Reducing Methane Emissions from Production Wells: Reduced Emission Completions in Gas Wells; Smart Automation of Gas Well Plunger Lifts

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TABLE OF CONTENTS PART III. REVISION 0 6-ii

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Reducing Methane Emissions from Production Wells: Reduced Emission Completions in Gas Wells; Smart Automation of Gas Well Plunger Lifts International Workshop on Methane Emissions Reduction Technologies in the Oil and Gas Industry Lake Louise 14-16 September 2009

Agenda Reduced Emissions Completions Methane Losses Methane Recovery Is Recovery Profitable? Partner Experience Plunger Lift and Smart Automation Discussion Contacts 2

Methane Losses During Gas Well Completions Gas wells in tight formations and coal beds require hydraulic fracture It is necessary to clean out the well bore and formation After new completion After well workovers Operators produce to an open pit or tank to collect sand, cuttings, and fluids for disposal Vent or flare the natural gas produced 67 Bcf 1 (1.9 billion m 3 ) of gas is vented or flared from completions and workovers in the U.S. resulting in 27 Bcf (0.8 billion m 3 ) of methane emissions Williams E&P, Glenwood Springs, CO 1 EPA estimate. 3

Methane Recovery by Reduced Emission Completions Recover natural gas and condensate produced during flow-back following hydraulic fracture Portable equipment separates sand and water, processes gas and condensate for sales Route recovered gas through dehydrator and meter to sales line, reducing venting and flaring Portable REC Equipment Source: Weatherford 4

Reduced Emission Completions: Preconditions Permanent equipment required on site before cleanup Piping from well head to sales line Dehydrator Lease meter Stock tanks for wells producing significant amounts of condensate Sales line gas can be used for compressor fuel and/ or gas lift in low pressure wells 5

Reduced Emission Completions: Equipment Skid or trailer mounted portable equipment to capture produced gas during cleanup Sand trap Three-phase separator Use portable desiccant dehydrator for workovers requiring glycol dehydrator maintenance Temporary, Mobile Surface Facilities, Source: BP Source: Williams 6

Reduced Emission Completions: Low Pressure Wells Partners and vendors are perfecting the use of portable compressors when pressure in reservoir is low Artificial gas lift to clear fluids Boost gas to sales line Manage slug flow Adds cost to project 7

Reduced Emission Completions: Benefits Reduced methane emissions during completions and workovers Sales revenue from recovered gas and condensate Improved relations with government agencies and public neighbors Reduced environmental impact Improved safety Reduced disposal costs 8

Is Recovery Profitable? Partners report recovering 2% - 89% (average of 53%) of total gas produced during well completions and workovers Estimate 7,000 12,500 Mcf (200 350 thousand m 3 ) of natural gas can be recovered from each cleanup $50,000 to $85,000 savings at $7/Mcf Estimate 1 580 barrels of condensate can be recovered from each cleanup $50 - $30,000 additional revenue at $50/barrel Incremental contracted cost of typical REC is $700 to $6,500/day for 3 to 10 days of well cleanup Purchase of REC equipment costs $500,000 Payback in 3 to 8 months for 25 well/year drilling program Gas Price (US$/Mcf) $3 $5 $7 Payback (year) 3.2 2.2 1.6 NPV (US$) 15,384 68,455 121,526 9

REC Partner Experience: BP Capital investment of about $500,000 per skid on portable three-phase separators, sand traps, and tanks in the Rocky Mountain Region Used Green Completions on 106 wells Total natural gas recovered about 350 MMcf/year (10 million m 3 ) 3.3 MMcf (93 thousand m 3 ) per well average Conservative net value of gas saved is $20,000 per well 1 6,700 barrels/year condensate recovered 1.5 year payback based on British Petroleum s prices for natural gas and condensate 1 Natural gas valued by company to be $7/Mcf 10

Agenda Reduced Emissions Completions Plunger Lift and Smart Automation Methane Losses Methane Recovery Is Recovery Profitable? Partner Experience Discussion Contacts 11

Methane Emissions from Liquid Unloading in Gas Wells Completion venting is not the only type of well venting Accumulation of liquid hydrocarbons or water in the well tubing reduces, and can halt, production Operators traditionally blew wells to atmosphere to expel liquids 59 Bcf 1 (1.7 billion m 3 ) of methane emissions from liquid unloading in the U.S. 1 EPA estimate. Source: BP 12

Methane Reductions from Plunger Lifts Plunger lifts automatically produce liquids without blowing the well to the atmosphere Shut-in gas pressure stored in the casing annulus periodically pushes the plunger and liquid load from the well bottom to surface separator Wells with the right combination of shut-in pressure, depth and liquid accumulation are kept productive with less operator attention Source: Weatherford 13

