World's gas-processing expands; Canada, U.S. lead remains steady

Expansion of Coastal Field Services Co.'s Pelican gas plant near Patterson, La., is nearly complete. Work began late last year to bring the plant, which processes gas from producers in the western Gulf of Mexico, to 325 MMcfd inlet capacity. (Photograph courtesy of ANR Pipeline Co., Detroit; photograph by Brian Alfes)

• Table 3 - World's major gas reserves [ 29,100 bytes]
• Table 4 - Worlds's top 20 gas producing countries: 1997 [26,559 bytes]
• Table 5 - Worlds's top 10 countries NGL producing countries: 1997 [17,563 bytes]
• Fig. 1 - U.S. Gas-producing trends [53,821 bytes]
• Fig. 2 - U.S. Plant consolidation [53,160 bytes]

About this report...

Oil & Gas Journal's annual report on the world's gas-processing industry reflects healthy gains in 1997 in major regions' capacities and production. The U.S. and Canada both experienced increases as assets were consolidated and utilization remained high. North American and worldwide production of NGL was up, despite high natural-gas prices for much of the year that squeezed margins in the U.S. and Canada. Accompanying this report is an exclusive survey of the world's petroleum-derived sulfur production. North America's share of that capacity and production held firm last year, while the rest of the world's advanced.

Worldwide gas-processing capacity increased in 1997, led by expansions in North America, Latin America, and the Middle East.

Commensurate increases in throughput reflect record natural-gas demand for much of 1997. Liquids production also increased, despite squeezed and, in some regions, negative processing margins.

Canada and the U.S. continued to dominate the rest of the world in capacity, throughput, and NGL production (Table 1 117,263 bytes]), but those countries' combined share of world capacities and production was kept steady in 1997 by expansions elsewhere.

This linkage of the two North American giants is likely to grow even stronger and more tangible in the next 20-24 months as major gas-pipeline projects between the two countries increase the flow of gas into the U.S. and bring more liquids to the U.S. Midwest.

Gas-pipeline linkage between the U.S. and Mexico, the other North American presence, is also solidifying as U.S. pipelines conceive and implement more projects to carry U.S. gas into northern Mexico. At the same time, Mexico is expanding infrastructure to move NGL within its borders as domestic gas production increases and more cities install distribution systems.

On Jan. 1, 1998, U.S. gas-processing capacity stood at more than 73 bcfd; throughput for 1997 averaged more than 49.7 bcfd; and NGL production, more than 80 million gpd (2 million b/d).

Canadian gas-processing capacity at the beginning of the year exceeded 42 bcfd with an average of more than 33 bcfd going through the country's plants last year. NGL production approached 48 million gpd.

These figures are based on Oil & Gas Journal's most recent exclusive, plant-by-plant, worldwide gas-processing survey (p. 57) and its international survey of petroleum-derived sulfur recovery (p. 102).

For Canadian figures, OGJ's report supplements operator-supplied capacity and production data with figures from the (1) Alberta Energy & Utilities Board (AEUB), (2) British Columbia Ministry of Employment & Investment's Engineering and Operations Branch, and (3) Saskatchewan Ministry of Energy & Mines.

OGJ began incorporating AEUB data in 1994 for 1993. Specific comparisons with 1992 and earlier years must therefore proceed carefully because of lack of response by some operators. Provincial data, nonetheless, confirm general trends indicated in data reported for those years.

Gas-processing capacity outside Canada and the U.S. at the start of 1998 stood at a little more than 85 bcfd, up from nearly 83 bcfd at the beginning of 1997. In 1997, throughput averaged more than 53 bcfd, compared to 1996 throughput of more than 51 bcfd.

NGL production from countries other than Canada and the U.S. in 1997 averaged more than 85 million gpd, off somewhat from more than 86 million gpd of production in 1996.

Among regions outside Canada and the U.S., Western Europe held the most capacity: more than 23.6 bcfd. Countries of the Middle East (more than 18 bcfd) and those of the Asia-Pacific region (nearly 16 bcfd) increased capacities in 1997.

Latin American countries, led by a recovery of capacity in Mexico and new capacity in Argentina, increased capacity to more than 13.5 bcfd. Gains in NGL production were small but enough to keep the area in third place behind Canada and the U.S.

In petroleum-derived sulfur recovery, Canada and the U.S. continued to dominate the world in 1997, holding more than 55% of processing capacity and 61% of actual production.

For worldwide production of sulfur derived last year from refining and natural gas, Canada accounted for more than 36% of the overall total; the U.S., nearly 26%.

U.S. snapshot

High natural-gas prices in the U.S. squeezed margins for gas processors through most of 1997. This occurred amid ongoing industry efforts to align itself to handle expected liquids coming ashore in Louisiana from prospective deepwater Gulf of Mexico development. (More on specific projects later.)

