leaking money

Leaking MoneyPotential Revenues from Reduction

of Natural Gas and Condensate Emissions in North Central Texas

Melanie Sattler, Ph.D., P.E.May 2011

Downwinders at Risk Education Fund

About the Author - Dr. Melanie Sattler has over 15 years of professional experience with air quality issues, including experience in consulting, academia, and government. She has published 50 peer-reviewed conference proceeding papers and journal articles related to air quality and other aspects of environmental engineering.

Dr. Sattler earned her Ph.D. in environmental engineering, with a focus on air quality, from the University of Texas at Austin. She is a registered professional engineer in the State of Texas.

Founded in 1995, the Downwinders at Risk Education Fund is dedicated to research and public outreach on issues of public health, air pollution and the environment.

PO Box 763844 Dallas TX 75376 972-230-3185 [email protected]

SUMMARY

The objective of this study was to estimate the amount of money that the natural gas industry in the Dallas-Fort Worth 9-county ozone non-attainment area could earn by reducing emissions of natural gas and condensate that currently escape into the atmosphere. Natural gas prevented from leaking could be sold as fuel. Recovered condensate can be used as a chemical feedstock or refined into gasoline and other products. Reducing such emissions would be a win-win: increased revenues for the natural gas industry, and lower ozone-forming volatile organic compound (VOC) emissions for the citizens of North Central Texas.

This study considered emissions from the following natural gas sources:

• Gas fugitives • Gas well completions • Gas well blowdowns • Pneumatic devices • Condensate tanks • Condensate loading.

VOC emission estimates for each of the above categories for 2012 were provided by the Texas Commission on Environmental Quality (TCEQ). Methane and ethane emissions, which also have commercial value, were estimated by multiplying the VOC emission estimates by the ratio of the weight percent of methane or ethane in natural gas or condensate to the weight percent of VOCs.

Significant conclusions include the following:

• By installing equipment to recover natural gas and condensate emissions in North Central Texas, natural gas companies could earn up to $51.9 million a year in new revenues, and at the same time reduce VOC emissions.

• Emissions from pneumatic devices account for the largest percent of emissions with economic value (70%), and thus should be targeted first. Addressing the “low-hanging fruit” of pneumatic devices could save up to $35 million in the current 9-county non-attainment region plus Wise County, and reduce VOC emissions by 71 tons per year (tpy).

• Technology for reducing emissions from pneumatic devices has already been successfully demonstrated by many companies in the field. Most retrofit investments pay for themselves in little over a year, and replacements in as little as 6 months.

An image captured from a Texas Commission on Environmental Quality film using an infrared cam-era. The black plumes are Volatile Organic Com-pounds escaping from a Barnett Shale gas field tank battery. These plumes are normally invisible to the naked eye.

Capturing this pollution instead of allowing its release into the atmosphere could bring millions in new profits to gas field owners, shareholders and mineral rights property owners.

Leaking Money page 1

1. Study Objective

The objective of this project was to estimate the amount of money that the natural gas industry in the Dallas-Fort Worth 9-county ozone non-attainment area could earn by reducing emissions of natural gas and condensate that currently escape into the atmosphere. Although some initial investment in replacing or retrofitting equipment would be required, much of this investment would pay for itself in 6 months to a year. Natural gas prevented from leaking could be sold as fuel. Recovered condensate can be used as a chemical feedstock or refined into gasoline and other products. Reducing such emissions would be a win-win: increased revenues for the natural gas industry, and lower emissions of ozone-forming volatile organic compounds (VOCs) for the citizens of North Central Texas. Wise County emissions were also included because of the concentration of gas industry VOCs there and the probability that a new federal ozone standard is likely to draw that County into the designated DFW non-attainment area in the near future.

2. Study Scope

VOC emission reductions of 140 tpy are required as part of the region’s rate-of-progress State Implementation Plan (SIP). According to TCEQ (Boyer, 2010), oil and gas drilling and production together will release 103 tons per day (tpd) of (VOC) emissions in the 9-county Dallas Fort Worth (DFW) non-attainment area in 2012 (see Figure 1).

