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The Energy Sector: Closer look at natural gas

September 25, 2016  

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After five years under $5/gigajoule, we should now be all-too familiar with the tales of natural gas price wows. After all, they have been in almost steady decline since peaking around $12/gigajoule in the summer of 2008. And except for brief period in 2014, they have been at near record lows in the $2 to $3 range for the past year, with little change forecasted on the horizon.

During the same time period, the annual domestic sales of natural gas have continued to increase. The difference has come from imports so much so that Canada is now a net importer of natural gas. The other shift has been in the sources for natural gas, with conventional fields making up only eight per cent of the reserves and the largest share at 49 per cent classified as “tight gas” — meaning that hydraulic fracturing techniques are required to get sufficient porosity for the gas to flow to the well bore. Surprisingly, despite these low prices and the plunge in the number of wells drilled to less than 2,000 per year, the annual production rate has not declined significantly.

That should mean that natural gas producers have quickly adapted to this new price regime by becoming more efficient producers than ever before. The Alberta government’s Petrochemicals Diversification program to use the Western Sedimentary basin gas and derivatives as feedstock for these facilities is intended to reverse the downward trend in domestic production while eventually providing additional incentive to develop fields and reserves that might otherwise have been left in place.

Another saving grace for natural gas producers has been the demand for condensate as a diluent. However, as more bitumen gets shipped by rail, for which diluent is not required, this market could also gradually deteriorate. An area of opportunity for the industry is to see more gas plants capturing the natural gas liquids produced in their gathering systems.

That said, the requirements to do so are not simple. Operating an NGL facility requires more equipment than a plant that only needs to meet the pipeline dew point requirements. NGL as per propane price is approximately 10 times the price of natural gas — though heating value is only 2.5 times of methane, which is often 97 per cent of the composition of a natural gas stream.

Dew point control to meet the minimum pipeline requirements can be done with a simple dehydrator at a compressor station. It would require not much more than either local loop controllers or small programmable logic controllers (PLC) or remote terminal units (RTU) that also served as data collectors for the SCADA system, reporting back to the central gas plant and to provide production accounting information.

Increasing the processing requirements also means more automation and control, typically as a minimum a PLC-based system to manage the larger assortment of control loops required as well as the interaction between the different parts of the facility. This also provides the ability to control the plant to produce different ratios of products by controlling, pressure, temperature and flow rates.

With today’s microprocessor-based field devices, it is also possible to measure the gas composition/heating value in real time at each well site to optimize the blend of feed gas. Doing so will allow operators to match the desired product spread within the design constraints of the process equipment (distillation towers mostly) of the plant.

Supervisory Control And Data Acquisition (SCADA) systems have been used for several decades now to connect gas plants to their production wells, as well as monitor and control pipelines. This technology continues to improve and evolve, making it easier to implement and accessible from anywhere or if desired operate multiple facilities from a single control room. SCADA does not remove the requirement for field operators, though it can make them more effective.

With the increasing importance of SCADA for monitoring and control, ISA has initiated a new standard project ( templates/news-detail.aspx?id=147644) to address the gaps between the existing standards developed for the individual elements of these systems. The kick-off meeting for this committee will be held Sept. 27. If you or your organization is interested in participating, please follow the contacts in the above link. Just like in other industries, automation will be part of solution for natural gas to stay competitive.

Like knowing your inventory or sales and revenue flow in business, automation provides a better understanding of what is happening in your processes and facilities, and allows you to forecast and manage your cash flow and profits more effectively.

About the author: Ian Verhappen is a professional engineer, ISA Fellow, certified automation professional, and a recognized authority on industrial communications and process analyzer technologies with 25-plus years’ experience in the hydrocarbon industry. Verhappen provides global consulting services specializing in industrial communications, SCADA, process analytics and heavy oil / oil sands automation. Reader feedback is always welcome. Verhappen can be reached at Reference: Much of the statistical information above was obtained from the Canadian Gas Association (2016-08-02).