Read part two of this article here.
Natural gas liquids
Natural gas liquids (NGLs) are stripped from natural gas at processing plants. In 2013, the US produced 2.61 million bpd of NGLs. By 2015, volumes had climbed to 3.26 million bpd, and the EIA expects average daily production to hit 3.55 million bpd this year.
Prior to 2014, the US had about 1.1 million bpd processing capacity; that is expected to expand by 800 000 bpd, to 1.9 million bpd, by 2018.
That leaves a lot of leftover NGLs. Storage capacity has increased dramatically over the last five years to handle peak seasonal highs; in September 2011, peak storage for propane reached 65 million bbls. By September 2015, that number had climbed to slightly under 100 million bbls.
Exports and terminal capacities have also increased dramatically. In 2011, NGL exports stood at 200 000 bpd, the limit of terminal capacity. By 2015, exports had exceeded 700 000 bpd, with terminal capacity expanding to 800 000 bpd.
Several major projects contributed to the terminal capacity expansion. Targa added 120 000 bpd to its terminal in Galena Park, Texas. Sunoco commissioned a 200 000 bpd facility in Nederland, Texas. Occidental added 75 000 bpd to its Corpus Christi, Texas, terminal, and Enterprise expanded its Houston Ship Channel plant by 227 000 bpd. Phillips 66 expects its 145 000 bpd Freeport, Texas, terminal to come onstream in mid-2016.
Stakeholders in the US were pleased that the 40 year old ban on crude exports was annulled by Congress in late December. Its elimination bodes well for extensive new tidewater storage and export facilities. In early 2016, Enterprise announced that it had already contracted for the export of 600 000 bbls of medium light crude from its Enterprise Hydrocarbon Terminal (EHT) in the Houston Ship Channel.
The NA glut of gas is eventually going to ease as production dips and consumption rises. Traditionally, US electric utilities have used coal to generate power. But low oil prices and environmental restrictions have galvanised a switch to gas-fired turbines, and gas to power (GTP) has risen from 20% in 2010 to 31% in mid-2015 (with coal dropping to 30%). As the oilsands grow, so will gas usage. Several billion cubic feet per day will be exported as LNG plants come onstream, and plans are afoot to ship up to 5 billion ft3/d from Texas to energy-hungry Mexico. In addition, petrochemical firms are investing over US$100 billion to build greenfield plants in order to use cheap gas as feedstock.
While underground gas storage capacity is not expected to increase dramatically (the US possesses around 10 trillion ft3 of space, but only consumes 2.1 trillion ft3/y), the way that storage is operated may evolve. “What is important is not the physical volume, but the ability to get it out when it is needed,” said Bill Gwozd, a Senior Vice President at Solomon Associates. “If you have US$1000 in the bank, but you can only take out US$200 a day, then its value is limited. It is the same with gas storage. Most of it is underground, in depleted reservoirs. It is served by vertical wells, so the ability to put gas in and draw it out is limited by physical constraints.”
According to Gwozd, there are several ways that gas storage operators can improve injection and withdrawal, without major capital expenses. “The upstream oil and gas sector has developed horizontal well drilling, and the costs are coming down,” Gwozd noted. “Storage providers can convert from vertical to horizontal wells. As you draw down a reservoir, the pressure drops. You can put a compressor on at the surface to raise the pressure and move more gas.”
Any predictions regarding the future price of oil and gas are fraught with uncertainty. Thanks to the current crude price doldrums, the EIA is pointing to a decrease in US shale oil production throughout 2016, which would significantly ease upward pressure on storage in the near term. The EIA also points out that US proven reserves exceeded 40 billion bbls of oil and 390 trillion ft3 of gas in 2015. Over the long term, it is safe to forecast that there will be ongoing demand for new terminals and storage capacity in North America. Several billions of dollars will be spent on meeting the storage needs of new producing regions, new exporting terminals, and improving environmental safety.
Written by Gordon Cope, Contributing Editor. This is an abridged version of an article taken from the Spring 2016 issue of Tanks & Terminals (a supplement to Hydrocarbon Engineering). Subscribers can view the issue by logging in.
Read the article online at: https://www.hydrocarbonengineering.com/special-reports/11032016/the-north-american-storage-boom-part-three-2714/