Understanding Oil Gas Business

UNIT 20: Case Study
MBA (Oil & Gas Management)
Understanding Oil &

Gas Business
Understanding Oil & Gas Business
Course Design
Advisory Council
Chairman
Dr Parag Diwan
Members
Dr Shrihari Dr Anirban Sengupta Dr Ashish Bhardwaj
Dean Dean CIO
Dr Satya Sheet Prof I M Mishra Mr M K Goel

VP – Academic Affairs Dean – IIT Roorkee Management Consultant
SLM Development Team

Wg Cdr P K Gupta
Dr Joji Rao
Dr Neeraj Anand
Dr K K Pandey
Print Production
Mr Kapil Mehra Mr A N Sinha

Manager – Material Sr Manager – Printing
Author
Lallon Prasad
All rights reserved. No parts of this work may be reproduced in any form, by mimeograph or any other means,
without permission in writing from Hydrocarbon Education Research & Society.
Course Name: Understanding Oil & Gas Business
Version: July 2013
© MPower Applied Learning Enterprise

UNIT 20: Case Study
Contents
Block-I
Unit 1 Basic Concepts ................................................................................................................ 3

Unit 2 Crude Oil and Natural Gas Concepts.......................................................................... 13
Unit 3 The Macro-system......................................................................................................... 29
Unit 4 The Indian Perspective................................................................................................. 41
Unit 5 Case Study .................................................................................................................... 53
Block-II
Unit 6 The Exploration of Oil .................................................................................................. 61

Unit 7 Production Methods...................................................................................................... 77
Unit 8 Onshore Oilfield Processing ......................................................................................... 85
Unit 9 Offshore Oilfield Processing....................................................................................... 101
Unit 10 Case Study .................................................................................................................. 113
Block-III
Unit 11 Gas Processing ............................................................................................................ 117

Unit 12 Liquefied Natural Gas (LNG) .................................................................................... 133
Unit 13 Petroleum Refining..................................................................................................... 143
Unit 14 Refinery Requirements............................................................................................... 159
Unit 15 Case Study .................................................................................................................. 171
Block-IV
Unit 16 Distillation in Refineries ............................................................................................ 175
Unit 17 Petrochemical Industry .............................................................................................. 197

Unit 18 Production of Petrochemicals..................................................................................... 211
Unit 19 Transportation of Oil, Gas and Products: Pipelines ................................................. 227
Unit 20 Case Studies................................................................................................................ 251
iv
Block-V
Unit 21 Transportation of Oil, Gas and Products: Other Modes ........................................... 255
Unit 22 Health, Safety and Environment............................................................................... 267
Unit 23 IT Applications in Hydrocarbon Industry ................................................................. 293
Unit 24 Economics and Technology Trends............................................................................ 317
Unit 25 Case Study .................................................................................................................. 337
Glossary ............................................................................................................................................ 341

UNIT 1: Basic Concepts
1
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
BLOCK-I
Detailed Contents Understanding Oil & Gas Business
2
Notes
UNIT 1: BASIC CONCEPTS
___________________ UNIT 3: THE MACRO-SYSTEM
z Introduction z Introduction
___________________
z What is Petroleum z From Wellhead to Petrochemicals
___________________
z Reservoir, Well and Well Fluid z History of Oil and Gas Industry
___________________
z Crude Oil and Natural Gas
___________________ UNIT 4: THE INDIAN PERSPECTIVE
z Units Specifically Used in Oil and Gas Industry
z Introduction
___________________
UNIT 2: CRUDE OIL AND NATURAL GAS z The Indian Perspective – Upstream
___________________
CONCEPTS z The Indian Perspective – Downstream
___________________
z Introduction
___________________ UNIT 5: CASE STUDY
z Various Forms of Natural Gas
z ___________________
Elementary Concepts on Hydrocarbons
z Composition of Crude Oil
z Some Important Concepts on Crude Oil
z Products from Crude Oil

Unit 1
3
Notes
Basic Concepts
___________________
___________________
___________________
Objectives
___________________
After completion of this unit, the students will be aware of the following
topics: ___________________
\ Concept of petroleum, its constituents and their significance ___________________

\ Common concepts, definitions and terminologies used with respect to ___________________
oil and gas
\ Units Specifically used in Oil and Gas Industry ___________________
___________________
Introduction ___________________
Oil industry is perhaps the most exciting industry in the history of

civilization. Although the history of oil traces back to seepages of
oil as early as 3000 B.C., the real thrill of it started with the oil
boom in the USA. When Rockefeller was asked to tell very briefly
how people get rich, he replied “Some people find oil, some don’t”.
It’s amazing how much oil and gas has penetrated into our lives
today. The toothbrush we use to start the day, the suit we wear,
the fuel we use in our cars to drive to office, the car interiors, back
home with cozy furniture, tapestry, and mattress of the bed we
sleep on – all are petrochemicals i.e. chemicals from petroleum.
Oil business has been responsible for prosperity, war, intrigues

and adventure.
Search of oil and gas leads us to some of the most exotic forests,
deserts, and ocean. Perhaps some of the most beautiful man made
sights in the world are offshore platform in Deep Ocean, array of
offshore rigs in a remote desert or jungle or an illuminated
petrochemical complex at night.
Let us understand the importance of oil and gas industry by

looking at its share in the energy supply to the world. More than
60% of the energy needed in the world is provided by oil and gas.
And it is not really as expensive as it sounds.

4
To understand oil and gas business, one needs to understand a
Notes
Activity whole spectrum of activities from oil well to petrochemicals.
Discuss in groups if oil and
___________________
gas will truly start depleting in It is also important to understand the trend and future of the
___________________
another 20 to 30 years. industry in terms of technology, economics and pricing of energy
___________________ resources. Energy price is very important for the economy of any
___________________ country. As stated earlier, oil and gas provide over sixty percent of
the energy requirement of the world. Oil had been the dominant
___________________
component of the mix. Oil prices have been controlled from time to
___________________ time to a high level by the petroleum exporting countries (OPEC).
___________________ It is cleaner, cheaper and new discoveries and reserves of gas field
___________________
are coming up in many parts of the world including India.
___________________ Very often the question comes up how long the hydrocarbon
resources (oil and gas) will last. Many predict oil and gas will start
___________________
depleting in another 20 to 30 years.
But the world is keeping on adding new hydrocarbon finds and
developing technology to recover more hydrocarbons from existing
oil and gas fields. Also major R&D work is going on to find how to
exploit huge reserves of ‘Methane Hydrates’ i.e. an unstable
compound of water and methane, lying untapped deep below the
ocean in many parts of the world including coastal areas of India.
It is a fact that although the oil and gas industry will continue to
dominate for several decades from now, at some point of time other
forms of energy will take over. Oil and gas industry generates
wealth, and a part of the wealth is being put into R&D to innovate
for the future. We shall cover the topic in a later section on future
trends. Let us not call the industry just oil and gas industry – it is
energy industry.
What is Petroleum?
Petroleum is a word derived from the Latin words Petra (rock) and
Oleum (oil). It essentially comprises of naturally occurring
hydrocarbons i.e. compounds made of carbon and hydrogen atoms.
These hydrocarbons are trapped below the surface of the earth, in
porous rocks, in the form of oil and gas.
From where did the hydrocarbons come? There are various
theories. The most accepted theory is the organic theory.
Hydrocarbons came from remains of the bodies of pre-historic land
based animals, marine organisms (plankton) and vegetation, which
were washed away and buried below the earth during upheavals 5
on the earth’s surface millions of years ago. Notes
In the course of time the buried organic matters decomposed and ___________________
the carbon and hydrogen present in these reacted under heat and ___________________
pressure to form various compounds, generally hydrocarbons.
___________________
The hydrocarbons got trapped in the porous rocks and were
___________________
covered by hard sedimentary rocks that formed over it. They acted
___________________
as “cap” or seal to prevent hydrocarbons from escaping.
___________________
As explained later, carbon and hydrogen atoms can join together to
form molecules of various sizes and structures. Hydrocarbons could ___________________
be a small molecule with combination of one or a few carbon atoms ___________________

with hydrogen (e.g. Methane - CH4, Ethane - C2H6). Or it could be
___________________
very large molecule by combination of dozens of carbon and
___________________
hydrogen atoms (e.g. Wax - C20H42) or even thousands of carbon and
hydrogen atoms (e.g. Polythene).
Petroleum is essentially composed of hydrocarbons with some
other impurities. The words ‘petroleum’, ‘oil and gas’ and
‘hydrocarbon’ are all used synonymously in the oil and gas
industry.
Hydrocarbons in petroleum could be in gaseous, liquid or solid
form depending on the type and size of hydrocarbon molecule:
z It can be in gaseous form as natural gas, which can be
associated with oil in an oil field or found free of oil in a gas
field.
z It can be in liquid form as crude oil (dark and viscous), or
condensate (clear and volatile like motor gasoline).
z The solid and semi-solid forms of petroleum are called asphalt
and tar.
Petroleum as a general term is used for all three mentioned above.
Table 1.1: Light and Heavy Hydrocarbon Molecules
Name Formula Phase

Methane CH4 Gas
Hexane C6 H14 Liquid
Octane C8 H18 Liquid
Wax C20 H42 Solid
6
Check Your Progress
Notes
Activity
State whether the following statementsare true or false:
Construct a model of the
___________________
formation of a Reservoir.
___________________
1. Hydrocarbons in petroleum could be in gaseous, liquid
or solid form depending on the type and size of
___________________
hydrocarbon molecule.
___________________
2. Petroleum is a word derived from the Latin words Petra
___________________ and Oleum.
___________________
___________________ Reservoir, Well and Well Fluid

___________________ Through the burial and decomposition of organic material, huge
___________________ amount of hydrocarbons are formed below the earth’s surface.
Movements and convulsions below the earth’s surface resulted in
___________________
different types of geological formations, where the hydrocarbons
are trapped. In these formations, the hydrocarbons are contained
by porous rocks known as source rock, covered with strata of hard
sedimentary rocks known as cap rock which settled over them.
When huge quantity of recoverable hydrocarbon is trapped in rock
formations below the earth, it is called Reservoir. Figure 1.1
depicts a typical formation of a reservoir. The surface on earth
above the reservoir is called oilfield or gas field or condensate field
depending on what it produces.
Figure 1.1: Hydrocarbon Formation
It must be noted that the reservoir in an oil field is not like a pool
of liquid or a container filled with gas. It is oil or gas trapped in
pores of porous sedimentary rocks, covered by impervious cap rock.
7
To produce oil from the reservoir, wells are drilled through the
Activity
Notes
surface of the earth. A well is then perforated at right location
State all the components of
from where the oil or gas enters the well pipe and rushes out ___________________
Crude oil.
because of high pressure. ___________________
___________________
What is Well Fluid?
___________________
The fluid that comes out of the well in an oilfield or gas field is
called well fluid. ___________________
Well fluid is a mixture of crude oil, natural gas and saline water ___________________
along with small amounts of sand and sludge. The water is called ___________________
formation water or produced water. ___________________
If the crude oil had been just made of hydrocarbons, processing to ___________________
get the final products would have been easy and at low cost. But a ___________________
number of undesirable components come out with the well fluid,
which increases the processing blocks and processing cost.
z Other components like sulfur compounds, carbon dioxide,

nitrogen, traces of metals are also present. Their removal
constitutes part of processing.
z Proportion of oil, water and gas may vary widely from one field
to other. It changes substantially with time during production.
z Normally, well fluid comes out on its own pressure, which

depletes with time. Artificial methods of recovery are used in
later stages of production.
Check Your Progress

Fill in the blanks:
1. The fluid that comes out of the well in an oilfield or gas
field is called …………………. .
2. When huge quantity of recoverable hydrocarbon is
trapped in rock formations below the earth, it is called
…………………. .
Crude Oil and Natural Gas

The first processing step in an oilfield is separation between crude
oil, natural gas and produced water.
8
Notes
Activity What is Crude Oil?
Find out using the Internet
___________________ Crude oil is a mixture of about 500 organic chemicals,
how many barrels of oil India
___________________
predominantly hydrocarbons (molecules made of carbon and
imports in a year.
hydrogen). It is recovered from underground reservoirs, normally
___________________
1000 - 5000 meters down the earth.
___________________
Crude oil can be of wide variety and characteristics. It could be
___________________ very fluid, very viscous or semisolid. The colour could be black,
___________________ dark brown, amber or light brown.
___________________ It is also called Petroleum.
___________________
What is Natural Gas?
___________________
Natural gas is a mixture of the lightest hydrocarbons like
___________________ methane, ethane, propane and butane. It also contains water to its
saturation limit. It may also contain hydrogen sulphide (H2S),
carbon dioxide (CO2), nitrogen (N2) and occasionally small amounts
of helium (He).
When natural gas comes out of the well along with crude oil, it is
called associated gas. Associated gas is produced along with crude
in a field which is essentially an oil producing field.
When the well produces mainly gas with very little liquids, it is
called free gas. Free gas production can be shut when we do not
want it.
When acid gases like CO2 and H2S are present in substantial
quantity, the gas is called sour gas. Otherwise it is called sweet
gas.
Check Your Progress

Fill in the blanks:
1. ……………… is also called Petroleum.
2. When natural gas comes out of the well along with crude
oil, it is called ……………… .
Units Specifically Used in Oil and Gas Industry

Oil industry uses certain specific units for production rates and
volumes which will be bused frequently in our text. Due to past
history of oil and gas industry which is predominantly the history
of exploitation of hydrocarbon resources by the companies of 9

American origin, the American units are more often used in the Notes
industry rather than Metric Units. Here are some important units ___________________
commonly used with which one must get familiar. ___________________
z Crude-oil volume is usually measured in barrels. ___________________
z One barrel holds 42 gallons (159 liters). ___________________
z Weight or mass of crude in India is in metric tons (tonne). ___________________
___________________
z A barrel of average crude oil weighs 0.150 ton, as a thumb
rule. It must be remembered that it depends on the density of ___________________
the crude oil. ___________________
z Million Barrels of Oil Equivalent (MBOE) means amount of ___________________
gas or any other fuel whose calorific value or heating value is ___________________
equivalent of one million barrels of crude oil.
z Oil production capacity or refinery capacity are often

expressed in Barrels per Day (BPD) or Barrels per Standard
Day (BPSD). Roughly 20,000 BPSD is equivalent to 1 Million
Tons per year of crude, taking an average density of crude.
[Note: It obviously will depend on density of crude oil.]
z Some typical conversion figures used in the oil industry are

given in Table 1.2.
Table 1.2: Commonly Used Measurement

Units in Petroleum Industry
10
Check Your Progress
Notes
Fill in the blanks:
___________________
1. Crude oil volume is usually measured in ……………… .
___________________
2. Weight or mass of crude in India is in metric ………… .
___________________
___________________
Summary
___________________
Petroleum is a saying determined from the Latin statements Petra
___________________
(rock) and Oleum (oil). It basically includes commonly happening
___________________ hydrocarbons i.e. fuses made of carbon and hydrogen particles. The
___________________ aforementioned hydrocarbons are trapped beneath the surface of
___________________
the earth, in permeable shakes, in the manifestation of oil and gas.
___________________ Carbon and hydrogen molecules can join together to shape

particles of different sizes and structures. Hydrocarbons could be a
modest atom with consolidation of one or a couple of carbon
particles with hydrogen (e.g. Methane CH4 , Ethane -C2H6). On the
other hand it could be extremely huge atom by fusion of portions of
carbon and hydrogen iotas (e.g. Wax - C20H42) or even many carbon
and hydrogen particles (e.g. Polythene).
Petroleum is basically made out of hydrocarbons with some
different pollution. The statements 'petroleum', 'oil and gas' and
'hydrocarbon' are all utilized synonymously as a part of the oil and
gas industry.
Lesson End Activity

