Given the ever-evolving nature of oil and gas regulations in this country, it is critical for producers to stay ahead of the game when developing their sites. Playing regulatory catch-up by replacing or updating existing equipment to remain in compliance is expensive, time consuming and it prevents the operator from focusing its attention on its long-term site planning needs.
Forward-looking engineering can help with this, by designing systems that exceed the standards called for in current environmental regulations, thereby ensuring that the facility will be compliant for some time down the road.
Case in point: Halker’s central processing facility (CPF) design was originally developed in 2012 in an effort to ease E&P site management, allow for safer installations and reduce the overall cost of site operation. But the design offers regulatory and environmental benefits as well. The consolidated and centralized processing facility significantly reduces the footprint of well sites, minimizes air emissions and reduces water consumption. Best of all, given the forward-looking approach of the design, as of 2015 Halker’s CPF remains compliant with:
- The Environmental Protection Agency’s 40 CFR 60 Subpart O (Quad O) regulation that affects oil and gas exploration and production facilities that utilize hydraulic fracturing;
- The State of Colorado’s Regulation 7, that imposes requirements that are stricter than Quad O; and
- Expected 2015 revisions to Quad O that will add methane and ethane control requirements to the regulation which the CPF will be able to meet without any equipment or design changes.
By utilizing Halker’s forward-looking CPF design, operators can enjoy all of the efficiency and safety gains of a centralized system, along with the peace of mind that their facilities will remain compliant going forward.
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An article written by Halker Vice President of Operations, Travis Hutchinson and Vice President of Business Development, Peter Dickey, has been published in the April 2015 issue of Oil and Gas Facilities magazine, available in print and online now.
[Click here to read the full article on Oil and Gas Facilities magazine’s site.]
Entitled “Value-Added Engineering: A Solution to a Down Market,” the article deals with the challenges currently facing the U.S. energy market — including falling prices, tightening margins and delayed exploration efforts — and how engineering can help operators address those challenges.
“In the short term, oil and gas firms need to find ways to cut costs and optimize their existing production efforts and debottleneck their systems to maximize available revenues from what they are already producing to maintain profitability until the market returns, all with an eye on future needs,” write Hutchinson and Dickey. “Prices are falling now, but are expected to rise again in the future. Operators need to know that they can make adjustments to expenditures now without sacrifcing future opportunities down the road.”
Among the engineered solutions that the authors recommend are cost reductions through process optimization, new revenue generation through debottlenecking, strategic site planning and pre-engineering to prepare for the eventual upturn.
“Oil and gas firms cannot give up on existing assets as a result of market pressures because it will cost more to get back into production mode later if they do. Maintaining a readiness to return to the market at higher production levels is key. Now is the time to work more effectively to extract maximum productivity from existing facilities by building value, maintaining flexibility, and improving efficiency.”
Click here to read the full article.
By Tyler Farley
Senior Project Engineer, Halker Consulting
Changes are coming to oil and gas development planning that have the potential to vastly improve the game for operators, cutting down on site development time, improving well efficiency and offering cost savings across the board. By taking a modular approach to oil field development, rather than designing each facility individually, operators are becoming better able to manage their type curves, plan their long-term equipment needs and maximize the overall efficiency of their systems.
These changes are driving significant improvements in both efficiency and cost savings. Not only do modular facilities designs enable operators to plan out their entire oilfield developments in advance, maximizing overall production by limiting downtime and easing ongoing site management, but this approach also incorporates type curve planning, allowing for more efficient, better organized installations. Further, modular site designs are simpler to build, cutting down on build out, well preparation and maintenance time. In terms of cost savings, modular sites enable operators to order equipment in bulk, thereby saving on upfront costs.
The key ideas behind the modular oilfield are threefold: repeatable, consistent and interchangeable. The goal is to minimize field construction by using prefabricated, pre-designed pieces of equipment that are built on assembly lines with standard options in place. All the operator has to do is order up the pieces they need and effectively plug them into their system. In theory, that’s all there is to it.
These types of systems are great because they offer quick, cost effective solutions, but they can be challenging because updates and changes aren’t always easy when systems are shared site-wide and designs are in the hands of a single modular manufacturer. Fortunately for operators, there are other options.
One step beyond this is fit-for-purpose modular design. By taking an operator’s existing facilities and “modularizing” them, sites can be built that include both modular pieces as well as custom-designed equipment. This way the operator still owns their own equipment designs that they can take to any manufacturer for production, leaving them in control of their equipment rather than being beholden to any one modular designer. It’s like buying a car off the lot versus going online to build and price a custom car.
