WORLDWIDE GAS PROCESSING ENJOYS SOLID 1991

Warren R. True
Pipeline/Gas Processing Editor

Worldwide gas-processing operations exhibited growth across the board last year as demand for NGLs, primarily as petrochemical feedstock and gasoline blendstock, pushed operators to increases in capacities, throughputs, and production.

Most evident were the gains in the U.S., Canada, and Latin America.

As has been true for several years, the U.S. continued to lead the rest of the world in gas-processing capacity and NGL production.

Outside the U.S., the rest of the world continued to grow, although not as markedly. Canada and the countries of Latin America led others with solid gains in capacities, gas processed, and NGLs produced.

These developments are reflected in the exclusive, plant-by-plant, worldwide gas-processing survey (p. 62) along with an international survey of petroleum-derived sulfur recovery (p. 96).

Last year, one major plant in the Caribbean came on stream, adding 650 MMcfd of capacity and producing almost 10,000 b/d of product. By the time of next year's report, a major Canadian sour-gas plant near Calgary will be running.

Along with petrochemical demand, the most significant influence on gas-processing operations during 1991--and likely to continue for some time, especially in the Western Hemisphere--has been the move towards butanes as feedstock for plants producing methyl tertiary butyl ether (MTBE), a major oxygenate component for reformulated motor fuels.

INDUSTRY TRENDS

Gas-processing capacity worldwide (outside the republics of the Commonwealth of Independent States, Eastern Europe, and China) gained a respectable 3.6 bcfd last year compared with 1990.

Throughput gained almost 4 bcfd; production, nearly 6.8 million gpd (160,821 b/d; Table 1).

North America dominated activity last year with Canada and the U.S. accounting for 60% of worldwide gas-processing capacity, reporting 65% of the throughput, and producing 61.6% of the world's NGL.

The steady advance of worldwide gas plants, evident for 4 years through 1990, continued in 1991.

Last year, 1,494 plants were reported to be operating, representing a net gain of 16 worldwide with the U.S. losing 2.

For 1990, 1,478 were reported operating; for 1989, 1,475 were operating; for 1988, 1,424; for 1987, 1,407. That year represented a recent historic low.

Plant construction for 1991, which includes new plants and expansions and modifications of existing plants, remained strong (Table 2).

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

Worldwide natural-gas throughput for 1991 moved ahead by almost 4 bcfd (4.2%) over 1990.

Production of NGL showed a healthy increase from 1990, up 6.7 million gpd (160,821 b/d; 4.5%).

Canada and the U.S. continue to dominate world sulfur recovery, with more than 60% of available capacity.

In 1991, Canada led all countries and regions with 30% of total world capacity. Much 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 also near 39% of world capacity.

Although the shares of world sulfur-production capacity held by Canada and the U.S. remained the same last year, overall capacity worldwide increased.

U.S. PICTURE

Gas-processing capacity in the U.S. increased last year (up by 2.1 bcfd; 3.2%). And with the market for NGLs flourishing much of the year, throughput and production increased.

The U.S. in 1991 continued to hold the largest share of worldwide gas-processing capacity (44%), despite having only 4% of the world's gas reserves (OGJ, Dec. 30, 1991, pp. 48-49).

The growth in U.S. throughput and production last year continued patterns evident in 1990. The industry was relieved to experience another profitable year following the abysmal 1987-89 period (OGJ, July 9, 1990, p. 41; July 10, 1989, p. 33; and, Fig. 1).

U.S. plants operating in 1991 continued the slight shrinkage evident in 1990 when the industry returned to a downward trend after reversing a 5-year downward trend in 1989.

For 1991, 2 fewer plants were operating in the U.S. than in 1990 when there were 27 fewer plants operating in the U.S. than in 1989. For 1989, however, 19 more were in operation than in 1988.

Between 1986 and 1988, plants operated had dropped by 120 (-14%); since 1984, by 129 (-15%).

The U.S. capacity increase in 1991 follows a small increase in 1990 over 1989. Capacity in 1989 had held flat when compared with figures for 1988.

Since 1984, U.S. gas-processing capacity has gained slightly more than 2.5 bcfd (3.7%). Throughput, on the other hand, has increased by 6 bcfd (+15%); production, by more than 11.6 million gpd (275,400 b/d; +19.2%).

Throughput for 1991 increased over 1990 by 2.6 bcfd (5.8%) following a 1.7 bcfd (4%) rise in 1990 over that for 1989. Reported U.S. throughput has increased 5 years running.

Again in 1991, U.S. plant utilization improved to 66.1% following a 1990 utilization rate of 64.5%. Through 1990, this improvement had been slowing: 63.7% in 1989; 62.7% in 1988; 60.9% in 1987; and 55% in 1986.

