WORLDWIDE GAS-PROCESSING GROWTH SLOWS

Warren R. True
Pipeline/Gas Processing Editor

Canada and the Asia-Pacific region in 1989 continued growth patterns for gas-processing activates which were evident in 1988, this year's exclusive Oil & Gas Journal gas-processing survey shows.

Worldwide, however, gains of 1988 showed signs of slowing in 1989.

The survey is accompanied by the Journal's annual compilation of sulfur-recovery capacity. As Canadian experience is proving, however, new facilities to handle sulfur and high-H2S gas are becoming more difficult to build as public concern for the environment grows.

With a minimal drop in capacity and a solid gain in throughput, Canadian NGL production increased by more than 14% over 1988.

Indonesia extended its domination of the Asia-Pacific region's handling and throughput, adding 1.1 bcfd of capacity and processing 768 MMcfd more than in 1988. Virtually all of these increases, however, were tied to LNG operations as the country continued to expand its LNG trade, especially to Japan.

U.S. gas-processing continued essentially flat in 1989. Marginal increases occurred in capacity and throughput; production fell.

Overall, figures for the world outside the Soviet Union, China, and the U.S. showed flat growth in 1989, with only throughput showing a noticeable gain.

When U.S. figures are added to these, worldwide growth outside the Soviet Union and China is even flatter with production actually declining slightly.

Despite growth in the U.S., capacity and production declines for the world's sulfur-production industry outside the U.S. and Canada resulted in an overall contraction. Canada maintained its world lead in sulfur capacity and production.

These developments are reflected in the plant-by-plant, worldwide gas-processing survey along with international survey of petroleum-derived sulfur recovery.

INDUSTRY TRENDS

Slightly more gas-processing capacity was available last year than in 1988 to process more gas and in fact more gas was processed than in 1988 (Table 1). Activity is concentrated in North America where last year Canada and the U.S. had 62% of worldwide gas-processing capacity, reported 63.5% of the throughput, and produced 60% of world's NGL.

Processing capacity worldwide (outside the Soviet Union and China) advanced only slightly, by 1.4 bcfd (+1%) in 1989 compared with 1988 figures.

Worldwide gas-plant capacity has been moving ahead steadily in the past 3 years, despite a 3-year period of reduction in the number of plants: 1,439 in 1985, 1,408 in 1986, and 1,407 in 1987.

That decline was reversed in 1988 with a total of 1,424 plants reported to be operating. And the growth continued last year when 1,475 plants worldwide were reported in operation.

Plant construction skidded a bit in 1989 after showing some improvement in 1988 (Table 2).

Gas reserves are shown in Table 3 and production in Table 4.

Natural-gas throughput moved ahead by slightly less than 3 bcfd (3.3%) over 1988.

Production of NGL showed a slight drop from 1988, down by 2.9 million gpd (71,765 b/d; - 2%).

Canada and the U.S. continue to dominate world sulfur recovery with almost 65% of available capacity.

In 1989 Canada led all countries and regions with 33.3% of total world capacity. Most of Canada's sulfur recovery capacity is tied to its production of sour natural gas.

U.S. sulfur-recovery capacity, primarily in petroleum refineries, was at 30.8% of world capacity. The rest (outside the Soviet Union and China) of the world's capacity and production increased.

U.S. PICTURE

Despite flat growth in recent years, the U.S. continues to hold the largest concentration of the world's gas-processing capacity (45%; Table 1), although its proved gas reserves make up less than 7% of the world's outside the Soviet Union and China.

U.S. gas-processing capacity, throughput, and production were flat last year (Fig. 1) for the second year in a row (OGJ, July 10, 1989, p. 33) after showing good growth in 1987 (OGJ, July 11, 1988, p. 33).

The industry in 1989 reversed a 5-year decline in plants operated; 19 (+2.6%) more were in operation last year in the U.S. than in 1988. Between 1986 and 1988, plants operated had dropped by 120 (14%); since 1984, by 138 (-15.7%). But capacity in 1989 held flat when compared with figures for 1988, increasing only 367 MMcfd (0.55%).

Despite the drop in plants 1984-1988, U.S. capacity has declined by only 2.2 bcfd (-3.2%), actually rising slightly in 1987.

Throughput increased slightly for 1989 over 1988: up 909 MMcf (+2.2%). This continued the modest growth seen in 1988 of 550 MMcfd (+1.3%).

Although 1989 saw the third straight year of increase in total U.S. throughput, the modest rise followed an even slower 1.3% 1988 uptick compared with 7.8% for 1987.

Last year also showed a continued slowing in plant-utilization growth in the U.S.: 63.7% compared with 62.7% for 1988, 60.9% for 1987, and 55% for 1986.

