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Energy Engineering
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Equipment Sizing and Economic Analysis of CHP Natural Gas Liquid Recovery Systems
Chad Olsen , Theodore A. Kozman & Dr. Jim Lee
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Engineering Management Program Department of Mechanical Engineering, University of Louisiana at Lafayette, P.O. Box 44170, Room 244 CLR Hall, Lafayette, LA, 70504, USA Phone: (337)482-5354 Fax: (337)482-5354 E-mail: Published online: 07 Jul 2009.

To cite this article: Chad Olsen , Theodore A. Kozman & Dr. Jim Lee (2009) Equipment Sizing and Economic Analysis of CHP Natural Gas Liquid Recovery Systems, Energy Engineering, 106:1, 7-23 To link to this article: http://dx.doi.org/10.1080/01998590909509164

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Equipment Sizing and Economic Analysis of CHP Natural Gas Liquid Recovery Systems
Downloaded by [Curtin University Library] at 22:32 14 August 2013 Chad Olsen, Theodore A. Kozman and Jim Lee

ABSTRACT The objective of this research is to develop a methodology for analyzing combined heat and power (CHP) natural gas liquid (NGL) recovery systems. The methodology developed around the central ideas of product recovery, possible recovery levels, and the exibility within the process, which led to the design of the CHP-NGL recovery system with equipment sizing and economic analysis methods. Requirements for sizing refrigeration units, heat exchangers, and pumps are discussed. Using costs associated with the project and relevant data of the system, the amount of NGL recovered, heating value, payback period, net present value of project, and the internal rate of return can be calculated to determine the economic feasibility of the project.

INTRODUCTION The oil and gas industry has been around for nearly a century and a half, producing the life blood of the modern world economy. The natural gas portion of this industry, however, is just beginning to show high progress in capitalizing and marketing this resource. In the past, natural gas has been an unwanted byproduct of crude oil production and has been vented or ared. As technology progresses, the ability to nd, capture, process, transport, and utilize this invisible resource to its full potential can be accomplished effectively and economically. Major ongoing problems found in the natural gas industry are the ability to safely process, store, and transport natural gas while maximizing throughput [1-6].

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The hydrocarbon dew point (HCDP) of natural gas has direct effects on the processing, storage, and transportation of natural gas through temperature and pressure [7]. Dew point is dened as the temperature at which condensation begins when natural gas is cooled at a constant pressure. As natural gas cools through processing and transportation, natural gas liquid (NGL) such as a combination of condensed propane, butane, and heavier hydrocarbons (C4+) with different dew point temperatures at a given pressure will condense or evaporate back and forth from vapors to liquids based on pressure changes [8]. The HCDP of natural gas is dictated by the transporter of the processed natural gas, which is to be less than 20F at pipeline pressures [9]. The problem is reaching this dew point and ensuring that the processed, or residual, natural gas dew point meets or exceeds this value. Keeping the natural gas in transportation pipelines within the temperature range of 40F to 120F is one of the safeguards against what is known as slugging [10]. Slugs form when the condensation of NGLs builds up in low points of the transportation pipelines, eventually causing a blockage. The slug is held in place by gravity until the upstream pressure is great enough to temporarily push through the liquid barrier. Until the slug is removed from the system, the downstream pressure is reduced dramatically and can cause numerous other problems and safety concerns both upstream and downstream of the slug. The problems associated with HCDP are most economically and environmentally mitigated by the implementation of equipment between the wellhead and the entrance to the transportation pipeline [11]. Solutions to prevent the condensation of NGLs in the transportation pipeline fall into three general categories: refrigeration, chemical, and physical methods [12-13]. The constant pressure from corporate managers and stockholders to cut costs and increase production frequently leaves HCDP projects for the future waiting until technology catches up. Meanwhile, the problems associated with NGLs cannot be tolerated by the end user, who expects a high quality product that performs to specication and doesnt cause any safety concerns. Many industrial facilities require a dry natural gas, free of NGLs for the production process. Having a wet natural gas, with moderate to high levels of NGLs, enter the system could cause both product and operational dangers. The same is true for residential customers who have natural gas furnaces in their homes. If a wet gas were to enter the burners, there is the possibility that the ame could be smothered or the wet gas could change the ame activity, caus-

