Gas Flaring in Petroleos Mexicanos- Guillermo Camacho. Deputy Director of Operational Discipline,
Safety, Health and Environmental Protection
- Miguel Angel Maciel. Strategic Planning, Manager. Pemex Exploration and Production
EXTRACTIVE INDUSTRIES WEEK The World Bank
March 3-5, Washington, D.C.
2
Agenda
Energy Legal Reform and Pemex´s Vision
Diagnosis
Introduction
Case study: Gas flaring reduction in Cantarell
Conclusions
Next steps
Pemex´s brief description
3
Introduction
4
Introduction
• The Federal Government of Mexico considers energy efficiency and climate change as two crucial issues for the global society.
• The Global Gas Flaring Reduction Partnership (GGFR) was launched in August 2002 at the World Summit on Sustainable Development.
• The purpose of GGFR is to support governments, development agencies, and the oil and gas industry in their efforts to reduce the environmentally impact flaring and venting of gas associated with the extraction of crude oil.
• Through the Ministry of Energy of Mexico (SENER), Petróleos Mexicanos(Pemex) has been convoked to join the Global Gas Flaring Reduction Partnership (GGFR) of the World Bank.
• It is relevant for Pemex becoming a member of GGFR considering the coincidence of the objectives of both organizations, aimed at increasing the utilization of natural gas and abating GHG emission in the oil and gas industry.
5
• In supporting the Mexican Federal Government's energy strategy and contributing to reduce green house gas emissions in oil and gas industry, besides GGFR, Pemex participates in some of the main global initiatives:
United Nations Organization's Kyoto Protocol
US EPA´s Methane to Markets Partnership, in which Pemex co-chairs the Oil and Gas Industry Subcommittee
ARPEL´s. Pemex chairs the Energy Efficiency and Climate Change Committee.
EITI. Member of the Governing Group
• To foster and become more productive in the efforts put into practice by the oil and gas sector, it seems opportune to find synergy among these initiatives.
Introduction
6
The Pemex´s targets at the Extractive Industries Week are as follows:
1. Show the company's strategy to increase the gas utilization in the Pemex´s up-stream from the corporate perspective in both, the short and the long terms.
2. Evaluate the possibility of developing an Action Plan among SENER, Pemex and the GGFR partnership including, among others, the following issues:
- Technical assistance and capacity building on regulatory best practices
- Shared operational best practices
- Support in seeking carbon finance for flare reduction and natural gas infrastructure projects
Introduction
7
Pemex´s brief description
8
• Pemex is an integrated State-own oil and gas company; it ´s the main corporation of Mexico and one of the biggest in Latin America.
• In 2008 produced 2.8 million barrels per day of crude oil and 6, 919 million cubic feet per day of natural gas (2´363,986 MMCF/Y).
• At this point of the time, Mexico occupies the 18th. place among the 20 major gas flaring countries. It is expected to drastically reduce gas flaring at the end of 2009.
• Its GHG emissions during that year amounted near 50 million ton of CO2e, equivalent to near 10% of the GHG México´s emissions.
• To run the oil and gas business in Mexico, Pemex is integrated by a Corporate level and four Subsidiaries:
Pemex´s brief description
• Pemex Exploration and Production• Pemex Gas • Pemex Refining• Pemex Petrochemicals
9
Corp
orat
e
Pemex Gas
Crude oil
Natural Gas and condensates
Dry Gas
Ethane,Methane
Gas natural, LPG, Sulphur
Pemex Exploration
and Production
PMI International
Pemex Petrochemicals
Gasoline, diesel
Lubricants and asphalts
Oil gas and cokePemex Refining
Natural Gasoline
Ammonia,Polyethylene,Aromatics
Petrochemicals
Research &
Development
Pemex´s Organization
Pemex up-stream
•The up-stream sector of Pemex is operated by Pemex Exploration and Production (PEP) and Pemex Gas (PGPB).
10
Main infrastructure
MEXICOGULF OF MEXICO
344 Production fields6,247 Production wells225 Off-shore Platforms11 Gas processing complexes
6 Refineries8 Petrochemical Complexes77 Distillates products Storage
and Distribution Terminals21 LPG Distribution Terminals
64,000 Km Pipelines (crude oil, gas and distillates)
USA
11
Diagnosis
12
- Before 2000 Pemex made huge investments in compression capacity to reduce gas flaring in offshore platforms, reaching 97% of gas utilization in 2004.
- Nevertheless, an unexpected behavior due to the complexity of the Cantarell field, and the contamination with Nitrogen injected for hydrocarbons recovery, Pemex had to flare sour gas again.
