The Attractiveness of Integrated Power Generation
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On-site integrated power generation is rapidly becoming an attractive option for midstream oil and gas operators. Concerns about grid power accessibility, transmission reliability, and the risk of increasing power costs are encouraging power generation to fulfill on-site demands.
Integrated power generation (IPG) uses existing gas flows at the facility to generate electricity instead of flaring, which is then used to power local O&G production and processing equipment. In addition, generation packages provide usable heat that can also be incorporated into the facility process design to improve operational efficiencies and reduce emissions.
IPG facilities can operate in island mode, completely independent of the power grid, which prevents grid outages from affecting the uptime of the facility. Furthermore, unplanned downtime tends to cause equipment stress due to unexpected start/stop cycling throughout at the site, leading to major maintenance costs over the lifetime of the facility. In addition, time required to commission a new facility can be reduced significantly with on-site generated power, which can be installed in coordination with the project plan, eliminating dependence on utility infrastructure buildout and lengthy right-of-way negotiations.
IPG uses gensets — equipment packages consisting of a driver (typically an engine or turbine) and an electrical generator packaged to use the natural gas that is readily available on-site at a relatively low cost as fuel. This efficient approach eliminates the costs associated with transporting natural gas through a pipeline to a power producer, and in turn sending electricity back to the gas facility.
These solutions should be considered to be integrated from the initial facility planning and construction, or during the expansion of an existing site. In either case, generating power on-site eliminates the need to negotiate or renegotiate existing contracts with power suppliers and reduces the risk associated with grid capacity planning and pricing fluctuations.Background: Traditional Versus IPG
Midstream facilities have typically relied on grid power but the extent of this dependence varies from site to site. Either when combining gas-driven compression with auxiliary equipment powered by the grid or when sites use electric-driven compression (completely dependent on the grid), facility uptime is out of the operator’s control and the uncertain nature of the causes of power outages (storms, animal damage, for example) could lead to considerable production losses.
On the other hand, in locations where the grid power is inaccessible, options for developing or expanding existing facilities may be limited. For midstream companies, this can play an important role when competing for contracts: whoever brings products to market in a shorter period becomes the most attractive option for producers. Therefore, an operator that efficiently generates power on-site has a competitive advantage.
Not only is dependence on the power grid a concern, there are other issues with reliance on grid power, particularly in basins and regions that are experiencing high growth. Project timelines may be affected by landowners and regulators. And construction times required for new power lines increase project duration while delaying its start-up.
A keen assessment must be developed to determine if an IPG is an economical and feasible option for any given facility:
- Generator sizing: based on the expected power requirement, a full review on the equipment load list, sequencing, frequency, voltage, and transformer consideration is needed.
- Fuel gas: electricity can be generated from a wide range of fuels, from flare gas to commercial quality gas, so the available fuel composition and pressure must be considered for the selection of the equipment and process solution.
- Site characteristics: site elevation and ambient temperature play a relevant role in selecting gensets, motors and driven equipment, especially gas turbine driven IPG.
- Facility footprint: the layout of the equipment should be optimized within the overall site design. Provisions can be made for future generation capacity and site expansion.
- Site construction: area classification and required type of foundation would affect equipment selection and installation.
- Standby/emergency and redundant equipment: based on the back-up power required to ensure lesser interruptions of the facility when a genset is out of service for preventive or corrective maintenance.
- Emissions: Compliance with local regulation and/or restrictions is always required.
- Grid connection: is it best to operate in island mode, or should grid interconnectivity and sequencing be considered?
There are multiple midstream applications that can benefit from IPGs, including:
- Well pads: production can fluctuate, so the flexibility inherent in modular design is important to accommodate these changes.
- Compressor stations: due to relatively long usable life of a compression station, electricity costs can increase. Integrated power generation savings can be substantial over the long term.
- Gas processing and treating plants: thermal heat is usually required in process and treating facilities and can be provided by a gas engine or turbine used in IPG.
While these benefits are particularly relevant in the midstream segments, they may also apply across other types of applications.
Integrated power generation is quickly becoming an attractive option for midstream facilities, removing the concerns operators typically face with grid power accessibility and reliability, and unpredictable power costs. The time to first gas for a new facility can be significantly reduced by eliminating the lead times associated with utility infrastructure expansions.
Finally, today the business models for this kind of solution vary widely, offering economical and operational advantages to the O&G operators, such as: 0% investment, high plant availability and reliability and $/kWh reduction, by enabling them to select the best possible approach for each case, including BOOM, BOOMT, DBOOM, “Take or Pay” or by generated kWh.