And that brings us to adaptable modularity, which is the use of adapters to fit off-the-shelf pieces together with existing equipment. This is the best of both worlds: Lower-cost modular pieces adapted to work with proprietary customer systems. Facilities are becoming more complicated, so we need to adapt existing pieces from established providers to work with new parts. It’s about adapting standard equipment to your needs in a scalable, interchangeable, and safe way.
Why do these equipment trends matter to the industry at large? More than six decades after it was first introduced to the market, hydraulic fracturing is now a mainstay of the U.S. oil and gas industry and has emerged as a key technology in the nation’s push for energy independence. We are finally in a position, thanks not only to rich product reserves in the lower 48 states but also new techniques that allow us to fully exploit these reserves, to meet all of the United States’ energy needs, both today and well into the future. Hydraulic fracturing is at the heart of this opportunity. With that promise at stake, now is the time to improve on these decades-old production techniques in order to maximize their efficiency and ensure long-term cost savings for operators
The modular oilfield is a key step in this direction.
By Scott A. Stewart, Regional Manager, North Rocky Mountain
Oil and gas companies operating in the Williston Basin of North Dakota have a challenge.
Production in the region has grown by leaps and bounds, but with limited pipeline takeaway capacity, 70% of all crude moving out of the state is transported by rail. Unfortunately, rail transport of hydrocarbons can be dangerous – with derailments, spills and explosions in parts of the U.S. and Canada making the news this past year.
Starting in 2015, regulators with the North Dakota Industrial Commission (NDIC) are stepping in, mandating strict new processing rules designed to minimize these risks. The new regulations, based on the belief by some that Bakken crude is more volatile than products from other basins, will require operators to soon begin treating their hydrocarbons in an effort to remove the more volatile light compounds from the oil and reduce the overall vapor pressure. This, it is believed, will make rail transport of these hydrocarbons safer.
As it stands right now, operators only have until April 1, 2015 to come up with a conditioning solution to treat their oil before the new regulations take effect.
So what are the options?
Optimize existing facilities: In order to effectively “boil off” the light hydrocarbons to meet the NDIC vapor pressure standards, operators will need to heat their oil to a certain temperature during the separation phase. But, heat it too much and you’ll boil off the heavier products as well, eating into your profit margins. In order to strike the proper balance, operators will need to know how much heat input is optimal for their systems in order to remove the lighter hydrocarbons safely and efficiently.
Install new equipment: Operators that don’t already have the needed phase separators and heater treaters in place to accomplish this type of conditioning will need to design, procure and install those systems in early 2015.
At Halker, we are committed to finding the most economic and straightforward solutions to our client’s challenges. The NDIC Crude Conditioning order has not required much adjustment for Halker’s current producer clients in the Bakken. For instance, all of Halker’s surface facilities designs in the region had already included the proper equipment to meet the oil temperature heating requirement. System modeling was simply performed to find and implement the optimum settings.
How can Halker help?
For those producers having to comply with the vapor recovery requirements related to higher pressures, Halker Consulting is uniquely prepared to evaluate your system and recommend the best path forward. Halker can identify the most cost effective equipment specifications, when needed, and incorporate those components into your existing facility in a way that maximizes safety, ease of use and efficiency. We will stay with you through installation and startup, evaluating and balancing your system so that best results are achieved.
Each wellpad is unique, and there may be other avenues to approach these new compliance requirements without vapor recovery systems or other costly pieces of equipment depending on your individual needs.
Halker Consulting is committed to helping producers in the Bakken adapt to these new regulations. We can study and assess your situation and offer individualized, custom solutions to manage your production and conditioning flows up to, through, and after the implementation phase of these regulations. Contact me for more information.
Oil and gas prices are falling in the U.S. due to a range of larger economic forces – including product oversupply and fluctuating demand – leaving many producers with some hard choices to make in the event of further revenue reductions. Among other risks in this changing market, operators now face lost profits, shifting facility needs and changes to their long-term site and production plans.
Left unchecked, this represents a significant and potentially long-term risk for operators, processors and the U.S. energy industry at large.
In the short term, oil and gas firms need to find ways to cut costs and optimize their existing production efforts, debottlenecking their systems to maximize available revenues from what they’re already producing, in order to maintain profitability until the market returns, all with an eye on future needs. Prices are falling now, but will certainly rise again in the future. Operators need to know that they can make adjustments to expenditures now without sacrificing future opportunities down the road.
Fortunately, value-added engineering can be part of the solution.