U.S. production slowed considerably in 1989 compared with 1988 figures. Total 1989 U.S. production was down 3.9 million gpd (about 97,000 b/d; -5.7%) from 1988; for that year, production had dropped only 68,600 gpd (-0.1%) from 1987 (Fig. 1).

U.S. DATA

For 1988, Oil & Gas Journal survey data (OGJ, July 10, 1989, p. 46) included for the first time specific throughput and production figures from Phillips Petroleum Co. The company is by far the world's largest processor of natural gas and producer of NGLs.

Prior to that time, only capacity figures for Phillips' plants were available. State-by-state plant throughput figures for the company were estimated as a percentage of rated capacities. And production figures were available only in aggregate for all Phillips' U.S. operations.

State-by-state comparisons of U.S. throughput and production totals for 1988 and years following with those for years before 1988, therefore, are impossible because of Phillips' dominance in those states responsible for most U.S. NGL production: Texas, Oklahoma, and New Mexico.

For 1989, Texas continued to lead all states with 315 gas plants, up from 311 in 1988 but still down from 325 in 1987. The number of plants had been falling steadily since 1983. Throughput was slightly less than 10.7 bcfd, off 227 MMcfd ( 2.1%) from 1988.

Texas' production as usual outstripped that of any state at slightly more than 28.2 million gpd (672,567 b/d) in NGL.

Texas' share of 1989 U.S capacity was 24.8%; of daily throughput, 25%. Of total daily U.S. 1989 NGL production, however, Texas had 43.9%.

Louisiana, with 80 gas plants, 2 more than in 1988, led states in gas-processing capacity with 18.7 bcfd (Texas having 16.7 bcfd) and surpassed Texas in 1989 with throughput of 11 bcfd. Louisiana remained second in NGL production with 9.7 million gpd (230,352 b/d).

Louisiana's share of capacity was 27.9%, of throughput 25.9%, and of production 15.5%.

Combined capacities for Louisiana and Texas (35.3 bcfd) represented 52.7% of total U.S. 1989 daily capacity; throughputs (21.7 bcfd), slightly less than 51%; and NGL production (37.9 million gpd, or 902.9 b/d), almost 59%.

Colorado's gas-processing capacity increased 119 MMcfd (+ 12%) and throughput was up 114 MMcfd (+20%); production leaped by 280,700 gpd (about 7,000 b/d; 31 %).

Oklahoma processing, on the other hand, fell 180 MMcfd (-4%) in capacity, 202 MMcfd (-7%) in production, and 674,000 gpd (-9%) in production from 1988.

Processing capacities and throughput in the states of Texas, Oklahoma, and Louisiana can be expected to continue flat for the near-term. Texas and Louisiana will continue to dominate in NGL production, however slightly that production will fall as demand continues soft.

Processing capacities and throughputs for the states of Wyoming, Colorado, and New Mexico should show moderate growth in the immediate future as plans materialize for moving gas from these areas, especially Wyoming, into California and toward U.S. Northeast markets.

WORLD ACTIVITY

Oil & Gas Journal's data for 1989 show that total gas-processing capacity for the world's plants outside the U.S. (and the Soviet Union and China) crawled forward in 1989, increasing only 1 bcfd (+1.3%). Throughput also improved, up 2 bcfd (+4.3%) over non-U.S. throughput for 1988.

Total production outside the U.S. also advanced 1 million gpd (25,438 b/d; 1.3%; Table 1).

Growth in gas-processing capacities and throughputs in countries of the Asia-Pacific region were offset by reported drops in NGL production there.

Indonesia reported increases in its processing capacity (up almost 40%) and gas handled (up better than 30%).

In relation to the world totals, 1989 capacities for that region made up 12.8% of total non-U.S. capacities and 7.1% of worldwide capacities including the U.S.; throughput, 15.14% of non-U.S. and 8% of all; and, production, 10% of non-U.S. and 5.5% of all.

