Critical applicationsin oil & gas

Gas supply & demand

• Gas supplies remote from demand: new pipelines and LNG plants needed

• Japan and Korea far away from gas pipelines relying on additional LNG supplies

• Gas consumption will reach 5 Trillion cubic meters in 2030 from 2.8 in 2006 (+100%)

• In 2030 the world generated power from natural gas will increase to 33% from current 27%

750 774

1%

2%

North America

135 124

4% 3%

South America

463 716

-1%

1%

Europe

162 71

3% 3%

Africa

292 251

3%3%

Middle East

Billion (cubic meters)

North AmericaProduction

Consumption

AAGR ‘06-’10 %

360 406

1%5%

Asia Pacific

162 142

4%1%

Caspian region

598 405

2%2%

FSU

Source: BP, EIA

Severe service applications in oil & gas

• Oil & gas production

• Gas processing plants

• LNG liquefaction plants

• Gas transportation & storage

• Petroleum transportation & storage

• Ethylene plants

• Refineries

• Ammonia plants

Focus on LNG Production

• Liquefied Natural Gas is the most economic way of transporting Natural Gas

• Gas is cooled to -161 ºC (-260 ºF) and remains liquid

• Liquefaction reduces gas volume by a factor of 610 for transportation by LNG tankers

• Average production (size) of an LNG liquefaction plant is 5 million metric tons per year (enough to supply power to the city of New York for 1 year)

• CAPEX of $120 bn in the next seven years for about 24 new LNG liquefaction plants

• IMI Severe Service valves installed on 110+ MTpA of LNG - 2/3rds of world capacity

The LNG liquefaction process

• Works exactly like a $2-$2.5 billion refrigerator

• The principle is exactly the same:

– Has a compressor (more than one, in reality, moved by gas turbines)

– A heat exchanger

– Has an expansion valve where the refrigerant produces the cold needed to liquefy the gas

Compressor anti-surge valve

• Reduced flow demand

• Reversal Flow at outlet

• Flows forward again

• Cycle repeats

• Disrupted operations ($$)

• Damage to compressors seals (> $50,000)

• Damage bearings, impellers, shaft (> $300,000)

• Loss of Production (~$1.5M per day)

• Repair, maintenance, personnel safety

• Catastrophic failure of compressor (~$2-3M)

GasTurbine Compressor

Anti-surgeValve

A

BWhy surge happens What are the consequences

Requirements for anti-surge service

Requirement Impact

Recycled gas velocity control AVOID NOISE and VIBRATION

Prevent surge AVOID CASTROPHIC DAMAGE

Recycle operation SAFETY; MAXIMIZE EFFICIENCY

Continue operation AVOID LOSS OF PRODUCTION

Focus on wellhead chokes

Wellhead chokes principle:

• Drilling a production well into an underground reservoir is like sticking a pin into a balloon

• To use the gas you have to control the energy of the “explosion”

• Gas pressure can be as high as 15,000 psia

• Reservoir pressure provides the force needed to drive the gas to the plant

Responding to market demands

• The new oil & gas field developments are mostly offshore deepwater, high pressure & high sand content

• Increasing awareness of safety issues– Excessive noise

– Integrity of pressure boundary

– Resistance to impact of extraordinary force

– Severe mechanical vibration

– Emission of noxious fluids

• Increasing effort to extend well production– Wider range of operating conditions

– Change over from oil - gas production

• Increasing need for reliable, automatic control– Remote & un-manned sites

Example of competitor’s damaged choke trim

Chokes: Cost of failure

• Initial investment for a conventional choke = $20,000

• 5 replacements annually = $306,100

– Replacements = 5 x $20,000 = $100,000

– Lost production = 5 x 1.5 hours x 458 bph x $60/barrel = $206,100

• This is for one choke only!

Severe service choke solutions

• DRAG technology applied to wellhead chokes– Ideally suited to velocity control requirements

– DRAG trim velocity <¼ that of conventional chokes

– x2 reduction in velocity = x8 reduction in erosion rate

• CCI established as a market leader for severe service chokes

CCI choke valve … …disk stack design… …velocity control principle

Case study: Provide stable and reliable operation

Plant Offshore platform, North Sea

Application Wellhead production choke

ProblemsFrequent maintenance & repair required (changed every five days!)

Symptoms1. Rapid erosion & failure of choke trim

2. Loss of pressure control function

Consequences Lost production & high maintenance costs

Solution Replaced existing competitor chokes with CCI DRAG® trim

In summary

• Buoyant end markets

– Strong demand

– Significant oil & gas investment

• Strong market position

• Targeting the most critical applications