Category Archives: News

Op Ed: Liberals failed to exert federal jurisdiction over Trans Mountain

Op Ed: Liberals failed to exert federal jurisdiction over Trans Mountain

Op Ed: Liberals failed to exert federal jurisdiction over Trans Mountain

Today, the Minister of Natural Resources confirmed that the Liberals failed to exert federal jurisdiction over the Trans Mountain Expansion project and that he has no idea when the construction of this important project will begin. It’s been almost a month since the Prime Minister announced that C...

Source: FB-RSS feed for BOE Report

OPEC countries to pump more oil to contain price increase

VIENNA – The countries of the OPEC cartel agreed on Friday to pump 1 million barrels more crude oil per day, a move that should help contain the recent rise in global energy prices. Questions remain, however, over the ability of some OPEC nations — Iran and Venezuela in particular — to increase production as [Read More…]

Source: BOE Report

AltaGas Announces Closing of the Sale of a 35 Percent Indirect Equity Interest in the Northwest British Columbia Hydro Electric Facilities

CALGARY, June 22, 2018 /CNW/ – AltaGas Ltd. (AltaGas) (TSX: ALA) announced today that it has successfully completed the sale of a 35 percent indirect equity interest in the Northwest British Columbia Hydro Electric Facilities (the “Facilities”) for $922 million, which implies a value of $2.6 billion on a 100 percent basis. The sale of [Read More…]

Source: BOE Report

Trump’s Pick to Head the Renewable Energy Office Has a Soft Spot for Coal


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NRDC Joins Fight to Defend New York’s Ivory Ban and Protect Elephants and Rhinos


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OPEC+ Proposes 1-Million-Bpd Production Increase

Update: OPEC chairman Kachikwu says that OPEC+ will add 700,000 bpd ‘real barrels’ The joint ministerial monitoring committee of OPEC, Russia and the other non-OPEC partners has proposed a production increase of 1 million barrels daily, Russia’s Energy Minister Alexander Novak told media in Vienna after the June 21 meeting of the committee. That number was made public about a month ago, but there were doubts that some OPEC members would back such a large increase in production. Most of these doubts have been dispelled now, it…

Source: Oilprice.com

OPEC Reaches Deal For Modest Oil Output Increase

[Editor's note: This story was updated at 9:54 a.m. CST June 22.] OPEC and its allies agreed on June 22 to raise oil production by about 1 million barrels per day (bbl/d) starting in July at the group’s 174th meeting in Vienna. The group reaffirmed the prior agreement to cut supply by 1.8 million bbl/d between OPEC and non-OPEC countries that started in 2017 but decided to a nominal output gain to compensate for losses in production at a time of rising global demand. The real output increase will translate to roughly 600,000 bbl/d of crude because some countries will not be able to substantially ramp up production.

Source: Oilandgasinvestor.com Feeds

Is ‘Big Oil’ to blame for California’s gas prices? Not so fast.

As spring becomes summer, there are a few things about which Californians always justifiably complain. June gloom. The waiting list for a boat to Alcatraz. The Major League team that isn’t living up to its potential (I’m looking at you, Dodgers).

But nothing is more predictable than Californians – and the media (see here, here, here, here, or here) – highlighting the rising price of gasoline. This is understandable, as Californians love to drive around our beautiful state – particularly when the kids are out of school – and we routinely have some of the highest gas prices in the country. We are now uncomfortably close to averaging $4 per gallon.

Anti-industry activists, of course, like to prime their torches and pitchforks and blame “Big Oil” for the prices at the pump, but there are a host of factors that go into the price consumers pay, particularly this year – factors that have little or nothing to do with oil producers and certainly little to do with the industry’s highly exaggerated profits, which I will discuss below.

To help you visualize what goes in to the price of the average gallon of fuel, the Energy Information Administration (EIA) put together the following graphics:

Below is a quick overview of the many factors that determine what you will pay at the pump this summer in California, along with a little perspective on why attacks on “Big Oil” for gas prices are misguided.

