plot Plan Powered by Solaris-MCI Page 14

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17 Appendix D: Plant Process Simulation Powered by Solaris-MCI Page 16

18 Sales Gas Temperature C Temperature Pressure Molar Flow Temperature Pressure Inlet Gas C 5000 kpag MMSCFD Inlet HC Phase Liq Vol Cond (Liquid Phase) Phase Liq Vol Cond (Aqueous Phase) Inlet Gas Separator Inlet HC C kpag barrel/day barrel/day Inlet Liquid Separator MIX-104 MIX Condensate Stabilizer 8 O/H Comp 1 CS Reboiler 9 10 O/H 1 Air Cooler 1 MIX-105 Air Cooler O/H Comp O/H MIX-106 Gas Chiller 13 Refrig 2 17 Inlet Comp 14 Lean EG Inlet LTS MIX Rich EG 28 VLV-102 Gas/Gas Tube Gas/Gas Shell 24 G/G Shell G/G Tube 32 Low Pressure Vent 33 De-ethanizer FG DEth Cooler DEth Reboiler 23 De-butanizer 36 DBut Cooler DBut Reboiler E-102 Air Cooler 1 Pressure Molar Flow Air Cooler 2 Temperature Pressure Sales Gas Sales LPG kpag Sales LPG Liq Vol Cond Vapour Fraction Temperature Pressure MMSCFD C kpag barrel/day Sales Condensate Liq Vol Cond C kpag barrel/day VLV E MIX-108 Vapour Fraction Sales Condensate 0.00 Produced Water Produced Water Temperature Pressure C kpag Liq Vol Cond 2500 barrel/day