U.S. gas processing consolidates while world tempo increases

NGC Corp.'s Texarkana gas processing and treatment plant (Miller County, Ark.) produces 588 b/d of NGL with an inlet capacity of 22 MMcfd.

About this report...
Gas-processing capacities and production outside North America began closing the gap on U.S. and Canadian industries in 1995, as U.S. companies consolidated facilities. Nevertheless, Canada and the U.S. continue to lead the rest of the world in gas-processing capacity, gas throughput, and NGL production along with processing capacity and production of petroleum-derived sulfur. This theme toward greater capacity and production outside North America is echoed in a major overview article by Purvin & Gertz Inc. The consulting company sees international demand, especially in Asia, driving expansion in worldwide NGL trade, but North American supplies falling further behind growth in regional petrochemical demand.

Consolidation characterized U.S. gas processing in 1995, while plants in Canada, Western Europe, Middle East, and Asia displayed growth in capacities and NGL production.

The U.S. and Canada continued to lead the rest of the world in capacity, throughput, and NGL production, although by smaller margins (Table 1 [24385 bytes]).

A rash of consolidations underway in the U.S. among gatherers and processsors, shrunk capacity by more than 1.8 bcfd (-2.6%) and production by nearly 950,000 gpd (ǃ.3%).

U.S. capacity stood at slightly more than 69 bcfd as of Jan. 1, 1996; throughput for 1995 averaged nearly 48.4 bcfd; and NGL production exceeded 74,550 gpd.

Canada saw its gas-processing capacity increase last year by more than 2.3 bcfd (6.3%) led by a handful of major expansions at large Alberta scavanger plants that straddle major gas export pipelines to the U.S.

Gas-processing capacity in Canada as of Jan. 1 was nearly 39 bcfd; throughput for 1995 averaged nearly 30.5 bcfd; NGL production fell to slightly more than 43,000 gpd.

Oil & Gas Journal's most recent exclusive, plant-by-plant, worldwide gas-processing survey (p. 65) and its international survey of petroleum-derived sulfur recovery (p. 110) reflect these trends.

This report supplements operator-supplied capacity and production data for Alberta with figures from the Alberta Energy and Utilities Board (AEUB), formerly the Energy Resources Conservation Board (ERCB).

OGJ began incorporating these data in the 1994 report for 1993. Specific comparisons with 1992 or earlier years are therefore questionable because of lack of response by some operators. Nonetheless, AEUB data confirm general trends indicated in data reported for those years.

Outside Canada and the U.S., gas-processing capacity at the beginning of 1996 was fractionally more than 79 bcfd. During 1995 throughput averaged nearly 46.7 bcfd. Non-Canadian and non-U.S. NGL production was almost 88.4 million gpd (2.1 million b/d) last year.

Among regions outside Canada and the U.S., Western Europe retained the most processing capacity (23 bcfd) followed by countries of the Middle East (15.8 bcfd). Countries that make up Asia-Pacific had more than 15.2 bcfd of capacity and processed more gas (10.8 bcfd). Latin America processed nearly 10 bcfd.

Latin America reported more NGL production (27.5 million gpd; nearly 656,000 b/d) than other regions outside the U.S. and Canada.

Canada and the U.S. continued to lead the world in petroleum-derived sulfur recovery in 1995, holding more than 58% of processing capacity and 57% of actual production.

For worldwide production of sulfur-derived last year from refining and natural gas, Canada accounted for more than 33% of the overall total; the U.S., more than 24%.

U.S. lead shrinks

Ownership of gathering and processing assets in the U.S. has been shifting almost faster than one's ability to keep track of it. And rumors of more mergers circulate weekly.

A snapshot of the industry on Jan. 1 shows the U.S.' leading share of the world's gas-processing capacity shrunk to 37% from 39% for 1994. (Table 4 [24830 bytes]presents U.S. natural-gas production.) Its share of gas processed was 38%, down from nearly 41% in 1994.

NGL production for 1995, still the largest portion of the world's production, fell to 36% from 38.5% for 1994.

All of this resulted from a relatively flat U.S. industry for the year compared to a burgeoning one outside North America.

