MidstreamBusiness.

com

April 2013 | Vol. 3 | No. 4

PUMPING The

DUMBBELL
From the publishers of

Source: Valerus

Treating natural gas can be a complex process as the maze of pipes at this Surabaya, Indonesia, cryogenic plant illustrates. Proper
design and planning can cut costs and increase efficiency. This facility has a capacity of 100 million cubic feet per day. It extracts
significant gas liquids from the gas stream powering the 250-megawatt power plant in the background.

Gathering And Processing Design

Options For Unconventional Gas
Developing gas shale gathering and processing systems presents special challenges for midstream
operators. Recognizing the unusual characteristics of these unconventional resourcesand
planning appropriatelycan cut construction costs and increase profitability once
production begins.
By Kevin A. Lawlor and Michael Conder
nconventional gas presents unique challenges to natural gas gathering and processing companies. Many
of these plays are in areas where there is little or no
gas-handling infrastructure, thereby requiring heavy
grassroots investment. High initial production rates,
extreme decline rates, unpredictable well interference
effects and unusual gas composition require that special attention be paid to the design of the pipeline,
54 April 2013

compression, measurement, dehydration, sweetening,

gathering and processing systems associated with
these plays.
The success or failure of these investments will largely
determine the success or failure of these companies in future years. A proper understanding of the challenges and
risks of designing surface facilities for unconventional
plays is essential for maximizing protability.
MidstreamBusiness.com

Most unconventional gas elds are in areas in which

there has been little or no gas production or development, or in areas where existing facilities sized for conventional gas production are greatly undersized for the
characteristically high unconventional gas production.
Therefore, design of the gathering, compression, measurement, treating, dehydration, sweetening and processing facilities are typically grassroots projects and
extremely capital intensive.
These systems will likely have an operational life of 20
to 80 years. In order to achieve the greatest cash ows
from these systems, they must be designed to be exible,
modular and uniform and utilize the best of modern
control technology. These traits will allow the systems to
remain protable during times of changing production
rates, well locations, product compositions and commodity pricing.
A natural gas gathering system typically follows one
of three main styles in its initial development: linear,
nodal or circular. The main factors in determining which
style to use are desired wellhead pressures, well spacing
pattern and gas composition. In actual practice, gathering systems often evolve into a combination of two or
three of these design types.
The selected style of the gathering system will be dictated by many diverse requirements and conditions.
These can include geographic considerations, environmental regulations, eld development plans, legal and
contractual requirements and any number of special conditions. The selected style may not remain constant
throughout the elds life, either. Flexibility built into the
initial designs reduces the capital expenditure required
later in the life of the eld.
These problems can be analyzed using gathering system software such as WinFlow, F.A.S.T. Piper and similar
programs. When combined with a well-drilling schedule,
pipe sizes can be reviewed for various stages of a elds

development. The results of these designs will provide the

best compromise in pipe diameter and compression costs.
The accompanying tables present current, approximate costs to lay one mile of pipeline of different diameters. These costs assume the pipelines will be laid across
at, easily trenched farmland.
Compression choices

The major types of compression used in gas gathering systems are screw, reciprocating and centrifugal. Each type
has its specic application. The choice of which type of
compressor to use depends upon the suction pressure, discharge pressure and production rate of the application.
Screw compressors are the most economical form of
compression for applications that require low suction
pressures and low to moderate ow rates. The most common form of compression found in gas gathering systems is reciprocating compression, which can be built in
either single or multiple stage congurations. This type of
compression can handle a wide variety of pressure and
ow-rate conditions.
The third type of compression utilized in gas gathering applications is centrifugal compression. Centrifugal
compressors are best used for applications with stable
large gas ow rates and low to moderate pressure boost.
There are several different types of prime movers used
to power compression on midstream systems. The most
common types are gas engines, electrical motors, propane
engines and diesel engines. The main drivers for the selection of prime movers are the richness of the gas stream
and contaminants in that stream, availability of electricity in the local area, environmental permitting issues regarding a facility and the construction schedule.
Spark-ignited natural gas engines are the most common form of prime mover used to power compression.
These engines have the advantages of being readily available in a wide range of sizes, possessing the ability to turn

APPROXIMATE COST TO LAY ONE MILE OF STEEL PIPELINE

3

10

12"