Plunger Lift Applications Plunger lifts are a long term solution Common plunger lift applications include Wells with gas-to-liquid ratios of 400 scf/bbl (11.33 m 3 /bbl) per 1,000 feet of depth Wells with shut-in pressure that is 1.5 times the sales line pressure Gas wells with coiled tubing Wells in need of paraffin and scale control 14

The Real Benefit is Increased Production Plunger Lifts Installed 15

Plunger Lift: Benefits Continuous production Lower maintenance Increased efficiency Reduced methane emissions 16

Is Recovery Profitable? Partners report annual gas savings of $90,000 to $130,000 1 per well by the installation of plunger lifts Estimate 4,700 18,250 Mcf (130 520 thousand m 3 ) per well of natural gas can be recovered by the installation of plunger lifts $32,900 to $127,750 savings at $7/Mcf Benefits from both increased gas production and emissions savings are well and reservoir specific and will vary considerably Cost of implementation ranges from $2,591 to $10,363 per well Purchase of plunger lifts costs $7,772 1 Payback in 2 to 14 months for incremental gas production ranging from 30 Mcf/day (850 m 3 /day) to 3 Mcf/day (85 m 3 /day) Gas Price (US$/Mcf) $3 $5 $7 Payback (months) 2.8 1.9 1.5 NPV (US$) 120,630 176,157 231,684 1 - EPA Lessons Learned 2006, Installing plunger lift systems in gas wells. 17

Smart Automation: Continuous improvement on plunger lifts Plunger lifts are an improvement over blowing down wells to unload liquids, but there are limitations to conventional plunger lifts: Fixed timer in conventional plunger lifts requires manual adjustments of the plunger cycle time Manual adjustments are not performed regularly Do not account for gathering line pressure fluctuations, declining well performance, plunger wear Results in manual venting to atmosphere when plunger lift is overloaded and production loss when liquids are not unloaded efficiently Source: BP 18

Smart Automation Well Venting Automation can enhance the performance of plunger lifts by monitoring wellhead parameters Tubing and casing pressure Reservoir pressure recovery time Sales line pressure Flow rate Plunger travel time Using this information, the system is able to optimize plunger operations To minimize well venting to atmosphere Recover more gas Further reduce methane emissions 19

Smart Automation: Methane Savings Methane emissions savings is a secondary benefit Optimized plunger cycling to remove liquids increases well production by 10 to 20% 1 Additional 1% 1 production from avoided venting Conventional plunger lift reduces venting by 50% Smart Automation recovers another 25-40% of vent gas 6,300 Mcf/year (180 thousand m 3 /year) methane emissions savings for average U.S. well venting 9,400 Mcf/year (270 thousand m 3 /year) 1 Reported by Weatherford Source: BP 20

Smart Automation: Other Benefits Reduced manpower cost per well Continuously optimized production conditions Remotely identify potential unsafe operating conditions Monitor and log other well site equipment Glycol dehydrator Compressor Stock Tank Vapor Recovery Unit Source: BP 21

Is Recovery Profitable? Estimate 6,260 24,300 Mcf (177 688 thousand m 3 ) per well of natural gas can be recovered by the installation of smart automation $44,000 to $170,000 savings at $7/Mcf Benefits from significant reductions in gas venting volumes along with production improvements Automation System can be installed at a cost of less than $12,000 per well Payback in 1 to 3 years Gas Price (US$/Mcf) $3 $5 $7 Payback (months) 16 10 7 NPV (US$) 40,548 82,247 123,945 22

Smart Automation Partner Experience: BP BP s first automation project designed and funded in 2000 Pilot installations and testing in 2000 Installed plunger lifts with automated control systems on ~2,200 wells ~$15,000 per well Remote Terminal Unit (RTU) installment cost $50,000 - $750,000 host system installment cost Achieved roughly 50% reduction in venting from 2000 to 2004 23

Smart Automation Partner Experience: BP Year Source: BP 24

Smart Automation Partner Experience: BP BP designed two pilot studies in 2006 to further improve well scientific control Interviewed control room staff and worked closely with the field automation team leader Established a new procedure based on plunger lift expertise and pilot well analysis In mid 2006, smarter automation was applied to wells 1,424 Mcf (40 thousand m 3 ) reported annual savings per well 25

Smart Automation Partner Experience: BP Source: BP 26

Discussion Industry experience applying these technologies and practices Limitations on application of these technologies and practices Actual costs and benefits 27

Contact Information Jerome Blackman 202-343-9630 blackman.jerome@epa.gov Carey Bylin 202-343-9669 bylin.carey@epa.gov Roger Fernandez 202-343-9386 fernandez.roger@epa.gov Suzie Waltzer 202-343-9544 waltzer.suzanne@epa.gov www.epa.gov/gasstar www.methanetomarkets.org 28