Factors influencing gas prices

Factor #1: Gasoline prices generally track global commodity prices. Refined products like gasoline are traded on the world market and their prices are determined by global market prices, in this case, the global Brent crude index. According to an Energy Information Administration (EIA) report:

“Gasoline is a globally traded commodity and, as a result, prices and changes in prices are highly correlated across global spot markets.”

Since January, the Brent crude oil is up about nearly 15 percent and California has seen a similar uptick – closer to 20 percent – because of the factors listed below, some of which are self-inflicted and avoidable.

Factor #2: Switch to more expensive “summer blend.” By now, most people know that refiners are required by federal regulation to switch to blend of fuel that has a different evaporation point to help prevent smog. The good news for the consumer is that the more expensive gasoline is offset somewhat by improved fuel economy.

Factor #3: Taxes (and taxes and taxes) and regulation. It’s no secret that California is one of the highest taxed states in the nation. We have the highest sales tax (7.25 percent) as well as the highest state income tax rate in the country (13.3 percent top marginal rate). We also have the strictest environmental regulations in the country, which, when combined with federal regulations, mean that the energy industry in the Golden State complies with more layers and levels of government than anywhere else – which bring with it obvious compliance costs not faced by producers in other states. There are nearly 20 agencies that in one way or another regulate the oil and gas industry in Los Angeles County alone.

While our taxes provide important funds for schools, healthcare, social programs, pensions and infrastructure, the money has to come from somewhere, and California policymakers have frequently targeted gasoline as a way to build state coffers as the legislature did last year when it passed, and Governor Brown signed, Senate Bill 1, a 12 cents-per-gallon tax increase on gasoline and a 20 cents-per-gallon tax increase on diesel last year. This is not, obviously, the doing of “Big Oil.”

As Kara Siepmann of the Western States Petroleum Association (WSPA) noted recently:

“State and federal laws like the recently approved gas tax, the Low Carbon Fuel Standard and other fuel-related taxes and fees add a little over 92 cents to each gallon of gas and have a profound impact on California’s businesses and communities.” [emphasis added]

It is actually more than 95 cents per gallon, as new analysis of the impact of Senate Bill 1 has shown:

Factor #4: State socialism failed (surprise!) in Venezuela. Venezuela has the world’s largest proven oil reserves. Great news, right? If only. Because of mismanagement of both the state-owned oil sector and overall chaos in the top-down, socialist economy, oil production is down 30 percent. This creates much more pressure on other oil producers and naturally pushes prices up as supply dwindles.

Factor #5: Middle East turmoil and uncertainty. A host of factors involving the Middle East have collectively pushed oil prices upward. OPEC has, for a variety of reasons, slashed production in a deliberate attempt to increase prices, removing an estimated 500 million barrels of supply from the global market since cuts started in early 2017. President Trump’s mere threat to bomb Syria in the wake of a chemical weapon attack last month sent prices to a four-year-high even before the actual bombing. And President Trump’s eventual decision to pull out of the Iran deal will limit Iran’s ability to sell oil on the international market, which is most likely causing similar pressures as Venezuela’s involuntary but just as damaging (for gas prices) decrease in supply.

What about the impact of oil exports? Some politicians – notably Sen. Ed Markey (D-Mass.) have seized on the lifting of the misguided crude oil export ban, arguing in a report that “… Congress should reinstate the crude oil export ban to ensure that American crude stays here, insulates us to the greatest extent possible from global shocks, and protects American consumers at the pump.”

As Energy In Depth has shown, this betrays a complete misunderstanding of how global markets work. As noted above, crude oil is a commodity traded on the global market and gasoline price changes are closely tied to global market prices. The argument that if, at a time of record oil production, the United States should keep crude here instead of exporting it when gasoline prices are high, ignores the fundamental nature of the market. Indeed, EIA reports that our domestic oil inventories are surging even as we export into the global marketplace.

The Brookings Institution, not a bastion of free market ideologues, issued a 2015 report that noted:

“Lifting the [oil export] ban actually lowers gasoline prices by increasing the total amount of [global] crude supply.”