ROW

$39,400

$39,400

$39,400

$39,400

$39,400

$39,400

PIPE

$45,600

$53,300

$84,500

$142,200

$159,600

$167,800

TRUCKING

$1,150

$1,150

$2,300

$3,450

$4,600

$5,750

ENGINEERING/SURVEY

$2,600

$2,600

$2,600

$2,600

$2,600

$2,600

INSTALLATION

$46,200

$68,200

$85,400

$119,400

$189,000

$207,000

SUPERVISION

$2,000

$2,500

$3,000

$3,500

$4,000

$5,000

CONTINGENCY

$13,700

$16,700

$21,000

$31,000

$39,900

$42,800

TOTAL

$150,650

$183,850

$238,200

$341,550

$439,100

$470,350
Source: Valerus

MidstreamBusiness.com

April 2013 55

APPROXIMATE COST TO LAY ONE MILE OF HDPE PIPELINE

production decreases. The disadvantage of these types of

engines is the expense of the fuel and the logistics of the
shipping and storage of the fuel to compressor locations.

ROW

$39,400

$39,400

$39,400

Gas treatment

PIPE

$9,650

$15,900

$34,500

TRUCKING

$1,150

$1,150

$1,150

ENGINEERING/SURVEY

$2,600

$2,600

$2,600

INSTALLATION

$35,120

$38,200

$83,200

SUPERVISION

$2,000

$2,500

$3,000

CONTINGENCY

$8,650

$9,700

$16,100

TOTAL

$98,570

$109,450

$179,950

Unconventional gas plays differ little from conventional

gas plays in technologies to remove water from a gas
stream to meet sales gas specications. However, the contaminants found in unconventional gas do present difculties for the typical processes of water removal such as
triethylene glycol (TEG) units, molecular sieve dehydration systems and ethylene glycol injection systems. The
choice of which system to utilize depends on either the
method used for processing the gas or the gas sales specication for water of the transmission pipeline.
The main process used to remove water in unconventional gas plays is TEG. If the unconventional gas is being
processed for natural gas liquid (NGL) removal then
other dehydration processes must be used. If the gas is
being dehydrated by a refrigeration plant or JouleThompson (JT) cryogenic plant below its dew point, either methanol injection or ethylene glycol injection is
used to supplement TEG unit and prevent freezing problems in the liquid-removal plant. If the gas is being cryogenically treated to remove NGL, a molecular-sieve plant
is used to dehydrate the gas to levels that will allow cryogenic processing without freezing.
Almost all unconventional gas will require some sort
of NGL extraction process. The common NGL extraction processes include JT plants, medium-temperature
refrigeration plants, low-temperature refrigeration plants
and turbo expander-based cryogenic plants.

Source: Valerus

down effectively as production decreases to optimize fuel

usage, and the gas production can normally be used to
power the engine thereby reducing fuel hauling or infrastructure expenses. The disadvantages of this type of engine are environmental permitting requirements
associated with it and its high operating expenses.
Engine emission permitting requirements have been
getting stricter for the past several decades, and this
trend is expected to continue in the future. In many areas
it can take between six to eight months to permit a natural gas engine. Once the unit is operational it may need
to be tested on a regular schedule to ensure the unit is
operating per its permitted emission limits. This time
delay for installation of compression can be problematic
in an unconventional gas play where production rates
can vary widely from well to well. Additionally, in play
areas where the richness of the gas exceeds approximately 1,200 Btu per cubic foot, it may be difcult to
nd gas engines that are capable of using the produced
gas as fuel.
The preferred solution for avoiding environmental
permitting issues regarding compression is to use electric motors. Electrical motors have the advantage of being
able to be installed without a rigorous permitting process,
have better run times and provide lower operating costs
than gas engines.
These signicant advantages are offset by some signicant disadvantages. In many areas where unconventional gas is being developed, there is not sufcient
electrical power infrastructure. Additionally, electrical
motors have the disadvantage that they do not turn down
well compared to gas engines, and electrical expenses to
run the motors in a declining eld may be prohibitive.
A third type of prime mover that could be used is the
spark-ignition engine. The advantages of these engines
are that they are able to operate in areas with rich gas and
no electrical infrastructure, are available in a wide range
of horsepower and are able to turn down effectively as
56 April 2013

