Warren R. True
Pipeline/Gas Processing Editor
PG supplies for international trade will increase sharply through 2000 and begin to outstrip demand by 1997 or 1998. This outlook depends on several production projects proceeding as planned.
Leading the way to increased volumes are projects in Algeria, Nigeria, and Australia, among others.
Pun,in & Gertz, Dallas, projected this trend earlier this year at an international LPG seminar near Houston. Representatives from LPG supplying countries also presented information to support this view and subsequently supplied more specifics to OGJ in response to questions.
Overall, LPG supply will increase by 17.1% to 193.9 million metric tons in 1998 from 164.7 million metric tons in 1994 (Fig. 1).
Refinery production of LPG will remain relatively flat to 1998, growing only to 70.6 million metric tons from 62.4 million metric tons in 1994. The consulting company said projected gas-plant LPG production will increase to 123.3 million metric tons in 1998 from 102.3 million in 1994, a jump of 20.5% (Fig. 2).
LPG base demand, said Purvin & Gertz, will grow worldwide by 4.3%/year through 1998. Strongest growth will occur in such developing regions as Asia, the Middle East, and Latin America. Growth of LPG demand in developed regions will be flat.
Base demand is defined as demand in either premium or captive markets, or in both, which have little or no ability to switch to alterative fuels in response to price increases.
This demand will be insufficient to absorb the added volumes of anticipated LPG supplies expected in the latter half of this decade. After 1996, said Purvin & Gertz, surpluses in both propane and butane will grow.
The build-up in LPG supply through 1998 will result not only from stagnant demand in developed, industrialized markets, but also from completion and start-up of several major projects, some of which are discussed presently.
But Purvin & Gertz noted that whether some of these projects will be built is in some doubt.
AFRICAN SUPPLY TO JUMP
LPG production in Algeria will get a considerable boost later this decade when the first of several major projects comes on stream.
Sonatrach's M.A. Larbi-Cherif said that projected 1994 LPG production for the fields of Hassi R'Mel and Hassi Messaoud is 3.6 million metric tons/year (mty), lowest since 1989 (Table 1).
Sonatrach expects significant new production from Hassi Messaoud, North and South, and Rhourde Nouss (Phase B), said Larbi-Cherif. These gas fields will begin producing associated LPG in 1996 and 1997, respectively. Other production will come on stream from Hamra (1995), Gassi Touil (1997), and Oued Noumer (Phase B; 1995).
Additional Algerian LPG production in 1997 will be on the order of 3.12 million mty, an 87% increase over 1994 production.
With projects in Amenas, Alrar (West), Ohanet, and Tin Fouye Tabankort coming into production in 1999 and 2000, additional LPG production should peak in 2001 at nearly 5.6 mty then decline gradually to 3.9 mty by 2014 Compared with 1994 production.
Sonatrach says gas treatment plants for the production of condensate, LPG, and treated gas will be built in Amenas, Ohanet, Tin Fouye Tabankort, Rhoude Nouss, Gassi Touil, Oued Noumer, and Hassi R'Mel South.
Moreover, two new plants to separate LPG from produced gas are under construction at Hassi Messaoud North and South.
From newly developed gas fields in the Alrar region in Southeast Algeria near the Libyan border a 10 and 12-in. LPG pipeline is under construction. It will extend 988 km (614 miles) to Hassi R'Mel and be able to carry 6.75 million mty (220,000 b/d; Fig. 3).
Currently, pipelines varying in size from 12 to 24 in. can carry as much as 7 million mty of LPG 350 km (217 miles) from Hassi Messaoud to Hassi R'Mel and on 509 km to a fractionation plant at Arzew.
Capacity on the Hassi R'Mel-to-Arzew tine is being increased by additional pumping to 9 million mty from its current 6 million mty. This new capacity is to accommodate new LPG production further southeast at Alrar.
Another pipeline, 12-16 in. OD and 800 km long, can carry as much as 2.3 million mty from Haoud El Hamra into Arzew.
A breakdown of Algeria's major petroleum pipelines occurs in Table 2.