“Gasoline prices decline when the ban is lifted because they are set in the international market. The international price of crude declines as more U.S. oil enters the market, driving down gasoline prices.”

Some perspective

This article isn’t intended to make anyone – not you, not me – feel better about the pinch of more expensive summer gas. It is, however, an effort to show that the “Blame Big Oil!” activists might want to direct their torches and pitchforks elsewhere.

What about those profits? Activists, and those influenced by their rhetoric, routinely accuse “Big Oil” or making “obscene” profits, suggesting that the exploration and production of oil – which is highly cost intensive – is outlandishly profitable. Thus, any increase at the pump must surely be a sinister plot to squeeze even more profit from the public.

This, however, isn’t the case. According to the Fortune’s calculations when releasing the Fortune 500, only one oil and gas company – Exxon Mobil at number 10 — was among the 10 most profitable companies in the United States.

This makes sense when you think about the enormous costs associated with exploring for oil miles under the surface when there is never a guarantee of success.

It could be worse but California policymakers could make it better. OK, that isn’t very comforting, but it is worth remembering that only six months ago we experienced record-breaking U.S. oil production, thanks to the fracking boom and the renaissance it created. This record domestic production – which, sadly, California hasn’t kept up with – has mitigated price impacts on gasoline around the country over the past several years. A few years ago, for example, American Automobile Association (AAA) estimated that the shale boom was saving drivers about 50 cents per gallon. The impact is likely larger today, because production levels are even higher.

Unfortunately, in California, we are an energy island with no interstate crude oil pipelines. We not only consume all of the oil that we produce, but we have to import more than half of it from places with laxer environmental regulations and from places like Russia and Venezuela that that don’t share our geopolitical interests. A concern for energy independence and security, not to mention more good California jobs, suggests that producing more oil in California is better for our security, our environment, and the economy – not to mention that it would put downward pressure on gas prices.

It’s all relative. While the average price of a gallon of gas in California is around $3.50 per gallon or higher, you could be living in Europe where you’d pay (converted to dollars per gallon) $6.29 in the United Kingdom, $6.56 in Germany, and $7.88 in The Netherlands.

More perspective? At 7-11, a 20 oz. bottle of Dasani water costs $1.99, which equates to $12.75 per gallon.

As this article has shown, while more domestic production would certainly help, there are many, many external factors that go into what makes a gallon of gas in California cost what it costs. It might not be fun to pay more to fill up the tank, but at least we can count our blessings: we could live in Iceland ($7.97 per gallon) or have cars that run on bottled water.

The post Is ‘Big Oil’ to blame for California’s gas prices? Not so fast. appeared first on .

Source: Energy In Depth

WTI vs. WTI vs. WTI

The degree to which the perception of quality of West Texas Intermediate crude oil influences price was on display Wednesday in the form of the following crude value indication given to S&P Global Platts: WTI Midland at Cushing, Oklahoma, is worth 90 cents/b more than WTI at Cushing.

If that sounds confusing, it is, and let me explain.

West Texas Intermediate is the flagship US grade of oil produced in the Permian Basins of West Texas and transported by pipe, rail and truck to refiners near and far (like India far). The value of WTI at Cushing, Oklahoma, is the most commonly accepted benchmark for crude sales in the Americas for varying types of crude oil produced onshore and offshore in the US. It’s called “Cash WTI.”

WTI at Cushing also forms the backbone of the de facto North American crude oil futures contract, CME Group’s NYMEX WTI Light Sweet Crude Oil, which for simplicity’s sake we’ll call NYMEX Crude from now on. Launched in March 1983, historically, it was often colloquially referred to in the market as “NYMEX WTI,” even though WTI was one of many grades that could be delivered at Cushing against the contract, which caused uncertainty.

“Confusion over what is sold has led to problems, Merc officials say,” an Associated Press article from August 1990 reads. “Some buyers who thought they were getting WTI have discovered they were getting a different grade.” That led the NYMEX at the time to tell the market it should refer to the contract as light sweet crude instead of WTI, though the three-letter acronym persists to this day.