Production of U.S. gas plants responded to higher NGL prices, driven mostly by petrochemical demand, and improved over 1990 production by 4.5 million gpd (106,240 b/d; 6.6%). This increase follows a smaller one for 1990 over figures for 1989: 2.9 million gpd (about 69,000 b/d; Fig. 1)..

STATE TRENDS

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

Before 1988, only capacity figures for Phillips' plants were available. OGJ estimated Phillips' state-by-state plant throughput figures as a percentage (80%) of rated capacities, while production figures were available only in aggregate.

State-by-state comparisons of U.S. throughput and production can therefore only be made for years following 1988.

Texas last year experienced a net increase in operating gas plants of 2, to 303, from 1990. That's still less than for 1989 (315), 1988 (311), and 1987 (325). This year's slight increase reverses a steady decline since 1983.

Texas' throughput was slightly less than 11 bcfd, up almost 500 MMcfd (4.8%) from 1989.

As usual, Texas' production far outstripped that of any state at almost 30 million gpd (707,183 b/d; +1.8%).

Texas' share of 1990 U.S. capacity remained where it lay for 1990, at 24.2%; of daily throughput, 23.6%. Of total daily U.S. 1991 NGL production, however, Texas declined marginally to 41%.

Louisiana's number of operating plants continued to decline last year, down by 6 from 1990. That year, 75 gas plants were reported to be operating, 5 fewer than in 1989.

Nonetheless, the state continued to lead all states in capacity with 18.8 bcfd (Texas having 17 bcfd) and surpassed Texas in 1991 with throughput of 12 bcfd.

Louisiana remained second in NGL production, however, with 10.6 million gpd (253,145 b/d). In all three categories, Louisiana experienced increases despite the net loss of 6 plants.

Louisiana's share of capacity was 27%, of throughput 26%, and of production 15%.

Louisiana and Texas held combined capacities in 1991 of 35.8 bcfd, representing 51% of total U.S. daily capacity; throughputs of 23 bcfd, slightly less than 50%; and NGL production of 4.3 million gpd (960,329 b/d), 56.3%.

Operators in Oklahoma reported growth from 1990 in processing capacity (by 464 MMcfd), in throughput (151 MMcfd), and in NGL production (1 million gpd; 23,869 b/d).

In 1991, demand for NGLs--primarily ethane and propane--was unexpectedly strong, especially for use as a petrochemical feedstock. This demand combined with pressure on butanes (isomerized and dehydrogenated) as feedstock for the growing number of MTBE plants to hold NGL prices at respectable levels for much of the year.

Prices for natural-gas in late 1991 and through first quarter 1992, however, sunk to near-record lows, forcing many operators to curtail or shut in production in some areas.

By the spring, however, spurred in part by unusually cool weather in the U.S., prices had rebounded.

Prospects appear good that demand for NGLs will remain firm as inventories are built up through this summer in anticipation of the heating season. This market will continue to compete with petrochemicals for supplies. And the demand specifically for isobutanes to produce MTBE will augment forces already at work to buoy demand and prices.

See accompanying articles (pp. 50 and 57.)

Assuming natural-gas prices continue to push toward $2/Mcf, production out of New Mexico (from special tax-credit gas through expanding interstate systems), Colorado (through the newly built Kern River Pipeline), Arkansas, and the Gulf Coast will improve.

WORLD ACTIVITY

Total gas-processing capacity for the world's plants outside the U.S. increased slightly in 1991, Oil & Gas Journal's data show. Throughput and production likewise improved slightly.

• Worldwide capacity outside the U.S. (and the C.I.S., Eastern Europe, and China) increased 1.4 bcfd (1.6%). in 1991 over 1990.

  Most regions showed gains of less than 1% with volume increases most apparent for Canada (862 MMcfd) and Latin America (650 MMcfd).

  Canadian companies for 1991 reported a total of 555 plants operating; for 1990, companies reported 539 plants operating (Fig. 2).

  Capacity increased in Canada, up 862 MMcfd (3.2%).

• Natural-gas throughput gains outside the U.S. exceeded 1.4 bcfd (2.8%) over non-U.S. throughput for 1990. Canada and Latin America showed the largest gains.

• Total production outside the U.S. also advanced almost 2.3 million gpd (54,581 b/d; 2.8%; Table 1). Canadian companies reported net gains over 1990 in production of almost 2 million gpd; Latin American, of nearly 445,000 gpd.

Canadian companies' capacities represented 30% of the non-U.S. world total capacity, 20% of the throughputs, and 29% of the production.

The countries of Western Europe held 22% of non-U.S. worldwide gas-processing capacity last year; 10% of its throughput; and 7.6% of the production.

Latin America: 13% of non-U.S. capacity; 18.4% of throughput; 28% of production.

WHAT'S HAPPENING

The growth in U.S. capacity and markets for its production are indicated by the activities of Valero Natural Gas Partners L.P.