Canada's shares of capacity (20.8%), throughput (24.3%), and production (20.9%) kept it firmly in second place among the world's regions and ensured that most of the world's capacity (57.8%), throughput (62.3%), and NGL production (56.9%) lie in North America, despite gains elsewhere.

OGJ data for 1995 indicate 1,548 operating gas plants worldwide; 623 plants in the U.S., 675 in Canada. Recent OGJ data for new-plant construction show a drop in activity compared with a year ago (Table 2 [31154 bytes]).

Worldwide natural-gas reserves showed a decline in 1995 (Table 3 [18323 bytes]), while gas production (Table 4 [24830 bytes]) increased.

Finally, Table 5 [55408 bytes] presents the top 10 NGL-producing nations in the world.

U.S. mergers

Last year saw the completion of the merger of Natural Gas Clearinghouse Inc., Houston, and Trident NGL Holding Ltd., The Woodlands, Tex., to form NGC Corp.

It was, at that time, one of the largest combinations of several that took place among U.S. gas gathering and processing companies. And it suggested that more serious redeployment and consolidation of assets among gas processors was yet to come.

The other shoe dropped earlier this year with announcement of two major mergers that will redistribute and likely further shrink U.S. gas processing capacity.

In January, Chevron Corp. and NGC Corp. began merger talks to form North America's largest gas and NGL marketer.

The deal will combine all NGC's operations with most of Chevron's Houston gas business unit and all of Chevron's Warren Petroleum Co. subsidiary in Tulsa. The exception is Warren's Venice, La., processing complex.

Envisioned is a merger of Warren and Chevron's gas business unit with NGC's mid-stream and energy-marketing operations.

NGC will market almost all of Chevron's North American gas, NGL, and electrical power. It also will manage all feedstock supplies-gas, NGL, and electricity-for Chevron's refineries, chemical plants, and other facilities in North America.

The reformed NGC gas division will operate under Natural Gas Clearinghouse, while combined NGL assets would operate as Warren Petroleum. NGC had operated its NGL assets as Trident NGL Inc.

At its announcement, the deal was valued in the neighborhood of $740 million.

NGC will become North America's largest gas marketer, with sales amounting to more than 10 bcfd; NGC had been marketing about 7 bcfd through operating units and affiliates.

The merged companies will be the continent's largest NGL processor and marketer, with NGL production of 140,000 b/d and total sales of 470,000 b/d. The company will own, operate, or have major interest in 62 gas plants.

A few days after NGC's announcement, units of Mobil Corp. and PanEnergy Corp., Houston, agreed on the sale of Mobil's U.S. natural gas gathering and processing assets to PanEnergy. The deal is worth about $300 million.

PanEnergy will acquire about 2,600 miles of pipeline as well as Mobil's seven operated natural-gas processing and fractionation plants in Texas and Oklahoma (848 MMcfd combined capacities).

PanEnergy will also acquire substantially all Mobil's equity interest in 17 other gas gathering and processing assets operated by other companies in Texas, Utah, Louisiana, and Oklahoma.

The combination will market approximately 7.6 bcfd of gas and 93,000 b/d of NGL.

In the states

With mergers, sales, and consolidations, U.S. plant utilization rate in 1995 stood at 70%, up from 67.4% in 1994 and 66.3% in 1993. In 1986, the rate was 55%.

Louisiana retained its lead in processing capacity and throughput last year with its string of large gas plants along the Gulf Coast taking gas from nearby onshore and offshore fields.

Companies in Texas operated by far the largest number of plants, as in years past, 38.5% of all plants operated in the U.S. Those plants produced 40.8% of the country's NGLs in 1995.

Louisiana and Texas hold more than 34.2 bcfd (50%) of U.S. capacity and 24.2 bcfd (50%) of throughput for the year. In both states, 305 plants were reported to be operating at Jan. 1, nearly half of the 623 reported operating in the entire U.S.

1994 NGL production in Texas, however, was greater than that of any other state, yielding more than 30 million gpd (nearly 725 b/d).

Totals for the three nearest NGL-producing states-Louisiana (11.4 million gpd), Oklahoma (7.3 million gpd), and New Mexico (6.8 million gpd)-made up 25.6 million gpd (more than 609,000 b/d), or more than 34% of total U.S. production.