CME says NYMEX Crude represents light sweet crude oil meeting a series of specifications including 37-42 API, less than 0.42% sulfur and other parameters, which includes WTI-type light sweet crude streams as well as other blends referred to as Domestic Sweet, or DSW, that meet those specs.

To simplify: NYMEX Crude is WTI that meets NYMEX parameters, as well as other crudes, which may be blends, that meet NYMEX parameters. Blended crudes aren’t bad, but the possibility that a buyer may get one is an uncertainty, and uncertainty leads to lower bids for the unknown and higher bids for the known.

The difference between physical, NYMEX-spec WTI and the NYMEX contract is what’s called the exchange-for-physical, or EFP, which on Wednesday was heard to have traded at 2 cents/b. Therefore, physical WTI that meets NYMEX specs is worth 2 cents/b more than plain-old NYMEX-suitable crude.

Returning to that first price indication for WTI Midland at Cushing. Someone appears willing to pay a 90 cent/b premium to NYMEX-suitable WTI for pure, unblended WTI direct from the Permian to Cushing. An absolute guarantee of quality is nearly a full dollar over what, in theory, should be the same grade, if you figure that all WTI is Midland WTI.

Refiner worries about the significant amount of blending that goes on at Cushing — where crudes from all around North America comingle — has led to a significant price difference between DSW (NYMEX crude that isn’t WTI), NYMEX-suitable WTI, and virgin WTI from Midland.

That’s confusing.

To ease the confusion, CME Group in mid-December said it would amend Chapter 200 — essentially the rulebook for the NYMEX Crude — by adding additional quality requirements for physical crude deliveries against the January 2019 contract month and beyond.

Its move followed an identical move announced one day earlier by Enterprise Products Partners, one of two midstream outfits to which pipeline access is a must for barrels to be included in NYMEX Crude delivery. (The second, Enbridge, does not appear to have expanded its definition of WTI.)

“CME Group is amending the contract specifications to include five additional quality test parameters which will provide assurance that the quality and integrity of West Texas Intermediate (WTI) is maintained,” the exchange said at the time.

The changes have been applauded by refiners — largely through their work via the Crude Oil Quality Association, which recommended the Enterprise- and CME-adopted changes — but it remains to be seen whether this results in a narrower spread between “pure” WTI Midland at Cushing and WTI at Cushing that’s suitable for NYMEX delivery. In other words, as a result of the changes, does the perception of WTI at Cushing — or Domestic Sweet — improve?

One notable point: Enterprise and CME kept the API ceiling at 42 degrees in their mid-December changes. (In their defense, the COQA does not appear to have suggested any changes to API or sulfur.)

Platts Analytics data suggests the majority of the oil coming out of the Permian Delaware and Permian Midland basins is skewed toward light-sweet. Three of four crude assays for non-Cushing WTI provided to Platts since November showed API gravity of more than 42 degrees — 42.2, 43 and 43.4 — that wouldn’t be suitable for NYMEX delivery. That WTI isn’t on-spec to be called WTI.

In its revised specs, CME Group ditched the uncommon grades — Low Sweet Mix (Scurry Snyder) and New Mexican Sweet, among others — but will continue to allow blending of domestic crudes so long as they meet the same specs deliverable WTI must meet.

In 2018 alone, my boss and I have spoken with buyers of US crude in Singapore, India, China, South Korea, Japan and Northwest Europe. The overwhelming consensus about US crude quality has been that it varies dramatically, and blends are bad. By and large, US exporters can forget about selling DSW abroad for the moment.

If we’ve learned anything in the more than two years since US crude export restrictions were lifted, it’s that globally, refiners are well aware of the sophisticated blending operations in the US and are wary of anything that hints of a blend. That’s why buyers are asking for “WTI Midland” instead of just “WTI” — to be sure they’re not getting WTI via Cushing.

But judging by the continuing price spreads between DSW, NYMEX WTI and unblended WTI Midland, all at Cushing, it appears US refiners are just as picky as those outside of the US.

The post WTI vs. WTI vs. WTI appeared first on The Barrel Blog.


