Updates
October 1, 2014: this is the best description yet, from the comments below:
Y-grade pipelines have in-line analyzers and flow meters that continuously measure both and density. A quality assurance (QA) system is in place so that accuracy is ensured.
The Vantage pipeline to Alberta from the Hess plant is probably the longest ethane pipeline in North America. OneOK y-grade pipe line takes Bakken NGLs to Conway, Kansas, where the propane is fractionated and sent to north to Iowa and points north. The rest of the NGLs are sent to Mt Belvieu, TX, where the rest of the fractionations occur.
Some shippers have started to use tankers to take ethane to Asia and Europe. Bakken ethane is left with the methane, as OneOK doesn't find it profitable to transport it to Conway and then to Texas. Bakken ethane may have billions of dollars in economic potential for ND if a cracker is ever built.Later, 4:00 p.m. CDT: a reader is wondering how y-grade is transported to the fractionator since different components have different monetary value. Hopefully a reader will provide more insight. My hunch is that there is a "black box" at the pad that measures the percentage makeup of the NGL. But I really don't know. Way beyond my expertise. But it's a great question. Wiki comes close to answering the question, but not quite (unless I missed it, which is possible). It's very possible, the value of the y-grade (and its components) is determined "after the fact," after it has been processed at the natural gas processing plant.
Original Post
Houston Business Journal is reporting: Houston-based Enterprise Products Partners LP will build its ninth natural gas liquid fractionator at its complex in Mont Belvieu that is just east of Houston.
The massive pipeline company is increasingly busy in the Houston region, already building the world's largest ethane export facility at the Houston Ship Channel, and also just completing this week the the first segment of the Aegis ethane pipeline between Mont Belvieu and Beaumont.
Enterprise's fractionators are used to separate ethane and NGLs like butane and propane from the natural gas, or methane. This ninth fractionator will have a capacity of 85,000 barrels a day and is expected to begin operations as early as January 2016, according to Enterprise.
Enterprise also said it has secured the required permits and emission credits for a similarly sized 10th NGL fractionator at the same complex. Upon completion of the ninth fractionator, Enterprise will have gross NGL fractionation capacity of 755,000 barrels a day at Mont Belvieu and total gross NGL fractionation capacity of approximately 1.2 million barrels daily. Enterprise will have 265,000 barrels a day of propane production capability at Mont Belvieu upon the completion of the ninth fractionator.I would assume RBN Energy has discussed these developments; I can't recall everything RBN Energy has touched on but they have discussed the activity in the Houston and the Houston Ship Channel on many occasions and in great detail. A search of "Houston Ship Channel will bring you to several posts of all the activity going on there.
RBN Energy provides a great introduction to the NGLs:
Let’s start at the beginning – before the NGL products become NGL products.
The majority of US natural gas liquids (NGLs) reach fractionation centers such as Mont Belvieu in the form of semi-processed y-grade. Traders do not trade y-grade and there is no posted price for it. All you can do with y-grade is fractionate it into purity products.
The value of y-grade is all in the purity products. So when you talk NGL trading, you are talking trading of the individual NGL products.
Recall that once fractionated, y-grade becomes five unique purity products; ethane, propane, normal butane, isobutane and natural gasoline. Unlike y-grade, each of these products has a specific market value and they are traded each day. A lot. The majority of those trades occur at market hubs where there is a critical mass of infrastructure – with the two biggest being Mont Belvieu, TX and Conway, KS.
Purity products are traded both physically (transfer from seller to buyer at a point within the physical trade location) and financially (via derivative transactions where the parties settle up against an index price, usually OPIS).NGL fundamentals can also be found here.
How is y-grade transported to the fractionators? Special pipelines? One for each substance or timeshared?
ReplyDeleteAre fractionaters generally near petrochemical usage? Or near the gas source? (note this affects the supply and product infrastructure)
And how are the pure products (generally) transported to their uses? Pipelines or containers?
Great question. Way beyond my expertise. My hunch is that RBN Energy discussed this but may be not. I will move the questions to the main body of the blog and hope someone provides some insight.
DeleteI checked in RBN and they had some decent explanations. Impression I get is that the fractionation is pretty central and a lot at one place in Gulf Coast. So the methane (sometimes ethane also) is separated from the Y grade and then dry gas goes into interstate transmission lines. And the y-gas is piped to the fractionator. Pure products are sent to petrochemical plants on Gulf Coast. Propane has a pipeline throughout southeast.
ReplyDeleteWhat I don't get is a place like the Bakken. Does it have all the interstate gas pipeline (and y-grade) pipe that is needed? Seems funny that they lack oil pipes and it takes so freaking long to get any (plus all kinds of permitting delays and enviro fighting), but that the gas lines are under capacity?
First the Gulf Coast. I think the question is this: if operator A sends y-grade from one well to the fractionator; and operator B sends y-grade from another well to the fractionator, where is it determined the concentration/mix of the various components (they can't all have separate pipelines going to the fractionator, I wouldn't think).