And an expansion is under way at the LPG separation plant at Bethioua, about 5 miles east of Arzew. Two trains are to be installed presently to treat 1 million mty.
Current capacity at Bethioua for fractionating LPG into commercial propane and butane is 4 million mty at Arzew 800,000 mty and at LNG plants at Arzew and Skikda a combined 1.2 million mty.
Virtually all of Algeria's LPG goes for export, while refinery production meets domestic demand (Fig. 4).
Also arriving on the export market in 1998 will be 1.5 million mty of LPG from Nigeria's Oso export project, according to Godwin Adamolekun, Mobil Producing Nigeria.
The production will come from 600 MMcfd of rich gas currently being reinjected in the Oso condensate project to maintain reservoir pressure and preserve the gas for later production.
The Oso project started up in late 1992 (OGJ, Dec. 21, 1992, p. 26) to produce 100,000 b/d of condensate. The project is a joint development of Mobil Producing Nigeria and the Nigerian National Petroleum Corp.
Mobil Producing says as much as 50,000 b/d of LPG can be stripped from the 600 MMcfd of gas produced with the condensate.
The company has plans to build what it believes would be the world's largest offshore extraction plant alongside current gas compression equipment in approximately 50 ft of water.
The LPG would be pumped into a 40-mile pipeline to an export terminal on Bonny Island. There, the stream would be separated into C3s, C4s, and C5 + s for export into waterbourne markets.
Construction of the offshore separation plant, pipeline, and terminal could begin later this year, says Mobil Producing, if financing for the project is quickly obtained.
This is one of the international LPG-export projects, however, whose completion in anything like the planned timetable Purvin & Gertz believes to be problematic.
AUSTRALIA
LPG exports from the Asia-Pacific region will take an 800,000 mty bump sometime in early 1996 when extraction and export facilities are completed at Australia's North West Shelf LNG project, according to Rich Farley, Chevron Asiatic Ltd.
In October 1993, joint-venture participants in North West Shelf -BP, BHP, Chevron, Japan Australia, Shell, and Woodside-agreed to build and operate LPG extraction and export facilities at the site.
Currently, LPG produced with natural gas from the North Rankin field offshore Western Australia is used to satisfy energy specifications in the projects' three products: LNG for Japan, domestic natural gas, and condensate.
Later this year, however, the Goodwyn field, some 23 km (14 miles) southwest of North Rankin, will come on stream with a much richer gas and a condensate-gas ratio of approximately 70 bbl/MMscf.
Additionally, in early 1996, two fields 30 km east of North Rankin will start up. Chevron Asiatic Ltd. estimates these fields contain about 200,000 bbl of recoverable oil and are rich in LPG.
LPG from these two developments will exceed Woodside's product specifications. An LPG export scheme was therefore conceived.
In fact, excess fractionation capacity at the existing LNG plant meant that the only new facilities needed would be storage tanks, a chiller, a new jetty, and associated pipe works.
Construction completion targets Jan. 1, 1996, at an estimated cost of $240 million (U. S.).
Two LPG storage tanks are currently under construction, both to have inner carbon-steel lining and cement outer lining. The butane tank will be able to store as much as 65,000 cu m; the propane tank, 52,000 cu m.
Chevron Asiatic said these storage-tank sizes reflect expected production ratios of these two NGLs and allow for 7 days' buffer storage to tank tops.
The jetty is being designed to allow a range of LPG tankers from 40,000 cu m to 100,000 cu m in capacity.
Production at 800,000 mty is anticipated to continue for at least 10 years with small liquids-rich fields nearby coming on stream in later years to maintain that rate.
NORTH AMERICA
Canadian natural gas production in 1993 was 5.5 tcf, 28.7% of U.S. production of 19.2 tcf. In 1992, Canadian natural gas production was 4.7 tcf, 27% of the U.S. total.
Major gas-plant expansions have recently occurred in Canada or are under way or planned for the main line straddle plants in western and eastern Alberta. These expansions combined with reduced domestic demand for LPG are behind the growing volumes of LPG available for export in the second half of this decade (Fig. 5).
