Tengizchevroil. sulfur production and sales

Transcription

1 Tengizchevroil sulfur production and sales

2 Table of Content What is sulfur?...5 Manufacturing operations...6 The global marketplace...8 Protecting the environment Looking ahead... 13

3 Tengizchevroil (TCO) is a major producer and marketer of crude oil. In a region northeast of the Caspian Sea, the company produces some 300,000 barrels of oil a day from the giant Tengiz and nearby Korolev fields. A major product of TCO s oil production is sulfur, a valued commodity in its own right that s used in some 30,000 products. Established in 1993 as a joint venture between Chevron Corporation and the newly independent Republic of Kazakhstan, TCO today is a partnership of Chevron Corporation (50 percent), KazMunaiGas (20 percent), ExxonMobil (25 percent) and LukArco (5 percent). Since its founding, Tengizchevroil has been committed to safety, environmental protection and the well-being of the communities where it operates. It aims to earn superior value for its shareholders and to earn respect from its Kazakhstani neighbors. 3

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5 What is sulfur? Sulfur is a basic chemical element, widely distributed in nature. It s found in small amounts in all living creatures, including humans. Sulfur makes up 0.05 percent of the earth s crust and often accumulates in large amounts near volcanoes. Large sulfur deposits exist in scattered regions of the world, including southern Italy, the southern United States, Japan, Mexico and Central Asia. Sulfur is also found, in varying amounts, in crude oil and natural gas. The crude oil produced by TCO, for example, contains sour gas that has a hydrogen sulfide content of about 14 percent. Hydrogen sulfide has a pungent odor and accounts for the rotten egg smell often associated with sulfur ( sweet gas contains virtually no sulfur). The TCO processing plant removes this hydrogen sulfide from the crude oil and associated gas and converts it into elemental sulfur. Elemental sulfur is a yellow solid substance that is not hazardous. Some sulfur compounds, however, do pose risks that must be handled appropriately. Accumulations of sulfur dust can be explosive if not managed properly. Loose sulfur and sulfur dust is flammable and, when burning, decomposes into sulfur dioxide (SO 2 ). However, such ignitions are rare, and TCO takes appropriate measures to minimize the risks associated with open storage of block sulfur. 5 5

6 Manufacturing operations T engizchevroil currently produces about 1.6 million metric tons of sulfur per year. As of the end of 2006 TCO had an inventory of about 8.9 million metric tons stored as solid blocks on specially designed pads. Throughout 2006 the total sulfur inventory stored as solid blocks actually dropped since the total volume of sulfur sold exceeded the volume of sulfur produced. It is expected that the inventory will continue to decrease over time. The Republic of Kazakhstan has determined that solid sulfur is a hazard Class 4 material. Other examples of materials in this same hazard class are brick rubble, worn-out tires and scrap metal. Many international organizations, including the United Nations, classify sulfur as a non-hazardous material. TCO separates the sour gas from crude oil. It then removes hydrogen sulfide from the gas so that the end products oil, natural gas and liquefied petroleum gas meet marketing and environmental specifications for sulfur content. Once removed, hydrogen sulfide reacts with air, heat and a catalyst to produce liquid elemental sulfur and water. This complex processing serves the dual purpose of increasing the value of the hydrocarbon products and creating, in sulfur, a separate marketable commodity. Most of the liquid sulfur is sent to on-site sulfur granulation or sulfur flaking plants and later delivered by rail to customers. Any liquid sulfur not granulated or flaked is either sold in liquid form via rail tank cars or is allowed to cool down and form solid blocks. Sulfur from the blocks is mechanically crushed (or de- blocked ) and distributed to markets by rail. TCO is expanding its de-blocking capabilities to allow stored sulfur to also be re-melted and sent, in liquid form, to the granulation and flaking plants. This will increase the company s range of marketing options. Increasing production Tengizchevroil currently is expanding its oil production capabilities. With completion of its second-generation project, the company expects to boost output from about 300,000 barrels of oil a day to between 460,000 and 550,000 barrels per day. At the same time, sulfur production is expected to increase from 1.6 million metric tons a year to 2.4 million. Beyond that, a sulfur expansion project is under way to increase sulfur sales capacity by an additional 25 percent above production through additional re-melting of stored sulfur. 6