Additionally, moderate shifting and consolidation of assets continued last year, with Koch Industries being most visible in expanding its pipeline and processing holdings.

The U.S. share of world gas-processing capacity remained flat as of Jan. 1, 1998, with slightly more than 35%, even though actual capacity rose by more than 3% for the year.

U.S. NGL production, as a portion of world production, held at 37%, despite increasing more than 5% on the year. The country's production remains the largest in the world, with Canada holding more than 22% of production in 1997.

Canadian capacity and throughput, as portions of the world's, both held level in 1997, despite absolute increases of more than 5% for both.

OGJ data for 1997, based on its exclusive survey and other published sources, indicate that nearly 1,600 gas plants were operating worldwide, 615 plants in the U.S., 717 in Canada. Table 2 [15,066 bytes] indicates a relatively flat trend in new plants, but that situation should change especially for North America and Latin America.

If the effects of the Asian financial crisis are short-lived and relatively mild, that region may witness resurgence in capital plans involving new capacity in the form of new plants or expansions of existing ones.

State-by-state

Slightly fewer plants in the U.S. were operating at the end of 1997 than began the year.

Utilization of U.S. capacity dropped slightly last year, to 70.7% from 72% for 1996. In 1995, it stood at 70%. OGJ data indicate an historic low utilization rate, at least for the modern era of deregulated natural-gas prices, occurred in 1986: 55%.

Louisiana leads other U.S. states in gas-processing capacity with more than 17.6 bcfd, followed closely by Texas with slightly more than 17 bcfd. The two states between them hold nearly 35 bcfd (49.5%) of the nation's capacity.

Considerable planning was under way last year and is continuing in 1998 to accommodate expected increases in wet gas coming ashore in Louisiana from deepwater development offshore Gulf of Mexico.

Much of this development is for oil with large quantities of associated, therefore wet, gas. Existing Louisiana plants and pipeline infrastructure would be pushed beyond capacities.

At its annual International LPG Seminar in March 1998, Purvin & Gertz Inc., Houston, said that more than 40 production projects were under development in the U.S. Gulf of Mexico, most for oil. Crude-oil production will likely increase by more than 800,000 b/d; natural-gas production could rise by 3-4 bcfd.

Purvin & Gertz said that NGL production from Louisiana gas-processing plants, which stood at slightly less than 300,000 b/d in 1995, will reach about 350,000 b/d in 2000 and more than 450,000 by 2005.

For Texas, which contains more natural-gas processing plants than the entire U.S. contains crude-oil refineries, and Louisiana, the two states contain nearly half of all U.S. gas-processing plants.

In 1997, these plants produced nearly 57% of the entire U.S. NGL production. Texas alone produced more than 42 %.

Canadian plans advance

Gas producers in the Western Canadian Sedimentary Basin of eastern British Columbia and western Alberta can now feel confident that their gas will, at some near-term date, make its way out of the low-price regime of Western Canada and into the more attractive markets of the U.S. Midwest.

Although the Alliance pipeline, prime mover in the shake-up in the Alberta natural-gas transportation industry in the last 2 years, is somewhat behind its desired schedule, it seems certain now that by 2000 it will be moving as much as 1.3 bcfd of gas under high pressure to a new gas-processing hub near Chicago.

There, liquids which will have by-passed the huge Empress straddle complex near Medicine Hat, Alta., will be stripped and fed to fractionators and end users in the region.

On the eastern side of the country, natural gas from the Sable Island project, offshore Nova Scotia, will begin moving volumes ashore and towards U.S. markets by late 1999, with full start-up scheduled for early 2000.

Majority owner Mobil Oil Canada told attendees of the Purvin & Gertz LPG Seminar that initial design calls for 578 MMcfd of sales gas with more than 20,000 b/d of liquids produced (6,270 b/d C₃; 3,667 b/d C₄; and 10,358 b/d C₅+).

The liquids will be separated from the gas as it comes ashore at the Goldboro, Guysborough County, N.S., gas plant. They will then be sent via an 8-in., 40-mile pipeline to a fractionation plant in the Point Tupper area.

Whatever the final picture of Canadian, especially Albertan, gas processing, it seems clear the province's plants (which alone outnumber all those in the U.S.) will continue to thrive as Alberta natural-gas production ramps up in response to higher prices.

Total Canadian gas-processing capacity at Jan. 1, 1998, stood at more than 42.5 bcfd; throughput for 1997 averaged more than 33 bcfd; NGL production, nearly 47.5 gpd (more than 10,000 b/d).

Canadian plant utilization in 1997 was more than 78%.

OGJ's survey and governmental data from Canada's three major producing provinces indicated that 717 plants were operating in Canada in 1997. Alberta alone has 673 plants, with more than 38.5 bcfd capacity.