Write a report on the OPEC oil price controversy.
Keywords
Aromatics: They are compounds having a ring of six carbon atoms
with alternating double and single bonds and six hydrogen atoms.
Crude Oil: It is predominantly made of hydrocarbons. It is
composed of three main hydrocarbon groups: Paraffins,
Naphthenes, and Aromatics.
Well Fluid: It a mixture of crude oil, natural gas and saline water
along with small amounts of sand and sludge.
Petroleum: It essentially comprises of naturally occurring
Questions for Discussion 11

Notes
1. Write a short note on Crude oil.
___________________
2. Explain the formation of Petroleum.
___________________
3. Define Natural Gas. State its various forms.
___________________
4. What are the units most commonly used in the Oil and Gas ___________________
industry?
___________________
Further Readings ___________________
___________________
Books ___________________
Vollhardt, K.P.C. & Shore, N., Organic Chemistry (5th Edition), ___________________
New York: W.H. Freeman, (190-192), 2007.
___________________
Shore, N., Study Guide and Solutions Manual for Organic
Chemistry (5th Edition), New York: W.H. Freeman, (70-80), 2007
Web Readings
www.need.org/needpdf/infobook_activities/ElemInfo/PetroE.pdf
www.hindustanpetroleum.com
12
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 2: Crude Oil and Natural Gas Concepts
Unit 2
13
Notes
Activity
Crude Oil and Natural Gas

Find___________________
out what basis the colour
of Crude oil depends on, using
___________________
the Internet.
Concepts ___________________
___________________
Objectives ___________________
___________________
topics:
___________________
\ Hydrocarbons
\ Composition of Crude Oil ___________________
\ Products from Crude Oil ___________________
___________________
Introduction
Crude oil is a mixture of about 500 organic chemicals,
predominantly hydrocarbons (molecules made of carbon and
hydrogen). It is recovered from underground reservoirs, normally
1000 - 5000 meters down the earth.
Crude oil can be of wide variety and characteristics. It could be
very fluid, very viscous or semisolid. The colour could be black,
dark brown, amber or light brown. It is also called Petroleum.
Natural gas is a mixture of the lightest hydrocarbons like
methane, ethane, propane and butane. It also contains water to its
saturation limit. It may also contain hydrogen sulphide (H2S),
carbon dioxide (CO2), nitrogen (N2) and occasionally small amounts
of helium (He).
Various Forms of Natural Gas

There often exists a lack of understanding regarding the various
terminologies or nomenclature used in the industry in describing
components or forms of natural gas. The most commonly used ones
are NGL, LPG, LNG and CNG. Let us understand what are these
and how do they differ from natural gas.
NGL: During production or transportation of gas, the heavy
components such as pentane or hexane, condense due to natural
cooling and separate out as liquids. This is called NGL (Natural
Gas Liquids).
14
As the name suggests, this is not really a gaseous component, but
Notes
volatile liquid.
___________________
LPG: The propane/butane component of the natural gas is
___________________ liquefied under moderate pressures and is supplied as cooking gas
___________________ fuel.
___________________ This is called LPG (Liquefied Petroleum Gas).
___________________ LNG: Natural gas in bulk is liquefied under very low (cryogenic)
___________________ temperature for transportation in large quantities by marine
tankers. This is bulk of the natural gas in liquefied form and is
___________________
re-vaporized after receiving it at its destination from tankers, to be
___________________ used as natural gas. The objective of converting the gas to LNG is
___________________ transportation in large quantities or export by marine tankers.
___________________ This is called LNG (Liquefied Natural Gas).
CNG: Natural gas is compressed to high pressures for use as
automotive fuel or for transportation in small quantities. This is
natural gas in highly compressed form but not liquefied.
It is called CNG (Compressed Natural Gas).
Check Your Progress

Fill in the blanks:
1. ……………………. is formed when natural gas is
compressed to high pressures for use as automotive fuel
or for transportation in small quantities.
2. ……………………. is Natural gas in bulk is liquefied
under very low temperature for transportation in large
quantities by marine tankers.
Elementary Concepts on Hydrocarbons

Now that we know crude oil is made of around 500 components,
mainly hydrocarbons and natural gas is mainly light hydrocarbons,
it becomes important to understand a little basic about
hydrocarbon molecules.
The whole petroleum and petrochemical industry revolves around:
Starting with the hydrocarbon molecules as produced
naturally from the well.
Rebuilding them into valuable products by various types
of processing.
What is Hydrocarbon? 15
Notes
Hydrocarbons are compounds made of carbon and hydrogen. The
hydrocarbon molecules are formed by: ___________________
Bonding of hydrogen atoms to carbon atoms. ___________________
___________________
Bonding of a number of carbon atoms to form chain or cycle or
a combination of chain and cycle. ___________________
___________________
The number of carbon atoms bonded together can be a few or
many, in various combinations, creating numerous chemicals. ___________________
___________________
The bonding of carbon atoms could be in the form of a straight
chain, branched chain or cyclic manner. ___________________
___________________
Typical hydrocarbon structures are depicted in Figure 2.1.
___________________
Figure 2.1: Hydrocarbon Structure
The phase (solid, liquid or gas) of the hydrocarbon depends on the

number of carbon atoms joined together in a chain, for example,
CH4 (METHANE) : GAS
C6H6 (BENZENE) : LIQUID
C20H42 (WAX) : SOLID
Crude oil is made of a mixture of more than 500 components,

mainly Hydrocarbons, which are the desired components. Crude oil
contains from light components as dissolved gases (LPG), light
liquids (Petrol, diesel) to heavy stock like wax, tar and resins.
The more carbon atoms a hydrocarbon molecule has,
the “heavier” it is (the higher is its molecular weight).
and the higher is its boiling point.

16
Check Your Progress
Notes
Activity
Fill in the blanks:
Conduct further research on
___________________
Paraffins and make
___________________
a 1. Hydrocarbons are compounds made of ………………... .
presentation.
___________________ 2. The bonding of carbon atoms could be in the form of a
straight chain, ………………... or cyclic manner.
___________________
___________________
Composition of Crude Oil
___________________
Crude oil is predominantly made of hydrocarbons. It is composed of
___________________
three main hydrocarbon groups:
___________________
Paraffins
___________________
Naphthenes
___________________
Aromatics
It also contains unstable hydrocarbons called olefin.
Paraffins are straight chain compounds, chemically stable. Lighter
ones (CH4, C2H6) are gas. Heavier molecules are liquid (oil) or solid
(wax).
Naphthenes consist of carbon rings, with/without side chains.
Saturated with hydrogen, naphthenes are also chemically stable.
Lighter naphthenes are liquids and heavier ones could be solid.
Aromatics are compounds having a ring of six carbon atoms with
alternating double and single bonds and six hydrogen atoms. They
are relatively unstable.
Olefins are double bonded hydrocarbon chains, normally produced
during high temperature processing of petroleum. Olefins are
unstable and polymerize easily i.e. a large number of olefins can
combine together easily to form large gummy or plastic molecules.
17
Notes
___________________
___________________
___________________
Activity
What___________________
is the boiling point of a
mixture of two liquids A and B
___________________
mixed 50-50, A and B having
a boiling points of 70°C and
___________________
80°C respectively?
___________________
___________________
___________________
___________________
Figure 2.2: Types of Hydrocarbons
Check Your Progress

Fill in the blanks:
1. ……………… are straight chain compounds, chemically
stable.
2. ……………… are double bonded hydrocarbon chains,
normally produced during high temperature processing
of petroleum.
Some Important Concepts on Crude Oil

Carbon Numbers
The hydrocarbons are often referred in terms of number of carbon
atoms rather than whole formula.
18
Example:
Notes
C1 = Methane
___________________
___________________
C4 = Mixture of Butane and hydrocarbons with 4 carbon
atoms
___________________
C7 = Mixture of all hydrocarbons with 7 carbon atoms.
___________________
For further clarity let us put down some of the paraffin
___________________
hydrocarbons the symbol (-) indicating carbon to carbon bonds:
___________________
Methane CH4 CH4
___________________
Ethane C2H6 CH3 - CH3
___________________
Propane C3H8 CH3CH2CH3
___________________
Butane C4H10 CH3 - CH2 - CH2 - CH3
___________________
(normal butane or n-butane)
Butane structure can also be branched
chain type as given below:
CH3 - CH - CH3
|
CH3
(Isobutane or i-butane)
Both the structures of butane have same number of carbon atoms
and same number of hydrogen atoms i.e. C4H10.
The only difference is how the carbon atoms are bonded with each
other. This makes them different chemical entities but with very
similar and close physical properties like boiling point and vapour
pressure. The branched chain hydrocarbons of same carbon
numbers, same number of hydrogen atoms and same chemical
formula are called isomers.
Now let us look at Pentane.
Pentane C5H12 CH3 - CH2 - CH2 - CH2 - CH3

(n-pentane)
Pentane can have quite a few isomers:

CH3 - CH - CH2 - CH3 CH3 - CH - CH3
| |
CH3 CH2
|
CH3
19
Thus one can have more and more isomers as the number of
carbon atoms in the chain increases. Notes
In addition to the numerous isomers, there are other types of ___________________
hydrocarbons like olefins (double bonded or triple bonded ___________________

hydrocarbons). C5 and higher hydrocarbons can have cyclic ___________________
structures (naphthenes and aromatics) and there could be
___________________
molecules with combination of cyclic and straight chain
hydrocarbons. ___________________
For example, C6 hydrocarbon can be compounds of: ___________________
Normal paraffinic chain structure (e.g. normal hexane) ___________________
Isomers (isohexanes) ___________________
Olefinic structures or structures with double bond (hexanes) ___________________
Cyclic structure (benzene) ___________________
Thus just saying C6 means a number of hydrocarbons with six

carbon atoms put together in various forms.
That explains:
How innumerable varieties of hydrocarbon molecules are
possible.
How with same number of carbon atoms, say C8, numerous
hydrocarbon compounds are possible.
Higher the number of carbon atoms, more numerous is the possible
hydrocarbon compounds.
Classification of Crude Oil

Various crude oils are often referred by their API Gravity. API
Gravity is expressed as (141.5/ Sp. Gravity - 131.5). As specific
gravity is in the denominator, API Gravity is higher for lighter
crude and lower for heavier crude.
A comparative idea of this gravity unit can be obtained by
comparison with water:
Water : 10 API
Typical API Gravity figures for crude oil are:
Mumbai High Crude : 40 API - Light Crude
Arabian Crude : 34 API - Medium Crude
Venezuelan Crude : 15 API - Heavy Crude
There could be sub-categorization as Medium Heavy or Light
Medium.
20
Another common classification is based on Characterization
Notes
Factor, which depends on API Gravity and Boiling Point.
___________________
The crude oils are also classified in terms of chemical nature, for
___________________ example:
___________________ Paraffinic base
___________________ Asphaltic base
___________________ Intermediate base
___________________ Naphthenic base
___________________ Crude oils for which the residue after distillation contains paraffin
wax is called paraffinic. If the residue contains asphalt, it is called
___________________
asphaltic base and so on.
___________________
Refinery processing scheme and product yields depend on type of
___________________ crude in terms of chemical nature and gravity. It also indicates the
type of product it can yield.
As typical example:
Paraffinic base crude do not yield good bitumen (road tar) and
is not good for lubricating oil manufacture. But it is good for
diesel.
Light crude contains more of gasoline.
Medium crude is good for diesel production.
Heavy crude may give better bitumen.
Naphthenic crudes are good for lubricating oil.
Cut or Fraction
Crude Oil and its products are mixtures of several components.
Each component has a boiling point. It is interesting to examine
what would be the boiling point of mixture of several liquids.
Thus mixtures do not have a single boiling point; it has a boiling
range - from the initial boiling point to the final boiling point.
Liquid mixtures are identified with their boiling range. Crude oil
being a mixture, has a boiling range. Each product like gasoline or
kerosene is also a mixture and has a boiling range.
Cuts, Fractions and Carbon Numbers

Crude oil is a mixture of over 500 components. It has a boiling
range of around 40-600°C. Each product from Crude oil is also
mixture of several components (hydrocarbons). The hydrocarbons
range from C1 to C65 in terms of carbon numbers.
21
Product of a particular boiling range taken out of crude is defined
Notes
as cut or fractions.
___________________
The products are identified as cuts from crude of certain boiling
ranges and carbon numbers. ___________________
___________________
Table 2.1: Petroleum Product Cuts and Carbon Numbers
___________________
Product / Cut Boiling Range Carbon Number
Natural Gas <20°C C1- C4

___________________
Gasoline 40 - 200°C C5 - C10
Kerosene 180 – 250°C C10 - C15 ___________________

Diesel (Gas Oil) 240 – 350°C C14 - C20
Jet Fuel (ATF) 170 - 240°C C10 - C15 ___________________

Lube Oil 350 - 450°C C20 - C30
___________________
Bitumen/Tar 450°C+ C30 ++
___________________
Petroleum Products ___________________
Crude oil (Oil) and natural gas (Gas) mixed along with water,
comes out of the well as well fluid. Crude oil and natural gas
together can be broadly referred as petroleum. Petroleum is just a
raw material. Let us see what products we get from oil and gas
that comes out from well head.
Well Head to Energy and Petrochemicals

There are two distinct uses of well head oil and natural gas- as fuel
and as high value products. Primary use of the petroleum products
in the early days of its exploration has been as fuel. But later with
the development of petrochemical area (plastics, fibres, etc.),
emphasis has shifted to greater valorization of the raw material.
Let us look at the table below to understand this.
Table 2.2: Petroleum as Fuel and as Value Products
Fuel and Products Calorific Value Price