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ing a potentially poisonous or explosive situation. These NGLs have been used as a prot stream throughout the development of natural gas processing and are tied to other industries, such as automotive and chemical [14]. The NGL nancial markets uctuate just as any other market, causing the recovery of these liquids to move in and out of economic protability. An instance of this was when the leaded automobile gas market had the regulations changed by the U. S. federal government for pollution reasons. This caused the recovery of leaded automobile gas to become environmentally and nancially unfriendly. The chemical manufacturing industry was able to pick up the slack in the recovered liquids demand shortly thereafter due to the large feed stocks available and advancing technology which nanced their recovery. Even with the new demand from the chemical and more currently the pharmaceutical industry, venting and aring of natural gas and NGL streams is still more favorable than capturing and selling natural gases and liquids. This is due, in large part, to the mentality that if you cannot see it, it is not a problem. With current environmental concerns, venting and aring are being slowly eliminated throughout the oil and gas industry. The objective of this research is to develop a methodology for analyzing combined heat and power (CHP) natural gas liquid (NGL) recovery systems. We will focus on combining the requirements of production throughput, reducing the physical footprint, and reducing the environmental footprint of the HCDP system through a CHP system. The analysis involves understanding how components are sized, how they interact, and what the economic feasibility of implementation is for this project. It will help us realize greater efciencies of equipment while maintaining a small physical and environmental footprint at a cost competitive advantage. Utilizing a CHP system to combine compression production with cooling requirements to meet multiple processing objectives will also be explored. The system diagram of a typical compressor engine utilizing refrigeration for NGL recovery is shown in Figure 1.

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EQUIPMENT SIZING Sizing equipment for a project should be done with full attention to the details of the system. For this type of project, there are three major components that need to be sized based on information of the engine and the process natural gas: the chilling unit, the heat exchangers, and the pumps.

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Figure 1. System Diagram

The most signicant sizing is that of the chilling unit needed to create the desired cold space used to cool the incoming natural gas. This is where the sizing will need to start, followed by an analysis of heat exchangers and nally the pumps. The heat exchanger and pump analysis should be done in parallel to optimize system performance. As ow rates change in the heat exchangers, the pump size could change, and vice versa. In sizing equipment, simplied equations will be presented, where appropriate, as a guide for the project manager to start the sizing process. Chiller Sizing The chiller unit of a CHP system will determine the production rate of NGLs, which will be the driving force for all other components related to the NGL recovery. This component is also the major economic consideration in the implementation of this system. In turn, the chiller unit is based upon the compressor engine and natural gas stream properties. However, since the compressor and natural gas streams are already known, assuming the natural gas composition remains constant, these conditions will dictate the chiller system. Understanding how to size a chiller system is therefore very signicant to the implementation of this system. The main pieces of information needed to accurately size the chiller unit for the proposed system are the physical properties of the natural gas,

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the quantity of gas being cooled, and to what degree the natural gas needs to be cooled. With this information it is possible to verify if the compressor can supply the amount of waste heat needed to run the chiller unit. This will then drive the sizes of the heat exchangers and the pumps of the system. Also, knowing what the cooling rate will be for the gas will determine how much NGL can be recovered. Depending on the gas throughput of the system, it may be possible to utilize an ammonia chiller. The process ow of the proposed system is designed with gravity as the driving force, thereby reducing the amount of electricity needed to run the chiller unit. Heat Exchanger Sizing A number of heat exchangers will be needed to implement this NGL recovery system. The main component of the system is the engine exhaust heat exchanger, with much smaller heat exchangers used for heat recovery from the lube oil and water jacket of the compressor. Depending on the design and capacities, the lube oil and water jacket exchangers could be simplied into a single larger exchanger to minimize costs. The prime factors for sizing come from the exhaust natural gas characteristics and the requirements for running the chiller unit. Sizing heat exchangers involving air, the available heat load (Q) that can be taken out of the ow, is important in order not to oversize the exchanger: Q = CFMAir T 1.13 (1)

Where Q is the Btu/minute load available in the air, CFMAir is cubic feet per minute of air, T is the change in temperature of the air before and after the heat exchanger, and 1.13 is a constant commonly used to ensure enough driving force in the working uid to function. The Btu load is known based on the chiller sizing, and the CFMAir is assumed to be constant based on the engine performance. Finding T will be a check to see if the engine exhaust can supply the heat to drive the heat exchanger. On the liquid side of the heat exchange using water as the working uid, the equation is essentially the same. The heat load that needs to be absorbed is known because both sides must transfer the same amount of heat. Using the following equation and setting either the Btu load or the T equal from equation (1), it is possible to nd the ow rate of the pump. Q = GPMWater T 500 (2)