In May, the company completed an $11.5-million expansion of its gas plant near Freer, Tex., to 300 MMcfd. A 110-MMcfd turboexpander unit was installed to boost NGL recovery to 8,000 b/d.

Valero also is installing a 200-MMcfd turboexpander gas plant near Thompsonville, Tex. Construction on the $30.9-million project began in January with targeted completion of March 1993. It will produce 10,000 b/d of ethane and other NGLS.

With an eye toward the gasoline-blending markets, Enron Liquid Fuels Co., Houston, will build and operate one isomerization unit at each of its Bushton, Kan., and Geismar, La., gas plants.

Similarly, Warren Petroleum Co., Tulsa, is building an isomerization unit and a hydrotreater at its refractionation plant in Mont Belvieu, Tex. Completion is set for early next year. And Enterprise Products Co., Houston, is expanding its NGL fractionator at Mont Belvieu, increasing charge capacity by 30,000 b/d to 165,000 b/d by the middle of 1993.

In activity outside the U.S., Shell Canada has completed about 65% of its sprawling 300-MMcfd Caroline sour-gas removal and treating plant northwest of Calgary (OGJ, June 22, p. 23).

Caroline gas contains slightly more than 35% H2S. A Claus sulfur-recovery unit, followed by a SCOT tail-gas cleanup unit, will achieve an overall sulfur recovery of 99.8% under normal operating conditions.

The project will produce 17,500 b/d Of C5+, 4,100 tons/day of sulfur, 90 MMcfd of sales, gas, and 28,000 b/d of ethane, propane, and butane.

What Shell Canada says is the longest liquid-sulfur pipeline in the world--26 miles--has been installed between the gas plant and the sulfur plant south of the site.

Elsewhere, construction on Nigeria's first gas-processing plant is proceeding in the Obiafu and Obrikom oil fields about 90 km north of Port Harcourt on the Niger River delta (OGJ, July 29, 1991, p. 44). Targeted start-up for the $300 million plant is mid-1993.

Nigerian Agip Oil Co. Ltd. will operate the plant in a joint venture with Nigerian National Petroleum Corp. (NNPC) and Phillips Oil Co. (Nigeria) Ltd.

The cryogenic design will recover 85% of the ethane, 99% of the propane, and 100% of the butane. The plant will produce 25,800 b/d of NGL from associated gas currently being reinjected. Inlet-gas capacity has not been disclosed.

The plant will recovery as much as 480,000 tons/year of ethane, propane, and butane, and 150,000 tons/year of C5s.

NNPC will use the NGLs as feedstock for its $1 billion Eleme Petrochemicals Co. Ltd. plant being built near Port Harcourt.

Algeria's Sonatrach is building two LPG plants at Hassi Messaoud that will double Algerian LPG output to 8 million tons/year: 832,000 tons/year at Hassi Messaoud Sud and 485,000 tons/year at Hassi Messaoud Nord.

And Enron Gas Processing (U.K.) Ltd. will build a 400-MMcfd plant at Seal Sands on Teesside to process Central North Sea area gas.

Last year, Gas Authority of India Ltd. commissioned a gas plant at Bijaipur in Madhya Pradesh. It is designed to recover 8,000 b/d of LPGs.

And a major gas plant was dedicated in 1991 by Phoenix Park Gas Processors Ltd., Trinidad (OGJ, Oct. 28, 1991, p. 42). The plant has capacity to process 650 MMcfd and is currently running at about 535 MMcfd producing 4,100 b/d of propane, 2,500 b/d of butane, and 3,400 b/d of natural gasoline. Its total productive capacity is 13,500 b/d.

SULFUR RECOVERY

The H2S levels of Caroline and other Alberta gas streams suggest why, for 1991, Canada continued to lead the world in petroleum-derived sulfur recovery capacity with 30,173 tons/day, or more than 30% of worldwide capacity.

The U.S. held more than 29,500 tons/day of capacity in 1991, mostly in petroleum refineries.

Canadian figures represent a slight drop of 181 tons/day; the U.S., an increase of almost 2,000 tons/day.

Total worldwide sulfur-recovery capacity in 1991 rose to 99,911 tons/day, up almost 3,000 tons/day from 1990.

World sulfur-recovery capacity outside Canada and the U.S reached slightly more than 40,000 tons/day or about 3%.

Worldwide production of sulfur increased last year.

Production exclusive of Canada and the U.S. reached 20,996 tons/day, a fractional increase over figures for 1990.

Canada produced 17,052 tons/day of sulfur in 1991, up 1,282 tons/day; the U.S., 11,572 tons/day, up 1,398 tons/day.

Total 1991 world production of petroleum-derived sulfur including Canada and the U.S., stood at 49,520 tons/day, up by 2,854 tons/day over figures for 1990 production.

Copyright 1992 Oil & Gas Journal. All Rights Reserved.