7 Railroad tank car liquid sulfur loading rack. Flaked sulfur is a relatively easy product to manage during the production operations and handling by user; it is shipped in bags. Granulated sulfur can be easily managed during loading, transportation and handling by customer. Flaked sulfur bags loading into rail cars. General view of the existing sulfur granulation units and a construction site to build two new ones. A block of solidified sulfur (sulfur pad). Storage of sulfur in solid blocks prevents it from blowing away as it might have been the case if it were stored in powder form. Note the metal formwork set up on top of the sulfur block. This formwork keeps liquid from overflowing across the top edge of the block when the next layer of molten sulfur is poured. Granulated sulfur on a conveyor. Block sulfur pad crushing process.

8 The global marketplace Sulfur has many uses. It s a key element in the production of paper, rubber and textiles and to make cosmetics, plastics and paints. It s used by the pharmaceuticals, mining and food industries and in the production of cement, asphalt, glass and steel. Its largest use is in making fertilizers and soil conditioners. The sulfur market is highly cyclical. That fact, combined with challenges the company has faced in transporting sulfur, resulted in TCO s current surplus of product. Since Kazakhstan is a land locked country, the shipment of sulfur out of Kazakhstan relies entirely on the existing rail infrastructure. The largest producers of sulfur are China, the United States, Canada, and Russia. Other important producers include Saudi Arabia, the United Arab Emirates, Japan, Germany, Iran and Kazakhstan. Since 1992, worldwide supply of sulfur has exceeded demand. It s estimated that, by 2010, supply will reach 60 million metric tons a year and demand will be about 55 million. Continued oversupply is likely as the result of increased output of high sulfur content crudes in the Middle East and elsewhere. TCO s sulfur sales have increased faster than production in recent years and, for the first time, sales exceeded production in The company is planning for sulfur sales of some 3 million metric tons a year in the near term. Longer term, the company is planning to increase oil production without increasing sulfur production. It aims to inject the sour gas recovered from crude oil back into the underground reservoir as part of an enhanced oil recovery (EOR) project. This form of EOR like others that use water, steam or carbon dioxide helps maintain underground pressure and increases the total recovery of crude oil. Depending on its success, sour-gas injection might prove to be the most beneficial use of the company s sulfur. If that is the case, TCO gradually may increase sour-gas injection, thereby reducing sulfur production from future increased oil output. For now, however, it expects to remain active in the sulfur business. 8

9 Production, millions of tons Forecast Sulfur extracted from subsurface deposits Sulfur recovered from crude oil production and processing operations Sulfur recovered from gas production and processing operations Other extraction methods Demand for sulfur Figure 1. World sulfur production, demand in millions of tons (forecast data from 2005). U.S.A. 19% Canada 17% Russia13% Saudi Arabia 6% U.A.E. 4% Kazakhstan 4% Japan 4% Germany 4% Iran 3% Other 26% Figure 2. Elemental sulfur-producing countries (2005 data). Canada 31% Russia 17% Saudi Arabia 9% U.A.E. 7% Iran 5% Japan 5% Germany 4% U.S.A. 3% Poland 2% Other 17% Figure 3. Elemental sulfur-exporting countries (2003 data). Loading sulfur onto a merchant ship in Vancouver, Canada: Granulated sulfur is loaded onto ships by conveyors to be sold at different locations across the world. From this port in Vancouver sulfur is shipped to China, U.S., Brazil, Morocco, Mexico, South Africa, Australia and many other countries. Temporary sulfur storage facility is located at the sulfur loading terminal Van Wharves, near downtown Vancouver. These piles of granulated sulfur are very near downtown Vancouver; from here it is loaded onto huge ships. Because sulfur is heavy, it is not blown into the water. Because sulfur is harmless, it poses no threat to Vancouver s population of 2 million people. U.S.A. 23% China 15% Former USSR СССР 8% Morocco 7% India 6% Figure 4. Elemental sulfur-using countries (2005 data). Tunisia 4% Brazil 4% South Africa 3% Other 30% 9

