Disclaimer This publication was prepared for the Canadian Association of Petroleum Producers, the Gas Processing Association

Canada, the Alberta Department of Energy, the Alberta Energy Resources and Conservation Board, Small Explorers and Producers Association of Canada and Natural Resources Canada. by CETAC-West. While it is believed that the information contained herein is reliable under the conditions and subject to the limitations set out, CETAC-West and the funding organizations do not guarantee its accuracy. The use of this report or any information contained will be at the users sole risk, regardless of any fault or negligence of CETAC-West or the sponsors.

Acknowledgements This Fuel Gas Efficiency Best Management Practice Series was developed by CETAC WEST with contributions from: Accurata Inc. Clearstone Engineering Ltd. RCL Environmental REM Technology Inc. Sensor Environmental Services Ltd. Sirius Products Inc. Sulphur Experts Inc. Amine Experts Inc. Tartan Engineering

CETAC-WEST is a private sector, not-for-profit corporation with a mandate to encourage advancements in environmental and economic performance in Western Canada. The corporation has formed linkages between technology producers, industry experts, and industry associates to facilitate this process. Since 2000, CETAC-WEST has sponsored a highly successful ecoefficiency program aimed at reducing energy consumption in the Upstream Oil and Gas Industry.
Head Office # 420, 715 - 5th Ave SW Calgary, Alberta Canada T2P2X6 Tel: (403) 777-9595 Fax: (403) 777-9599 cetac@cetacwest.com

Table of Contents

1. Background 2. Who Developed the BMPs? 3. Why Were the BMPs Created? 4. How to Use the BMPs 5. Available Training and Resources 6. How to Measure Success 7. Appendix A
Efficiency Committee Membership

1 1 2 4 5 5 7

1.

Best Management Practices (BMP) Background

Does your company know the dollar value of how much fuel gas it uses in upstream processing? This question will become increasingly critical as the costs relating to the production of natural gas will continue to increase and greater focus is placed on industry to employ environmentally sound practices in all aspects of its operations. Total fuel gas consumption, which may be defined as the part of the produced natural gas consumed by operations in the production, transportation and processing of natural gas from the wellhead to the sales line, is increasing. Even a moderate reduction in fuel gas consumption could translate in savings of millions of dollars. The amount of total fuel gas consumption in 2006 from the Upstream Oil and Gas Industry (oil and gas batteries, gas gathering systems and gas processing plants excluding bitumen batteries and straddle plants) was more than 10.5 billion cubic metres. A ten percent reduction in fuel gas consumption could result in an estimated savings of more than $300 million per year at $7.5/GJ (or enough to heat more than 300,000 homes) and a reduction in greenhouse gas emissions of over 2.1 million tonnes of CO2 equivalent per year. Reducing fuel consumption at a facility reduces operating costs, air emissions and makes a facility more competitive so it can operate for a longer period of time. More efficient use of energy resources will extend both the life of the facilities and the oil and gas industry in Alberta. Currently, fuel gas optimization by industry is not a regulatory or legislative requirement. While there is a strong interest by regulators in Alberta in improving efficiencies, doing so without additional regulation is the preferred approach, provided it is successful. These BMPs are a first step to assist industry in identifying and implementing opportunities for greater fuel gas efficiencies. The success of this initiative will determine whether industry can proactively use these BMPs to improve efficiencies or whether regulatory initiatives are necessary.

2.

Who Developed the BMPs?

In order to further examine this issue and explore ways, other than by regulation, to encourage industry to become more efficient in fuel gas usage, a government/industry working committee was established in April 2006. The committee included industry representatives from the Canadian Association of Petroleum Producers (CAPP), the Small Explorers and Producers Association of Canada, the Gas Producing Association Canada, several other large industry players and government representatives from the Department of Energy (DoE), the Energy Resources Conservation Board and Natural Resources Canada.

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3.

Why were the BMPs Created?

The Terms of Reference mission statement is to set direction and provide leadership to improve the upstream industrys petroleum energy efficiency per unit of production and reduction of fuel gas use in oil and gas production, pipeline and gas processing facilities regulated by the EUB. (now the ERCB) Generally, there has been an increase in the amount of fuel gas use in the upstream sector. The following chart shows total fuel use in the upstream sector:

Source: ERCB

Of this fuel gas approximately 43 percent of the fuel gas consumption can be attributed to gas processing plants, 35 percent to gas gathering systems and 22 percent to gas and oil batteries.