How? By helping energy operators cut costs and raise revenues in innovative ways. By leveraging proven approaches to midstream engineering to help with these pricing challenges, operators can retrofit existing facilities, better plan new installations, and ensure economic operation of sites in both current and future market conditions.
Cost reduction through process optimization: Existing systems can be improved by focusing on efficiency improvements, addressing product quality needs and eliminating redundancies. The overall goal of process optimization is to reduce the cost of production at existing sites and reduce long-term maintenance needs.
Revenue generation through de-bottlenecking: By bringing more to market, operators can increase potential revenues from existing sites by both increasing production and adding new products to the mix. Where is production currently being held back? Done right, engineered de-bottlenecking can allow operators to make more money with their existing resources.
Strategic site planning: Would shifting to prefab or modular facilities help with overall system efficiency and cost? This approach can be used for both retrofit applications as well as new builds, minimizing the cost of construction.
Pre-engineering to prepare for the eventual upturn: By taking market dynamics into account, operators can make better decisions and investments with their sites, preparing both for a changing market and a changing regulatory environment. Smart preparations made now with targeted engineering and regulatory awareness can, and will, pay dividends down the road.
Oil and gas firms cannot give up on existing assets due to market pressures, as it will cost more to get back into production mode later if they do. Maintaining readiness to return to market at higher production levels is key. The time is now to work more effectively to extract maximum productivity from existing facilities, by building value, maintaining flexibility and improving efficiency.
By Matt Halker, PE – Owner and Consultant
As demand for domestic oil and gas has grown in recent years, the market has developed to such a point as to support even small production facilities in far-flung areas. As a result, operators are now partnering with innovative engineering firms to develop their new and existing assets, bringing once-unsustainable revenue streams back online.
Sometimes this doesn’t even need to involve petroleum products.
Case in point: Halker was recently called in to help retrofit a dormant facility in western Colorado. Built in 2001, the plant came with a nameplate processing capacity of 24 million cubic feet per day and was designed primarily to remove carbon dioxide and nitrogen from natural gas streams. But, at the time of conversion, the plant was grossly oversized for the amount of production that was available in the area. The client needed to “turn down” the processing level to fit with this new reality.
That wasn’t all. If the client had simply retrofitted the existing system to remove nitrogen via a different method, but at lower levels, it would still have been uneconomic. They needed a new revenue stream to make the whole project work.
The answer? Helium.
Why? Because helium is an extremely scarce element, especially in the U.S. There are only three places in the country that currently produce it — Amarillo, Texas; the Hugoton gas field in Kansas and Oklahoma; and Southwest Wyoming. It has long been known that Western Colorado also has helium in its gas, but the way that helium is traditionally removed from natural gas streams – a cryogenic process that takes the gas temperature below -300 degrees – is highly capital and energy intensive. It rarely has made sense for operators in Colorado to process it via this method.
But the helium processing system we implemented at this particular plant is more efficient and cost-effective than most. It can also be easily scaled as processing loads increase. As a result, the client now has a new, in-demand product to take to market at a minimal capital outlay.
Now that’s what I call smart growth.
By Travis Hutchinson, VP Operations
You have to spend money to make money, that’s the old line.
But the truth is, in gas operations even a small investment in facility engineering can save operators dramatically when it comes to much larger capital investments.
Case in point: Halker recently worked with a client, an operator, that was experiencing less than optimal results from its new central processing facility and gathering system. It was part of a phased installation that was designed to ramp up to full production over the course of a year, but it wasn’t operating as expected or predicted and was already starting to max out just a few months into production. There was some concern that the entire system would have to be scrapped and replaced with a larger system capable of handling the eventual full loads.
So Halker was called in and we did a full breakdown of the engineering behind the system, measuring and understanding what was really going on. Turns out, the system was actually behaving as it should but several of the inputs were operating out of the predicted ranges, so the pressure entering the system was higher than what the sales statement said it should be. The set points weren’t being hit in terms of set pressures and temperatures, so it was throwing off the entire system.
The solution? All the client had to do was go back and upsize the tank vapor piping and add slots for additional compressing at the central processing facility for those tank vaporizers. They were able to make those corrections and bring the rest of the facility online safely. As of now, the facility is up to full production and everything is functioning as it should.
Cost for engineered adjustments: $1M-$2M
Savings versus replacing the entire system: More than $100 million
So, it might seem like a lot to spend to troubleshoot an existing system when problems occur, but proper engineering can save exponentially more down the road by negating larger adjustments.