• Therefore, in 2008 the gas flaring reached 461,748 MMCFY* (near 17% out of the total gas production)
Diagnosis. Pemex´s up-stream gas flaring. 2001–2008
148,19493,910 100,372
53,756 63,03295,564
174,358
459,105
2,397
2,643
1,028
877533
6331,455
4,144
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
500,000
2001 2002 2003 2004 2005 2006 2007 2008
PGPBPEP
MMCF/Y
Gas flaring reduces due to the operation of new gas compression platforms C-7 and C-8
Source: SISPA Preliminary dataPGPB. Does not include gas´ liquids
1
1
Gas flaring increases due to high Nitrogen concentration in the natural gas produced in Cantarell
2
2
- To reduce gas flaring in Cantarell and about 6.9 MM ton of CO2 emissions, PEP is currently executing a EOR project by re-injecting sour gas with high concentration of Nitrogen.
•The Cantarell field is operated by PEP; it is located in the Gulf of México and is still the most important oil reservoir in Mexico.
•Since 2005, Cantarell became the most important site of gas flaring.
•Briefly, the current gas flaring situation of Pemex can be described as follows:
13
Gas flaring in Pemex Exploración y Producción by Regions. 2001 - 2008
93,65462,532 71,333
26,009 25,86455,151
143,768
434,322
9,118
6,960
8,494
7,8167,395
7,3658,647
16,525
2001 2002 2003 2004 2005 2006 2007 2008
RMNE RS RMSO GTDH RN
Source: SISPA. *Preliminary
(MMCF/Y)
Cantarell is located in theNortheast Marine Region(RMNE) of PEP
•Consequently, the Northeast Marine Region (RMNE), where is located Cantarell, is the main source of gas flaring of Pemex Exploration and Production
•This image compares the RMNE´ gas flaring and the North Region
14
4,144
1,455
633 533877 1,028
2,3972,643
42
51
38
27
18
27
40
125
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2001 2002 2003 2004 2005 2006 2007 20080
20
40
60
80
100
120
140
MMPC
TON
Gas Flaring and CO2 Emissions in Pemex Gas
• During the period 2001-2004 the gas flaring reduction was due to the operation of new Sulphurrecovery plants in the main gas processing centers.
• During the period 2005-2008, gas flaring in Pemex Gas increased rapidly because operational troubles in the gas processing complexes and the natural gas rejection due to high Nitrogen concentration
Source: SISPA. *Preliminary
MMCFY TON
Gas processing is the second most important gas flaring source in Pemex´s up-stream. Its behavior will depend on Cantarell´s performance.
15
Cantarell plus other Pemex´ sites
Cantarell gas flaring reduction effect
Other Pemex´ sites Potential flaring reduction: 1%
December 2009
Gas flaring MMcfd
Standard: 2% out of the total production
Current: 17% out of the total production
Pemex´s Gas Flaring in Context
Time
Assessment: base line study and potential opportunities identification
Pemex –GGFR main activities
Once Cantarell quits gas flaring at the end of 2009, Pemex will utilize up to 97% out of the total production, 2% should remain venting and flaring for safety and operational requirements, and the rest (1%) will be the area for potential opportunities to reduce flaring.
16
Energy Legal Reform and Pemex´s Vision
17
Energy Legal Reform in Mexico
• The Comisión Nacional de Hidrocarburos (National Hydrocarbons Commission) was created in the recent Pemex´s legal reform approved by the Mexican Congress in November 2008.
• As a part of the Ministry of Energy (SENER), this Commission will direct the activities related to the exploration, production, processing, transportation and storage of hydrocarbons in Mexico.
• The Law on National Hydrocarbons states for Pemex the following responsibilities:
•“To reduce venting and flaring of natural gas at the minimum level in the exploration and production projects of Pemex.
•“To promote the sustainability of the natural resources, as well as the industrial safety and the environmental protection”
*Artícle 3. Ley de la Comisión Nacional de Hidrocarburos
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Pemex´s priorities
1. At the end of 2009, PEP will reduce the gas flaring in Cantarell, consequently it will allow to reach 97% of the gas utilization, to reach again the percentage of the year 2004.
2. In the long term, the PEMEX´s up-stream must reach and sustain the best gas utilization standards in the world's oil and gas industry, to contribute to the efficiency and competitiveness of the company as a whole.
From the corporate perspective, Pemex will focus on addressing the gas flaring in two steps:
19
Case study: Gas flaring reduction in Cantarell
20
Location of Cantarell Asset
• Cantarell is located on the continental shelf and slope of the Gulf of Mexico, at 80 km northwest of Ciudad del Carmen, Campeche, between the isobaths of 40-50 meters below sea level
• The producing formations are the Kimmeridgian and Oxfordian of Upper Jurassic, Lower, Middle and Upper Cretaceous, and Paleocene-Eocene
• This important asset produces is the first producer of oil in the country with 1,016 mbd and 1,626 mmcfd (end 2008) of heavy oil de 19° to 22° API. The cumulative production up today is 13,248 millions of barrels The main fields that integrate the asset are
Akal, Ixtoc, Nohoch, Takin and Sihil.