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Where GPMWater is the ow rate measured by gallons per minute of water, and 500 is the constant based on manufacturers sizing equations. This type of heat exchanger sizing will be utilized multiple times in the cooling system, the lube oil, and water jacket heat exchangers. The main ideas for a project manager to keep in mind are how much uid needs to be circulated and how much heat needs to be transferred. Pump Sizing Pump sizing will be done in tandem with heat exchanger sizing and is dependent on the chiller sizing used to obtain an accurately sized pump. The main considerations in sizing a pump are the ow rate, usually in gallons per minute (GPM), and how much upstream height is associated with each pump. In the proposed CHP system there will be two pumps in the system, one to circulate the cooling uid and one to remove the recovered NGLs. The NGL recovery pump will depend on the rate at which NGLs are produced, which is a function of the chiller sizing. The coolant circulation pump will be based on the heat exchanger uid ow rates as discussed in the previous section.

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ECONOMIC ANALYSIS In determining the feasibility of implementing the system, the economic benets and cost need to be understood. The benets include increased natural gas quality, a new prot stream of selling the NGLs, and an increase in the efciency of the fuel being used. The costs associated with such a system include increased equipment capital, overhead such as maintenance, capacity to store the recovered NGLs, and the increased physical footprint of the compressor system. Each natural gas production facility is different and unique in both the equipment and arrangement of the equipment at the site. Natural gas may not always be fully processed before it is compressed or processed to remove a signicant portion of the NGLs. The majority of compressors do have liquid separators on the incoming header to the compressor, but they do not chill the incoming natural gas to remove NGLs found in the gas, such as the propane and butane. By adding a chiller system and recovering all of the NGLs through butane and a signicant portion of propane, a drier natural gas will be sent to the compressor, and a larger volume of

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NGLs can be recovered over and above a typical liquids separator. With the reduced amount of liquids reaching the compressor, the depth and frequency of maintenance needed will drop, and the amount of natural gas that can be compressed will increase. This will result in greater throughput of natural gas to the pay line per unit of fuel used to compress the natural gas. In the case of natural-gas-driven compressors, this means that less fuel gas is pulled off the natural gas stream to power the compressor, thereby allowing more natural gas to be delivered to the pay line. In the case of diesel-powered engines, greater fuel efciency would reduce the number of times that a tank would need to be lled during a given period of time, saving on delivery and diesel fuel costs if the diesel is not already produced on site. The major benet of NGL recovery is the realization of a new prot stream. Instead of aring, venting, or leaving the NGLs in the natural gas pipeline to form slugs, revenues can be generated from their individual sale. With better payback and moderate production rates, the ability to recover NGLs and to see a protable return is much greater. The economic analysis of implementing this system needs to be carefully looked at to ensure that the project will be protable. A facilities manager will not want to spend a large amount on a project that only ends up costing more in the long run. However, in some cases this may happen due to new and upcoming environmental regulations. A costly system may be required to bring a facility into environmental compliance, thereby avoiding a shut-in or hefty nes, and should not be overlooked. A system that can be both protable and environmentally friendly will be a positive factor for implementation. The major capital costs for implementation of this project are the heat exchangers, pumps, and the chiller. The other costs associated with implementation are the costs of piping, labor, and maintenance of the site after commissioning. The costs for the chiller, heat exchangers, and pumps are just the delivered cost of the equipment without considering the integration and installation costs. The piping cost includes the raw materials, pipe, ttings, and supports that will be needed to pipe in all of the equipment to the existing system. Labor includes the cost of manpower, lodging for the duration of the project, and equipment needed to complete the job. Transportation to and from the job site for men and equipment is also included, along with a miscellaneous category for any extras or contingency that come up during installation.