North American activity

Consolidation in the U.S. gas-processing industry has continued with recent activity involving one of the country's largest privately held companies.

Koch Midstream Processing Co., subsidiary of Koch Industries Inc., Wichita, Kan., announced earlier this year it had acquired remaining ownership in 11 gas-processing plants in western Oklahoma from Oneok Products Co., a unit of Tulsa-based Oneok Inc.

Koch Midstream had previously acquired 50% ownership in the plants in November 1997 after purchasing the Delhi Group from USX Corp. The plants have gas-inlet capacity of 475 MMcfd and NGL production capacity of 31,000 b/d.

Late in 1997, Koch Oil Co. purchased ARCO Western Energy's North Coles Levee gas processing and NGL fractionation plant near Bakersfield, Calif. Capacities are 20 MMcfd of inlet gas and 300,000 gpd of NGL.

In other companies, Texaco Exploration & Production Inc. and NGC Corp. subsidiary Warren Petroleum Co. LP, Houston, have been discussing the possible merger of gas gathering and processing assets in New Mexico and Texas.

The limited liability company would oversee Texaco's Buckeye and Eunice gathering systems and plants and Warren's Eunice, Monument, and Saunders complex gathering systems and plants.

Anticipated increased liquids production from future production offshore Gulf of Mexico has prompted several processing agreements and plans for additional capacity, especially around Mobile Bay, Ala.

Williams Cos. recently agreed with Exxon Co. USA to process 300 MMcfd of natural gas at Williams' NGL extraction plant to be built near Coden, Ala. The plant, expected to be in service by first quarter 1999, will have 600 MMcfd inlet capacity.

Four other companies have recently formed a joint venture to fractionate NGL produced in the Mobile Bay/Pascagoula, Miss., area. Amoco Oil Co., Enterprise Products Co., Exxon Chemical Co., and Williams Field Services plan to form Baton Rouge Fractionators LLC to build and operate a 60,000 b/d NGL fractionator near Baton Rouge.

Start-up is scheduled for March 1999. Enterprise will operate the plant and manage fractionation services.

Also, Mobile Bay Processing Partners (MBPP), Houston, last year agreed with Mobil Exploration & Producing U.S. Inc. to process as much as 300 MMcfd of Mobile Bay area gas sweetened at Mobil's plant near Coden.

MBPP's planned cryogenic plant will recover more than 90% of ethane and virtually all heavier liquids from the gas stream, said the company. Construction is to be completed this month.

The design called for as many as three trains with total capacity of 900 MMcfd, including a 300 MMcfd train also slated to start up this summer for producers in the gulf's East Main Pass and lower Viosca Knoll areas.

Elsewhere along the U.S. Gulf Coast, Promix LLC, a joint venture of Koch Hydrocarbon Southeast Inc., Dow Hydrocarbons & Resources Inc., and Shell Fractionation Inc., announced late last year plans to double capacity at Promix' Napoleonville, La., NGL plant.

Capacity prior to expansion was 62,500 b/d of NGL; completion is set for mid-1998.

Also, Warren Petroleum Co. LP, Houston, has under construction a $57 million NGL fractionation plant near Lake Charles, La., slated for completion later this year.

The 55,000 b/d plant will process liquids from gulf gas production and produce C₂, C₃, and C₄/C₅ mix for area petrochemical plants and refineries.

The plant will be connected to Warren's 300-mile NGL gathering system, 11 underground storage facilities, and Warren's 12-in., 80,000 b/d liquids pipeline to Mont Belvieu, Tex.

And Coastal Field Services Co., a unit of Coastal Corp., Houston, is nearing completion on expansion of its Pelican gas plant near Patterson, La., to 325 MMcfd from 235 MMcfd. The plant processes gas from producers in the western Gulf of Mexico.

In Canada, Novagas Canada Corp., Calgary, has been given the green light from British Columbia to build a 160-MMcfd gas plant at Stoddart, near Fort St. John. Construction on the gas plant and related pipelines begins immediately.

Gas and liquids will be shipped through two parallel 69-km pipelines (16-in. gas; 6-in. liquids) to the Younger gas plant at Taylor, B.C., and to Imperial Oil Ltd.'s Redwater, Alta., refinery.

Novagas Canada is also nearing completion on a 120-MMcfd plant, under an agreement with Canadian Natural Resources Ltd. and Remington Energy Inc., in West Stoddart oil field, about 30 miles northwest of Fort St. John, B.C. A 36-mile pipeline will ship sweet gas for further processing to the Novagas plant at Taylor, B.C.

And in March 1998, Novagas Canada agreed to purchase a 43.3% working interest in the Younger NGL extraction plant at Taylor from Taylor Gas Liquids Fund and PanCanadian Petroleum Ltd. for $30 million (C).