Here's a look at other activity:

• Transok Inc., Tulsa, began construction on a 120-MMcfd gas processing plant east of Rush Springs, Okla.

• Cornerstone Natural Gas Inc. last year restarted its refurbished Iola gas-processing plant in Grimes County, Tex., that had been shut down in 1988 because of falling production from old wells in the area.

  Cornerstone has hiked capacity at the plant to 40 MMcfd from 30 MMcfd. At capacity, NGL recovery will be 120,000 gpd.

• Also last year and therefore before its merger agreement with PanEnergy, Mobil Natural Gas Inc. agreed with Western Resources Inc. to develop a 200-MMcfd gas processing plant and gas-gathering system in the Hugoton of Southwest Kansas to market services to third parties.

  The plant would be anchored by Mobil production and operated by Mobil. Western Resources' Astra Resources unit will lay and operate about 47 miles of gathering lines, as well as compressor stations. The system will connect with Western's Midcontinent market center, providing shippers with five interstate pipeline options.

• And NGC Corp. is building and will operate a 100-MMcfd cryo plant at Waskom, Tex., for Waskom Gas Processing Co., a venture of NGC's Trident division and NorAm Energy Corp. unit NorAm Field Services Corp.

  With ethane recovery, residue-gas volumes from the new plant will reach 83 MMcfd, NGL output 190,000 gpd. It is to be operating by yearend 1996 and cost $12-18 million. An existing plant at the site will be shut down once the new plant is built.

• Earlier this year, William Field Services Group doubled capacity of the Echo Springs, Wyo., gas-processing complex that it owns with Union Pacific Resources. Capacity increased to 240 MMcfd with the addition of a cryogenic unit and 17,000-hp compression.

  The complex is tied to the transmission systems of Williams Natural Gas Co. and Colorado Interstate Gas Co. The latter has added a 12-in. loop to boost Echo Springs' takeaway capacity to 300 MMcfd.

• ANGC Corp., unit of PanEnergy, completed this year a $13 million purchase of three cryogenic and gas-processing plants from Mitchell Energy & Development Corp., The Woodlands, Tex.

  The deal includes Mitchell's wholly owned Dagger Draw and Pecos Diamond plants in Eddy County, N.M., and its 50% interest in a Port Arthur, Tex., plant. The New Mexico plants have capacities of 40 MMcfd each, the Port Arthur plant, currently operated by ANGC, 150 MMcfd. Combined NGL output of the plants is about 2,100 b/d.

• Conoco Inc. bought from Meridian Oil Inc. the Wingate gas-processing assets in northwest New Mexico, about 70 miles south of Conoco's San Juan gas processing plant.

  The assets include 30,000 b/d of fractionation capacity, a 200-mile NGL line, and 5 million gal of product storage capacity. The deal has boosted Conoco's total U.S. fractionation capacity to 75,000 b/d.

Closing the gap

Canada continued in 1995 to be the center of gas processing outside the U.S. Its industry, based almost entirely (90% of capacity) in the Province of Alberta, kept pace with capacity growths outside North America but not with NGL production, however. Much Canadian NGL continued to lack convenient markets.

In 1995, Canadian plant utilization was 78.21%, about level with that for 1994; Alberta's in 1995, 78.4%.

OGJ's survey and data from Alberta's AEUB indicated that 675 plants were operating in Canada in 1995, compared to 677 in 1994; processing capacity approached 39 bcfd; gas processed was nearly 30.5 bcfd; and NGL production exceeded 43 million gpd (1.02 million b/d).

Alberta alone has 622 plants with nearly 34.9 bcfd in capacity that processed almost 27.4 bcfd of gas.

With virtually no growth in the U.S. industry, the rest of the world closed the processing gap last year.

In 1995, Canada's capacity as a portion of the world's outside the U.S. was 33%, roughly the same as in 1994. Total world capacity outside the U.S., however, grew by more than 7 bcfd (6.6%).

In NGL production, Canada's represented nearly 32.8% of the world's in 1995; in 1994, it made up more than 36%.

Largest gains in capacity were made in the Middle East-more than 4 bcfd (34%; see accompanying article by Purvin & Gertz.).