(Kcal/Kg) US Dollars/Ton
Coal 6,500 80
Crude Oil 10,400 150
Fuel Oil 10,000 120
Motor Gasoline 11,000 180
Polythene Not fuel 500
Polystyrene Not fuel 550
The high calorific value of the petroleum products, its low cost in
the past and its suitability for use as relatively clean fuel created
incentive to consume as fuel. But in the current economic scenario,
valorization to higher value products has become integral part of
oil and gas industry.
22
It is important to note that besides producing fuel and automotive
Notes
products like gasoline or diesel, both crude oil and natural gas
___________________
provide feed stock for petrochemicals. Feed stocks are component
___________________ of crude oil and natural gas that are converted into high value
___________________ petrochemical products like polythene, polyester, synthetic rubber
and synthetic fibre, etc. It is apparent from the table above that
___________________
there is substantial valorization once the oil or gas is converted to
___________________ petrochemicals.
___________________ The macro-system from well head to Petrochemicals has been dealt
___________________ in detail in the next section. For an initial understanding of the
___________________
petroleum products let us have a look at the simple block diagram
given in Figure 2.3.
___________________
___________________
Figure 2.3: Petroleum Utilization Blocks
The various blocks in overall system are:

Well fluid is processed at the oilfield first. Oil and gas are
separated, made transportable and despatched to the Refinery
and Gas Processing Facility respectively.
Refinery produces products like petrol, diesel oil, lubricating
oil etc. It also produces feed stock (Naphtha) for petrochemical
(plastic, fibre, etc.) manufacture.
Gas Processing Facility purifies the gas from undesirable
components and separates feedstock for petrochemical
production.
Petrochemical feed stocks from Gas Processing or Refinery or
both are sent to a Petrochemical Complex for production of
petrochemical.
The balance gas is used as fuel for power generation or as
industrial fuel.
23
Each individual block in the above diagram could be a separate
company. And each of these blocks could be located far away from Notes
each other in the same or different countries. ___________________
This makes the oil and gas industry a real global industry. ___________________
Some important terms often used in oil and gas industry with ___________________
respect to the block diagram:
___________________
Offshore: Oil or gas field situated in the sea/ocean.
___________________
Onshore: Land based oil or gas field.
___________________
Upstream: The blocks covering reservoir, production,
___________________
processing and transportation of oil and gas is referred as
upstream blocks. ___________________
Downstream: Gas Processing, Refinery and Petrochemical ___________________
Facilities are referred as downstream blocks. ___________________
Products from Natural Gas

The natural gas is made mainly of the four lightest hydrocarbons
i.e. C1 (Methane), C2 (Ethane), C3 (Propane) and C4 (Butane). As
gas separates out of the crude oil, it pulls out a little bit of heavier
hydrocarbons like C5, C6, etc.
Table 2.3 shows the typical composition of gas and use of various
components towards high value product.
Table 2.3: Gas Composition and Utilization
Component Composition Utilization

Volume %
Methane (C1) 50-96 Fuel, Petrochemical
feedstock, power generation
Ethane (C2) 2-15 Petrochemical feedstock
Propane (C3) 1-12 Petrochemical feedstock,
LPG
Butane (C4) 0.5-3 Petrochemical feedstock,
LPG
Heavies (C5+) (NGL) 0.1-1 Refinery blending stock,
petrochemical feedstock
Hydrogen Sulfide (H2S) 0-15 Toxic, corrosive and
undesirable component
Carbon Dioxide (CO2) 0-30 No fuel value, corrosive,
Nitrogen 0-30 No fuel value, corrosive,
Water Saturated Undesirable component
Total 100
The points to note here are that:

There is a wide range of gas composition, varying from field to
field and well to well.
24
Only consistent trend is the reducing pattern of the
Notes
hydrocarbon constituents from the lightest to the heavier ones
___________________
e.g. methane followed by ethane and heavier hydrocarbons.
___________________
Utilization of gas as fuel is the easiest but lowest in the value
___________________ chain.
___________________ Utilization of gas to make petrochemicals is the highest in the
___________________ value chain.
___________________ Hence very often the components of the gas are separated by gas
___________________ processing to be used for manufacture of petrochemicals.
___________________ While Table 2.4 gives a range for gas composition; typical gas
composition is given in Table 2.3.
___________________
Table 2.4: Typical Gas Composition
___________________
Component Methane Associated Sour Gas with
(Volume%) rich gas gas high
Sweet Gas (mildly N2
sour)
Methane (C1) 94.5 76.5 71.5 62.5
Ethane (C2) 2.8 12.2 10.2 4.2
Propane (C3) 1.0 6.5 5.7 2.5
Butane (C4) 0.2 1.8 1.0 0.5
Heavies (C5+) Traces 1.0 0.5 0.1
Hydrogen Sulfide Nil Nil 3.5 Nil
Carbon Dioxide 1.5 2.0 7.6 5.4
Nitrogen Nil 300 ppm Nil 24.8
Water Saturated Saturated Saturate Saturated
Total 100.0 100.0 100.0 100.0
Obviously each of these gases will have different processing

techniques and problems in the Gas Processing Plant. These will
be dealt with later. But let us look at the obvious -
The methane rich gas will have very little feedstock for
petrochemicals.
The associated gas is rich in petrochemical feedstock and LPG.
The sour gas will need treatment to remove highly toxic and
corrosive Hydrogen Sulfide.
The nitrogen rich gas will have low calorific value.
Check Your Progress

Fill in the blanks:
1. …………………….. Facility purifies the gas from
undesirable components and separates feedstock for
petrochemical production.
2. The ……………….. rich gas will have low calorific value.
Products from Crude Oil 25

Notes
Activity
The five hundred odd components mostly hydrocarbon ranging
What is the chemical
___________________
from C1 to C65 gives wider range of products. Each of the products composition of C7
by itself is a composite of numerous hydrocarbons. The crude oil is ___________________
Hydrocarbon?
processed in the refinery to separate the base stock (raw products) ___________________
by distillation into ‘cuts’. Then the various product base stocks are
___________________
processed and treated to meet specifications.
___________________
Table 2.5: Products from Crude Oil Refining
___________________
___________________
___________________
___________________
___________________
The important petroleum products produced in bulk in a refinery

are presented in Table 2.6. Each of the products has to meet
certain performance specifications. Only one typical specification is
stated in the table for a preliminary understanding of its
significance with respect to the usage. It must be remembered that
besides performance specifications, there are strict specifications to
meet environment and emission norms. These are related to
polluting components like sulfur, aromatics, etc.
Petrochemical Products/Petrochemicals
What are petrochemicals? Petrochemicals are usually plastic
products and chemicals that are derived from petroleum and
natural gas and are made on a large scale (approximately >10,000
tons per annum upwards). As indicated in the earlier sections,
certain components from gas processing plants and refinery are
used as feedstock for manufacture of petrochemicals (e.g. ethane,
propane, naphtha).
26
Petroleum products from refinery and natural gas, supply over
Notes
50% of the feedstock for the entire chemical industry and more
___________________
than 50% of organic chemicals.
___________________
As you can see in the next table, petrochemical products have
___________________ permeated into every facet of our lives.
___________________ A vast majority of them are polymers, whose molecules are tailored
___________________ by reaction process to suit specific characteristics or properties.
___________________ Table 2.6: Petrochemicals
___________________
___________________
___________________
___________________
Check Your Progress

Fill in the blanks:
1. ………………… are usually plastic products and
chemicals that are derived from petroleum and natural
gas and are made on a large scale.
2. The important petroleum products are produced in bulk
in a ………………… .
Summary
Raw petroleum might be of wide mixed bag and aspects. It could be
exceptionally liquid, extremely thick or semisolid. The colour could be
dark, dim tan, golden or light tan. It is additionally called Petroleum.
Regular gas is a mixture of the lightest hydrocarbons like
methane, ethane, propane and butane. It likewise holds water to
its immersion limit. It might additionally hold hydrogen sulphide
(H2S), carbon dioxide (CO2), nitrogen (N2) and at times minor
measures of helium (He).
Hydrocarbons are fuses made of carbon and hydrogen.
27
Unrefined petroleum is overwhelmingly made of hydrocarbons.
Notes
It is made out of three primary hydrocarbon bunches; Paraffins,
Naphthenes and Aromatics. ___________________
___________________
Lesson End Activity ___________________
Prepare an assignment on the Gas Composition and Utilization. ___________________
___________________
Keywords ___________________
Natural Gas Liquids (NGL): It is formed during production or ___________________

transportation of gas, when the heavy components such as pentane or ___________________
hexane, condense due to natural cooling and separate out as liquids.
___________________
Liquefied Petroleum Gas (LPG): It is the propane/butane
___________________
component of the natural gas is liquefied under moderate
pressures and is supplied as cooking gas fuel.
Liquefied Natural Gas (LNG): This is bulk of the natural gas in
liquefied form and is re-vaporized after receiving it at its
destination from tankers, to be used as natural gas.
Compressed Natural Gas (CNG): This is natural gas in highly
compressed form but not liquefied.
Questions for Discussion

1. Give a brief outline of the different forms of Natural gas.
2. What are Hydrocarbons? Explain.
3. Write a short note on the Composition of Crude oil.
4. What are the various products from Crude oil? State them.
Further Readings
Books
Vollhardt, K.P.C. & Shore, N., Organic Chemistry (5th Edition),
New York: W. H. Freeman, (190-192), 2007
Shore, N., Study Guide and Solutions Manual for Organic
Chemistry (5th Edition), New York: W.H. Freeman, (70-80), 2007
Web Readings
www.need.org/needpdf/infobook_activities/ElemInfo/PetroE.pdf
www.hindustanpetroleum.com
28
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 3: The Macro-system
Unit 3
29
Notes
Activity
The Macro-system
Make a chart showing the
___________________
entire Petrochemical industry.
___________________
___________________
Objectives
___________________
topics: ___________________
\ Oil and gas chain from oil well down to the petrochemical industry ___________________
\ Overview of business environment in each block of the chain ___________________
\ Overview of the major players in the chain
___________________
Introduction ___________________
___________________
Use of petroleum dates back to 3000 BC. But it was sourced from
natural oil seepages that occurred on the earth’s surface. Asphalt
from natural oil seeps is known to have been used around 3000 BC
in Mesopotamia They used it for construction of roads. Egyptian
mummies were known to be wrapped in asphalt-soaked clothing.
Application of asphalt was also made for the construction of
pyramids.
The oil producing countries are divided into two groups those who
are members of Organization of Petroleum Exporting Countries
(OPEC) and those who are not.
In India, the oilfield in Digboi was discovered during the later part
of nineteenth century. Till 1970, oilfields in Assam and Gujarat
were the major producers. In the seventies, Mumbai High was
developed into a major producer.
From Wellhead to Petrochemicals

A block diagram representation of the entire industry is given in
Figure 3.1.
The first step in the block is oilfield processing. The well fluid is
processed in or in the vicinity of the oilfield. The processing steps
here are:
Separation of crude oil, natural gas and water which comes as
mixture in the form of well fluid.
Oil and gas are treated to meet specifications for
transportation and any customer specification. Oil is normally
30 treated to remove water, and then it is pumped and metered

Notes before putting it through pipeline.
___________________ Similarly gas is dehydrated, compressed and metered before
___________________ putting it through pipeline. Separated water (called produced
water) is treated to meet environment specifications for
___________________
discharging it.
___________________
Sometimes the produced water is re-injected into the reservoir.
___________________
In such case it is treated to meet reservoir quality
___________________ specifications.
___________________ Separated gas is sent by pipeline to the gas processing plant, which
___________________ may be located away from the field.
___________________ Transportation of oil and gas, which are raw material, is done by
pipeline, marine tankers or rail/road tankers. Transportation by
___________________
itself is a huge business sector.
The gas is first treated to remove impurities like sulfur. Then
cryogenic (low temperature) processing is carried out to liquefy and
separate by distillation, the components like ethane, propane and
LPG. The separated components are utilized to make higher value
products:
Methane, which is bulk of the gas, is a good raw material for
manufacture of urea fertilizer, chemicals like methanol or can
be used as fuel to generate power.
Ethane and propane are sent to the petrochemical plants as
feedstock to crack them into ethylene/propylene, which are
polymerized into plastics (polythene, polypropylene).
LPG (propane and butane mix) is bottled in cylinders and sent
for domestic consumption.
The heavier hydrocarbons (C5+), which are present in the gas
condenses as Natural Gas Liquids (NGL). NGL is sent to the
refinery to be processed as blending stock for gasoline or it is
sent to a petrochemical complex as feedstock.
If the gas is to be transported to another country by marine
tankers, it is liquefied as LNG.
The oil from the oilfield processing block is pumped (or taken by
tanker) to the refinery. Oil refining is a composite of several
processing steps. The first step is separation of raw products by
distillation. There are subsequent process steps to meet certain
specification of the products. Then there are processing to meet
environment related specifications. Also there is processing to 31

crack the heavy part of the crude into lighter products like Notes
gasoline, kerosene and diesel. The finished products that we get ___________________
from the refinery are summarized in Figure 3.1.
___________________
Each of the blocks of gas processing and processing of oil in the
___________________
refinery generates feedstock for Petrochemical Complex.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 3.1: The Oil and Gas Chain
Naphtha is the main feedstock for petrochemical manufacture

generated in the refinery. Even the kerosene and gas oil (raw
diesel cut) can be used as feedstock. Methane, ethane, propane,
butane and the NGL component of the gas can be used as
feedstock.
Most of the petrochemical processes are conversion of the
molecules of feedstock by:
Cracking the feedstock, i.e. breaking bigger molecules into
smaller molecules. In Petrochemical Processes cracking of
feedstock like ethane, propane or naphtha is done to generate
smaller olefin molecules like ethylene or propylene.
Polymerization of the olefins i.e. joining together of the olefin
molecules several thousand fold producing large molecules
which are called polymers. Olefins tend to polymerize easily
making resinous or plastic material like polythene or
polypropylene.
Very often a non-hydrocarbon or inorganic component can be
brought into the reaction process to generate other petrochemical
products. For example nitrogen becomes an essential raw material
besides methane as feedstock, for synthesis of urea fertilizer.
32
Similarly for making PVC (polyvinyl chloride), vinyl chloride is
Notes
first formed by reaction of chlorine with ethylene.
___________________
With any of the feedstock mentioned, numerous petrochemical
___________________
products are made. Starting with ethane as feedstock,
___________________ configuration of a typical petrochemical complex is shown in
___________________ Figure 3.2. Ethylene is made by cracking ethane. Vinyl chloride is
made by reaction of ethane with chlorine. Plastic end products like
___________________
Polythene and PVC are made by polymerization of ethylene and
___________________ vinyl chloride.
___________________
Part of the ethylene undergoes processing with benzene
___________________ (originating from naphtha as feedstock) and produces polystyrene
___________________ as end product.
___________________ Figure 3.3 shows a typical petrochemical complex.
Figure 3.2: Petrochemical Building Blocks
Figure 3.3: View of a Petrochemical Complex
Upstream and Downstream