Gas processing options

If the primary requirement for processing a natural gas

stream is to meet a certain hydrocarbon dew point specication, the processes most likely chosen are either a JT
expansion plant or a medium-temperature refrigeration
plant. A JT plant utilizes the cooling achieved via a pressure drop across a control valve to extract NGLs from a
natural gas stream. These types of units are most commonly found on well locations for wells owing less than
10 million cubic feet (MMcf) per day and for relatively
low-Btu gas.
The primary advantage to these units is that they are
inexpensive to purchase and install, and they are simple
to operate. The disadvantages are their liquid-extraction
efciencies are low, and their cost of operation could be
quite high if compression is needed to increase the pressure of the gas either prior to or past the plant.
Medium-temperature refrigeration units are typically
used if the production rates are greater than 10 MMcf per
day or if the gas is very rich in hydrocarbons. These units
are designed to chill the gas to approximately 0F with
very little pressure drop using a water/Freon or
water/propane refrigeration scheme. These units are
MidstreamBusiness.com

often equipped with electrical motor-driven refrigeration

compression to save weight and simplify operations. Hydrocarbon dew points of 10F to 40F can be achieved
with these processes, and both units are available typically on short notice.
If maximizing the economics from extraction of NGLs
is the primary driver for the installation of a processing
facility, then either a low-temperature refrigeration unit
or a turbo-expander plant will be installed. The choice
between the two processing technologies depends on the
composition of the gas and the local infrastructure.
Most low-temperature refrigeration units use
propane for the refrigeration medium. These units are
less available than the medium-temperature units and
may need to be custom designed and built for a specic
application. These units can typically provide hydrocarbon dew points of -20F to -40F. Lead times for such
units can be four to six months. The advantage of this
type of facility is its ease of operations and low-fuel consumption due to the minor pressure drop required by
the process. A signicant disadvantage of these units is
they are not as efcient at recovering ethane and
propane as a turbo-expander facility.
A turbo-expander facility utilizes an isentropic expansion of the gas to reduce the temperature of the gas to
between -130F and -160F. This allows an expanderbased plant to recover the majority of ethane within a gas
stream. However, the expansion does mean that additional compression is usually required to meet sales gas
transmission-line pressure.
Ethane extraction

The choice between plant processes often takes into consideration whether there is an ethane pipeline available
in the vicinity. In the Barnett and Eagle Ford shales and
the Piceance basin unconventional gas plays, turbo-expander plants were installed to be able to extract ethane
and maximize the economics of the plant. However in
the Bakken play, mechanical refrigeration plants have
been installed despite the richness of the gas due to the
lack of a market for ethane in the region.
Numerous projects are being contemplated in the
Marcellus to bring an ethane outlet to the region so that
cryogenic plants can be installed to maximize the profitability of those facilities.
Engineers and executives need to follow a disciplined
approach to the design and construction of their assets
and contracts in order to maximize the returns from the
economic investments made in unconventional gas plays.
The following concepts should be considered when developing in grassroots projects for these plays:
1. Modularization of designs
2. Standardization of equipment
3. Design exibility
4. Preventative maintenance programs
5. Leasing of equipment
MidstreamBusiness.com

6. Utilization of technology to minimize costs and maximize protability

7. Mitigating risks via contracts
Midstream systems have traditionally been designed
to operate at or near capacity for years at a time. This was
possible due to the shallow decline rates on conventional
wells, expansion of local producing elds and expanding
into adjacent elds. This situation was economically very
benecial to midstream companies since high utilization
rates of their equipment maximized the rates of return
for the facilities involved.
Unfortunately, unconventional gas plays are different
and the economics risks are much greater. Due to high
initial production and decline rates in unconventional
gas wells, the production rate through the facilities can
vary greatly especially once drilling in an area is suspended. In order to maximize the rate of return for these
facilities a modular design approach must be used.
A modular approach allows companies to increase or
decrease their capacity in an area in incremental phases.
Instead of trying to capture economies of scale with
larger equipment and facilities as was done in conventional eld development, numerous smaller equipment
packages or trains should be used to be able to maximize
turndown efciency. A good rule of thumb to use in unconventional gas designs is to rate the individual train at
between one-fth and one-seventh of the total designed
throughput for the facility.