Novagas Canada also will pay an equivalent share to expand the plant's processing capability to 750 MMcfd from 400 MMcfd, making it the largest liquids extraction plant in British Columbia, it said.

Also, Novagas Canada has assumed operation and control of the Harmattan gas-processing plant in Alberta, a 380-MMcfd plant formerly majority-owned by Mobil Oil Canada Ltd. Novagas Canada has had plans to invest about $35 million to improve NGL and sulfur recovery. Modifications are to be complete by yearend 1998.

In one of the most significant moves in the last year, Suncor Energy Inc. and Novagas Canada have joined in a $164 million (C) natural-gas extraction project that includes building a Novagas extraction plant at the Suncor oilsands plant in northern Alberta.

The NGL will be shipped to the Edmonton area through a 239-mile Suncor pipeline. And a new NGL fractionation tower will be installed at Novagas' Redwater, Alta., facility. Target completion is fall 1999.

Novagas said the joint project is the first time NGL recovered from oilsands production will be separated and sold.

Meanwhile on the eastern side of the country, Sable Offshore Energy Project (SOEP) let a $2 million (C) contract to Accent Engineering Consultants Inc., Halifax, for engineering on the gas-fractionation plant at Point Tupper, mentioned previously.

Major news for LPG traded in the Atlantic Basin was that in mid-1997, Petroleos Mexicanos (Pemex) restarted its Cactus, Chiapas state, gas plant damaged a year earlier in an explosion that killed seven people (OGJ, Aug. 5, 1996, p. 22).

New plant inlet capacity is 630 MMcfd, up from 500 MMcfd. The blast knocked out two units and cost Pemex about $200 million in lost production and repairs. Unit No. 1 was rebuilt with improved technology to handle gas feeds that two units handled before the incident.

World activity

Elsewhere in Latin America, a Total-led consortium will build a plant to extract liquids from natural gas produced from Canadon Alfa and Ara fields in Tierra del Fuego. The $70-million plant, to start up in 1999, will be able to produce 250,000 metric tons/year of LPG and 60,000 tons/year of natural gasoline.

LPG will be exported through a pipeline owned by Chilean state firm Empresa Nacional del Petroleo (ENAP) to a separation plant at Cabo Negro, Chile. ENAP will purchase the propane, and the butane will be sold to Petroleo Brasileiro SA. The natural gasoline will be blended with crude from the Total-operated Hidra offshore field.

In Western Europe, Statoil is building an NGL processing plant and expanding condensate-processing facilities at Statoil's Mongstad refinery. Work will be completed by late 1999.

The Statoil-led Vestprosess group (Statoil 58%, Saga Petroleum AS 17%, Mobil Development Norway AS 10%, Norske Shell AS 8%, Total Norge AS 5%, and Norske Conoco AS 2%) plans to develop a pipeline to carry raw NGL and condensate from Sture and Kollsnes terminals to Mongstad.

In Asia, Malaysia's state-owned Petronas Carigali Sdn. Bhd. is bringing on stream a $643.26 million complex of two new gas-processing plants at Tok Arun, Terengganu, each capable of processing 500 MMcfd, with potential combined capacity of 1.5 bcfd.

Combined with Petronas' four other plants at Kertih, Malaysia will have 2.7 bcfd maximum gas processing capacity.

Petronas also will build two new pipelines. The first, slated for completion by 2000, will extend 510 km to link Kertih, Kuantan, and Port Klang. The second, 710-km line will link Kertih, Pulau Pinang, and Pauh in Kertih.

Also, Viet Nam's state-owned Petrovietnam has hired Japan's NKK Corp. and South Korea's Samsung Engineering to build a gas-processing plant at Vung Tau, 80 km southeast of Ho Chi Minh City.

The 150-MMcfd gas plant will receive natural gas from Bach Ho field in the South China Sea and recover propane, butane, and condensate. Completion is set for mid-1999.

Sulfur recovery

Petroleum-derived sulfur production capacity worldwide increased last year to more than 122,800 metric tons/day (mtd) from more than 118,400 mtd in 1996.

Canada reported more than 33,500 mtd capacity in 1997 (27.3% of the world's total); the U.S. held more than 34,500 mtd (28.1% of the world's total).

Worldwide capacity in 1997 outside the U.S. and Canada was up to more than 54,000 mtd from slightly more than 50,000 in 1996.

Worldwide production of petroleum-derived sulfur increased last year to nearly 60,500 mtd, from 59,700 mtd in 1996.

Canada accounted for nearly 22,000 mtd; the U.S., for more than 15,500 mtd.

Copyright 1998 Oil & Gas Journal. All Rights Reserved.