These two terms are very frequently used in the petroleum
industry. Let us look in to the broad category of processing blocks
we described:
Oilfield Processing
Transportation of oil and gas
33
Gas Processing
Notes
Refinery
___________________
Petrochemicals
___________________
Power Plants and other gas based industries ___________________
Of course another large industry not mentioned earlier is the ___________________
storage, transportation and logistics of numerous products that
___________________
come out of processing of oil and gas.
___________________
The first two businesses i.e. oilfield processing and transportation
___________________
activities are known as Upstream. The others are referred as
Downstream. ___________________
Now we shall touch upon brief history of development of oil and ___________________
gas industry. Then the Indian oil and gas industry with reference ___________________
to the macro-system, upstream and downstream will be described.
Check Your Progress

Fill in the blanks:
1. Oilfield processing and transportation activities are
known as ………………. .
2. For making PVC, ………………. is first formed by
reaction of chlorine with ethylene.
History of Oil and Gas Industry

The use of petroleum dates back to more than 3000 BC. But it was
sourced from natural oil seepages that occurred on the earth’s
surface.
Oil and Gas from Seepages and Brine Wells

Asphalt from natural oil seeps is known to have been used around
3000 BC in Mesopotamia. They used it for construction of roads.
Egyptian mummies were known to be wrapped in asphalt-soaked
clothing. Application of asphalt was also made for the construction
of pyramids.
Natural gas seeps were known in the Baku region of Azerbaijan,

Iran, India and other countries. Some of them caught fire and
burnt for thousands of years. Use of petroleum as medicine was
made in China.
34
The first effort for production of petroleum by digging wells were
Notes
reported in China in the year 600 BC. Crude oil is reported to have
___________________
been produced during digging of brine wells.
___________________
Those days the technique for search of oil was limited to looking for
___________________
oil or gas seeps and trying to locate an adequate source nearby.
___________________ The search for oil and gas today is much more complicated.
___________________
___________________
Industrial Revolution and the Search for Oil
___________________
During the eighteenth century, the industrial revolution created
the demand of lighting, fuel and lubricating oils for the
___________________
machineries. This intensified the search for oil (exploration) and it
___________________ resulted in the development of the technology for oil exploration.
___________________ In the middle of the nineteenth century oil from coal (named
kerosene) was being used to satisfy the demand of lighting oils lamps.
Whale oil and coal oil were also used for lubrication of the machines.
Kerosene from the petroleum produced from natural seepage started
shortly afterwards. During the period 1850 to 1870, drilling of wells to
produce oil started the oil boom in the USA. Those days often oil was
found at depths of 30 to 100 meters. Today the depth of oil wells are a
few thousand meters to several Kilometres. Development of the
exploration and drilling technology moved faster with the companies
getting cash rich with the oil boom. Some of the largest and
financially strong oil companies emerged in the USA. The landmark
events in the history of oil and gas industry are:
In 1870, John D. Rockefeller founded the Standard Oil Company,
which soon gained a near monopoly on oil production and became
one of the largest companies in the world.
Till 1900, fuel oil, kerosene and lubricating oils were the main
products from petroleum. Then came the advent of cars and the
demand for gasoline. During the early part of the twentieth
century, gasoline-fueled cars became popular; locomotive and ship
engines were converted from coal to oil; and the airplanes using
aviation gasoline started flying. The demand for gasoline went up
and with the advent of electric power, the demand for kerosene for
lighting went down, bringing change in refinery technology.
Search and production of oil became more technology oriented
since early twentieth century. Rotary drills were used to dig wells
for oil. The first offshore wells were drilled in California in 1896. In
1948 the first platform was used to drill an offshore well in
Louisiana.
35
In the first half of the twentieth century, the discovery of large
Notes
oilfields spread to the other parts of the world. New fields were
discovered in erstwhile USSR, the Middle East and other locations. ___________________
USSR became a major producer of oil under state ownership of the ___________________
various oil reservoirs. With the participation in major discoveries
___________________
and ownership worldwide, some of the pioneering American
companies like Standard Oil, Texaco, and Mobil became giants. ___________________
In India, the oilfield in Digboi was discovered during the later part ___________________
of nineteenth century. Till 1970, oilfields in Assam and Gujarat ___________________
were the major producers. In the seventies, Mumbai High was
___________________
developed into a major producer.
___________________
The Middle East came into the picture in the 1930s. In 1932, the
first crude oil discovery in Bahrain was made by Standard Oil. In ___________________
1936, Standard Oil of California joined with other American ___________________
majors to form Arabian American Oil Company (ARAMCO).
ARAMCO made a major oil discovery in Saudi Arabia in 1938.
North Sea oil field were discovered and developed during the late
sixties and seventies. During the eighties and nineties, some of the
Latin American countries (Mexico, Venezuela) made major oil field
discoveries and development. During the nineties, Asia Pacific
countries like China and Indonesia became major producers.
Oil Scenario Worldwide

The regions having the largest proven oil reserves today are given
in Figure 3.4 below.
Figure 3.4: Region-wise Hydrocarbon Reserves

36
It is important to know that India’s proven reserves are meagre
Notes
compared to the size and potential of the country.
___________________
The oil producing countries are divided into two groups those who
___________________ are members of Organization of Petroleum Exporting Countries
___________________ (OPEC) and those who are not.
___________________ This post consists of oil producing countries. Total world
___________________ production of the oil is 12%. The oil of the world will run out in a
few years. Every country is trying to discover more reserves of oil.
___________________
It is known that how far this struggle will succeed. It is the need of
___________________ the hour that we cut short the need of oil. Anyhow we should try to
___________________ maximize the oil production.
___________________ Following are the list of top ten oil producing countries in which we
___________________
discuss their production, import and export of the oil.
Figure 3.5: Top 10 Oil Producing Countries in the World
1. Russia: The single largest oil producing country in the world

is Russia, with a production of 10,124,000 barrels per day. It
shares 12% oil of the world. It has about 60 billion barrels of
proven oil reserves or 5% of the world oil reserves.
2. Saudi Arabia: Saudi Arabia is the second largest oil
producers. It produces oil less than the Russia. The production
of Saudi Arabia is 10,121 million barrels oil per day. It has
one-fifth of the world’s proven oil reserves. It is the world’s
largest oil exporter.
3. United States: It is the third largest oil producing country
and produce large amount of oil in the world. It produces 9.6
million barrel oil per day. It shares about 11% oil of the world.
It has 21 billion barrel proven oil reserves.
37
4. China: It produces about 4.27 million oil barrels per day.
Notes
It supplies 5% of the world. It has about 20.3 billion barrels of
proven oil reserves. It is the fifth biggest supplier of oil to the ___________________
US. Iran supplies 11% of China oil imports. ___________________
5. Iran: Iran plays a major role in the world oil market because ___________________
its quality is very good. It produces about 4,172,000 bbl and
___________________
4.25 million barrels of oil per day. It supplies 4.95% oil to the
___________________
world.
___________________
6. Canada: It is the major industry in the economy of North
America. Its production is 3,289,000 barrels per day. It ___________________
supplies about 3.90% oil of the world. It is the single largest ___________________
source of oil imports into the United States.
___________________
7. Mexico: It supplies three leading foreign countries to the ___________________
United States, along with Canada and Saudi Arabia. Its
production is 3,001,000 oil of the world. It shares about 3.56%
oil to the world.
8. United Arab Emirates: It produces about 2,798,000 oil of the
world and exports 3.32% oil of the world. Their oil reserves are
ranked as the sixth largest country in the world and possess
one of the most developed economies in west Asia.
9. Brazil: It produces 2,572,000 barrel oil the world. It shares
about 3.05% oil to the world. It has 8.5 billion of proved oil
reserves. In Brazil, Tupi oil field is a large oil field.
10. Kuwait: It produces less than Brazil. The production of oil of
Kuwait is 2,494,000. It exports 2.96% oil to the world. It has
104 billion barrel proven oil reserves. Kuwait’s oil reserves are
the fourth largest in the world. It is on seventh no. in export.
Some important features of OPEC and non-OPEC countries are:
Proven crude reserves are concentrated in OPEC countries.
Out of the world’s 1.0 trillion barrels of proven reserves, 80% is
held by OPEC.
80 to 90% of the oil produced by them are exported.
There is very little internal consumption indicating the
economy to be oil export dependant.
OPEC countries have very high spare capacity for production.
Non-OPEC countries hold approximately a combined 500,000
barrels per day (bbl/d) of spare oil production capacity, while
38 OPEC spare production capacity is estimated to be as high as

Notes 8 million bbl/d.
___________________
The petroleum resources of OPEC countries are mostly owned
___________________ by the State whereas in non-OPEC countries the ownership is
___________________ generally in private hands.
___________________ Greater OPEC production as a proportion of world production

will be seen in the future.
___________________
With this kind of profile of OPEC countries, it is apparent that
___________________
they are in a position to control the oil prices in the world,
___________________
whenever they are united.
___________________
There are a few important points to note in the global production
___________________ and consumption pattern. There is not a single OPEC country in
___________________ the top ten oil-consuming countries. This indicates that in terms of
industrial development other than oil production, the OPEC
countries are lagging behind. The only developing countries in the
top ten oil consumers are China, Brazil and India. This indicates a
growth of industry and infrastructure driven by oil and gas as
sources of energy.
Major Oil Companies

Major oil companies are very large transnational corporations.
They rank among the largest corporations in the world. There have
been a number of mergers recently to meet the crisis created by
slowing down of the economy since the late nineties. As per survey
done by Fortune magazine, five oil companies feature among the
top fifteen companies in the world in terms of revenues.
There has been a spate of mergers between major oil companies in
the recent times. As apparent from the above table, some of the
largest companies are result of merger of major oil companies of
the world. The merger of Exxon and Mobil, and that of BP, Amoco
and Arco happened during the last few years. Some more mergers
are in the offing.
The result has been detrimental to the consumers. USA has seen a
rise in gasoline prices as a result of the mergers which has
lessened competition.
The cartel created by OPEC which is keeping oil prices around
28 to 30 Dollars per barrel and the recent mergers of oil majors has
created a situation detrimental to the growth of oil importing
countries.
39
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 3.6: World’s Largest Oil and Gas Companies
Check Your Progress

Fill in the blanks:
1. ………………….. oil companies feature among the top
fifteen companies in the world in terms of revenues.
2. In terms of industrial development other than oil
production, the ………………….. countries are lagging
behind.
Summary
In this unit, the total macro-system from oil well to petrochemicals
was explained in the form of block diagram. Flow of various
components of gas and oil in to the manufacturing blocks of
refinery and petrochemicals leading to final products was
highlighted.
Indications were given how at each step of processing the oil and
gas get valorized in to higher priced products.
Having explained the macro-system, a brief history of oil and gas
industry was presented. Major players in the world and specifically
in India were identified.
40
Lesson End Activity
Notes
Prepare a project report on the history of oil and gas industry and
___________________
their composition worldwide.
___________________
___________________
Keywords
___________________
Organization of Petroleum Exporting Countries (OPEC): It is
___________________ an organization formed in 1961 to administer a common policy for
___________________ the sale of petroleum.
___________________ Industrial Revolution: The rapid development of industry in
___________________ Britain in the late 18th and 19th centuries, brought about by the
introduction of machinery.
___________________
Ethylene: It is made by cracking ethane.
___________________
Review Questions
1. Draw a block diagram showing the flow of gas and its
components from a gas field offshore to further processing and
generation of ethylene based petrochemicals.
2. Name three of the largest oil companies in the world.
3. Give an outline of the Oil and Gas industry worldwide.
4. Explain the Oil and Gas chain with the help of an illustration.
Further Readings
Books
March, J., Advanced Organic Chemistry: Wiley, 4th edition. 1992.
Walber, Richards & Haltiwangler, J. Am.Chem. Society. 1982
Web Readings
www.economywatch.com/world-industries/oil
www.oilmillmachinerysuppliers.com/history.html
www.history.com/topics/oil-industry
UNIT 4: The Indian Perspective
Unit 4
41
Notes
Activity
The Indian Perspective

Starting with Mumbai High
___________________
oilfield, trace in the form of a
block___________________
diagram the following:
(a) ___________________
How oil and gas are
Objectives transported to shore.
___________________
After completion of this unit, the students will be aware of the following (b) Where do the sub-sea oil
topics: and gas pipelines
___________________
terminate.
\ Overview of oil and gas business environment in India ___________________
(c) To which refineries the oil
\ The Indian perspective-upstream and Downstream is transported by pipeline.
___________________
\ Major players in the Petrochemical sector (c) ___________________
What happens to the gas
after it reaches shore.
Introduction ___________________
(e) How is the gas distributed.
(f) ___________________
What are the
Oil exploration and production industry in India dates back to the Petrochemical Complexes
late nineteenth century. The first commercial oilfield was struck at and fertilizer plants based
Digboi in North-Eastern India in the year 1890. Till the 1970s, on Mumbai High Gas.
petroleum production was mainly from oilfields in the North-

Eastern region and Gujarat.
In this unit we will study about the Indian Oil and Gas scenario.
The Indian Perspective – Upstream

The government owned companies known as Public
Sector Units (PSU) earlier dominated the upstream oil and
gas industry. The two companies - Oil and Natural Gas
Corporation Ltd (ONGC) and Oil India Ltd (OIL) were the
main players. They were responsible for exploration and
production. Bombay High (now known as Mumbai High)
was discovered in the 1970s and was one of the largest finds in the
world at that point of time (albeit not enough for a large country
like India). The government felt the need for liberalizing
participation of foreign companies for exploration and production.
In 1991 various offshore blocks were offered for licensing. The
government policy now allows joint as well as private sectors to
participate in this sector. The government has leased a number of
blocks of potential fields to both Indian and multinational
companies.
As a result of these measures the number of players in the
upstream industry has gone up substantially. Reliance Petroleum
42 became owner of a few major oilfields in the Mumbai High region.

