Engineering Design Exercise for Oil Field Development

Introduction

Process design entails making trade-offs between competing factors and working within constraints that go beyond purely technical considerations.  This is particularly true during the conceptual design stage of large projects when process engineering decisions must be made that balance economic, safety, environmental and political factors.  Process design encompasses the skills of synthesis (creating options) and analysis (evaluating options) in order to arrive at engineering solutions.  This exercise focuses on conceptual engineering design decisions and provides an opportunity to apply these skills and to examine the same problem from a number of competing perspectives.

Background Information

The country of Megabuckland has discovered a significant oil field with estimated recoverable reserves of 3.5 billion barrels.  The government wants to develop these reserves to secure its own energy needs and to establish itself as a refined oil products and petrochemical provider to the region, however, there is insufficient technical capability in-country that could deliver a project on this scale.  Consequently, it has entered into a Production Sharing Agreement with Strath Oil Company Ltd and it has also secured a loan from the World Bank to fund its share of the capital costs.  Strath Oil Company Ltd is responsible for the overall project to develop the offshore reserves, onshore processing facilities and product export routes.

A preliminary design concept for the offshore field development has been put forward by Strath and is excluded from the scope of this exercise.  The onshore processing facilities and export routes have still to be defined and comprise the content of this exercise.

The three parties – the state owned oil company (MegaOil), Nocandoo Consultants working for the World Bank, and Strath have been tasked by the government to present their own design concepts for the onshore facilities and export routes in the form of a short report.  You will have been assigned a role as one of these three parties and a group.  You should undertake the exercise from that perspective. 

The report (excluding appendices) should be limited to four pages of A4 in Arial 11 point.  It should provide an outline of the overall processing scheme for the onshore facilities and objectives of the project with justification for each of your major decisions.  It should include the following components:

-A block diagram of the facilities showing key unit operations.

-A list of final products.

-Export routes and their capacities.

-Total estimated capital expenditure.

Group Report Requirements

-An outline economic assessment.

-A statement on energy consumption.

-A brief environmental impact statement.

-A paragraph outlining what you think may be the main negotiating points with the other two parties and uncertainties that would need to be resolved.

-2,000 words maximum,Summarise your approach from the stakeholders’ perspective.

-Reflections on where some of the difficulties/risks will arise in trying to align with other stakeholders.

Electricity generation capacity 1.2 GW.  Megabuckland has signed up to the Kyoto Protocol as part of its agreement with the World Bank and has struggled to achieve its targets against a backdrop of increasing oil production.  Plans are in place to develop a 140 MW gas fired power station to replace existing coal fired capacity.

Refining capacity = 125 mbd stabilised oil.  No planned upgrades to refining capacity but demand for road and air fuels is growing at 5% per annum.

The government is in early negotiations with a European petrochemical company to develop a 0.5 million tonne per annum ethylene plant which could start up in 2015.

Existing oil export pipeline capacity is 150 mbd to China but crude exported this route tends to be discounted at up to $5 per barrel over what could be realised in North America or Europe but the government is keen to keep this route open as it is heavily dependent on trade from China.  A project by MegaOil to expand the capacity of this route has stalled in the past two years due to economics.

The nearest port for exporting crude oil to Europe and North America is approximately 1,000 km away.

The country currently has no LPG (propane and butane) internal market and therefore no LPG storage, distribution or export facilities

The PSA effective date is 1 January 2019 and lasts for 30 years after which ownership reverts to the state owned oil company.  Year 1 production must start prior to 1 January 2023.

Operating costs are recovered by Strath as quantities of crude oil at the equivalent value.

Capital expenditure is recovered by Strath as quantities of crude oil up to a maximum of 50% of the remaining oil after operating costs have been recovered.

The remaining production after operating and capital cost recovery is split equally between Strath and MegaOil.

Offshore Pipeline Oil density 822.5 kg/m³

Sales oil density 830 kg/m³

Oil heat capacity  2.1 kJ/kg K

CO₂ content of offshore pipeline oil 0.2 wt% (excluded from mass balance above)

Water heat capacity  4.18 kJ/kg K

The unstabilised crude oil is pumped ashore and has an arrival pressure of 60 barg, and temperature of 6°C.

Onshore facilities power demand ~56 MW (electrical requirements plus pump/compressor drivers)

Onshore facilities gas processing heat demand ~4 MW per fractionation unit

Fuel gas (nominal value) 23 - 30 $/te

Cracker Feedstock     75 – 90 $/te

Ethane 115 - 145 $/te

Propane 150 - 224 $/te

Butane 140 - 255 $/te

Condensate 100 - 123 $/te

Oil 40 - 65 $/bbl

Oil   <0.5% vol. water, Vapour Pressure < 0.82 bar @ 25°C

Fuel Gas  LHV > 47 MJ/kg, max 75 ppmw water

Ethane  Max. 1 mol% methane

Propane Max 0.5 mol % ethane, max 2 mol % butane

Butane Max 0.5 mol% propane, max 1 mol % condensate

Condensate Max 0.5 mol % butane.

Water discharge to sea: <25 ppm (vol) oil

Flaring is generally only allowed for emergencies.  Flaring to maintain oil production may be done under government consent.

-In order to ensure that the export oil vapour pressure specification is achieved it must be heated to a minimum of 55°C and the pressure reduced to 0.2 barg in a final flash stage.

-There is no limit on the amount of condensate that can be injected into the export oil and still achieve the vapour pressure specification.

-The maximum amount of butane which can be injected into the oil export is 1% by weight.

-No components consisting of propane or lighter can be injected into the export oil.

-Cracker feedstock can be any combination of ethane, propane and butane.  The cracking reaction is:  C_xH_y à^x/₂ C₂H₄ + H₂

-Surplus fuel gas can be absorbed into the country’s gas infrastructure but there will be no monetary compensation from the state owned gas company for this feedstock.

-A gas turbine for power generation can is assumed to be 28% efficient.  If waste heat recovery is employed then the additional heat available is a further 42% of the rated turbine power.

-Crude stabilisation train turndown ~25%, maximum capacity per train 300 mbd.

-Planned availability of the facilities is 95%.

-Operating costs can be assumed to be 1% of total capital costs annualised.