500 m
T a b a s c o
Yucatán
Quintana Roo
V e r a c r u z
500 m
Cantarell
KMZKMZ
Campeche
21
Evolution of Cantarell project
After 25 years of increasing production, Cantarell production decline started in 2004. Therefore, a new strategy was defined to maximize the oil recovery factor including EOR techniques
1979-1996: “Development and
exploitation”
1997-2004: “Maximize the
recovery of production”
2005-2008:“Decline administration”
First field discovered en 1976 well Chac-1
Akal field in 1977
First production in 1979
Target: production platform of 1 mmbd
Strong investment
Nitrogen injection to sustain pressure
Target increase production up to 2,124 mbd.
Beginning decline
Reduce the production decline through maintain the recovery factor
mmbd
0.0
0.5
1.0
1.5
2.0
2.5
1979 1984 1989 1994 1999 2004 2010
22Source: Gerencia de Planeación Operativa, SPE 96-99< 90 91-95 >100Compliance :
Current situation on gas flaring
Exploración ProducciónEvaluación
del potencialIncorporación
de reservaDelimitación
de yacimientos
Distribución primaria
Desarrollode campos
Explotaciónde yacimientos
Abandonode campos
percentage Compliance
The goal for 2009 is 97% in accordance with the new Pemex law approved in November 2008 establishes the legal mandate to reduce gas flaring
84 %
95.7(15.0)80.7
(10.3)91.0
2007 real program
2008
23
0
200
400600
800
1,000
1,2001,400
1,600
1,800
FlaringMillions of daily cubic feet
2006 2007 2008
Nitrogen
Natural gas
Historic behavior of flaring in Cantarell
0
20
40
60
80
100
120
Natural gas production
2006 2007 2008
Cantarell
July
Real
July
• The production of natural gas from the transition zone has increased derived from the advance in the gas-oil contact in Cantarell
• To address this situation, Pemex has begun the construction of additional infrastructure, including a nitrogen recovery unit (NRU) where nitrogen is separated from the natural gas stream, and various compression modules in order to inject natural gas and nitrogen into the reservoir, which started to operate in April 2008
24
Operative actionsAdditional compressor
capacity in Akal-B, Akal-C y Akal-G platforms
Actions to reduce flaring
• The nitrogen recovery unit (NRU) started operations in April 2007, and now operates at full capacity
• Maintain sour gas injection at levels of 300 million cubic feet per day
• Increase the volume of treat sour gas in Akal C8 platform
• Separate streams with high nitrogen content
• Two turbo compressors to process additional gas volumes
• Five turbo compressors to inject natural gas into the reservoir
• Construction of additional infrastructure to inject natural gas into the reservoir.
25
Advances gas flaring reduction plan
P
R
2 P Scheduled 65% to Junuary 31, 2009
R Progress 42%
3 P
R
P
R
P
R
P
R
P
R Progress 45% (controls, process equipment and turbomachinery)
P
R
P
R
Actions and works to reduce the gas sent to the atmosphere
Keep the injection of sour gas to the reservoir 350 mmcfd
Enhance the capacity of injection of sour gas to the reservoir (350 to 1,230 mmcfd)
1
4
2009Oct NovApr May Jun Ago SepJun Feb Mar Jul
Increase the reliability and availability of compression equipment
Improve gas sweetening process efficiently
Conversion to dry seals T60 TC's in SLM's Akal-C (2 - 210 mmcfd)
Installation of a compressor injection Akal-C (180 mmcfd)
Installation of compressors injection Akal-B, # 1 (210 mmcfd)
Installation of compressors injection Akal-B, # 2 (210 mmcfd)
Installation of a compressor injection Akal-G (210 mmcfd)
Dic
Started operations on December 26, 2008
At January 31, 2009, was injected to the reservoir a monthly average volume of 519.4 mmpcd sour gas.
Started operations on December 14, 2008
Implementation stage. Global progress: 42%
Progress 63% (Installing compressors)
Progress 62% (Installing compressors)
End August 8, 2009
Implementation of System Operational Reliability
End May 8, 2009
End May 12, 2009
End Jun 6, 2009
End Jun 6, 2009
JanJan
26
Handling and process of gas flaring
P
R
P
R
P
R
P Scheduled Junuary 21, 2009:
R Progress 63% in turbo-machinery
P Scheduled 21-Ene'09 :
R Progress 62% in turbo-machinery
7 P
R
P
R
P
R
P
R Progress: 1% (Development of Basic Engineering)
Actions and works to reduce the gas sent to the atmosphere
6
Increase capacity compression equipment Booster
5
Sep
Rehabilitation of the 3rd Turbocharger for PB-S-Ku
Turbocharger M100 SLM # 2 Management Gas (Process) at Akal-B (70 mmpcd)
Installing Turbocharger Booster T60 # 2 SLM in AKJ
Installing Turbocharger Booster # 1 in T60 SLM AKJ
2009OctJun Feb Mar Dic
1st June, 2009 is going to be shipped from Houston, Tx
NovApr May Jun Jul Ago
The nitrogen removal plant is operating.