Notes A number of Indian and overseas private operators explored and
___________________ produced oil from newly developed fields in Krishna Godavari and
Kaveri basin. ONGC is still the biggest player upstream due to
___________________
historical reasons. The proven oil and gas resources are still
___________________
meagre for India’s size and requirement.
___________________
Oil and Gas Field
___________________
Figure 4.1 shows the producing and proven oil and gas reservoirs
___________________
in India.
___________________
The locations of the various reservoirs are only indicative. They do
___________________
not show the map and size of the fields. Some of the major gas and
___________________ oil pipelines are also shown in Figure 4.1.
___________________ Let us understand the oil and gas infrastructure of India by
looking into a few of the systems with the macro-system block
diagram in mind.
Figure 4.1: Location of Producing and Proven Reservoirs
Mumbai High is the largest oil and gas producer in India. It is

located offshore about 200 Km. away from the coast off Mumbai.
As seen in the map an oil pipeline and a gas pipeline are laid below
the sea reaching landfall point at a place called Uran south of
Mumbai. Up to this point, it can be called the upstream and is 43

owned by ONGC. The oil is distributed to the refineries (BPCL) Notes
near Mumbai. LPG is extracted out of gas at Uran. Also ethane ___________________
and propane are extracted out of gas in the gas processing facility
___________________
located at Uran. The balance gas goes to nearby power plant and
fertilizer plants at Thal (Maharashtra). The ethane and propane ___________________
extracted from gas at Uran goes to petrochemical complex at ___________________

Nagothane (Maharashtra).
___________________
Another major pipeline originating from Mumbai High area is a ___________________
gas pipeline laid below the sea up to landfall point at a place called
___________________
Hazira. Bulk of the gas comes from a gas field offshore near
Mumbai High called South Bassein Field. This gas is sour gas ___________________
(Hydrogen sulphide bearing). ___________________
A major gas processing complex is located at Hazira where ___________________

sweetening (removal of sulfur from gas) and recovery of LPG are
carried out. Hazira is the originating point of India’s longest gas
pipeline network called HBJ Pipeline (Hazira Bijapur Jagdishpur
pipeline).
HBJ Pipeline is a network of over 2000 Km. of pipeline extending
from Hazira to northern part of India. It provides feedstock to
numerous fertilizer plants, power plants and petrochemical plants
on its route. In addition the balance gas provides fuel to the
industries. From Hazira onwards ownership of the pipeline and
gas distribution facilities changes from ONGC to Gas Authority of
India Ltd. (GAIL).
Figure 4.1 also shows a few major oil pipelines. From the North-
Eastern oil fields of India, the first major cross country pipeline was
laid starting from Nahorkatiya in Assam to Barauni and Haldia.
This pipeline feeds oil to all major refineries in the North-Eastern
and eastern India including Barauni refinery and Haldia refinery.
Major Player Upstream

The major players of upstream are given in Table 4.1.
Table 4.1: Major Players Upstream
No. Company Exploration & Production Other activities

Areas
Bombay High, South

1 Oil & Natural Gas Bassein, Heera and other Oil and Gas
Corpn. western offshore Oilfields, Pipeline
KG basin, Assam, Gujarat,
Rajasthan
Contd…
44
2 Reliance India Ltd. Neelam, Panna, Krishna Downstream
Notes Godavari Basin refineries &
petrochemicals,
Pipeline
___________________
3 Oil India ltd. Assam, Rajasthan
___________________ 4 Cairn Energy India Cauvery Basin
5 Essar Oil Ratna Oilfield Development Downstream
___________________ Refinery
6 Gas Authority of India Oil Exploration, Gas Petrochemicals
___________________ Pipeline
7 Hindustan Oil KG Basin (PY3), Cambay
___________________ Exploration Co. Basin
8 Videocon Petroleum KG Basin (Ravva Offshore)
___________________ 9 Niko Resources Cambay Basin
___________________
The domestic oil demand and supply are presented in Table 4.1. It
___________________
can be seen that we are grossly insufficient in our hydrocarbon
___________________ resources and dependant on imports of oil and gas.
___________________
Figure 4.2: World Oil Supply and Demand
Natural Gas
The demand of gas has been projected by various estimates
depending on assumed user pattern at figures between 150 to 200
million SCMD. Major consumption of Natural Gas in India will be
in the Power and Fertilizer sectors. Natural Gas consumption in
other industries, such as petrochemicals, town gas, or as
Compressed Natural Gas (CNG) in the automobile sector, is also
considered in the projections.
This leaves a wide gap in the supply demand balance for Natural
Gas in the country. The India Hydrocarbon Vision 2025 has
projected that the demand for Natural Gas will go up to about 230
million standard cubic meters per day by 2007, to more than 310
million standard cubic meters per day by 2011, finally reaching a
level of 390 million standard cubic meters per day by 2025. In the 45
long-term policy statement, the Government of India has Notes
visualized Hydrate reserves and coal bed methane, as potential ___________________
indigenous resources.
___________________
Earlier plan was to meet the future gas requirements by import of ___________________
LNG. Recent hydrocarbon discoveries of Reliance and ONGC are
___________________
expected to bridge the gap to a certain extent.
___________________
Future Perspective ___________________
The per capita energy consumption in India is very low at the level ___________________
of 226 Kg of Oil Equivalent compared to 7759 Kg Oil Equivalent in
___________________
the USA. With a low base, the energy supply in India has been
___________________
growing @ 6% annually compared to an average of 1.5% worldwide.
It is projected that the growth rate of Indian economy may go up to ___________________
7-8% in the near future. This will further increase the energy
requirement for the future.
Obviously the future energy needs has to be planned keeping

hydrocarbon, coal, hydroelectric power, nuclear energy and
unconventional sources of energy into consideration. The
hydrocarbon resources are expected to be enhanced in the following
manners.
Increased search of hydrocarbon resources in India by the

policy of liberalization and leasing out prospective hydrocarbon
basins.
Prospecting for hydrocarbons overseas by Indian companies

(e.g. ONGC investing in Vietnam and other prospective
regions).
Import and distribution of LNG. Petronet, a public sector LNG

distribution company was set up for this activity.
Linking hydrocarbon resources from countries like

Bangladesh, Iran by cross country pipeline to India.
Exploitation of hydrate resources in coastal sea bed.
Exploitation of coal bed methane reserves.
A comprehensive energy study and planning with above resources

and other resources like coal, hydroelectric, nuclear and
non-conventional energy is needed for long term planning of
energy needs.
46
Check Your Progress
Notes
Activity
Fill in the blanks:
Carry out a similar exercise as
___________________
the first one for the oil, gas,
___________________
1. A major gas processing complex is located at
refinery and petrochemical
………………….. where sweetening and recovery of LPG
facilities of
___________________Reliance
Petroleum. are carried out.
___________________
2. The first major cross country pipeline laid in North-
___________________ Eastern oil fields of India, was from ………………….. in
___________________ Assam to Barauni and Haldia.
___________________
___________________
The Indian Perspective – Downstream
___________________ The refinery industry also dates back to over one hundred years.
India’s first refinery was built at Digboi in 1901 by British
___________________
Petroleum. In the late ’50s and early ’60s multinational oil
companies such as Shell, Caltex and Esso invested in refineries in
India. Indian Refineries Ltd., the first state owned (public sector)
refinery was built in Guwahati in the early sixties. Later it became
Indian Oil Corporation.
India nationalized the refining and product marketing sector in

1976. Regulatory regime was introduced on production,
distribution and pricing of crude oil and petroleum products. State
owned companies such as Indian Oil Corporation, Bharat
Petroleum and Hindustan Petroleum were the largest companies
in the refinery sector.
The Administered Pricing Mechanism implemented in the

seventies subsidized prices for products like kerosene and LPG.
Charging higher prices for other products like gasoline and
aviation fuel generated part of the subsidy. Diesel prices were kept
neutral. The Administered Pricing Mechanism was based on fixed
12% post-tax return on net worth deployed for refining,
distribution and marketing.
The Refining Industry

India has one of the largest and fastest expanding Petroleum
Refinery Industry in Asia with over 110 Million tons per year
installed capacity. The petroleum products’ demand was around
150 Million tons per year in the year 2006-07. The stress will be on
revamp, expansion and de-bottlenecking as well as new refineries.
47
With the deregulation of the oil economy initiated in the early
Notes
nineties, a number of private players emerged. The Reliance
refinery at Jamnagar became the biggest refinery in India and one ___________________
of the biggest in the world. Other players like Mangalore ___________________
Refineries and Petrochemicals Ltd emerged in the private sector.
___________________
Privatization of some of the public sector refineries are also on the
cards but presently held up in the legalities. ___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 4.3: Refinery Locations
In the early nineties, India started the process of de-regulation and

liberalization of the economy to make the economy market driven.
This already has created impact and structural changes in the
hydrocarbon sector. In 1997, the Government of India firmed up a
plan for deregulations of the oil industry by year 2002, with respect
to all aspects of pricing, imports and exports of crude and
petroleum products. Generally deregulation has been achieved as
per the plan. The private sector can now carry out refining as well
as marketing of a limited number of petroleum products e.g. LPG,
naphtha, aviation fuel, fuel oil etc., which have been taken out of
Administrative Pricing Mechanism. Divestment of some of the
State owned companies also has taken place.
Emergence of the Reliance Group has been a major development in
the private sector of oil industry. Today Reliance has the largest
48 refinery and the largest petrochemical complex in India, which are

Notes also among the largest in the world.
___________________
The Petrochemical Industry
___________________
In the Petrochemical sector also, the initial big players were the
___________________
multinational companies in the private sector. National Organic
___________________ Chemical Industries Ltd. (NOCIL) and Union Carbide plant at
___________________ Mumbai were the first two major petrochemical plants in India.
___________________ The Indian Petrochemical Corporation Ltd. (IPCL) at Vadodara
___________________
was the first major petrochemical complex set up under state
ownership in the mid ‘70s. This was followed by another major
___________________
petrochemical complex at Nagothane in Maharashtra under IPCL.
___________________
India has also a large and growing Petrochemical industry with
___________________
one of the largest integrated petrochemical complexes in the world
and several other petrochemical complexes. India has the second
largest fertilizer production capacity in the world.
There is abundance of small and medium size petrochemical and

chemical plants badly needing improvements through revamp for
increasing their efficiencies. Many of them are old and revamp of
the plants pose a challenging opportunity.
In the Petrochemical Sector, the major players are:
Reliance Industries Ltd (RIL)
National Organic Chemical Industries Ltd (NOCIL)
Indian Petrochemical Corporation Ltd. (IPCL) now acquired by

Reliance
Haldia Petrochemicals Ltd. (HPL)
Gas Authority India Ltd. (GAIL)
Except GAIL, which is government owned company (PSU), the rest

are private holdings listed in the stock exchange. HPL is held
jointly by government and private entities.
Transportation Infrastructure
India has major ports for handling of oil and products (export and
import) at Jamnagar, Mumbai, Mangalore, Cochin, Chennai, Vizag
and Haldia. Inland transportation of crude from the production
sites or ports is primarily undertaken via pipelines.
49
Transportation of refined products is carried out through multiple
Notes
options – pipelines, the rail system, road tankers and coastal
shipping using marine tankers. A very broad and approximate ___________________
distribution of load on various modes of transportation of ___________________
petroleum products is:
___________________
Pipelines: 42%
___________________
Marine transportation: 10% ___________________
Rail transportation: 38% ___________________
Road transportation: 10% ___________________
Thus railways carry almost as much load as pipelines as far as ___________________

product transportation is concerned. With greater investments ___________________
coming in pipeline, in future the balance will be in favour of
___________________
pipeline.
Pipelines
A few of the major pipeline systems in the country is shown in the
next block. A vast network of oil, gas, LPG and petroleum product
pipelines exist all over the country.
Rail System
About 40 Million tons of petroleum products are moved from
refineries to storage terminals or depots in other various cities and
towns by the railway network.
Check Your Progress

State whether the following statements are true or false:
1. The Reliance refinery at Jamnagar is the biggest
refinery in India.
2. India nationalized the refining and product marketing
sector in 1967.
Summary
In this unit, the total macro-system from oil well to petrochemicals
was explained in the form of block diagram. Flow of various
components of gas and oil in to the manufacturing blocks of
refinery and petrochemicals leading to final products was
highlighted.
50
Indications were given how at each step of processing the oil and
Notes
gas get valorized in to higher priced products.
___________________
Having explained the macro-system, a brief history of oil and gas
___________________
industry was presented. Major players in the world and specifically
___________________
in India were identified. Hydrocarbon infrastructure in India was
___________________ presented with maps. The high growth potential of oil and gas
___________________ business and future opportunities were highlighted.
___________________
___________________ Lesson End Activity

___________________ Prepare an assignment to show the present and future prospects of
___________________ natural gas in India and worldwide.
___________________
Keywords
Oilfield Processing: The well fluid is processed in or in the
vicinity of the oilfield.
Upstream: Includes Oilfield Processing and Transportation of oil

and gas.
Downstream: Includes Gas Processing, Refinery, Petrochemicals,

Power Plants and other gas based industries.
HBJ Pipeline: It provides feedstock to numerous fertilizer plants,

power plants and petrochemical plants on its route.