Source: Platts - The Barrel Blog News Feed

EU leaders set to prolong Russia sanctions again

European Union leaders willnext week extend until the end of January economic sanctionsagainst Russia over its intervention in Ukraine, diplomats andofficials said. The curbs on Russia's energy, defence and financial sectorshave been prolonged every six months since first being slappedmid-2014 after Moscow annexed the peninsula of Crimea from Kievand backed rebels fighting government troops in [Read More…]

Source: BOE Report

Week 74: Move Over, Pruitt . . . Zinke Is This Week’s King of Corruption


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Methane Leaks from Oil and Gas 60% Higher Than EPA Estimates, New Study Finds

Read time: 6 mins

Each year, oil and gas industry operations in the U.S. are leaking roughly 60 percent more methane, a powerful greenhouse gas, into our atmosphere than previous estimates from the U.S. Environmental Protection Agency, which relied heavily on self-reporting by the industry.

That's the conclusion of a study published today in the peer-reviewed journal Science and conducted with funding from the Department of Energy, NASA, and private foundations. The two dozen researchers involved found that the U.S. oil and gas supply chain releases between 11 and 15 million metric tons of methane per year. 

“This study confirms the growing body of peer-reviewed science indicating oil and gas extraction's methane pollution makes it as harmful to climate as coal burning's carbon dioxide pollution,” said Dr. Anthony Ingraffea, Cornell University professor emeritus of engineering and vice president of Earthwork's board of directors.

Source: DeSmogBlog

TransGlobe Energy Corporation Announces Mid-Q2 2018 Update

CALGARY, Alberta, June 22, 2018 (GLOBE NEWSWIRE) — TransGlobe Energy Corporation (TSX:TGL) (NASDAQ:TGA) (“TransGlobe” or the “Company”) announces a mid-second quarter 2018 update. All dollar values are expressed in US dollars unless otherwise stated. Highlights Published AIM listing documents June 1st, 2018; application has been made for admission to trading in London on June 29th Drilled [Read More…]

Source: BOE Report

Oil company additions to proved reserves in 2017 were the highest since 2013

(Fri, 22 Jun 2018) In 2017, a group of the world’s largest publicly traded oil and natural gas producers added more hydrocarbons to their resource base than in any year since 2013, according to the annual reports of 83 exploration and production companies. Collectively, these companies added a net 8.2 billion barrels of oil equivalent (BOE) to their proved reserves during 2017, which totaled 277 billion BOE at the end of the year.

Lithium to remain cornerstone of EV battery technology

Demand for lithium, one of the key materials used in making lithium ion batteries, is rising rapidly. The metal is used in a wide variety of industrial applications including glass, ceramics and greases, but it’s the use of lithium as a key component in the batteries that power electric and hybrid electric vehicles that has so excited markets.

Lithium does not occur naturally in nature. Instead it is found in a variety of mineral salts which needs to be chemically processed to form the lithium compounds and chemicals required by industry. A number of lithium compounds are used by industry but it is lithium carbonate that is the most commonly used form of lithium, accounting for more than half of total demand. The lithium industry often expresses lithium production and trade in lithium carbonate equivalent (LCE) units.

If electric vehicles, which rely wholly or partly on electricity stored in batteries as their source of energy, revolutionize road transport in the way many expect, demand for the metal will rise exponentially. China will be at the forefront of this.

China is already the world’s largest market for EVs, accounting for nearly half of global sales last year. This trend is expected to continue, supported by government policies driving the development and adoption of electric vehicles. This will require a significant increase in both lithium carbonate and increasingly lithium hydroxide, another lithium compound, which is the preferred basis for the next generation of lithium battery technologies.

China accounted for slightly more than half of total global production last year producing 123,000 tons LCE, according to statistics from the China Nonferrous Metals Industry Association (CNMIA). Of this, 83,000 tons was lithium carbonate with the remainder comprising other compounds like lithium hydroxide, lithium chloride and lithium metal.