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The recurring costs of this project are essentially the maintenance of the new system. This would include the maintenance needed for the two new pumps, the chiller unit, and the new heat exchangers. Any cost savings on the compressor are removed due to the new maintenance costs of the additional system. While the costs can add up very quickly on a project, the benets associated with the project need to be properly analyzed. These benets will help keep the payback period short, and help the facility and parent company reduce the costs associated with environmental issues. The reduction in down time is due to reduced NGL build-up in pipelines and compressor components. With the reduction of slugs in lines and traps, the system can be kept running longer between slug formation. With the reduction of NGLs in the natural gas going into the pay line, there is less chance of developing transport pipeline nes. The nal step in the economic analysis is to take all of this information and generate a report on the economic feasibility of implementation. Based on a company discount rate, the internal rate of return can be calculated over a planning period for this project. Also calculated is the breakeven point of the project, or how long until the project becomes protable. The overall net present value of money is calculated for the same planning period along with the annual projected cash ow. The most obvious benet is that there is now a new product to sell, the recovered NGLs. This benet is variable due to the nature of supply and demand for the NGLs. As the market changes, the economic feasibility of NGL recovery will change. However, with the current prices of petroleum products, recovery is a protable project. Once the system has recovered the cost of implementation, it does not matter what the NGLs can be sold for, because all of it will be prot.

MANAGEMENT TOOL All of the ideas discussed above have been used separately in many industries for many decades, but this unique combination of theory and practice allows for the selection of a CHP system for NGL recovery with production, economics, and the environment in mind. Knowing what the key points are for a go or no go on a project is what makes the difference between a tool that is cumbersome and a tool that is straightforward for a manager to use. This knowledge helped to shape the de-

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velopment of the sizing and economic sections of the HCDP reduction management. Sizing of equipment is important to a project, because the tendency to either over- or under-size equipment based on past experience or judgments can prove to be dangerous and costly. In knowing what the needed variables of sizing are, a manager can more accurately and easily assimilate the needed data to make an informed decision. The information presented in the above sizing section was developed into forms to gather and centrally locate information about the process conditions for easy access and modication. Having this information in a single location and in an organized format makes the system easier to size and the progress of the project easier to track. Not only does this system keep all information organized for the manager, it also indicates which information is missing. Not having all the needed information can change the entire economic feasibility outlook of a project. Organizing the sizing information is a major advantage to a project manager, but having the economics organized may be of even more importance. The project manager is more than a technical person overseeing other technical people. The project manager needs to understand how a project will impact the facility, operating budget, and company as a whole. With economic analysis of a project done both before and during a project, it is easy to see where costs and benets can come up and change during a project or during a company policy change. The tool developed for economic analysis will report the internal rate of return and payback periods as well as cash ow on an annual basis for six years. It gives an at-a-glance view of what the cost needs of the project are and how the project will impact the facilitys or companys cash ow. The structure of the analysis tool also allows for easy what-if analysis as aspects of the project change before or during the course of the project. This will help to see what best and worst case scenarios will yield and what the costs can end up being both in the short and long run. In bringing these three concepts together in a coherent and logical fashion, the creation of a project management tool geared towards HCDP reduction is efciently created for the manager. The underlying framework of ideas and theory come from the project philosophy, the required data comes from the need of sizing equipment correctly, and the economic analysis comes from a project managers need to know how this project will impact other projects and the company as a whole.

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CASE STUDY Once the management tool has been developed, testing the system is necessary to validate the process using a case study. For pricing equipment needed in this project, various vendors were contacted throughout the country in the appropriate industry. A degree of uncertainty in the calculations is introduced due to the variability of natural gas composition and the use of an average engine and not a specic case. However, the general size and order of magnitude of the equipment and prices are sufcient in performing this case study. Refer to data in Tables 1 through 5.

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Table 1. Chiller Sizing Data Sheet

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Table 2. Heat Exchanger Sizing Data Sheet for Engine Exhaust Gas

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Table 3. Heat Exchanger Sizing Data Sheet for Lube Oil and Water Jacket

To fully understand if this project is worth pursuing, the economic analysis described in the previous section needs to be performed. The analysis includes estimation of one-time costs, the recurring costs, the tangible benets, and the nal analysis using rate of return and payback period. The estimated costs and benets are presented in Tables 6 and 7. The nal step is to take all of this information and generate a report on the economic feasibility of implementation. Based on a discount rate specic to a company, the internal rate of return can be calculated. Also calculated

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Table 4. Pump Sizing Datat Sheet for NGL Recovery

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is the break-even point or payback period of the project. The overall net present value of money is calculated for the same period along with the annual projected cash ow. This information is summarized in Table 7. The results in Table 7 are interesting to look at because such a small project is shown to be a big prot stream for the location. The payback period or break-even point of this project, with only the sales of the recovered NGLs as benet, is less than half a year. In the rst six years it is possible to produce nearly $5,000,000 in revenues for a typical facility. The internal rate of return goes above 80 percent in the second year, which is a signicant advantage over other projects, giving a manager a very strong selling point to the capital expenditures approval group.