1. Draw a block diagram showing the flow of gas and its
components from a gas field offshore to further processing and
generation of ethylene based petrochemicals.
2. Name three of the largest oil companies in the world.
3. In a blank map of India, mark the location of major oilfields

and major refineries.
4. Name three of the upstream oil companies in India.
5. Name four major refining companies in India with

approximate refining capacity owned by them.
Further Readings 51
Notes
Books ___________________
March, J., Advanced Organic Chemistry: Wiley, 4th edition. 1992. ___________________
Walber, Richards & Haltiwangler, J. Am.Chem. Society. 1982 ___________________
___________________
Web Readings
___________________
www.economywatch.com/world-industries/oil
___________________
www.oilmillmachinerysuppliers.com/history.html
___________________
www.history.com/topics/oil-industry
___________________
___________________
___________________
52
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 5: Case Study
Unit 5
53
Notes
Case Study
___________________
___________________
___________________
Objectives
___________________
After analyzing this case, the student will have an appreciation of the
concept of topics studied in this Block. ___________________
___________________
___________________
The Changing Environment within the Gas Industry
___________________
Gas is the carefully controlled source of nearly half of the
country’s energy needs. And most of that gas is transported safely ___________________
and reliably by a British company - Transco. All day, every day,
___________________
sophisticated computer-based telemetry watches, records and
reports as the gas goes through meters, compressors, valves and
governors on its way to more than 20 million homes, factories and
businesses. Millions of cubic metres of gas every day are pushed
through the system at a steady 10-15 miles an hour.
Transco is the gas transportation arm of BG plc. The top

management team comprises a managing director, chief operating
officer, finance director, corporate affairs director and strategy &
business development director. The business is divided into a
number of groups, or directorates - licence to operate, legal,
human resources, corporate projects, regulation and reform of gas
trading arrangements.
Transco is highly information-rich. Its cutting edge computer

systems and technological knowhow run the gas transportation
network and underpin the competitive market in domestic,
industrial and commercial gas supply. This case study focuses on
changes to the gas industry in recent years.
Few organisations exist within a market that changes almost by

the hour. Transco is able to cope with changes in demand - and
this is largely because its forecasting of gas demand is accurate. It
is a complicated process, taking account of all aspects of the
weather and the hourly gas demands of consumers. Demand
forecasts are made four times a day, but more may be made if the
weather forecast or demand changes significantly.
Few organisations exist within a market that changes almost by

the hour. Transco is able to cope with changes in demand - and
this is largely because its forecasting of gas demand is accurate. It
is a complicated process, taking account of all aspects of the
Contd…
54 weather and the hourly gas demands of consumers. Demand

Notes forecasts are made four times a day, but more may be made if the
weather forecast or demand changes significantly.
___________________
Safety and security of supply have top priority. Transco monitors
___________________
the system to maintain a physical balance, making sure that gas
___________________ is available at the right place at the right time. Thousands of
___________________
computer simulations are run each year to ensure optimum
operation of the network under all operating conditions, including
___________________ planned maintenance and special operations. It’s not only
___________________ ensuring security of supply that’s a crucial element of Transco’s
business. Making sure that all its operations are carried out
___________________
safely is vital, too. As part of Transco’s commitment to safety, it
___________________ operates the national 24-hour freephone gas emergency service.
Anyone who smells gas – no matter who their gas supplier is - can
___________________
contact the freephone service on 0800 111 999 *.
___________________
Calls to the helpline are dealt with by trained operators at one of
three national centres at Hinckley, Killingworth and Gloucester.
Operators can give safety advice and, if the situation warrants it,
despatch an engineer to make safe any escaping gas. An engineer
has to attend within one hour if the leak is uncontrolled, two
hours if controlled. It is estimated that in 1999, the service will
receive around five million calls and of these, approximately half
will be of an emergency nature.
Source
The gas starts its journey deep beneath the North Sea and is
pumped ashore on the mainland of Great Britain at one of the
seven terminals - St Fergus (Scotland), Bacton (Norfolk), Barrow
(Cumbria), Easington (Yorkshire), Theddlethorpe (Lincolnshire),
Burton Point (North Wales), and Teesside. From the terminals, it
enters the National Transmission System and eventually arrives
at the customer’s meter.
The Bacton-Zeebrugge interconnector links Great Britain with
Europe, so during periods when the gas flows into the country
rather than out, it is in theory possible that a gas consumer in
Scotland could burn gas which started its journey in the Urals.
Two other interconnectors supply gas from the mainland to
Northern Ireland and the Irish Republic.
Nationalisation to Regulation
In the past the gas industry was owned by Government, within
the public sector. In 1986, gas became the first energy source in
Great Britain to be regulated, three weeks after the then British
Gas was privatised, with the issue of shares on the London Stock
Exchange taking it into the private sector.
Contd…
UNIT 5: Case Study
55
Even though gas is in the private sector, it is still heavily
regulated. Transco is the country’s near-monopoly gas transporter Notes
and the largest of around ten public gas transporters licensed by ___________________
the regulator, OFGEM (the Office of Gas and Electricity Markets)
___________________
to move gas around the country. Transco’s pipeline business,
because it is a monopoly, is regulated by OFGEM whose staff ___________________
ensure that Transco works within the requirements of the Gas
___________________
Acts and its licence conditions.
___________________
Pricing and Competition
___________________
Transco’s revenues are earned within a price control linked to the
rate of inflation and modified by an efficiency factor decided by ___________________
the regulator who controls Transco’s revenues. The formula - RPI- ___________________
X - was introduced in the mid-80s. That type of control and the
___________________
regulation of profits in general was seen as a temporary means of
‘holding the fort’ until competition arrived. Developments in the ___________________
price controls in both the gas and electricity supply industries -
both now regulated by a common regulator - are being looked at.
Full competition in gas supply arrived in 1998, when every

domestic consumer was given the opportunity to select a supplier
of their choice. There is also competition in the field of gas
connections and gas meter reading. OFGEM is proposing that
metering will have its own price control, similar to that imposed
on Transco.
From a nationalised industry to public gas transporter
1965: In the same year that The Beatles received their MBEs, the
nationalised Gas Council rebuilt and modernised the UK’s gas
industry. The energy map of Britain was drastically redrawn with
the discovery in the North Sea of high quality gas reserves that
would provide supplies for the foreseeable future. Coal and oil
gasification plants become virtually obsolete.
1967-1977: In the decade that Neil Armstrong landed on the

moon, the Gas Council carried out one of the biggest civil and
commercial engineering programmes ever undertaken. A ten-
year, £1 billion programme converted every gas appliance in the
UK to use natural gas and retired existing plants. By the end of
the decade, gas usage had tripled.
1971-72: Money went metric and the UK gas industry was

transformed from a local manufacturer of gas with a distribution
network to a full-scale energy company with operations that
extended from exploration to marketing. In 1972, a new Gas Act
restructured the Gas Council and regional gas boards into the
nationwide British Gas Corporation.
Contd…
56
1979: Margaret Thatcher’s first government was elected and, in a
Notes
programme to be copied around the world, it prepared to privatise
___________________ national corporations.
___________________ 1986: The British Gas Corporation was privatised as British Gas
plc, with 17 million customers, 4.5 million shareholders, over
___________________
89,000 employees and had annual cost operating profits of £688
___________________ million. It was granted a 25 year monopoly to supply gas to
___________________ customers using under 25,000 therms a year and was subject to
strict pricing controls by the regulator, the Office of Gas
___________________
Regulation (Ofgas).
___________________
1988: Competition began to be felt. The South Morecambe gas
___________________ field, British Gas’s first major independent find, was brought into
operation. It was one of the largest gas fields on the UK
___________________
Continental Shelf. The Monopolies and Mergers Commission
___________________ (MMC) recommended the publication of contract price schedules,
allowing competitors to undercut British Gas in the 25,000-plus
therms a year business user market.
1989: Ofgas issued direction for the use of common carriage

rights, using the British Gas network.
1991: Government proposed a reduction of the monopoly

threshold to 2,500 therms a year. British Gas was required to
separate its transportation and supply businesses, and agreed to
create the conditions to allow competitors to supply 60 percent of
the market by 1995.
1993: Boris Yeltsin stopped an attempted coup in Russia. The

MMC recommended divestment of British Gas’s gas trading
business. It proposed a totally competitive gas market by 2000-
2002. British Gas announced a major restructuring into five
business divisions to be completed by March 1994. The
Government demanded that competition in the domestic market
be phased in from 1996-1998, well ahead of the original timetable.
1994: The Channel Tunnel was completed and Transco formally

separated as a stand-alone business within BG plc.
1996: Mad cow disease (BSE) and competition in domestic gas

supply in the southwest hit the headlines. The Network Code,
which governs relationships between gas suppliers, shippers and
Transco was published and came into force.
1997: In the UK’s largest demerger, the marketing, sales and

retail activities of British Gas separated to become Centrica plc.
BG plc was formed and focused on the operation of the gas
pipeline (through Transco) and storage systems, gas and oil
Contd…
UNIT 5: Case Study
exploration, international gas transportation, distribution and 57

power generation and energy research and technology. Notes
1998: The domestic gas market became fully competitive. Transco ___________________
spent over 500 man-years to design and build the computer
___________________
systems that enable the world’s largest competitive market to
function. ___________________
Controlled all the way to the door ___________________
Transco’s national control centre at Hinckley, Leicestershire, ___________________

monitors and controls the flow of gas through the network,
___________________
operating compressor stations and flow control valves to ensure
the optimum supply of gas to Transco’s local distribution zones, ___________________
power stations, and other large gas users. ___________________
Every minute of every day, 44,000 telemetered items, such as ___________________
pressures and flow rates, are scanned. The centre uses the
___________________
demand forecasts produced by the areas, together with
nominations from power stations and other large users, to
determine the country’s total gas requirements. The centre also
monitors the amount of gas which shippers plan to put into the
system, and takes steps, including the buying and selling of gas,
to ensure that supply and demand remain in balance throughout
the day.
Four area control centres – at Killingworth, Hinckley, Dorking

and Gloucester - operate the local gas transportation system in
their area. Gas from the National Transmission System has to be
reduced in pressure several times before it reaches the consumer’s
meter. To achieve this, each area control centre monitors and
controls up to 600 major pressure reduction stations, as well as
local storage installations, which smooth out the variation in
demand throughout the day.
A matter of branding
The gas industry has undergone enormous change in recent years.

The monopoly of the former British Gas has been broken. Instead
of being restricted to one supplier, all gas consumers can choose
from a number of companies from whom to buy their gas.
With so much change, there is understandably some confusion in

the public mind as to who does what within the industry. Some
people find it hard to move on from the idea of ‘the gas board’.
Transco is keen for its various audiences to have a clear
understanding of the role it plays in helping deliver gas across the
country. With that in mind, it launched a £3.75 million
nationwide advertising campaign using television, radio and the
press.
Contd…
58
The theme, ‘Transco, an essential British company, piping gas for
Notes
you’, continues to be used in company advertising, along with a
___________________ series of ‘We do, we don’t’ adverts which seek to emphasise that
Transco pipes gas and runs the gas emergency service - but
___________________
doesn’t sell gas, fit cookers, send gas bills or mend boilers.
___________________ Regular surveys, carried out to track public awareness of Transco
___________________ as a brand, demonstrate a steady rise.
___________________ Question
___________________ Critically analyse the case.

Source: http://businesscasestudies.co.uk/transco/the-changing-environment-within-the-gas-industry/a-
___________________ matter-of-branding.html#ixzz2Qj0YNSIv
___________________
___________________
___________________
UNIT 6: The Exploration of Oil
59
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
BLOCK-II
60
Notes
UNIT 6: THE EXPLORATION OF OIL
___________________ UNIT 8: ONSHORE OILFIELD PROCESSING
___________________
z Formation of Oil Traps z Typical Field Configuration for Production
___________________
z Exploration for Oil and Gas z Description of Oilfield Processing
___________________
UNIT 7: PRODUCTION METHODS
___________________ UNIT 9: OFFSHORE OILFIELD PROCESSING
___________________
z Production – An Overview of Methods z Offshore Production Facility
___________________
z Offshore Field Operation and Logistics
___________________
___________________ UNIT 10: CASE STUDY
___________________
Unit 6
61
Notes
Activity
The Exploration of Oil

Make a presentation on the
___________________
formation of Oil traps.
___________________
___________________
Objectives
___________________
topics: ___________________
\ How hydrocarbons (oil and gas) were formed and trapped below the ___________________
surface of the earth
___________________
\ How hydrocarbons are explored, located and assessed for commercial
viability ___________________
\ Overview of primary production methods and enhanced oil recovery
___________________
methods.
___________________
Introduction
It is important to have an elementary understanding on how
hydrocarbon is formed and trapped in the rocks below the earth.
It was explained earlier that according to the widely accepted
“organic theory”, oil and gas were originated from huge masses of
organisms, animals and vegetation that got buried under the earth
and were covered by sedimentary rocks. Layers of rock formed over
it and the formation and trapping of the hydrocarbons took place in
the following stages over millions of years.
Formation of Oil Traps

The following explains the formation of oil traps:
Formation of Hydrocarbons: The hydrocarbon formation took
place by decomposition in various layers of rock called source rock.
The decomposition took place under high pressure and
temperatures between 50°C and 170°C at depths between 1500
meters and 6000 meters. At lower temperatures (normally at lower
depths) heavier oil was formed and higher temperatures lighter oil
was formed.
Migration of Hydrocarbons: Due to lighter gravity of
hydrocarbon formed compared to water which is always present
below earth’s surface and due to high pressures below the earth, oil
and gas migrated slowly through the gaps in subsurface rocks with
high permeability. During the migration, the oil and gas got into
62 densely packed sedimentary rocks of very high porosity known as

Notes reservoir rocks. Sandstone and limestone are common reservoir
___________________ rocks. Figure 6.1 shows typical indicative sketch of permeable
rocks and Figure 6.2 shows an indicative sketch of porous reservoir
___________________
rocks.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 6.1: Migration of Hydrocarbons through Rocks

having Permeability
Figure 6.2: Porous Reservoir Rocks

Formation of Traps: Migration of the oil and gas stopped at traps 63
which were formed due to various reasons like sedimentation and Notes
convulsions that took place on earth’s strata. A typical trap is ___________________

covered with non-permeable hard rock called cap rock.
___________________
Traps are formed by deformation of the rocks, deposition of rocks ___________________
or by creation of faults due to movement of rock strata. The
___________________
common types of structural traps are anticlines and domes or a
fault. Figure 6.3 shows some typical traps. ___________________
___________________
___________________
___________________
___________________
___________________
Figure 6.3: Traps
In the trap, the gas being the lightest rises to the top. The oil
settles below the gas, and the water, which is heaviest, settles at
the bottom. Due to high pressure, a lot of gas remains dissolved in
the oil. A large formation of rocks of this nature bearing
hydrocarbons is called reservoir. The earth surface above a
reservoir from which commercial exploitation takes place, is called
oil, gas or condensate field depending on what it produces.
The term hydrocarbon reserves refers to the estimated amount of
oil, gas or condensate that is expected to be produced in the future
from wells in known fields.
The search for hydrocarbons is called prospecting or exploration of
oil or hydrocarbons.
64
Check Your Progress
Notes
Activity
Fill in the blanks:
Differentiate between
___________________
Geologists and Geophysicists
___________________
1. The hydrocarbon formation took place by decomposition
according to the nature of their
in various layers of rock called ………………….. .
work.___________________
2. During the migration, the oil and gas got into densely
___________________
packed sedimentary rocks of very high porosity known
___________________ as …………………...
___________________
___________________ Exploration for Oil and Gas

___________________ As stated in the previous section, early oilfields were discovered
___________________ through locating seepages. It is said that the first oil field in India,
___________________
at Digboi was identified after oil was seen on the mud carried with
footsteps of elephants in the jungles of Assam. With such easily
locatable and shallow oilfields having been exhausted and the
demand for energy having gone up by leaps and bounds, the search
for oil is a different ball game today. It is very technology-oriented,
yet uncertainties and risks are still heavy.
A commonly used terminology in oil companies, Exploration