China is very reliant on imported raw materials with many Chinese producers using concentrated spodumene, a mineral form of the metal mainly imported from Australia, to produce products including lithium carbonate. This is expensive and the cost of producing a ton of lithium carbonate at some Chinese producers using imported spodumene is reported to be more than $10,000 a ton. In contrast, producers like those in Chile that produce lithium carbonate from mineral brines may have costs under $2,500 a ton.

Strong lithium demand over the last few years has seen high-cost Chinese producers using imported spodumene set the marginal price. This has been reflected in the average price of imported lithium carbonate, which has more than doubled over the past year and a half, according to customs data. The price of battery-grade material is even higher, with S&P Global Platts assessing battery-grade lithium carbonate CIF North Asia at $17,250/mt in early June.

With demand continuing to outstrip supply and prices holding at elevated levels, imports remained strong in the first quarter of this year, rising 13% on the same period in 2017.

In a bid to secure future supplies Chinese companies have therefore been looking overseas. China’s Tianqi Lithium controls 51% of Talison Lithium, the world’s largest spodumene producer, most of which is shipped to China. And in May Tianqi Lithium also bought 24% of Chile’s SQM, the world’s lowest-cost lithium producer. This should support continuing imports of lithium carbonate into China even whilst a number of new Australian spodumene projects come online.

Chinese Lithium Carbonate Imports

One unique feature of the Chinese electric vehicle market is the popularity of battery (BEV) and plug-in hybrid (PHEV) electric buses. Due to city governments favoring cleaner battery technologies over diesel engines, EV buses last year accounted for over 20% of total sales of buses in China. This contrasts markedly with passenger BEV and PHEV volumes, which although much higher in absolute terms, accounted for under 2.5% of total car sales.

Chinese Sales of BEV and PHEV passenger cars and buses

A new policy introduced this year to promote development and production of EVs is expected to change the landscape for EVs in China. Though ambitious, it could see annual EV sales reach 7 million units by 2025, accounting for 20% of new passenger car sales.

The scale at which Chinese EV battery production capacity is expected to rise to meet this demand can be seen in the recent IPO prospectus by battery maker CATL. It forecasts that EV battery capacity will rise by nearly five times by 2022 to meet the demands of both local and foreign vehicle manufacturers in China, which are ramping up production and development of BEV and PHEV vehicles to comply with the new policy.

Historical and forecast production of batteries for New Energy Vehicles in China

LITHIUM WILL BE A KEY COMPONENT OF BATTERIES FOR MANY YEARS

This increase in battery production will see a significant rise in demand for metals like cobalt, nickel and lithium. Lithium carbonate is currently the predominant form of the metal used by battery makers in China, where it is used in the LFP (lithium-iron-phosphate) batteries that are commonly used by Chinese vehicle manufacturers including BYD, FAW-Volkswagen, Geely and Great Wall Motors.

Newer battery technologies like NCA (nickel-cobalt-aluminum) and NMC (nickel-manganese-cobalt) produce more energy for their size than LFP technology, but are more expensive owing to the use of nickel and cobalt. Regardless of the battery technology and the amount and proportions of other metals, the lithium intensity of batteries — the amount of lithium used per unit of energy the battery produces — remains more or less the same. While lithium intensity is expected to decline slightly over the next decade, this will be offset by a shift to larger battery packs to give EVs the range that consumers demand.

The next generation of NCA and NMC 811 batteries, which use eight parts nickel to one part each of manganese and cobalt, will favor the use of lithium hydroxide. However, it is likely that LFP batteries will continue to be used in China. LFP batteries do not provide as much energy as an NCA or NMC battery of the same weight, but in addition to being cheaper to produce they have a higher thermal stability, making them safer. NCA batteries in particular can be unstable and prone to overheating, causing fires. LFP batteries are therefore likely to continue to be used in China, especially in vehicles like electric buses where safety is of paramount importance.

The battery packs used in BEV and PHEV buses are on average much larger than those found in passenger cars, which means that they have been a significant driver of lithium demand. Indeed, S&P Global Platts estimates that in 2017 buses accounted for around 45% of all lithium demand from the Chinese EV sector.

Estimated lithium carbonate demand from Chinese EVs

Given the government’s desire to reduce air pollution and develop China as a leader in EV technology, we think that commercial vehicles, and buses in particular, will continue to be significant driver of EV penetration in China in the years ahead.