DeleteIn the Bakken it's even more problematic because there are no fractionators? In the wiki schemata, the fractionators are separate (and farther downstream) than the natural gas processing plants that ONEOK is building -- unless they fractionate at the natural gas plants.
I would think the same issues apply with crude oil. It varies somewhat in composition. How do they separate different customers "lots" that are moving down the pipe. And how do customers buy the oil (based on an assay)?
DeleteYou are absolutely correct; I don't know how it's all tracked, but is begins at the pad. The operators have to ask permission to even commingle oil from neighboring pads into a tank battery. The composition, obviously, at that point has to be identical. But the details, I do not know.
DeleteIn the Bakken it is a mixed bag as far as natural gas plants whether they fractionate to purity products, or simply produce a y-grade. For example some of OneOk's facilities fractionate to purity product, and some of them simply produce a y-grade that they put into a pipeline to send to one of their fractionation facilities. I would assume their decision to fractionate as a gas plant or not depends largely upon supply and demand for purity products in the local market in North Dakota and Montana.
DeleteAnd again that makes sense. Very much appreciated. I finally have a feeling for how this works. Some days I am just very slow.....I really appreciate everyone providing insight. The other readers really appreciate it also.
DeleteAn assay of the y-grade is taken prior to entering the plant for processing. The assay gives a mole percentage of each component in the stream, ie methane, ethane, propane, butane, natural gasoline, etc. This determines the value of the y-grade.
ReplyDeleteThank you. That makes sense. I'm starting to feel a bit stupid on this ... the light bulb just went on. Thank you very much for that note.
DeleteThis is how it must work, for crude oil and liquids. A sample is taken (and either at the site or in the lab -- probably a lab elsewhere) the sample is analyzed, and then it's simply after that. Volume of oil or condensate or gas is put into truck or pipeline and volume times percent of each component provides the necessary data.
Thank you. I think we were thinking too hard on this one (or probably not thinking at all).
I forgot to mention that y-grade is either piped into a plant or it can be trucked in and unloaded.
ReplyDeleteYes, thank you. That all makes sense now. I appreciate you not calling me an idiot. LOL. It was nice you held your thoughts to yourself and just presented the answer. I should be tactful in my own posts. Smile. Have a great day.
DeleteSo, I assume coming out of the Bakken, there is:
ReplyDelete*crude oil pipelines (insufficient capacity, rail making up difference)
*interstate natural gas lines (sufficient capacity...but I wonder why given the growth in associated gas)
*y-grade interstate gas line (sufficient capacity...but I wonder why given the growth in associated gas)
From the note, sounds like there is also some local distribution of purity products (by pipeline or C3 and higher by truck). Can you truck C2?
According to the few websites I checked, ethane (C2) is carried by pipeline almost exclusively. The "almost" is the operative word, but it certainly sounds like trucking C2 is very, very unusual.
DeleteI guess my question is interstate transmission of methane, ethane, and y-grade. Was there already existing infrastructure with sufficient spare capacity for the Bakken boom's gas products (why was the spare existing)? Or did they have to build new lines...and if so, how come they seem to have gone in so much easier than the crude pipeline capacity?
DeleteOthers will have to weigh in; the question is beyond my expertise. However, I never let that stop me.
DeleteYour question has to do with interstate transmission.
1. I doubt the Bakken NGL added much to the nation's natural gas pipeline system.
2. The Bakken is 90% crude oil (some say as low as 85%; others say as high as 94% -- depends on where one is in the Bakken; but the Bakken is 90% crude oil, it's safe to say.
3. Much of the natural gas was being flared; only recently has ONEOK built several processing plants and Hess doubled the capacity of their plant in Tioga.
4. I think the answer to the pipeline takeaway question is simply that there was SO much crude oil from the Bakken, it simply overwhelmed the system. Compared to oil, there was not nearly as much natural gas. The Bakken is an oily field, not gas.
But again, that's just my 2 cents worth.
Y-grade pipelines have in-line analyzers and flow meters that continuously measure both and density. A QA system and certain is set up so that accuracy is ensured.
ReplyDeleteThe Vantage pipeline to Alberta from the Hess plant is probably the longest ethane pipeline in North America. OneOK y-grade pipe line takes Bakken NGLs to Conway, Kansas, where the propane is fractionated and sent to north to Iowa and pts north. The rest of the NGLs are sent to Mt Belvieu Tx where the rest of the fractionations occur. Some shippers are started to used tankers to take ethane to Asia and Europe. Bakken ethane is left with the methane, as OneOK doesn't find it profitable to transport it to Conway and then to Texas. Bakken ethane may have billions of dollars in economic potential for ND if a cracker is ever built.
Thank you. Great comment. I also moved your comment up to the main post for easier accessibility. I finally understand it. Of course I don't understand all the details but the big picture is now very, very clear. Much appreciated.
Delete