10 Protecting the environment Тengizchevroil has an unrelenting commitment to the safe handling of sulfur. At every stage of operations, the company has in place processes to monitor air, water and land to ensure that there is no danger to the environment and no hazard to people working in the operations or those living in outlying areas. (The nearest community is about 80 kilometers away.) In working with sulfur, the company follows international standards, regulations put forth by Kazakhstan and the United States, as well as its own strict company policies that emphasize safety first. TCO s environmental protection program addresses all risks in sulfur manufacturing. The company currently is studying the environmental effects of open sulfur storage. Partners in the study are Kazakhstan s ministries of Environmental Protection, Emergency Situations, Energy & Mineral Resources, and Health. Also involved are the Atyrau Oblast Akimat, KazMunaiGas and other institutions. TCO expects the field work to be completed during the course of 2007 and the final report by year-end. The company s core operations reflect its concern for the environment. Degassing units remove virtually all hydrogen sulfide from the liquid sulfur. TCO regularly monitors the air in accordance with requirements of the Republic of Kazakhstan and guidelines of the American Industrial Hygiene Association and methods of the National Institute for occupational safety and health. Regular air monitoring ensures that concentrations in the air fall well below the maximum permissible concentration (MPC) of 10 milligrams per cubic meter for hydrogen sulfide and six milligrams per cubic meter for sulfur dust. The company suppresses dust using a spray of steam or water to contain sulfur particles that might otherwise escape into the air, land or water. Basins in sulfur storage areas collect rain water, snow melt and any excess moisture from the dust-suppression spray. Regular sampling of the soil and water follows international standards and methods developed in accord with Kazakhstan s environmental authorities. 10

11 At any point in the manufacturing process where sulfur could be flammable, the company has eliminated ignition sources. Open flames, welding and grinding are prohibited. And to avoid even static sparks, equipment for handling sulfur is electrically grounded and loading equipment is outfitted with rubber bumpers. Key to maintaining a safe environment is a wellinformed and well-trained work force. TCO employees are highly skilled in their technical and operational disciplines; they also are rigorously trained in safety and emergency response. In addition to continuous monitoring, air samples are collected throughout the operation including the area adjacent to the sulfur storage pads. The monitoring checks for the levels of hydrogen sulfide, sulfur dioxide and sulfur dust in the air. The latest monitoring equipment is utilized for this work. Stationary and portable H 2 S detectors are used throughout the Tengizchevroil operation to alert the workforce if accumulations of H 2 S are present. Ground water sampling from monitor wells located in the area of sulfur pads is conducted quarterly to detect the content of hydrogen sulfide and sulfates in the composition of ground water. Gas alarms are located throughout the facility to warn the workforces if a gas leak is detected. Soil sampling in the area of sulfur pads is carried out once a year to detect the content of sulfur compounds in the composition of soil. 11

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13 Looking ahead Тengizchevroil continuously monitors changes in the marketplace, fluctuations in the business environment and advances in technology. The company intends to keep growing and developing Kazakhstan s resources for the benefit of all stakeholders. Our goal is to achieve superior operational performance. But that alone is not enough. The company aims also to be respected in the Atyrau Oblast and throughout Kazakhstan and to be the leader in safety and environmental performance. TCO is committed to corporate social responsibility and to maintaining the highest standards of business ethics. The company understands that it will be judged and fairly so not just by results, but by how it achieves them. Wellhead of one of four wells for injection of gas back into reservoir Sulfur sales, in millions of tons Sales Production Figure 5. Dynamics of production and sales of sulfur with year-by-year (actual and forecast). South America Ukraine Russia Kazakhstan Spain Morocco Tunisia Turkey Egypt Israel China India Senegal Figure 6. TCO sulfur market distribution. TCO sells sulfur to over to 56 Customers in 20 Countries. 13

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16 Tengizchevroil Prepared by the TCO Environmental Communications Group OE/HSE Department May Designed & Printed : DeLuxe Printery Printhous, Almaty, Kazkhstan, info@deluxe.kz