Figure. 1 DFW 9-County Non-Attainment Region Oil & Gas Production and Drilling VOC Emissions, 2010 (TCEQ, 2010)


Although oil drilling and production releases VOCs, this study limits itself to natural gas drilling and production. Of the 103 tpd of VOC emissions due to oil and gas facilities, only 0.7 tpd (0.7%) is attributable to oil drilling and production (well blowdowns, oil well completions, oil load-ing, crude tanks, and oil fugitives).

Of the categories of natural gas drilling and production emissions identified by TCEQ, this study consid-ers only the following:

• Gas fugitives • Pneumatic devices • Gas well completions • Condensate tanks • Gas well blowdowns • Condensate loading.

For explanations of the processes, the reader is referred to Bar-Ilan et al. (2008).

The categories listed above account for 87% of oil and gas VOC emissions in the DFW 9-county non-attainment area, according to the TCEQ data. Emissions from pumpjacks, dehydrators, gas heaters, compressor engines, drill rigs, and produced water are not considered. Emissions from most of these pieces of equipment are post-combustion (ERG, 2010), and would have little commercial value, since organics have been largely converted to carbon dioxide and water.

The TCEQ definition of volatile organic compound (VOC) excludes methane and ethane, which are less reactive than other organics in forming ground-level ozone. These compounds, however, still have commercial value and are, in fact, the primary constituents of natural gas. This study thus includes emissions of VOCs, methane, and ethane. Natural gas and condensate emissions also contain a small fraction of carbon dioxide (2-3% by weight). Although carbon dioxide has commercial value in the food, oil, and chemical industries, its value is not considered here.

3. Regional Emissions of Compounds with Commercial Value

Table 1 shows emissions from natural gas drilling and production facilities with a commercial value. Emission estimates are given for VOCs, methane, and ethane, as discussed above. Emission estimates are provided for the 9-county DFW non-attainment area, as well as for Wise County, which equals over half the VOCs of the 9-county total.

Table 1. Emissions with Potential Commercial Value from Natural Gas Facilities in North Central Texas

In Table 1, emissions from gas fugitives, gas well completions, gas well blowdowns, and pneumatic devices are lumped into the general category of “produced gas” emissions. According to a report prepared by Eastern Research Group for TCEQ (2010), emissions from these categories are assumed to have the same species composition as produced natural gas. Emissions from condensate tanks and loading, which have a different species composition, are lumped into the general category “condensate”.


The data in Table 1 are summarized in Figures 2-4 below. As shown in Figures 2-4, reducing emissions from pneumatic devices would recover the greatest amount of compounds with commercial value: 73%, 62%, and 70% for the 9-county non-attainment area, Wise County, and the combined 10-county region, respectively. Capturing emissions from condensate tanks would recover the second largest amount of compounds with commercial value: 12%, 28%, and 17% for the 9-county non-attainment area, Wise County, and the com-bined 10-county region, respectively. VOC emissions could be reduced by up to 52 tons per day by addressing pneumatic devices in the 9-county non-attainment area alone.

Figure 2. Sources of Natural Gas Emissions with Potential Commercial Value – 9-County DFW Non-Attainment Area

Figure 3. Sources of Natural Gas Emissions with Potential Commercial Value – Wise County


Figure 4. Sources of Natural Gas Emissions with Potential Commercial Value – 9-County Non-Attainment Area and Wise County Combined

VOC emissions in Table 1 were taken directly from TCEQ estimates for 2012 (Boyer, 2010; Maldonado, 2011). Methane and ethane emissions were estimated by multiplying the VOC emission estimates by the ratio of the weight percent of methane or ethane in natural gas or condensate to the weight percent of VOCs, as shown in Table 2.

Table 2. Weight Percents of Components of Natural Gas and Condensate in North Central Texas


The weight percent of methane and ethane in natural gas in Table 2 were taken from a permit application for the Havener well site. This was the only complete natural gas speciation data specific to the North Central Texas Barnett Shale that the author could find. According to Armendariz (2009), natural gas producers in the North Central Texas region reported unprocessed natural gas composition to be 8.2% VOCs and 74% methane on a mass % basis. Using these alternative numbers would actually increase the estimate of revenue-producing emissions, because the ratio of the weight percent of methane to the weight percent of VOCs would increase.