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Table 5. Pump Sizing Data Sheet for Circulating Fluid

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CONCLUSION Both the practicality and economic feasibility of a CHP based NGL recovery system has been demonstrated in this research. Knowing what the recovery requirements are, knowing how much can be recovered, and designing a exible system, a project analysis methodology was developed. The utilization of only a few extra pieces of equipment coupled with a current system has been shown to be capable of meeting a managers NGL recovery needs. The calculations that determine the amount of cooling required and the amount of recovery possible are of signicant value to the manager

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Table 6. One-time cost Summary of Major Equipment

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of a natural gas producing facility. The data show a manager what is being wasted and provide information to understand how to avoid the continued costs of aring and venting. These calculations gave way to the development of an economic feasibility analysis of the costs and benets associated with the CHP system. While rm numbers were not completely possible to obtain, the order of magnitude was found for each component of the costs and benets. This facilitated the development of the economic feasibility spreadsheet that demonstrated that this type of project was not only environmentally friendly, but could also be highly protable for the facility. This type of system is capable of creating a signicant prot stream for a facility as well as signicantly reducing its environmental footprint. With the current level of environmental regulations, and those in the works now, this will not be an issue that fades away. These issues will continue to impact the operating budgets of facilities, and the sooner action is taken, the sooner prot will be realized from the investment. During the course of this research, many other topics of interest were discovered that could be developed further to ne tune and improve the system developed in this research. The most signicant area would be to design an automated system to more easily track this information in a database. This database could them be integrated into a companys facilities database to give the needed information to easily move ahead with this type of project on a large scale.

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Table 7. Economic Feasibility Report

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A more in-depth analysis of the impact of cooling the exhaust natural gas stream would also be a good area to investigate further. The change in temperature of the exhaust gas will have an effect on the performance of the engine, but the magnitude and effects of the change are unknown. This analysis could also yield insight on the air permitting needed for the modied compressor engine. One nal area that would be useful to explore is the use of a series thermoelectric generators (TEG) to directly generate electricity on-site for the electronic controls. Utilizing the waste heat from the water jacket and lube oil coolers to directly generate electricity for the system would be valuable for isolated facilities. The use of TEGs would be another way to increase the efciency of the system with minimal added cost and footprint. References
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of integrating NGL extraction and LNG liquefaction technology, 2005 AIChE Spring National Meeting, Conference Proceedings, 2005 AIChE Spring National Meeting, Conference Proceedings, 2005, p 1943-1958.

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ABOUT THE AUTHORS Chad Olsen received his M.S. in engineering management from University of Louisiana at Lafayette. He worked for the Industrial Assessment Center at the University of Louisiana at Lafayette and performed numerous energy assessments of industrial facilities throughout the region. He also worked as a project engineer for COMM Engineering on various projects. Theodore A. Kozman is a graduate faculty in the Department of Engineering and Technology Management and Mechanical Engineering, University of Louisiana Lafayette. He is director of the Department of Natural Resources (DOE grant) assigned Louisiana Industries of the Future Teams (LIFT) for statewide interaction with major industry energy users to develop roadmaps for the major energy problems, and director and founder of Louisiana Industrial Assessment Center to assist manufacturing in reducing energy, waste reduction and productivity improvement. He received his Ph.D. in engineering science and mechanics from the University of Tennessee. Jim Lee is M. Eloi Girard Professor in engineering management at the University of Louisiana Lafayette and associate director of Louisiana Industrial Assessment Center. He received his M.S. and Ph.D. degrees in industrial and management engineering from the University of Iowa. His research areas include simulation, statistical analysis, decision support systems, and computer-integrated production systems. Dr. Jim Lee Engineering Management Program Department of Mechanical Engineering P.O. Box 44170, Room 244 CLR Hall University of Louisiana at Lafayette Lafayette, LA 70504 USA Tel :(337)482-5354 Fax:(337)262-5472 email: jlee@louisiana.edu

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