2. Co-Gen and Waste Heat Power Generation Potential in the Upstream Oil & Gas Industry 53rd Canadian Chemical Engineering Conf. October 29, 2003 Bruce Peachey, P.Eng. New Paradigm Engineering Ltd., Edmonton

3. Oil & Gas Sector Energy Use  Estimated sector energy use 1300 PJ/yr  Energy value = $5 billion/yr assuming $4/GJ  Vents, Flares and Fugitives value = $0.5 b/yr  Most producer energy use is “off-the-books”  Loss in potential revenue, not a direct cost  Many energy streams (fuel, vents and flares) are not adequately measured, monitored or assessed

4. First Prize - Increase Efficiency  Potential Economic Energy and Emission Reductions  Over $ 1 Billion per year for the oil & gas industry 15% reduction in energy use = $ 780 million/yr 45% reduction in other emissions = $220 million/yr**  GHG emissions reductions = 29 MtCO 2 e/yr  Excludes potential energy revenue or savings from cogeneration and other sources in the industry * Sources: NRCan, Clearstone Engineering, AEUB ** Alberta only Prepared by PTAC - Petroleum Technology Alliance Canada www.ptac.org

5. Cogeneration After Deregulation  Husky Lloydminster (TransAlta) - 220 MW (1999)  Dow Ft Saskatchewan (TransAlta) - 118 MW (1999)  Syncrude Mildred Lake - 80 MW (2000)  Nova Chem Joffre (EpCor/Atco) - 416 MW (2001)  Suncor Poplar Creek (TransAlta) - 356 MW (2001)  Imperial Oil Cold Lake - 170 MW (2002)  TransCanada Power Alberta - 392 MW Cancarb - 27 MW; Bear Creek - 80 MW; Carseland - 80 MW; MacKay River - 165 MW; Redwater - 40 MW  Over 1750 MWe - All made possible by deregulation of generation

6. Co-Generation Basics  Usually use exhaust of power generator to heat a process stream.  Just requires addition of heat exchange  Brings power generation up to efficiency of steam generation.

7. CoGen Potential for Oil and Gas? Oilsands Mining Gas Plants Thermal Heavy Oil Petrochemicals ? Gas Transmission Oil and Gas Production

8. Upstream O&G Energy Use Distribution

9. Gas Transportation Energy Distribution Ref: CAPP Pub #1999-0009

10. Second Prize - Co-Generation  May, 1991 CAPP Study - “CO 2 Reduction Through Energy Conservation” - Co-Gen Potential Main sources considered - 34 Major Sour Gas Plants Cogeneration potential - 12% of industry energy use Power from Cogen - 1100 MW Almost 20% of Alberta’s Current Power Use  Actions taken back then: Little or none mainly due to regulated power  So this prize is still there!

11. Why No Co-Gen in Gas Plants?  Most plants are older (1950-1980) A few have cogen for own power needs due to necessity  Few new large gas plants being built  Extremely difficult to economically and efficiently retrofit cogen into an old plant Has to be intimately integrated into the process Construction while a sour plant is in operation is hazardous to workers Months of downtime would not be acceptable

12. Why no Co-Gen in Oil and Gas Production?  Thousands of facilities that are small and often isolated from power lines  Heat loads and power loads don’t match and are geographically dispersed Often power loads goes up over time while heating loads drop  Power companies not interested in dealing with multiple small sources Often a safety issue, but also a lot more hassle

13. Third Prize - ORC Power from Waste Heat  Organic Rankine Cycle (ORC) Power Generation Used in Geothermal Applications (e.g. Birdsville Australia) Propane, Butane or Pentane power fluid Adapt to use heat from any waste heat source > 60 o C

14. Gold Creek ORMAT Energy Converter - 6 MW Photo from www.ormat.com

15. Gold Creek, Alberta  6.5 MW ORC installed on a gas turbine exhaust  Air cooled process  Operational since 1999  Fully automatic, self regulating  Unattended (2 hr/day check by operator of station)  Availability in excess of 95%  Avoids 40,000 tons/yr of CO2 emissions  $1/MW total for Operations and Maintenance Taken from ORMAT Presentationby H.M. Leibowitz PTAC Climate Change and GHG Workshop May 2002

16. Benefits of ORC Power Generation  Power with minimal incremental fuel or emissions  Uses energy that is currently lost  Proven for many years in Geothermal applications around the world  Can use low quality energy streams like hot water or exhaust gases  Potential for use in compressor stations, gas plants, oil production or thermal heavy oil

17. E.g. Thermal Heavy Oil Combine Cogen & ORC to Displace Power from Coal

18. E.g. “Geothermal Energy” - Swan Hills, Ab  Heat energy in Produced Water between 80 to 60 o C = 38.5 MW(h) Over 40,000m3/d produced water at 80 o C produced with the oil »(NB - Over 1 million m3/d of produced water in Alberta) Could produce 2-6 MW(e) of power with a propane ORC system (more in winter)  Combine with picking up waste heat from gas plant, oil battery and compressors Gas Plant already has a propane refrigeration process  Displace part of the 12 MWe of purchased power. Prize = $3-6+ million/yr at this site. (over $100M/yr in Alberta?)

19. What’s Hindering CoGen/Waste Heat?  Efficiency isn’t a major business focus Shareholders don’t see the energy losses  Many losses are not measured You can’t manage what you don’t measure  Power Deregulation and GHG Rules Still Fuzzy How do you decide if you want to be in the power game?  Everyone is overworked Producers don’t have time to understand the potential Aren’t any vendors for low cost systems  Systems can’t be seen to hurt oil and gas production

20. What is changing?  Power prices higher and volatile Producers want to get off the grid Feeding the grid more attractive now  Gas prices higher and will continue to go up Increasing demand, decreasing supply Energy efficiency needed to stay profitable  Shareholders and Markets forcing “off-the-books” costs into the open  Focus on GHG reductions

21. What is Needed?  Research - More people working on understanding ORC systems and looking for ways to reduce costs Modeling of ORC systems Process studies Good work for graduates which would attract NSERC and Kyoto funding  Motivation - Continued pressure on producers to become more energy efficient  Innovation - Combining the research and motivation into profitable applications

22. Summary  There is enormous potential for Co-Gen and Waste Heat Power Generation in the Upstream Oil and Gas Industry  Co-Gen for large centralized heat intensive operations  Waste Heat for smaller distributed generation  In Canada, systems will need to be flexible, easy to retrofit, and economic  Now we need people to get interested in it!

23. Contact Information New Paradigm Engineering Ltd. 10444 - 20th Avenue Edmonton, Alberta Canada T6J 5A2 tel: 780.448.9195 fax: 780.462.7297 email: bruce@newparadigm.ab.ca web: www.newparadigm.ab.ca