& Production (E&P), comprises of search, discovery and production
of oil and gas by undertaking the following activities:
z Licensing and agreement from the governments concerned.
z Geological surveys including aerial photography, satellite

images to examine nature of rocks and soil strata and
interpretation of such data.
z Geophysical surveys such as seismic surveys.
z Interpretation of data and geological modelling.
z Identifying hydrocarbon resources and their location based on

the interpreted data.
z Economic evaluation of the located reserves.
z Exploratory drilling to establish commercially viability.
z Preparation of field development plan.
z Commercially exploiting them by setting up necessary drilling

and production infrastructure.
65
The range of activities outlined take several years of teamwork
Notes
between Geologists, Geophysicists, Reservoir Engineers, Chemical
Engineers, Petroleum Economists and other disciplines. ___________________
Here we shall cover the exploration part. ___________________
___________________
Licensing and Agreement
___________________
The first step in exploration of oil obviously is entering into
___________________
contract, lease agreement or obtaining licenses from the
governments. Normally the government of the country carries out ___________________
a lot of surveys (see next item) to define a ‘block’ for exploration ___________________
and invites bids. The selected bidder then enters into agreement
___________________
with the government. There are two types of arrangements:
___________________
z Licenses to the exploring company to explore and produce oil
___________________
and gas with license fees, royalties (per unit production) and
taxes payable to the state.
z Production sharing contracts, in which the state or a state
owned company, is made a partner in the venture. Normally
the initial exploration costs are borne by the licensee.
Revenues earned on production are first set-off against the
costs incurred by the licensee and the balance amount is
shared in an agreed percentage.
Once the agreement is reached, the exploration starts.
Geological and Geophysical Surveys

Geologists try to develop a model or a map where hydrocarbon
might occur, based on geological principles. The map is based on a
wide variety of geological information. They try to locate anticlines
and domes by mapping rock layers coming out of earth’s surface.
They use very conventional tools like hand-held compass, telescope
etc. to determine the orientation of the rock layers. With these
instruments geologists generate drawings and maps of the position
and size of the rock protrusions.
Other tools used by Geologists are aerial photographs and satellite
pictures of the earth’s surface. When exploratory wells are drilled,
geologists examine the rock samples and other well data to make
subsurface maps of the reservoir rocks. Matching up rock layers
between wells allows geologists to draw cross sections in order to
find petroleum traps.
66
Geophysicists measure the properties and patterns of sub-surface
Notes
rock strata by three types of surveys. These are explained below:
___________________
z Magnetic Survey: To determine the strength of the Earth’s
___________________
magnetic field at a specific location.
___________________
z Gravity Survey: To determine the strength of the Earth’s
___________________
gravity at a location.
___________________
z Seismic Survey: To draw subsurface maps using sound
___________________
waves.
___________________
In seismic survey explosive charges are detonated in holes drilled
___________________
by truck mounted rigs at specific points in the survey area. This rig
___________________
is called Thumper Truck. The energy waves are picked up by
___________________ geophones laid out on the surface and recorded on magnetic tape
by seismographs, the same instruments that are used to measure
the earthquakes.
By knowing the velocity at which energy travels through rocks of

different types, and by measuring the time it takes for the energy
to be reflected to the surface, seismologists are able to construct
approximate relief maps of deeply buried rock layers. Computers
are used to enhance the subsurface picture formed from sound
waves.
Figure 6.4 depicts a seismic survey being done with a

Thumping Truck and a Recording Truck.
The geo-phonic data is processed by computers into seismic lines.

The seismic lines are two-dimensional displays that resemble
cross-sections of the rock strata.
The seismic data helps to develop the geometry and size of the
“trap” formation, where hydrocarbon exists under the trap and
decide whether an exploratory well is to be drilled.
Two-dimensional lines (2-D) are created as seismic data by laying

the geophones in single line. Three dimensional seismic lines can
be created by collecting geo-phonic data as an intersecting grid of
seismic lines. 3-D seismic data can help to create 3-D geometric
model of the reservoir.
67
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 6.4: Seismic Survey
Drilling
After geological and geophysical studies are carried out, the
possibility of presence of hydrocarbon deposits worth further
exploration is established. Once an exploration target is defined a
drilling contractor is hired to drill exploratory wells.
Exploratory well: An exploratory well is required to confirm the
existence of oil or gas in a basin identified through geological and
geophysical surveys. The first exploratory well drilled in a field is
called wildcat. The first successful well showing hydrocarbon
presence during wildcat is called discovery well. Points to note are:
z It may or may not produce oil and is abandoned if it does not
produce oil. The well is called dry hole.
z A lot of information is generated by logging some of the
properties of the well and analyzing the fluids and rocks that
come out during drilling. This data helps in defining the
geological history and the properties of the reservoir.
The information interpreted from the well logs is used for decision
making on whether the well is to be used for production or is to be
abandoned for being not viable economically. The information is
also used to update the geological models.
68
Drilling is a continuous effort in a field even after discovery and
Notes
production of hydrocarbons. Drilling of additional well after
___________________
discovery to define the size of the reservoir is called delineation.
___________________ Development wells are drilled into a known reservoir to increase
___________________ production.
___________________ Oil wells are being drilled all over the world in diverse
geographical areas. Very often they are in remote areas like
___________________
deserts, forests or oceans (offshore). On land (onshore) the well site
___________________ must be cleared and access roads are constructed.
___________________
A typical drilling rig onshore is shown in Figure 6.5.
___________________
___________________
___________________
Figure 6.5: Drilling Rig
Drilling the Well

Drilling rigs of special design are used to drill wells for exploration.
The basic system involves a rotary mechanism, a circulation
mechanism and a hoisting / lowering mechanism as shown in the 69

Fig. 6.5. The rotary system includes diesel based power and a Notes
rotating wheel assembly that causes the drill pipe to turn thus ___________________
activating the drill in the hole. The hoist is also powered by a
___________________
diesel engine and is used to raise and lower the drill stem to
change the bit. ___________________
The circulation system includes a pump to force a mixture of water ___________________
and mud down the inside of the drill stem to: ___________________
z keep the drill bit cool ___________________
z bring fragments of broken rock to the surface ___________________
z keep the drill bit lubricated ___________________
___________________
z to prevent any accidental “blow-out” meaning sudden eruption
of oil and gas through the well pipe. ___________________
As the mast is raised, the equipment is placed in position, it is

called “Rigging Up”. As the drilling the well is begun, it is known
as “Spudding In”.
Drilling is a 24 hours a day operation. Shallow wells on land may
be drilled very quickly, e.g. 500 meters in 3 to 4 days. Deep wells
(3000-4000 meters) offshore can take several weeks depending on
depth of sea, weather etc.
Each time the drilling bit is changed, the entire length of pipe in
the hole must be brought up, disconnected and stacked. This is
called “Making a Trip”. The mud circulates down the inside of the
drill pipe through the bit and up the outside of the pipe. Blow-out
Preventers ( B.O.P.) are located at the surface. These are valves
which automatically close if a sudden increase in pressure occurs.
A blow out can cause explosion and fire with severe loss of life.
Getting the fire out and controlling the well is a major problem.
Horizontal Drilling
Horizontal drilling is an important technology which makes oil
production more economic. Wells are usually drilled vertically or
slanted from a platform. Modern drilling technology can produce a
90 degree turn in a short distance. This is due to methods and tools
that control the drill bit, flexible pipe and innovative engineering
design. A horizontal well is first drilled vertically to a target then
angled to a path parallel to the formation to penetrate the
reservoir. This improves recovery and economics.
70
Offshore Drilling
Notes
Offshore or marine rig is positioned by tugs. The type of rig
___________________ selected depends on depth of the sea. The different types of
___________________ offshore rigs are shown in Figure 6.6.
___________________ The various types of offshore drilling rigs are:
___________________ 1. Jack-Up Rig is floated to its well location. At the location
___________________ huge “legs” are cranked down to reach the sea floor. Then the
hull is raised above sea level. It normally stands on four legs
___________________
resting on the sea bed. Its use is limited to water depths of up
___________________ to a few hundred meters.
___________________
2. A Drill Ship is like any other ship but has a mast located
___________________ centrally and is therefore a very mobile drilling rig.
___________________ 3. Submersible Rigs have hulls on which it floats while being
towed to the site. On location the hulls are flooded and the
hulls come to rest on the bottom. Used for shallow water
drilling only.
4. Semi-Submersible Rigs are similar to submersible rigs
but when the hulls are flooded they do not sink to the bottom.
Once a reservoir is found to be commercially viable, a development
well program is carried out from a platform anchored to the sea
bed.
The rigs must not be confused with offshore platforms, which are
normally permanently piled in the sea bed.
Figure 6.6: Jack-up and Semi-submersible Rigs

Field Development Plan 71

Notes
If the results of an exploratory drill indicates the possibility of
commercially viable oil or gas find then a field development plan is ___________________
created and an economic viability report based on the plan is ___________________
prepared. The field development plan is a project report containing:
___________________
z Projected production profile based on reservoir simulation
___________________
z Pressure, temperature and well production data
___________________
z Recovery techniques
___________________
z Optimal recovery rate over a period of time
___________________
z Life of the field
___________________
z Enhanced Oil Recovery methods needed in future
___________________
z Number and type of wells proposed and drilling technique
___________________
z Field layout with location of wells and other facilities
z Facilities required for production and processing at oilfield
z Transportation and distribution infrastructure
z Environmental impact
z De-commissioning costs
z Logistics support required at the oil or gas field
z Total investment, production cost, maintenance cost and cost
of material and logistics for production
An economic evaluation is made, based on contractual terms, and
taking into account the risks involved. The viability of the project
is worked out by discounting the estimated cash flows at suitable
discount rates.
De-Commissioning of Wells
In most of the countries, it is mandatory to decommission the
wells and bring back the land to its original state after the field is
abandoned.
Exploration and Production Costs
The costs incurred for production of oil and gas comprise of the
following:
z Exploration Costs
z Development Costs
z Operating Costs
72
Exploration costs include the cost of seismic surveys and
Notes
exploratory drilling and varies between US$ 1 per bbl in prolific
___________________
oilfields to more than US$ 12 per bbl, where the environment is
___________________ difficult and production per well is low. The finding costs have
___________________ reduced significantly over a period of time to US$ 4-6 per bbl on
average. This is due to the technological evolutions like:
___________________
z Developments of 3-D seismic surveys, which give more
___________________
precise location of wells
___________________
z Development of horizontal drilling
___________________
z Development of FPSO
___________________
z Development of sub-sea production system
___________________
Development and operating costs include the cost of production,
___________________
maintenance, processing, transportation, infrastructure, etc. It
varies from US$ 1 per bbl in Middle East to as high as US$ 20 per
bbl in certain locations.
On an average, the cost of oil exploration, development and
operation comes around US $ 10-12 per bbl.
Oil Industry is a Risk Business

The cost of exploration for hydrocarbon resources is very high.
In spite of technological developments in establishing oil finds, the
uncertainties involved in finding commercial quantities of oil and
gas is large. Several millions of dollars are often spent without
discovering a viable field. The successful ventures have to generate
sufficient profits for the unsuccessful ones to keep the business
going.
The risks exist because:
z In spite of high level of technology involved, methods are not
precise.
z Methods are indirect and they do not indicate the presence of
petroleum itself. They only indicate geological situations
with probability of oil find.
z We can not see what is happening below the earth. We
conclude only by interpretation of the data. Variables are
numerous and the interpretation may go wrong.
z Thus many dry holes are drilled.
Oil companies balance the risk with rewards.
Oil Production – A Challenging Task 73

Notes
Once the exploration and assessment stage is over and the
reservoir is found suitable for commercial exploitation, decision is ___________________
taken for commercial exploitation. The method of production ___________________
depends on:
___________________
z Location of the field
___________________
z Field life
___________________
z Size of the field ___________________
z Quality of oil and gas ___________________
z Production profile over the field life (for oil, gas and water) ___________________
z Pressure/Temperature profile over the field life ___________________
z Use of artificial methods of production ___________________
z Customer specification of oil and gas, market location and

method of transportation.
Location of the Field

Most hydrocarbon deposits today are found in remote areas. For
example, they are found more often in the deserts or dense forests
(onshore) or below the ocean (offshore). Earlier the hydrocarbon
finds and production offshore was limited to shallow or moderate
depth locations (a few meters to a few hundred meters). With
today’s exploration and production technology, we have shifted to
deeper seas (thousand meters water depth).
Field Life
It could be from a few years to a few decades. Fields with low
production profile and short life are referred as marginal fields.
Size of the Field

Area over which a field exists (measured over the earth’s surface)
could be as small as 50 to 100 square Km to a few thousand square
Km.
Quality of Oil and Gas

Oil could be light, medium, heavy or it could be even condensate. It
could be sour (high sulfur bearing) or sweet. The gas could be high
calorific value (methane rich), low calorific value (carbon dioxide or
nitrogen bearing), sweet or sour. Ratio of gas to oil known as Gas
74 Oil Ratio (GOR) can vary widely from field to field and over the
Notes field life.
___________________
Production Profile
___________________
Normally the oil production starts at a low level, it increases to a
___________________
peak level called plateau level and then tapers off. The gas and
___________________ water production also changes with field life depending on
___________________ characteristics of the reservoir. Typical production profile of an
oilfield is given in Figure 6.7.
___________________
___________________
___________________
___________________
___________________
Figure 6.7: Production Profile
Check Your Progress

Fill in the blanks:
1. An …………………… well is required to confirm the
existence of oil or gas in a basin identified through
geological and geophysical surveys.
2. …………………… rigs are similar to submersible rigs
but when the hulls are flooded they do not sink to the
bottom.
Summary
In this unit, at first the formation of hydrocarbon bearing
structures was described. A description of hydrocarbon reservoir
comprising of porous rocks containing the hydrocarbon in its
pores and covered by a non-permeable cap rock was given.
This was followed by description of the methods of oil exploration,
identification of probable hydrocarbon bearing structures and
drilling of exploratory wells. The risks and costs involved in search 75

for oil was highlighted. Notes
___________________
Lesson End Activity ___________________
Show digramitically the following on a chart paper: ___________________
z Porous Reservoir Rocks ___________________
z Migration of Hydrocarbons through Rocks having Permeability ___________________
z Drilling Rig ___________________
___________________
Keywords ___________________
Reservoir: A large formation of rocks of bearing hydrocarbons. ___________________
Horizontal Drilling: An important technology which makes oil ___________________
production more economic.

Exploration Costs: It include the cost of seismic surveys and
difficult and production per well is low.