The development of unconventional

gas and oil plays has transformed
our industry over the past decade,
and this transformation will only
continue in future years.
The xed assets of the facility and the layout of the facility should also be designed to accommodate the addition or removal of equipment from that facility in an
orderly fashion. Aspects of facility design that makes this
possible are the sizing and valve conguration of the
header system, proper sizing of pipe racks, having adequate equipment spacing to be able to move equipment
easily, strategic location of power lines and junction boxes
and additional tags in facility controls.
Standardized design advantages

A key component of making the modular facility design

functional and economic is that the individual pieces of
equipment must be standardized to as high a degree as
is reasonably possible. The more similar compression
April 2013 57

packages, amine sweetening systems and NGL processing plants are to one another, the easier it is to add or remove capacity as necessary and to optimize operations at
the facility level.
Production, compression, treating and processing
equipment has an operating life typically between 20 and 60
years. The typical life of an application for this equipment
is between two and 10 years. A company can save signicant
capital over its life if it adopts a eet-type mentality toward
its equipment. The more a company can redistribute its existing assets to serve new growth areas, the less capital intensive its budgets and the more efcient its operations.
A great deal of fuel, chemical, electrical and maintenance expenses have been wasted over the years in the industry due to operation of equipment that was oversized
for its application. Additionally, operating expenses will
be minimized through reducing both spare parts inventory and training expenses.

APPROXIMATE COST TO LAY ONE MILE OF

COMPOSITE PIPELINE
3

ROW

$39,400

$39,400

PIPE

$42,050

$58,780

TRUCKING

$1,160

$3,360

ENGINEERING/SURVEY

$2,600

$2,600

INSTALLATION

$35,120

$38,200

SUPERVISION

$500

$500

CONTINGENCY

$11,900

$14,000

TOTAL

$132,730

$156,840
Source: Valerus

The development of unconventional gas plays are difcult to predict. The compositions of the gas, the wellhead pressures required, and the level of contaminants
all can change quickly as a drilling program moves into
new areas of the play. The Barnett, the Eagle Ford and the
Marcellus are all examples of plays whose compositions
vary drastically with drilling locations.
The system designer should ensure that the equipment
purchased can accommodate these potential changes and
that exibility is built into their design. This exibility
not only is benecial for the initial application for this
equipment but it also helps insure that this equipment is
suitable for redeployment in other future applications.
The cost of designing extra exibility is normally not particularly onerous when the equipment is rst purchased.
The modularization of facilities, standardization of
equipment and purposeful design of exible equipment
are practices that try to mitigate the potential economic
58 April 2013

hazard of having idle equipment that generates no revenue. These practices are generally best implemented by
large companies that operate in multiple basins and plays
and that can move equipment from one operating area to
another as needed.
For smaller companies whose asset base does not readily facilitate this strategy or for specialized circumstances,
the use of lease equipment can avoid poor equipment investments. Most of the major pieces of midstream equipment such as compression, processing plants and amine
units are available for lease from numerous vendors.
These vendors can provide not only equipment but operational services as well. In general, if a company cannot
foresee use of the equipment for longer than four years, it
is economically best to lease the equipment from a vendor.
In years when prices are low, margins are also low, and
companies have the lowest operating costs are the ones
that survive to enjoy the next upswing in prices. A key to
maintaining low operating costs is the proper application
of technology in our business.
The best engineering and operations work cannot
mitigate all of the risks faced by midstream companies in
unconventional gas plays. Some assets cannot be designed in a modular fashion economically and cannot be
moved to another area if production is not realized. The
only way to minimize the risks with these types of assets
is contractually.
The costs for laying pipelines, site preparation, foundation work and electrical infrastructure installation can
only be mitigated for a midstream company via the contractual agreement with a production company. The
temptation for midstream companies is to attempt to
have all capital cost risk-mitigated via aid-in-construction, throughput guarantees or nancial indemnities.
However, this strategy often encourages production companies to build their own midstream infrastructure,
which can create a competitor.
The companies that best understand the risks involved with grassroots plays can effectively mitigate
those risks through engineering design, and that can
craft the more workable contract schemes will be those
companies that are able to most greatly prot from unconventional gas developments.
The development of unconventional gas and oil plays
has transformed our industry over the past decade, and
this transformation will only continue in future years.
Companies that best understand the characteristics of
these plays understand how to design infrastructure and
equipment to mitigate the risks associated with these
plays and that can craft contracts with producers that can
mitigate the unavoidable capital risks will succeed in this
new environment.
Kevin A. Lawlor is director of engineering with
Valerus. Michael Conder is senior facility engineer
with Berry Petroleum Co.
MidstreamBusiness.com