1st June, 2009 is going to be shipped from Houston, Tx
Scheduled 38% to Junuary 21, 2009 (turbo-machinery) Real: 27% In September 30, 2009 is going to be shipped from Houston, Tx
Train 1: Started operations April 8, 2008
Train 2: Started operations July 12, 2008
Train 1
Train 2
Turbocharger M100 SLM # 1 Management Gas (Process) at Akal-B (70 mmpcd)
Increase the handling capacity of high pressure gas (2480 to 2620 mmpcd)
Ciudad Pemex NRU facilities
End December 30, 2009
End December 30, 2009
Started, December 1st, 2008 End December 15, 2009
End December 30, 2009
End September 1st, 2009
End September 1st, 2009
End September 1st, 2009
JanJan
27
Maya to platforms
Exportation
Cayo Arcas
-
-
ABK-D
ABK-A
POL-A
Pumping
Dos Bocas
L2 36”
L2
36”
L1
36”
L3
36”
L4
36”
24”
20”
24”
30”
Exportation
20” 20”
FSO
24”
24”
24”
36” 36”
20”
24”
36”36”
AKAL-J
L-1 L-2 AKAL-B
NH-A
AKAL-C
AKAL-N
AKAL-L
KU-A
ZAAP-C
KU-H
KU-M
L3 36”
L3 36”
L1 36”L4 36”
36”
1
2
5
6
7
Bacab
8
910
11
12
14 15
21
22
AKAL-BN
AKAL-DB
AKAL-MR
24
25
27
EK BALAM
IXTOC - A
AKAL-C117
18
19
20
26Perforación
3233 34
35
38 3940
36
37
NUEVO TEAPA
LA CANGREJERA
13
16
28
Heavy oil
Light oil
Gas pipe (oil pipe in 2004)
23
4
3
Infrastructure and hydrocarbon streams
Construction of infrastructure to increase Compression and reduce flaring
28
Production complex Akal-B
ConnectionBooster
HousingProductionDrilling CompressionIncrease
compression
29
Natural gas production forecast and utilization
0
20
40
60
80
100
Natural gas productionpercentage
2006 2007 2008 2009
Proyecto Cantarell
July December
Current situation of gas use at 83%
Initiatives for natural gas usage:
• Increase and maintain the injection in Cantarell of 800 million of cubic feet per day of sour gas
• Separate natural gas streams with high nitrogen content
• Installation of turbo compressors to process additional volumes of gas
• Construction of additional infrastructure to inject natural gas into the reservoir
• Building three additional NRU
x
At August 2009, Pemex expects to achieve an use
rate of 97%
Use of natural gas
92%
30
Conclusions
31
• The recent Pemex´s reform approved by the Congress of Mexico emphasizes to reduce venting and flaring of natural gas at the minimum level in the exploration and production operations, as well as to promote the sustainability of the natural resources, the industrial safety and the environmental protection.
• Gas flaring reduction is considered an effective route to improve the economic and environmental performance of the company and to face the global warming as well, trough a better use of the hydrocarbons
• Pemex has established a goal of 97% Natural Gas usage at the end of 2009 through a continuous process of operational improvements, mainly in Canatarell
• In the long term, PEMEX will reach and sustain the best gas flaring standards in the world's oil and gas industry in PEP and Pemex Gas
• It is convenient for Pemex to be member of GGFR Partnership, and aim to create synergies with other global initiatives in the oil and gas industry oriented to the energy efficiency, GHG emissions reduction and climate change issues.
Conclusions
32
Next steps
33
• Finalize the assessment of México's joining GGFR and establish the Action Plan to be developed.
• Execute pilot projects to put into practice technical assistance and capacity building on regulatory best practices, share operational best practices, and seeking carbon finance for flare reduction and natural gas infrastructure projects
• It is opportune to create synergies with other global initiatives, as the US EPA´sMethane to Markets, ARPEL and carbon markets, for integrating efforts to increase gas utilization and mitigate GHG emissions in the oil and gas industry.
Next steps
Gas Flaring in Petroleos Mexicanos- Guillermo Camacho. Deputy Director of Operational Discipline,
Safety, Health and Environmental Protection
- Miguel Angel Maciel. Strategic Planning, Manager. Pemex Exploration and Production
EXTRACTIVE INDUSTRIES WEEK The World Bank
March 5, Washington, D.C.
