Installing Vapor Recovery Units to Reduce Methane Losses Lessons Learned from Natural Gas STAR Producers Technology Transfer Workshop Devon Energy Corporation and EPA’s Natural Gas STAR Program April 20, 2005

Page 2 Reducing Emissions, Increasing Efficiency, Maximizing Profits Vapor Recovery Units: Agenda p Methane Losses p Methane Savings p Is Recovery Profitable? p Industry Experience p Discussion Questions

Page 3 Reducing Emissions, Increasing Efficiency, Maximizing Profits Methane Losses from Storage Tanks p Storage tanks are responsible for 15% of methane emissions u 96% of tank losses occur from tanks without vapor recovery Inventory of U.S. Greenhouse Gas Emissions and Sinks Pneumatic Devices 60 Bcf Meters and Pipeline Leaks 11 Bcf Gas Engine Exhaust 12 Bcf Well Venting and Flaring 12 Bcf Storage Tank Venting 23 Bcf Other Sources 15 Bcf ReciprocatingCompressors 3 Bcf Dehydrators and Pumps 14 Bcf

Page 4 Reducing Emissions, Increasing Efficiency, Maximizing Profits Sources of Methane Losses p 23 Bcf methane lost from storage tanks each year from producers * p Flash losses - occur when crude is transferred from a gas-oil separator at higher pressure to an atmospheric pressure storage tank p Working losses - occur when crude levels change and when crude in tank is agitated p Standing losses - occur with daily and seasonal temperature and pressure changes * Inventory of U.S. Greenhouse Gas Emissions and Sinks

Page 5 Reducing Emissions, Increasing Efficiency, Maximizing Profits Methane Savings: Vapor Recovery Units p Capture up to 95% of hydrocarbon vapors vented from tanks p Recovered vapors have higher Btu content than pipeline quality natural gas p Recovered vapors are more valuable than natural gas and have multiple uses u Re-inject into sales pipeline u Use as on-site fuel u Send to processing plants for recovering NGLs

Page 6 Reducing Emissions, Increasing Efficiency, Maximizing Profits Types of Vapor Recovery Units p Conventional vapor recovery units (VRUs) u Use rotary compressor to suck vapors out of atmospheric pressure storage tanks u Require electrical power or engine p Venturi ejector vapor recovery units (EVRUs TM ) u Use Venturi jet ejector in place of rotary compressor u Do not contain any moving parts u Require source of high pressure gas and intermediate pressure system

Page 7 Reducing Emissions, Increasing Efficiency, Maximizing Profits Standard Vapor Recovery Unit Crude Oil Stock Tank(s) Control Pilot Vent Line Back Pressure Valve Suction Scrubber Suction Line Condensate Return Bypass Valve Electric Control Panel Electric Driven Rotary Compressor Gas Sales Meter Run Gas Liquid Transfer Pump Check Valve Source: Evans & Nelson (1968) Sales

Page 8 Reducing Emissions, Increasing Efficiency, Maximizing Profits Venturi Jet Ejector* High-Pressure Motive Gas (~850 psig) Flow Safety Valve Pressure Indicator Temp Indicator PI TI PI (-0.05 to 0 psig) Low-Pressure Vent Gas from Tanks (0.10 to 0.30 psig) PI TI Discharge Gas (~40 psia) EVRU TM Suction Pressure *Patented by COMM Engineering

Page 9 Reducing Emissions, Increasing Efficiency, Maximizing Profits Vapor Recovery with Ejector Oil to Sales Gas to 1000 psig LP Separator Oil Gas Compressor Ejector Oil & Gas Well 5,000 Mcf/d Gas 5,000 Bbl/d Oil 900 Mcf/d Ratio Motive / Vent = 3 = 900/ Mcf/d Gas 40 psig 6,200 Mcf/d Crude Oil Stock Tank (19 Mcf/d Incr.fuel) 281 Mcf/d Net Recovery

Page 10 Reducing Emissions, Increasing Efficiency, Maximizing Profits Example Facility for EVRU TM p Oil production:5,000 Bbl/d, 30 Deg API p Gas production:5,000 Mcf/d, 1060 Btu/cf p Separator:50 psig, 100 o F p Storage tanks: relief p Gas compressor:Wauk7042GSI/3stgAriel p Suction pressure:40 psig p Discharge pressure:1000 psig p Measured tank vent:300 1,850 Btu/cf

Page 11 Reducing Emissions, Increasing Efficiency, Maximizing Profits Emissions Before EVRU TM CO 2 Equivalents p Engine exhaust: 3, Hp load p Tank vents: 14,543 Tons/yr p Total CO2 equivalents:18,493 Tons/yr p Fuel 9000 Btu/Hp-hr = 171 MMBtu/d p Gas sales:5,129MMBtu/d p Gas value: $5/MMBtu

Page 12 Reducing Emissions, Increasing Efficiency, Maximizing Profits Emissions After EVRU TM CO 2 Equivalents pMotive gas required:900 Mcf/d pEngine exhaust:4, Hp load pTank vents:0 Tons/yr pFuel 9000Btu/Hp-hr:190 MMBtu/d pTotal CO 2 equivalents:4,897 Tons/yr pReduction:13,596 Tons/yr (73.5%) pTotal CO 2 equivalents:4,897 Tons/yr pReduction:13,596 Tons/yr (73.5%) pGas sales:5,643 MMBtu/d pGas $5/MMBtu pIncome increase:$2,570/d = $77,100/mo pEVRU cost installed:$75,000 pInstalled cost per recovered unit of gas: $0.73/Mcf/yr pPayout:<1 month

