Possible BTU Restrctions On Northern Border Gas Pipeline -- December 24, 2019

Possible BTU restrictions on the all-important Northern Border gas pipeline was mentioned by RBN Energy  in its daily blog.

Other links:

• Background, general: EIA, October 14, 2014. 
• From Reuters, John Kemp, October 26, 2012.
• Overview, SourceWatch. 
• Wiki: link here.
• abarrelful: link here.

From the RBN Energy post:

What’s behind the possible shift at Northern Border? Rising production of associated gas in the Williston Basin, combined with more gas processing capacity there, has increased the volumes of basin-sourced gas flowing into Northern Border, and also squeezed out more gas from Western Canada, which generally has less rejected ethane in it and therefore has a lower Btu content. Thus, as the volumes of Williston Basin gas received by Northern Border have increased, so has the overall weighted-average Btu content of the gas flowing on the big gas pipe. Our understanding is that while Northern Border doesn’t necessarily mandate a maximum Btu content, if the Btu content were to get high enough to cause problems for the utilities and other end-use customers it serves, Btu restrictions on the pipeline may need to be put in place.

I'm not going to explain it because I'll probably screw it up again, but when you read the paragraphs from the EIA below, note:

• BTU or heat content of methane vs ethane and propane
• heat content desired by end user
• ethane rejection

From the EIA report linked above:

The primary constituent of natural gas is methane, which has a heat content of 1,010 British thermal units per cubic foot (Btu/cf) at standard temperature and pressure. 

In July 2014, the heat content of natural gas in the United States was around 1,030 Btu/cf, or almost 2% more heat content than pure methane, reflecting the composition of the gases in the natural gas stream.

Natural gas requires a certain fuel-to-oxygen mix to burn properly, so stoves and other gas-fueled appliances typically require natural gas to be within a certain range of Btu content.

Pipelines also have a range of acceptable Btu content for natural gas going through their systems, which can vary from one pipeline to another.

High-Btu natural gas contains higher concentrations of natural gas liquids (mostly ethane and some propane) that have higher heat content than methane.

Pure ethane has a heat content of 1,770 Btu/cf and pure propane 2,516 Btu/cf.

Natural gas liquids are often removed during natural gas processing. However, because of the low price of ethane, many natural gas processors are choosing to leave ethane in the natural gas stream, a practice known as ethane rejection, rather than remove it for sale as a distinct product. A relatively high Btu content in a given state may be indicative of ethane rejection.

Propane -- The Next Big Story -- November 27, 2015

Updates

June 22, 2017: in less than five years, the US has flipped from next importer of LPG to net exporter, and exports are surging.

Original Post

From crisis to glut in less than a year. 

John Kemp is reporting:

Liquefied petroleum gases (LPG) are the fastest-growing category of hydrocarbon exports from the United States, with volumes up almost four-fold since 2012.

Some data points:

• US propane exports, 2012: 200,000 bbls
• US propane exports, 2015: nearing one million bopd 
• composition: a range of light hydrocarbons to include ethane, butane, and propane, among others; 
• purpose: petrochemical feedstock to residential heating and cooking
• rules: unlike crude oil, LPG is treated as a refined product and can be exported with few restrictions, a position the U.S. Department of Commerce confirmed in 2014
• traditionally, most LPG has been marketed in neighbouring countries, including Canada, Mexico, Central America and the Caribbean
• in 2012, neighbouring countries accounted for 55 percent of all LPG exports, rising to almost 80 percent if South America is included.
• by 2015, however, the total share of LPG exports to other countries in the western hemisphere had dropped to just 53 percent
• exports to Europe, Africa and especially Asia have surged and now account for nearly half of all the LPG shipped abroad
• China has overtaken Canada and Mexico as the most important export market for U.S. LPG, taking more than 24 million barrels, almost 100,000 bpd, in the first eight months of 2015

Much more at the link.

Previous posts of interest:

• US propane exports, October 29, 2015
• propane rejection, July 12, 2015
• propane update, RBN Energy, December 4, 2014
• tight propane supply reaches crisis, February 10, 2014

Propane 101 -- July 12, 2015

A reader sent me this link for various reasons. It's a good read.

The best part of the article was the explanation by the president of this Canadian oil and gas company with regard to "shutting in" propane.

Unfortunately, the usual solution for low prices – shutting in production and reducing supply – isn’t so easy for propane. The decision is a bit more complex than that, and so some explanation is required.

Starting back in the reservoir, raw natural gas is typically at a temperature and pressure where propane molecules (C3H8) are in gaseous phase – as are the methane (C1H4), ethane (C2), butane (C4), and many of the heavier hydrocarbon chains (C5+).

As this raw gas is produced up the wellbore, the temperature and pressure drops and the heavier hydrocarbons condense into liquid form. What tends to arrive at the low pressure inlet of our gas plants, for example, is a mix of liquid condensates and pentanes, along with gaseous lighter hydrocarbons.

These gases still contain too much of the heavier hydrocarbons to safely consume in our homes, so Peyto has to process the gas (dry it and cool it) to remove the water vapour and condense even more of the heav ier hydrocarbons out of the gas.

Our sales products, at the out let of our facilities, ends up being stabilized condensates, a mixture of pressurized LPG (Liquid Petroleum Gases), and high pressure lean gas. The LPG is a mix of approximately 1/3 Pentane (C5+), 1/3 Butane (C 4) and 1/3 Propane (C3). This LPG mix is then transported to a refinery where it is “fractionated” or distilled into the pure components.

As you would expect, shutting in just the propane because its price is negative, isn’t possible. You’d have to shut in the entire gas stream. Alternatively, warming up your plant process to condense less propane into liquid form (thereby leaving it in the gas phase) also leaves some butane and pentane in gas phase and those products are still worth more as liquids than gases. Plus, at some point, the gas becomes too rich to make lean gas specifications. So the decision of what to do about negative propane prices, like we’ve had in April and May is a much more complex one.

Our solution at Peyto has been to extract all of the more valuable liquids (C4 & C5+) that we can and then try to “push” an optimal amount of the propane back into the gas stream so that we get paid in increased heat content in the gas rather than liquid barrels. This is often referred to as propane rejection.

In order to find that optimal amount, we have to consider all of the component prices and the liquid recoveries at various process conditions. We are looking for the most optimal combination of gas and liquid recoveries which yields the greatest possible revenues.

This optimal combination won’t necessarily yield the greatest combined production volume. But maximum production is not the point, maximum revenue is. As I’ve said before, this is one of the reasons why owning and operating your own processing facilities is so important.