Projections for Canadian LPG supply over the next 5 years (Fig. 6) reflect this increased export availability, said Purvin & Gertz' David J. Hawkins.
By far the most highly publicized project that will contribute to this supply growth is Shell Canada's Caroline project (OGJ, Mar. 15, P. 36; June 22, 1992, p. 23) that will produce up to 305,000 mty of ethane, 188,000 mty of propane, and 222,000 mty of butane, according to Purvin & Gertz figures.
Processing began in March 1993 at the plant which handles 300 MMcfd from the Caroline Devonian gas-condensate field.
In western Alberta, near Cochrane and astride pipelines taking gas to the Alberta-British Columbia border, Alberta Natural Gas Co. Ltd. is expanding its 1.3 bcfd plant to handle volumes needed for, among other markets, Pacific Gas Transmission's recently built expansion to the U.S. Pacific Northwest and California (OGJ, June 28, 1993, p. 28).
Planned capacity will be 2.2 bcfd.
Alberta Natural Gas is reviving a 900 MMcfd former lean-oil plant dormant since 1983 to complement three cryogenic plants. Targeted start-up for the $55 million (Canadian) Cochrane plant was third quarter this year.
At Empress in the eastern part of Alberta, Amoco Canada operates two plants totaling 4 bcfd (1-7 bcfd, Amoco and Pan-Canadian Petroleum Ltd.; and 2.3 bcfd, TransCanada PipeLines Ltd. and Pan-Alberta Gas and operated by Amoco).
In late 1993, applications were filed with the ERCB to add two plants at 800 MMcfd each by Amoco and Pan-Canadian. Upstream pipeline expansions on NOVA's system headed east suggest adequate supplies for both projects.
Joined with this increase in gas processing capacity and LPG production are projected reductions in demand for LPG, especially in Alberta, for EOR (Fig. 7). Additionally, a planned methyl tertiary butyl ether (MTBE) plant for Alberta will miss its 1996 start up date and thus free up more butane for export.
SOUTH AMERICA
Production of LPG in Argentina will reach 1.8 million mty in 1994, up from 1.62 million mty for 1992, according to YPF S.A.'s Oscar Roig. By 1998, production could reach as much as 1.9 million mty.
Of the 1994 production, 454,000 mty will be exported, up from 193,000 mty in 1992.
With current facilities, exports of LPG will grow to 463,000 mty in 1995, then begin to decline, reaching 312,000 mty in 1997 then rising again in 1998 to 332,000 mty.
Roig projects that with adequate investment, however, and especially with expansion of the country's gas processing plants, LPG exports in 1994 could reach slightly more than 700,000 mty and grow to as much as 766,000 mty by 1998 (Fig. 8). Total LPG production could reach 2.5 mty.
Only three gas processing plants operate in the country.
In Bahia Blanca, Province of Buenos Aires, Transportadora de Gas del Sur (TGS SA) operates the 706 MMcfd General Cerri turboexpander plant. It processes natural gas from Austral basin (Tierra del Fuego) and Neuquina.
The plant produces 230,000 mty of propane, 150,000 mty of butane.
Refinor S.A. operates another turboexpander plant in Campo Duran, Province of Salta. The plant can process up to 564 MMcfd of gas produced from Noroeste basin and purchased from Bolivia.
Propane production is 150,000 mty, butane 100,000 mty.
The third plant, also a turboexpander plant, lies in Loma la Lata, Province of Neuquen, and is operated by YPF S.A. With an inlet capacity of 212 MMcfd, it treats gas from the Neuquina basin and produces 70,000 mty of propane, 50,000 mty of butane.
The Neuquina basin could add 1.06 bcfd of additional natural gas.
Investment possibilities to increase production for export are the General Cerri plant and the Loma La Lata gas treatment plant.
Currently, most export volumes move from Bahia Blanca by tanker to Brazil, Uruguay, Peru, and eventually Chile and other countries of Latin America.
LPG exports move by truck to Chile from Loma La Lata in Neuquen province, Lujan de Cuyo in Mendoza province, San Lorenzo in Santa Fe. They also are trucked from La Plata in Buenos Aires province to Uruguay.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