Page 13 Reducing Emissions, Increasing Efficiency, Maximizing Profits Vapor Recovery Unit Decision Process IDENTIFY possible locations for VRUs QUANTIFY the volume of losses DETERMINE the value of recoverable losses DETERMINE the cost of a VRU project EVALUATE VRU project economics

Page 14 Reducing Emissions, Increasing Efficiency, Maximizing Profits Criteria for Vapor Recovery Unit Locations p Steady source and sufficient quantity of losses u Crude oil stock tank u Flash tank, heater/treater, water skimmer vents u Leaking valve in blanket gas system p Outlet for recovered gas u Access to gas pipeline or on-site fuel use p Tank batteries not subject to air regulations

Page 15 Reducing Emissions, Increasing Efficiency, Maximizing Profits Quantify Volume of Losses p Estimate losses from chart based on oil characteristics, pressure and temperature at each location (± 50%) p Estimate emissions using the E&P Tank Model (± 20%) p Measure losses using ultrasonic meter (± 5%) p Measure losses using recording manometer and orifice well tester (± 100%)

Page 16 Reducing Emissions, Increasing Efficiency, Maximizing Profits Estimated Volume of Tank Vapors Pressure of Vessel Dumping to Tank (Psig) Vapor Vented from Tanks- cf/Bbl - GOR Under 30° API 30° API to 39° API 40° API and Over

Page 17 Reducing Emissions, Increasing Efficiency, Maximizing Profits Quantify Volume of Losses p E&P Tank Model u Computer software developed by API and GRI u Estimates flash, working and standing losses u Calculates losses using specific operating conditions for each tank u Provides composition of hydrocarbon losses

Page 18 Reducing Emissions, Increasing Efficiency, Maximizing Profits What is the Recovered Gas Worth? p Value depends on Btu content of gas p Value depends on how gas is used u On-site fuel - valued in terms of fuel that is replaced u Natural gas pipeline - measured by the higher price for rich (higher Btu) gas u Gas processing plant - measured by value of NGLs and methane, which can be separated

Page 19 Reducing Emissions, Increasing Efficiency, Maximizing Profits Value of Recovered Gas Gross revenue per year = (Q x P x 365) + NGL Q = Rate of vapor recovery (Mcfd) P = Price of natural gas NGL = Value of natural gas liquids

Page 20 Reducing Emissions, Increasing Efficiency, Maximizing Profits Cost of a VRU p Major cost items: u Capital equipment costs u Installation costs u Operating costs

Page 21 Reducing Emissions, Increasing Efficiency, Maximizing Profits Value of NGLs

Page 22 Reducing Emissions, Increasing Efficiency, Maximizing Profits Cost of a VRU (cont’d)

Page 23 Reducing Emissions, Increasing Efficiency, Maximizing Profits Is Recovery Profitable?

Page 24 Reducing Emissions, Increasing Efficiency, Maximizing Profits Trade Offs Conventional VRU Ejector Fuel for electricity (Mcf/yr) 2,281_ Fuel (Mcf/yr) _6,935 Operating factor 70%100% MaintenanceHighLow Installed cost per recovered unit of gas ($/Mcf/yr) $1.21 $1.21$0.73 Payback (excl. maintenance) 3 to 27 months <1 month

Page 25 Reducing Emissions, Increasing Efficiency, Maximizing Profits Technology Comparison pMechanical VRU advantages u Gas recovery u Readily available p Mechanical VRU disadvantages u Maintenance costs u Operation costs u Lube oil contamination u ~ 70% runtime u Sizing/turndown pEVRU advantages u Gas recovery u Readily available u Simple technology u 100% runtime u Low O&M costs u Sizing/turndown (100%) u Minimal space required p EVRU disadvantages u Need HP Motive Gas u Recompression of motive gas

Page 26 Reducing Emissions, Increasing Efficiency, Maximizing Profits Lessons Learned p Vapor recovery can yield generous returns when there are market outlets for recovered gas u Recovered high Btu gas or liquids have extra value u VRU technology can be highly cost-effective u EVRU TM technology has extra O&M savings, higher operating factor p Potential for reduced compliance costs can be considered when evaluating economics of VRU/EVRU TM

Page 27 Reducing Emissions, Increasing Efficiency, Maximizing Profits Lessons Learned (cont’d) p VRU should be sized for maximum volume expected from storage tanks (rule-of-thumb is to double daily average volume) p Rotary vane or screw type compressors recommended for VRUs where there is no source of high-pressure gas and/or no intermediate pressure system p EVRUs TM recommended where there is gas compressor with excess capacity

Page 28 Reducing Emissions, Increasing Efficiency, Maximizing Profits Top Gas STAR Partners for VRUs Top five companies for emissions reductions using VRUs in 2003 Company 2003 Annual Reductions (Mcf) Partner 1 1,333,484 Partner 2 962,078 Partner 3 661,381 Partner 4 521,549 Partner 5 403,454

Page 29 Reducing Emissions, Increasing Efficiency, Maximizing Profits Industry Experience: Chevron p Chevron installed eight VRUs at crude oil stock tanks in 1996

Page 30 Reducing Emissions, Increasing Efficiency, Maximizing Profits Vapor Recovery Units p Profitable technology to reduce gas losses p Can help reduce regulatory requirements and costs p Additional value of NGLs further improves cost-effectiveness p Exemplifies profitable conservation

Page 31 Reducing Emissions, Increasing Efficiency, Maximizing Profits Discussion Questions p To what extent are you implementing this BMP? p How can this BMP be improved upon or altered for use in your operation(s)? p What is stopping you from implementing this technology (technological, economic, lack of information, focus, manpower, etc.)?