Operating companies in Asia-Pacific realized the largest gains in NGL production: 5.5 million gpd on increased throughput of nearly 1.4 bcfd.

Following are some of developments in 1995 outside the U.S.:

• Conwest Exploration Co. Ltd., Calgary, commissioned a gas plant at Sexsmith, Alta., to handle about 80 MMcfd. This volume was set to rise to 150 MMcfd as the plant reached capacity by yearend.

  Conwest holds permits to operate the plant at 210 MMcfd, a level it expected to reach early this year.

• Also this year, Morrison Petroleum Ltd., Calgary, is building a $48 million (Canadian) plant in the Bulrush gas field, 65 miles north of Fort St. John, B.C. The raw gas processing plant and related pipeline will be completed by yearend.

• After regulatory and judicial battles last year, Westcoast Energy Inc., Vancouver, B.C., this year withdrew plans to build a $395 million (Canadian) grassroots gas-processing plant at Aitken Creek, north of Fort St. John, B.C. The company said low gas prices and permitting delays killed producer interest.

  Westcoast will proceed with a 70-MMcfd expansion at its Jedney plant, north of Aitken Creek. Another 20-MMcfd expansion of the existing Aitken Creek plant and expansion of the McMahon gas plant southeast of Fort St. John will add as much as 50 MMcfd capacity to Westcoast's system.

Elsewhere:

• Petronas Gas Bhd. last year let a $610 million contract to a group led by Snamprogetti SpA to build a grassroots gas processing complex at Kg Tok Arun, Paka, Dungun, and Terengganu Darul Iman on the Malay Peninsula's eastern coast.

  The project includes two 500-MMcfd processing plants for recovery and fractionation of ethane, propane, butane, and natural gasoline, a 500-MMcfd treatment plant for gas dewpoint control, product export facilities at the Kerteh marine terminal, and connecting pipelines.

  The contract called for gas sales by 1998 and project completion by 1999.

• Petronas also let a 3-year project management contract to Foster Wheeler (Malaysia) Sdn. Bhd. for an LPG plant at the Bintulu LNG export complex in Sarawak. The LPG plant is to start up in early 1998. No figures for capacity or project cost were released.

• By March of this year, National Iranian Gas Co. was to start up a 16 million cu m/day gas-processing plant in the southern port of Bandar Abbas. The plant will receive gas from Sarkhoun gas field.

• Also in Asia, Occidental of Bangladesh this year licensed Institut Franais du Petrole's (IPF) Ifpexol technology for use in a gas-processing plant it will build in Jalalabad gas field near Sylhet, Bangladesh. Plans call for the plant to start up in next year at initial throughput of 125 MMscfd, expandable to 250 MMscfd.

• In the North Sea, Mobil North Sea Ltd. has embarked on an expansion of its St. Fergus (Scotland) gas terminal. Fluor Daniel Ltd. is under contract to design, procure, build, and commission a 740-MMcfd plant to process gas from Britannia field, due on stream in October 1998.

• In Africa this year, Calub Gas Share Co. has hired Parsons Process Group Inc.'s London unit to design and manage construction for a gas-processing plant tied to Ethiopia's first commercial hydrocarbon development, a natural-gas field in the Ogaden basin.

  When complete in 1998, the $50-million plant will handle gas and condensate and produce LPG, kerosene, diesel, and gasoline.

Sulfur recovery

Petroleum-derived sulfur production capacity worldwide continued to rise last year, to more than 118,600 metric tons/day (mtd) from more than 115,500 mtd in 1994.

Canada reported more than 35,000 mtd capacity in 1995 (29.6% of the world's total), up from more than 32,500 mtd capacity in 1994. The U.S. held nearly 34,000 mtd (28.6% of the world's total), up from more than 31,800 mtd in 1994.

Worldwide capacity outside the U.S. and Canada fell to more than 49,500 mtd from more than 51,100 mtd in 1994.

Worldwide production of petroleum-derived sulfur decreased last year to more than 58,700 mtd from 60,000 mtd in 1994.

Canada accounted for almost 19,500 mtd; the U.S., for slightly more than 14,000 mtd.

Copyright 1996 Oil & Gas Journal. All Rights Reserved.