The post Lithium to remain cornerstone of EV battery technology appeared first on The Barrel Blog.


Source: Platts - The Barrel Blog News Feed

Pentanova Energy Announces Farmout Agreement on Colombian Gas Property

VANCOUVER, June 21, 2018 /CNW/ – PentaNova Energy Corp. (the “Company” or “PentaNova“) (TSXV: PNO), is pleased to announce the signing of the SN-9 Farm Out Agreement (the “Agreement“) with Panacol Oil & Gas (“Panacol“), a wholly owned subsidiary of LATAM Oil & Gas. Under the terms of the Agreement, Panacol will fully fund the Company's [Read More…]

Source: BOE Report

Pembina Pipeline Corporation and Breakfast Club of Canada Expand Breakfast Program to Four Indigenous Schools

CALGARY, June 21, 2018 /PRNewswire/ – Pembina Pipeline Corporation (“Pembina” or the “Company”) (TSX: PPL; NYSE: PBA) announced today that in celebration of National Indigenous Peoples Day, its signature community investment program, Fuel 4 Thought, has launched in Driftpile First Nation, Sturgeon Lake Cree First Nation, Alexis Nakota Sioux First Nation and Ktunaxa Nation Council. [Read More…]

Source: BOE Report

Cleaning the Coke Drum Vapor Lines Pays

How long is your plant willing to wait to clean (a.k.a. decoke, line mole, hydroblast, or– my personal favorite– “Clean the Donut”) the drum vapor line?

DOV Opening for Cleanout 6

DOV Opening for Cleanout 6

Determining the optimum frequency is site specific but when we look at some select factors, we often arrive at the same conclusion: you should be cleaning it more often than you are. This will pay significant dividends in the form of yield improvement.

New Delayed Cokers– like those by Bechtel, Amec Foster Wheeler or Lummus– are designed with minimal pressure drop between the coke drum and the fractionator flash zone to increase liquid yields. In many cases, it is not uncommon to see vapor lines +24″. The typical design pressure drop is 2-5 psig only. However, in site performance assessments, it is common to see the dP exceeding 4-5 psig above the clean state.

This is costing real money!

Pressure vs Yield PetroSIM

Pressure vs Yield PetroSIM

Yes, finding the yield shift in the poor DCU material balance will be hard, but there is enough science to demonstrate it is real to keep the economics on solid ground. Based on the PetroSIM DCU model, each PSI is worth (-0.16 wt%) reduction in coke yield. These products will be distributed in the yields but most of the incremental molecules will be HCGO. Assuming your HCGO goes to either a FCC or HDC, the marginal value of the extra HCGO will be $5-20+/BBL. Assuming a margin of $10/bbl on a 50kbd coker, the value of cleaning the vapor line at 2 psig versus 5 psig over the clean state is: 3 psig > 240 bpd+ HCGO > 876k$/year!

I could be wrong, but I think you can pay the salaries for a lot of maintenance guys to do this cleaning more regularly with those profit margins. At one recent plant visit, I observed operators doing the donut cleaning without maintenance support. That was amazing! Just make sure you torque the bolts on the dollar plate properly, guys….

Here are some cleaning frequency recommendations with proven success:

  • Clean the donut when the dP exceeds +1.5-2.0 psig over the clean condition (i.e. design = 1.5, clean at 3.0, or design = 5 psig clean, then clean at 7 psig).
  • Clean the entire vapor line to the fractionator during every major turnaround.
  • Optimize the drum vapor quench flow rate and nozzle design to reduce accumulation. Do a flash simulation to ensure the walls of the vapor line are liquid wet all the way to the fractionator. If dP gets too high, dry points can be created which accelerate coke accumulation.

Check out the recent presentation given at RefComm® Galveston 2018 by Sim Romero and Maria Aldescu about PetroSIM model results and new correlations.

For more information, feel free to contact me directly or visit www.RefiningCommunity.com.

–Written by Evan Hyde, Director of Field Operations