Condensate weight percents in Table 2 were taken from Hendler et al. (2009). Average weight percents for North Central Texas were used. T-tests showed that methane, ethane, and VOC weight percents for condensate tanks in DFW differed from other parts of the state, to 95%, 85%, and 98% levels of confi-dence, respectively. These t-test results are included in the appendix. Species with weight percents <1% were not included.

Table 2 also shows incremental reactivities (moles of ozone formed per mole of carbon added to the VOC mix in an air mass) for some of the compounds (Carter, 1991; Russell et al, 1995). For comparison, an urban mix has an average reactivity of 0.28 mol ozone/mol C (Carter, 1991). Although the VOCs listed in Table 2 are alkanes, and not highly reactive VOCs (HRVOCs), they still contribute to ozone formation. Released in large quantities, the amount of ozone that they form would be significant on a regional basis

4. Potential Revenues from Reduced Emissions

As discussed above, the emissions in the category “produced gas” have a composition like that of natural gas. If these emissions were captured, it is assumed that they could be sold as natural gas. According to the U.S. Energy Information Administration, the average commercial price of natural gas in Texas was $7.24 per thousand cubic feet for February 2011, the latest month for which information is available. The commercial price is the price of gas used by nonmanufacturing establishments or agencies primarily engaged in the sale of goods or services such as hotels, restaurants, wholesale and retail stores and other service enterprises; and gas used by local, State and Federal agencies engaged in nonmanufacturing activities. The commercial price is higher than the industrial price, but lower than the residential price, so represents an intermediate sales price. A price of $7.24 per thousand cubic feet was accordingly used in Table 3 to calculate potential revenues from capture of produced gas, based on the emission values from Table 1.

Natural gas condensate is a mixture of hydrocarbon liquids that are present as gaseous components in the raw natural gas. At temperatures below the hydrocarbon dew point of the raw gas, they condense out of the raw gas. Natural gas condensate can be used as a chemical feedstock for production of ethylene and propylene. It can also be refined into gasoline and other products. According to the Energy Information Administration (EIA), in 2006 refineries in the USA used 5563 million barrels of crude oil (15.24 million barrels per day) and 180 million barrels of natural gas liquids, or around 3% of the crude oil input volume.

The price of condensate fluctuates with the prices of natural gas and crude oil. Devon Energy reported in May 2011 that their average realized natural gas liquids price for the first part of 2011 was $37.39 per barrel. This number, along with a mid-range condensate density of 0.65 g/cm3, was used to compute the potential revenues from condensate shown in Table 3.

As shown in Table 3, potential revenues from capture of natural gas and condensate emissions in North Central Texas exceed $51 million per year for the 9-county non-attainment area and Wise County. Potential revenues from the combined 10-county region are summarized in Figure 5.


Table 3. Potential Revenues from Capture of Natural Gas and Condensate Emissions in North Central Texas

Figure 5. Potential Annual Revenues from Capture of Natural Gas and Condensate Emissions in the 9-County Non-Attainment Area and Wise County

5. Methods of Reducing Emissions

Pneumatic devices and condensate tanks should be targeted first for emission reductions, since they represent 70% and 17% of emissions, respectively, for the 10-county region including Wise County.

5.1 Pneumatic Devices

Pneumatic devices, used for various natural gas processes, are powered mechanically by high-pressure produced gas as the working fluid. Pneumatic devices include control devices that automatically operate values and control pressure, flow, temperature or liquid levels (EPA, 2006). As part of normal operation, these devices leak the working fluid, which is produced gas (Bar-Ilan, 2008). In the U.S. natural gas production sector, it is estimated that 400,000 pneumatic devices are used to control and monitor gas and liquid flows and levels in dehydrators and separators, temperature in dehydrator regenerators, and pressure in flash tanks (EPA, 2006). In the U.S. natural gas transmission sector, around 85,000 pneumatic devices actuate isolation valves and regulate gas flow and pressure at compression stations, pipelines, and storage facilities.