Source: ERCB

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While information is available on how to efficiently run and maintain equipment in upstream gas processing, this information is not always available from a single source. Making such information more accessible would facilitate industrys efforts to maximize the effectiveness of their operations. To this end, the committees first action was to support the development of a BMP which identifies fuel gas efficiency opportunities. The BMP will assist industry in identifying opportunities to reduce fuel gas usage in upstream gas processing, often with minimal or no capital investment; providing information to industry on how equipment should be operated for maximum efficiency; and reducing fugitive emissions, thereby contributing to the reduction of greenhouse gases.

4.

How to Use the BMPs

To effectively use these BMPs a company needs the support of senior executives who can track and reward the business units for improving efficiencies and reducing costs. This is critical to ensure improvements in efficiencies become a lasting success for the companies. These improvements need to become part of the companys operating policy; this will be facilitated if there are individuals who are truly committed to improving efficiencies and successes are advertised, shared and promoted across the company. The type of equipment being operated by the company and how much fuel being consumed are two factors which will help determine how the BMPs will be used. Before implementing changes, a company should examine which modules will be applicable to their facilities. In Alberta, fuel gas measurement is required when site fuel gas use becomes significant (greater than 500 m3/d). For the purpose of the BMPs, it is recommended that, as a minimum, companies should carefully examine opportunities for improvement in fuel gas efficiencies when site use exceeds this number. Furthermore, companies should be aware of which equipment accounts for larger fuel use and the reasons behind why energy consumption on a site is increasing or decreasing.

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At the front of each BMP module is a flow chart which identifies three potential locations for the processing equipment: in the field; at a sweet gas plant or; at a sour gas plant. The following example is from Module 6 Fired Heaters

FIELD

SWEET GAS PLANTS

Different modules will provide the most appropriate information depending on the location of the equipment. For each module the flow chart highlights where it best fits amongst the three locations. Each BMP module: identifies the typical impediments to achieving high levels of operating efficiency with respect to fuel gas consumption; presents strategies for achieving cost effective improvements through inspection, maintenance, operating practices and the replacement of underperforming components; and identifies technical considerations and limitations.

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5. Available Training and Resources

Many industries have started to change how they operate their business to include more efficient and environmentally friendly practices. This reflects increasing demands from the public who are becoming more educated and aware of the potential impact of fossil fuel development on the land, air, water and other resources. There is also increased pressure for industry to reduce the levels of greenhouse gases (GHG) emitted during processing, with financial incentives for reductions in GHG emissions and increasing penalties for those who fail to comply. To respond to this increased need for information, some companies, especially the larger ones, have in-house resources available to assist with staff training and to identify opportunities for greater efficiencies. In addition, there are a number of external resources available for training to help staff develop and incorporate efficient practices into their business practices. There are also companies who can provide a range of services including undertaking on-site energy efficiency audits, establishing benchmarking of equipment as well as providing more energy efficient equipment.

6.

How to Measure Success

What you do not measure, you cannot control. Tom Peters

A first step is to determine the amount of fuel gas being used by your company in upstream processing. Some companies already track this information but it isnt always at a sufficiently detailed level. More importantly, attaching a dollar value to the fuel gas used provides tangible support as to the size of the prize. Having such information will also assist in determining where the process would most greatly benefit from application of the BMPs. Benchmarking can be completed internally; there are also resources available externally who can undertake an efficiency audit of the process. Once benchmarks have been established, data needs to be collected on an ongoing basis to determine the effectiveness of the BMP and areas where application was effective as well as areas for enhancement or improvement. A number of steps can be taken to improve efficiency with minimal associated cost or time. A decrease in overall fuel gas usage or a better ratio between amount of fuel gas used and amount of gas processed will be a sign of success. Industry is starting to voluntarily identify opportunities to operate in a more efficient, environmentally responsible manner. This makes economic sense but can also contribute to a more positive image of industry by landowners and other stakeholders. If industry can demonstrate that it can successfully manage or reduced fuel gas use by undertaking voluntary measures, there will be less -5-

incentive for government to mandate such reductions through regulations or legislation which can be more costly and time consuming for industry. The Fuel Gas Committee is continuing its work on how to facilitate identifying appropriate benchmarks and tracking changes in fuel gas use. Additional information will be added to this module as it becomes available.

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Appendix A
Fuel Gas Efficiency Committee Membership 2007/08
The attached list identifies committee members who contributed towards the development of the Fuel Gas Efficiencies Best Management Practices manual. Members no longer participating on the committee by March 31, 2008 have been identified in italics. Alberta Department of Energy Alberta Energy Resources Conservation Board AltaGas Ltd. BP Canada Canadian Association of Petroleum Producers ConocoPhillips Dillon Consulting Gas Processing Association Canada Husky Oil Operations Ltd. Natural Resources Canada Small Explorers and Producers Association of Canada Suncor Energy Vantage Engineering Inc. Gas Processing Association of Canada

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