Capacity outside the U.S. (and the Soviet Union and China) continued its advance for the 1980s, up 33.2 bcfd (65.3%) since 1980.
By far the single greatest factor in the large Asia-Pacific capacity increase for 1989 centered on the expanded cryogenic operations at Pertamina's Arun facility. Actual production of LPG (ethane and propane) was up only 18,700 gpd.
P.T. Batak's Arun field plant is rated at 1 bcfd. And Pertamina Arun Natural Gas Liquefaction Co.'s plant now has 2.2 bcfd capacity. These plants are connected with LNG facilities for LNG markets, primarily in the Asia-Pacific region, especially Japan.
For the first time in recent reporting, the number of Canadian plants did not grow last year (Fig. 2). Canadian capacity actually fell, down 261 MMcfd (-1%).
Natural-gas throughput gains of 2 bcfd (4.3%) outside the U.S. are due almost entirely to Indonesian and Canadian activity. Indonesia pushed throughput for the Asia-Pacific region up more than 768 MMcfd (11.7%).
Although Canada's capacity remained essentially flat, throughput increased by 1.1 bcfd (+ 7.9%).
Among the many Canadian plants ramping up last year was Petro-Canada Inc.'s Empress facility which increased its throughput to plant capacity (2.4 bcfd) from reported 1988 throughput of 882.8 MMcfd, an increase of 172%.
Two British Columbia plants also increased their throughputs in 1989: Mobil Oil Canada Ltd.'s Sierra processed 225.2 MMcfd, up from 200 MMcfd, and Westcoast Energy Inc.'s Fort Nelson plant processed 447 MMcfd, up from 342 MMcfd in 1988.
Canadian production increased substantially, by 2.8 million gpd (approximately 69,290 b/d; 14.5%). Western Europe also saw a modest increase in production of 273,000 gpd (+4.5%).
In Alberta, ethane production led the surge in increases.

Petro-Canada Inc.'s Empress plant increased its ethane production 808,500 gpd (+158%). And Esso Resources Canada Ltd. increased ethane production at several plants: Bonnie Glen (up 197,700 gpd), Golden Spike (up 27,700 gpd), Leduc (up 66,300 gpd), and the Wapiti Deep Cut plant (up 101,000 gpd).

Total production increase for the Province of Alberta was 2.9 million gpd (approximately 72,950 b/d; + 15.7%) over what was reported for 1988. This follows a significant production hike in 1988 by Alberta: up 2.4 million gpd (approximately 57,640 b/d; 14.9%).

For all other regions, however, actual production of NGL was flat or declining.

WHAT'S HAPPENING

Later this year, Shell Offshore will begin construction of a 200-MMcfd sour-gas processing plant associated with gas production from its Mobile Bay (Ala.) fields. Pipelines for that plant will be installed beginning in August. Plant commissioning is targeted for second quarter 1991, according to Shell.

Construction of Coastal Oil & Gas Corp.'s 142 MMcfd Javelina plant in Corpus Christi, Tex., is nearing completion.

The plant is designed to process refinery offgases from Valero Refining, Champlin Refining & Chemicals, Coastal Refining & Marketing, and Kerr-McGee (Southwestern Refining).

Design recoveries are expected to be 84% hydrogen, 99% ethylene, and 100% ethane and heavier, according to Coastal.

In Canada, despite sizable increases in capacities, throughputs, and production at existing plants, the prospects of new plants are clouded as public concerns over the environment have put the brakes on National Energy Board approval of many applications. This is especially true of plants planned to handle highly sour gas, such as the Caroline project in Alberta.

Last fall (OGJ, Sept. 4, 1989, p. 24), Alberta's Energy Resources Conservation Board refused to issue a permit for construction of a gas plant sought by Unocal Canada Management Ltd. for a $2.5 million plant near Beaverlodge in northwestern Alberta.

And Shell Canada Ltd. and Husky Oil Ltd. have advanced competing development plans for Caroline which has estimated reserves of 2 tcf. The plans are opposed by most environmental groups.

Shell Canada's plans call for a plant to process up to 8.53 million cu m/day (approximately 300 MMcfd) of sour gas from the Caroline and nearby Bearberry fields.

Elsewhere, Argentina's Yacimientos Petroleum Fiscales is currently designing a 250 MMcfd expansion of its Campos Duran plant. And Petroleos Mexicanos has a 500 MMcfd plant under construction at Nuevo Pemex in Tabasco.

And Bahrain National Gas Co. is currently commissioning an expansion of the gas plant at Sitra. When complete, the plant will be able to process 170 MMcfd, up from the current 250 MMcfd, and will produce 15,000 b/d of LPG, up from the current 9,000 b/d.

SULFUR RECOVERY

In 1989, Canada led the world for petroleum-derived sulfur recovery with 30,650 metric tons/day (t/d) of capacity. The U.S. had 28,296 metric t/d. Canadian figures represent a drop of 8,203 metric t/d (-21%); the U.S., an increase of 2,447 metric t/d ( + 9.5%)

Total worldwide sulfur-recovery capacity in 1989 fell to 92,027 metric t/d, off by 2,552 metric t/d (-2.7%).

The rest of the non-Communist world's sulfur-recovery capacity fell to 33,081 metric t/d, down 4,787 (- 12.6%).

Canada produced 16,344 metric t/d of sulfur in 1989; the U.S., 9,014 metric t/d.

Total 1989 world production of petroleum-derived sulfur, including Canada and the U.S., stood at 92,027 metric t/d, off from figures for 1988 by 2,552 metric t/d (-2.7%).