Pneumatically-operated devices became the standard in the oil and gas industry since electricity was not available at remote production sites (EPA, 1996); this, however, is not the case with drilling and production in urban areas. Emissions could be reduced, and valuable natural gas saved, by (EPA, 2006; Armendariz, 2009):

1. Replacing high-bleed devices with low-bleed devices, 2. Installing low-bleed retrofit kits on high-bleed devices, 3. Improving maintenance practices, 4. Ensuring that all natural gas actuated devices discharge into sales lines or closed, loops, instead of venting to the atmosphere; 5. Convert gas pneumatic devices to instrument air (see EPA’s document, “Lessons Learned: Convert Gas Pneumatic Controls to Instrument Air” available at http://www.epa.gov/gasstar/docu ments/ll_instrument_air.pdf), or replace them with non-pneumatic devices (electric).

Options for reducing gas-bleed emissions by controller type are shown in Table 4. Enhanced maintenance can include repairing/replacing leaking gaskets, tubing fittings, and seals, as well as cleaning and tuning; such measures can save 5-10 standard cubic feet of gas per hour (scfh) per device (EPA, 2006). Eliminating unnecessary valve positioners can save up to 18 scfh per device. Pressure control valves with a self-contained spring/diaphragm can be used; such controls discharge to the downstream gas line, resulting in no bleeding of gas to the atmosphere (EPA, 1996).

Table 4. Options for Reducing Gas-Bleed Emissions by Controller Type (EPA, 2006)

Natural Gas STAR partners are natural gas companies who voluntarily partner with EPA to adopt cost-effective technologies and practices that improve operational efficiency and reduce emissions of methane.

According to EPA (2006):

Natural Gas STAR partners have achieved significant savings and methane emission reductions through replace-ment, retrofit, and maintenance of high-bleed pneumatics. Partners have found that most retrofit investments pay for themselves in little over a year, and replacements in as little as 6 months. To date, Natural Gas STAR partners have saved 36.4 Bcf by retrofitting or replacing high-bleed with low-bleed pneumatic devices, representing a sav-ings of $254.8 million worth of gas. Individual savings will vary depending on the design, condition and specific operating conditions of the controller.

Payback times for replacement, retrofit, and maintenance of pneumatic devices are shown in Table 5, and range from immediate to 13 months.


Table 5. Payback Times for Options for Reducing Natural Gas Emissions from Pneumatic Devices (EPA, 2006)

Savings from reduced emissions can range from $315 to $1820 per year per device, based on a natural gas price of $7 per thousand cubic feet (EPA, 2006). EPA’s field experience with Natural Gas STAR partners has shown that up to 80% of all high-bleed devices can be replaced with low-bleed equipment or retrofitted.

Union Pacific Resources provides one example of successful retrofit and replacement of high-bleed pneu-matic devices. Union Pacific replaced 70 high-bleed pneumatic devices with low-bleed devices and retrofitted 330 high-bleed devices. The retrofits and replacements cost $166,300, but will save $347,200 annually (at $7 per Mcf natural gas prices), resulting in a payback of less than one year.

In addition to saving money and reducing emissions of ozone-forming VOCs, the retrofit or replacement of worn high-bleed pneumatic devices can improve system-wide performance and reliability, and provide better monitoring of gas flow, pressure, liquid level, and other parameters.

The EPA brochure “Lessons Learned from Natural Gas STAR Partners: Options for Reducing Methane Emissions from Pneumatic Devices in the Natural Gas Industry,” available online at http://www.epa.gov/gasstar/documents/ll_pneumatics.pdf, provides additional information about replacing, retrofitting, and maintaining pneumatic devices.

5.2 Condensate Tanks

Vapor recovery units (VRU) are estimated to capture over 98% of emissions from condensate tanks (Hendler, 2009). Gases and vapors from the tanks are directed to the inlet side of a compressor, which increases the gas pressure so that many of the moderate and high molecular weight compounds con-dense back into liquid form. Methane and other light gases are directed to the inlet (suction) side of the compressors to join the main flow of natural gas. In this way, VRUs increase the total production of gas at the well. In addition, liquids produced by the VRU are directed back into the condensate tank, increasing condensate production and potential revenue (Armendariz, 2009).


