Convert Gas Pneumatic Controls to Instrument Air Lessons Learned from Natural Gas STAR Partners EPA’s Natural Gas STAR Program, Pioneer Natural Resources USA, Inc., and Pioneer Natural Resources USA, Inc., and The Gas Processors Association June 17, 2003

Page 2 Reducing Emissions, Increasing Efficiency, Maximizing Profits Air Pneumatic Devices O Methane Losses O Methane Recovery O Is Recovery Profitable? O Spreadsheet-based Analytical Tools O Industry Experience O Discussion Questions

Page 3 Reducing Emissions, Increasing Efficiency, Maximizing Profits Natural Gas Pneumatic System Gas Out Pressure Controller Natural Gas from Plant Inlet Fluids Liquid Out Utility Services Instrumentation and Control Systems Piping Network PSI Network LLC LLC: Liquid Level Controller

Page 4 Reducing Emissions, Increasing Efficiency, Maximizing Profits Sources of Methane Losses O As part of normal operations, pneumatic devices release natural gas into the atmosphere O High-bleed devices bleed in excess of 6 scf per hour u Equates to >50 Mcf/ year u Typical high-bleed pneumatic devices bleed an average of 140 Mcf/year

Page 5 Reducing Emissions, Increasing Efficiency, Maximizing Profits Magnitude of Methane Losses O Major source of methane losses from the natural gas industry O Pneumatic devices are used throughout the natural gas industry u Over 13,000 in the processing sector u Estimated methane loss of 16 Bcf/year = $48 million!

Page 6 Reducing Emissions, Increasing Efficiency, Maximizing Profits Convert to Instrument Air devices O Most applicable to: u Large facility with high bleed pneumatic devices and has access to electricity O Major components of instrument air system u Compressor u Power Source u Air Drier u Volume Tank

Page 7 Reducing Emissions, Increasing Efficiency, Maximizing Profits Compressed Instrument Air System Gas Out Pressure Controller Air from Atmosphere Inlet Fluids Liquid Out Utility Services Instrumentation and Control Systems Piping Network PSI Network LLC LLC: Liquid Level Controller Air Drier Compressor Volume Tank

Page 8 Reducing Emissions, Increasing Efficiency, Maximizing Profits Instrument Air Decision Process Identify possible locations for system installations Estimate project costs Determine optimal system capacity Estimate gas savings Evaluate economics Develop an implementation plan

Page 9 Reducing Emissions, Increasing Efficiency, Maximizing Profits Determine Optimal System Capacity O Instrument Air Requirements u Volume of the compressed air  Meter pneumatic gas supply  Rule of Thumb: 1 cfm air/control loop u Adjust for air losses  17% of air input is bypassed in drier O Utility Air Requirements u Rule of Thumb for pneumatic air systems:  1/3 for instrument air  2/3 for utility air

Page 10 Reducing Emissions, Increasing Efficiency, Maximizing Profits Calculate Gas Savings O Determine the Gas Value Saved u Value of Gas = (IA u + UA u ) * M * P/1000  IA u = Instrument Air Use: e.g. 35 control loops  UA u = Utility Air Use: e.g. assume 10 cfm utility gas  M = Minutes in a year (525,600)  P = Price of Gas: assume $3.00/Mcf u Value of Gas = (35*1 + 10) * 525,600 * 3.00 / 1,000  Value of Gas Saved = $ 71,000/year

Page 11 Reducing Emissions, Increasing Efficiency, Maximizing Profits Calculate Compressor Size O Determine Air Compressor Capacity u Air Compressor Capacity = IA S + UA S  IA S = Instrument Air Supply =IA U / (100% - % air bypassed in drier) =IA U / (100% - % air bypassed in drier)  UA S = Utility Air Supply IA U * (fraction of utility air use) / (fraction of instrument air use) = IA U * (fraction of utility air use) / (fraction of instrument air use) u Air Compressor Capacity = [(35 /(100% - 17%)) +((35*(2/3))/(1/3))] = 112 cfm

Page 12 Reducing Emissions, Increasing Efficiency, Maximizing Profits Determine Compressor Costs

Page 13 Reducing Emissions, Increasing Efficiency, Maximizing Profits Determine Cost of Tank

Page 14 Reducing Emissions, Increasing Efficiency, Maximizing Profits Determine Cost of Drier

Page 15 Reducing Emissions, Increasing Efficiency, Maximizing Profits Calculate Capital and Operating Costs O Determine Capital Cost u Equipment Cost = Compressors Cost (2)+Tank Cost (2)+Dryer Cost Compressors Cost (2)+Tank Cost (2)+Dryer Cost = 2*$12, *$ *$4,500 u Equipment Cost * Installation Cost Factor Total Capital Cost = $30,500*1.5 = $45,750 Total Capital Cost = $30,500*1.5 = $45,750 O Determine Operating Cost u Electrical Power = $13,140 Engine Power * Operating Factor * Electricity Cost Engine Power * Operating Factor * Electricity Cost

Page 16 Reducing Emissions, Increasing Efficiency, Maximizing Profits Economics of Replacement 1 Electrical Power at 7.5 cents/ kWh. 2 Maintenance costs include $1,200 compressor service and $2,000 air drier membrane replacement 3 Compressor overhaul cost of $3,000, inflated at 10% per year 4 Value of gas = $3.00/Mcf 5 Net Present Value (NPV) based on 10% discount rate for 5 years Year 0Year 1Year 2Year 3Year 4Year 5 Installation Cost ($)(45,750) O&M Cost ($)0(13,140) 1 (3,200) 2 (13,140) (3,200) (13,140) (3,200) (13,140) (3,200) (13,140) (3,200) Overhaul Cost ($)00000(4,800) 3 Total Cost ($)(45,750)(16,340) (21,140) Gas Savings ($)071, ,000 Annual Cash Flow ($)(45,750)54,660 49,860 Cumulative Cash Flow ($) (45,750)8,91063,570118,230172,890222,750 Payback Period (months)10 IRR117 % NPV 5 $158,454

Page 17 Reducing Emissions, Increasing Efficiency, Maximizing Profits Partner Experience: Spirit Energy ‘76 O Installed air compression system in its Fresh Water Bayou facility O Project Cost = $60,000 O Emissions Reductions = 69,350 Mcf/year O Savings = $208,050 /year O Payback Period < 4 months

Page 18 Reducing Emissions, Increasing Efficiency, Maximizing Profits Partner Experience : Texaco O Installed compressed air system to drive pneumatic devices in 10 South Louisiana facilities O Project Cost = $40,000 O Emissions Reductions = 23,000 Mcf/year O Savings = $69,000 / year O Payback Period ~ 7 months

Page 19 Reducing Emissions, Increasing Efficiency, Maximizing Profits Lessons Learned O Instrument air system has potential to increase revenue and cut methane emissions O It may extend the life of system equipment O Installing low-bleed devices in conjunction with switch to instrument air is economical O Existing infrastructure can be used O Rotary air compressors lubricated with oil must be filtered ahead of membrane dryer

Page 20 Reducing Emissions, Increasing Efficiency, Maximizing Profits Other Technologies O Liquid nitrogen system u Expensive and potential safety hazard O Mechanical controls and instrumentation system u No power source needed u Limited application, frequent calibration required O Electric and electro-pneumatic devices

Page 21 Reducing Emissions, Increasing Efficiency, Maximizing Profits Discussion Questions O To what extent are you implementing this BMP? O How can this Lessons Learned study be improved upon or altered for use in your operation(s)? O What are the barriers (technological, economic, lack of information, etc.) that are preventing you from implementing this technology?