5.3 Other Processes

Enhanced leak detection and repair can be used to reduce fugitive emissions, which represent 8% of emissions with commercial value in the 10-county region. “Green completions” to capture methane and VOC compounds during well completions, which represent 3% of emissions with commercial value in the 10-county region. For additional discussion of enhanced leak detection and repair, and green comple-tions, see Armendariz (2009).

6. Conclusions

• By installing equipment to recover natural gas and condensate emissions in North Central Texas, natural gas companies could save up to $51.9 million a year, and at the same time reduce VOC emissions that contribute to ground-level ozone formation.

• Emissions from pneumatic devices account for the largest percent of emissions with economic value (70%), and thus should be targeted first. Addressing the “low-hanging fruit” of pneumatic devices could save up to $35 million in the current 9-county non-attainment region plus Wise County, and reduce VOC emissions by 71 tpy.

• Technology for reducing emissions from pneumatic devices has already been successfully demonstrated by many companies in the field. Most retrofit investments pay for themselves in little over a year, and replacements in as little as 6 months.

7. References

Armendariz, Al. “Emissions from Natural Gas Production in the Barnett Shale Area and Opportunities for Cost-Effective Im-provements.” Report for Environmental Defense Fund, January 2009. Available online at http://www.edf.org/documents/9235_Barnett_Shale_Report.pdf .

Bar-Ilan, Amnon; Parikh, Rajashi; Grant, John; Shah, Tejas; Pollack, Alison K. “Recommendations for Improvements to the CENRAP States’ Oil and Gas Emissions Inventories.” Report prepared by ENVIRON International Corporation for the Central States Regional Air Partnership. November 13, 2008. Available online at http://www.wrapair.org/forums/ogwg/docu-ments/2008-11_CENRAP_O&G_Report_11-13.pdf

Boyer, Doug. “2006/2012 DFW Modeling Update.” Presentation prepared by Texas Commission on Environmental Quality for the DFW Photochemical Modeling Technical Committee, November 5, 2010.

Carter, William P. L. “Development of the SAPRC-09 Chemical Mechanism and Updated Ozone Reactivity Scales.” Report to the California Air Resources Board, Contracts No. 03-318, 06-408, and 07-730, Revised January 27, 2010.

Hendler, Albert; Nunn, Jim; and Lundeen, Joe. “VOC Emissions from Oil and Condensate Storage Tanks.” Final Report pre-pared for the Texas Environmental Research Consortium, April 2, 2009. Available online at http://files.harc.edu/Projects/AirQuality/Projects/H051C/H051CFinalReport.pdf .

“Permit by Rule for the Havener Tank Battery” located in Tarrant County, Texas. Attachment #7. Submitted by XTO Energy, Inc. to the TCEQ on May 24, 2010.

Pring, Mike; Hudson, Daryl; Renzaglia, Jason; Smith, Brandon; and Treimel, Stephen. “Characterization of Oil and Gas Produc-tion Equipment and Develop a Methodology to Estimate Statewide Emissions.” Final Report prepared by Eastern Research Group for Martha Maldonado of the Texas Commission on Environmental Quality, Air Quality Division, November 24, 2010.

Texas Commission on Environmental Quality. Texas Air Emissions Repository (TexAER), http://www.tceq.texas.gov/airquality/areasource/TexAER.html, accessed May 2011.


U.S. Energy Information Administration. “Natural Gas Prices.” Independent Statistics and Analysis, Texas, http://www.eia.doe.gov/dnav/ng/ng_pri_sum_dcu_STX_m.htm, accessed 5/11.

U.S. Environmental Protection Agency. “Lessons Learned from Natural Gas STAR Partners: Options for Reducing Methane Emissions from Pneumatic Devices in the Natural Gas Industry.” http://www.epa.gov/gasstar/documents/ll_pneumatics.pdf, October 2006.

U.S. Environmental Protection Agency. “Methane Emissions from the Natural Gas Industry: Volume 12: Pneumatic Devices.” National Risk Management Laboratory, EPA-600/R-96-0801, June 1996.

APPENDIX ATable A1. Weight Percents for Condensate Tank Emissions in North Central Texas vs. Other Parts of the State


leaking money

Documents