1. Describe how oil is formed and how it migrated and got
trapped in certain locations below the surface of the earth.
2. Outline the major steps an oil company has to go through
starting from the decision to explore for oil in certain area to
the decision to start production of oil.
3. List down all the factors that can affect economics of
production from an oil field.
4. Explain the Different types of Drilling.
Further Readings
Books
Fundamentals of Oil & Gas Accounting? Charlotte J. Wright,
Rebecca A. Gallun - Business & Economics, 2008
Introduction to the Global Oil & Gas Business? -Samuel Van
Vactor - Business & Economics
76
Web Readings
Notes
www.ril.com/html/business/exploration_production.html
___________________
www.wikinvest.com/.../Oil_%26_Gas_Drilling_%26_ Exploration
___________________
www.satimagingcorp.com › Satellite Imaging Services
___________________
www.hoovers.com › Hoover's Directories › Industry Overviews
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 7: Production Methods
Unit 7
77
Notes
Activity
Production Methods
Make a presentation on
___________________
Sucker Rod Pumps and how
they___________________
pump out the oil.
___________________
Objectives
___________________
topics: ___________________
\ Overview of Production methods ___________________

\ Various primary production methods ___________________
\ Overview of Enhanced oil recovery methods
___________________
Introduction ___________________
___________________
There are primary, secondary and tertiary methods of recovery of
hydrocarbons are used for maximum extraction of hydrocarbons
from the reservoir.
A team of reservoir engineers, geologists and geophysicists base
the choice of EOR method and its design/operating parameters on
a thorough simulation and study of the reservoir.
Production – An Overview of Methods

In the beginning of field life, unless the pressures are very low, the
well fluid comes out of the wells on its own pressure. This kind of
production of oil on its own pressure is called Primary Production.
A primary production facility comprises of:
z Manifold on top of the well, called Christmas Tree.
z Equipment and systems for separation of oil, gas and water.
z Equipment and systems to make the oil and gas as free of

water as specified by the customer (dehydration of oil and gas).
z Equipment and systems for measurement and transportation

of oil and gas to the customer.
z Equipment and systems to treat water for disposal.
During primary production, 25-30 percent of the oil in the reservoir

can be recovered by the natural reservoir drive. Other techniques
are used to recover some of the remaining oil. Secondary and
78 Tertiary methods of recovery of hydrocarbons are used for

Notes maximum extraction of hydrocarbons from the reservoir. These
___________________ methods are summarized in Table 7.1. These are also known as
___________________ Enhanced Oil Recovery (EOR) methods.
___________________ Sometimes the pressures of the reservoir are low at the early
___________________ stages of production. In such cases artificial methods are used even
___________________
during primary production.
___________________ A very popular method used for low-pressure shallow wells is

Sucker Rod Pumps to pump out the oil (Figure 7.1).
___________________
___________________ These pumps having huge size of their drive system, which moves
up and down, make a magnificent sight in the oilfield, where often
___________________
an array of such pumps can be seen.
___________________
The plunger goes deep down the well moving up and down
pumping out the oil.
Figure 7.1: Sucker Rod Pump
Water Injection
Water is first treated to meet reservoir specification for particulate
content, dissolved solids content, oxygen content etc. Then it is
injected around the periphery of the producing well as shown
(Figure 7.2).
79
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 7.2: Water Injection
Use of water injection can boost the recovery by another 15-20% of

the original oil in the reservoir, raising the recovery level to
40-45%. Water Injection is sometimes considered primary
production method and falls under the category of artificial lift,
meaning lifting the oil out of the well by artificial means rather
than its own pressure.
The essential equipments in water injection system are filters,
deoxygenating tower and chemical injection system.
Enhanced Oil Recovery (EOR) methods are tried after the water
injection. It can further increase the recovery by another 15-20%
leading to recovery of around 60% of the oil in the reservoir.
Table 7.1: Secondary and Tertiary Methods of Production
Contd…
80
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Steam Injection
Steam is injected down injection wells to heat the heavy oil to
reduce its viscosity and make it more fluid. The steam also
produces drive to push the oil toward producing wells.
Figure 7.3: Steam Injection
Main equipment are water treatment plant (for boiler quality

water), and boiler. Rugged types of boilers are used to produce
high-pressure steam (above reservoir pressure).
In-situ Combustion
This method of EOR is used for very viscous crude oils. It is also
used as primary production method where crude oil is too viscous
to flow up through the well on its own.
81
In-situ combustion has been effectively used in North Gujarat
Notes
Oilfield in India to produce very viscous crude oil, which is almost
like semi-solid in the ambient temperature. ___________________
In this process (Figure7.4), air and water are injected into the oil ___________________
reservoir in alternate cycles. At first air is injected around the ___________________

outer layer of the reservoir and the oil is ignited as a result of
___________________
presence of oxygen (air). The heat generated raises the
___________________
temperature of oil thus reducing the viscosity.
___________________
But due to combustion, there is loss of some amount of crude oil.
Once the desired temperature level in the reservoir is reached, air ___________________
injection is stopped. ___________________
___________________
___________________
Figure 7.4: In-situ Combustion
The flame in the reservoir is quenched with injection of water.

Water injection is stopped once the flame is quenched. As the
temperature falls, injection of air and ignition of the oil is done
again. This cycle goes on repeating according to the time cycle
decided by reservoir engineers.
Gas Injection and Gas Lift

It is important to note the difference between the two methods of
recovery of hydrocarbons. Gas Lift is injection of gas in the well
tubing to make the density of oil column in the well lighter. As a
result the hydraulic head of the fluid in the well becomes less and
oil flows out more easily.
But Gas Injection involves injection of the gas directly to the
reservoir to provide drive to push out oil.
Both processes involve compression of the gas coming out in the
field to high enough pressure to be put back either to the well or to
the reservoir.
82
These are some of the typical EOR processes. A team of reservoir
Notes
engineers, geologists and geophysicists base the choice of EOR
___________________
method and its design/operating parameters on a thorough
___________________ simulation and study of the reservoir.
___________________
Check Your Progress
___________________
Fill in the blanks:
___________________
1. ………………. is injection of gas in the well tubing to
___________________
make the density of oil column in the well lighter.
___________________
2. ………………. involves injection of the gas directly to the
___________________ reservoir to provide drive to push out oil.
___________________
___________________ Summary
In this unit, an overview was given on various primary and
secondary methods of oil and gas production. This included Water
injection, Steam injection, In-situ Combustion and Gas Injection
and Gas Lift.
Lesson End Activity

Prepare a presentation on the secondary and tertiary methods of
oil and gas production.
Keywords
Primary Production: It is the kind of production of oil on its own
pressure.
Christmas Tree: It is a primary production facility comprising a
Manifold on top of the well.
In-situ Combustion: This method of EOR is used for very viscous
crude oils.

1. Give brief description with sketch for Water Injection Process.
2. Give a brief description with sketch for In-situ combustion
process.
3. What is the difference between gas injection and gas lift
processes?
Further Readings 83
Notes
Books ___________________
Fundamentals of Oil & Gas Accounting, Charlotte J. Wright, ___________________
Rebecca A. Gallun - Business & Economics, 2008
___________________
Introduction to the Global Oil & Gas Business, Samuel Van Vactor
___________________
- Business & Economics
___________________
Web Readings ___________________
www.ril.com/html/business/exploration_production.html ___________________
www.wikinvest.com/.../Oil_%26_Gas_Drilling_%26_ Exploration ___________________
www.satimagingcorp.com › Satellite Imaging Services ___________________
www.hoovers.com › Hoover's Directories › Industry Overviews ___________________

84
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 8: Onshore Oilfield Processing
Unit 8
85
Notes
Activity
Onshore Oilfield Processing

Find___________________
out which are some
Hydrocarbon producing fields
___________________
in India.
___________________
Objectives
___________________
topics: ___________________
\ Overview of the configuration of facilities at the oilfield – offshore and ___________________

onshore
___________________
\ Why processing of oil and gas is required at the oilfield itself
\ How oil and gas are gathered from many wells in the oilfield ___________________
\ What kind of processing is required at the oilfield and the technology ___________________
involved
___________________
Introduction
Wellhead fluids must be processed before anything else. So, oil and
gas production involves a number of surface unit operations
between the wellhead and point of custody transfer. Collectively
these operations are called oilfield processing.
This unit talks about Oilfiels processing and its various facets.
Typical Field Configuration for Production

A hydrocarbon producing field can be a few hundred to a few
thousand Square Kilometres in area. Several wells need to be
drilled in the area for optimal production.
Figure 8.1: A Hydrocarbon Producing Field

86
In a land based field (onshore), the wells could be in short
Notes
distances (less than a Km) spread over the whole area. The well
___________________ fluid from the wells is collected into Group Gathering Stations
___________________ (GGS), where the oil, gas, and water are separated and processed.
___________________ A typical onshore field configuration is shown.
___________________ As shown, the well fluid is collected from the wells by flow lines
___________________ into a GGS. There could be more than one GGS in an oilfield
depending on the area of the field, number of wells and
___________________
development plan of the field.
___________________
After processing in the GGS, oil is stored in tank farms and sent to
___________________
the consumer (refinery) through pipeline or tankers. The gas is
___________________
compressed and sent by pipeline to the consumer (power plant or
___________________ industry) or sent to a gas processing plant to produce LPG and
separation of petrochemical feedstock.
Certain other terminologies on gathering and processing/storage of

hydrocarbons in the field are commonly used such as:
z Gas Collection Station (GCS - applicable for a gas field)
z Central Tank Farm (meaning oil storage facilities at the

oilfield)
z Oil Collection Station (OCS)
In an offshore field, the terminologies as well as the configuration

differ from an onshore field.
z The wells are normally drilled by Drill Ships of various types

and well head may be installed in small fixed platforms called
Well Platform.
z Well fluid from different well platforms is gathered by sub-sea

flow lines into a Production platform or Central Process
Platform.
The necessary oilfield processing is done at the Central Process

Platform. There are other categories of platforms as well as
floating production facilities (FPSO). With exploration and
production going deeper into the sea (2000 meters or more), subsea
production technology has developed with well and production
facilities under water, installed on the sea bed. The configuration
of offshore field is discussed later in this section.
Table 8.1: Oil and Gas as Produced and as Desired 87

Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Why Processing at Oilfield? ___________________
Oil and gas as produced in the field is not transportable and does ___________________
not meet customer specification. Before transportation to the buyer ___________________

by pipeline or tanker, crude oil and natural gas must be separated
and treated to meet certain customer specifications. Table 8.1 gives
an idea of the quality of oil and gas as it comes out from the oil well
and as desired by the customer.
Processing of the well fluid and oil, gas and water is needed before
we can bring them to the desired specification for sending to a
customer. Thus some amount of processing at the oilfield itself is
required, whether offshore or onshore, however remote the location
may be.
The configuration of an oil field is presented in Figure 8.2 in block
diagram format outlining the gathering scheme and minimum
processing at the gathering station.
The block diagram configuration of Group Gathering system
(Figure 8.2.) is to be seen in conjunction with oilfield configuration
shown in Figure 8.1. Flow lines carrying well fluid from the wells
are all taken to a GGS. A Header or a manifold collects all the well
fluid. As indicated in Figure 8.2 the main processing blocks are:
z Separation of oil, gas and water
z Treatment of water before it can be discharged safely meeting
environment requirements
z Dehydration of oil and gas to remove water
z Metering and pumping of oil
z Metering and compression of gas
88
Notes
Activity
___________________
topic “Gas Dehydration”.
___________________
___________________
___________________
___________________
___________________
___________________
Figure 8.2: Oilfield Facilities Configuration
___________________
___________________
___________________
Figure 8.3: Separation of Oil, Gas and Water
Check Your Progress

Fill in the blanks:
1. In a ………………….. based field, the wells could be in
short distances spread over the whole area.
2. The necessary oilfield processing is done at the
………………….. Platform.
Description of Oilfield Processing

Well fluid is a mixture of oil, gas and water, coming out of well
under high pressure. First, we need to separate them. This is done
in an equipment called Separator, which is essentially a vessel
having some internals to facilitate separation. A schematic
diagram of separation and some details of Separator equipment is
shown in Figure 8.3.
The separators are of many configuration and types such as
horizontal, vertical, spherical, cyclonic type etc. Their selection and
sizing part of engineering skill is not covered here.
Oil (in the well fluid), which is at high pressure with dissolved
gases, need to be brought to stable atmospheric pressure for
storage. This is called Stabilization of oil. Instead of bringing down 89

the pressure abruptly, it is stepped down slowly through a series of Notes
separators (Figure 8.4). The simple configuration shows High ___________________
Pressure (HP), Low Pressure (LP) and Atmospheric Pressure
___________________
separation.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 8.4: Crude Stabilization
Further removal of water from crude oil is required before we

transport the oil to refinery. This process is called crude oil
dehydration. This is often carried out in an equipment known as
Heater-Treater where heating the crude oil and coalescing the
water particles by electrostatic force helps in bringing down the
water content (See Figure 8.7).
Figure 8.5 shows the processes mentioned above in the form of a
simple flow diagram.
The water that is produced is either discharged or
re-injected to the well. We need to treat effluent water to meet
certain specifications before discharging or re-injecting. This
process is called Water Treatment. A description of a typical
facility for treating water is given later.
Like crude oil, the natural gas that is produced also needs to be
dried of water before it is put to the pipeline. This is to save the
pipeline from corrosion. This process is called Gas Dehydration.
A description of a typical facility for dehydration of gas is given in
later part of this section.
After processing as described above both oil and gas need to be
metered and transported to the customer which could be a refinery
or a gas processing plant owner. Often the customer could be
several hundred Kilometres away and transportation could be
through long distance cross country pipeline or by tanker.
90
To meet transportation requirement, compressors are installed to
Notes
meet pressure requirements in the pipeline and large oil pumps
___________________
are used to pump the oil into the pipeline or a tanker. Often for
___________________ greater efficiency of gas dehydration at higher pressures,
___________________ compressors are placed ahead of the gas dehydration facility.
___________________ Two more important items that form essential part of oilfield
processing are:
___________________
Custody Transfer Meter: Most often the producer of the gas and
___________________
oil and the customer are different companies or different profit
___________________
centres under the same company. Accurate metering of oil and gas
___________________ are required before they are despatched to the customer.
___________________ Pig Launcher: An equipment known as Pig, which is spherical or
___________________ cylindrical objects of diameter close to the pipeline diameter, is
pushed into the pipeline at certain intervals by the Pig Launcher.
The objective is to clean and monitor inner surface of the pipeline.
Figure 8.5: Flow Diagram of Oilfield Process System
Minimum Processing Requirement in Oilfield

Oilfields being often in remote areas, only the minimum processing
which is required for transporting and marketing the oil and gas is
carried out in the oilfields. The minimum processing facilities
necessary to be installed in an oilfield are:
z Separation of oil, gas and water
z Separation of sand and sludge
z Stabilization of crude oil
z Dehydration of crude oil
z Dehydration of gas
z Treatment of water
91
z Pumping and metering of oil
Notes
z Compression and metering of gas
___________________
In addition a number of utilities and other facilities are needed
___________________
like:
___________________
z Flare System
___________________
z Chemical Injection System
___________________
z Control System
___________________
z Utilities like power generation ___________________
Certain other facilities also may need to be installed in the field. ___________________
These are:
___________________
z Gas Sweetening: If hydrogen sulfide or carbon dioxide
___________________
content in the gas is high enough to cause severe corrosion
during processing and transportation.
z Storage of Oil: It is based on logistics of operation.
z Secondary and Tertiary Recovery: Requirement of
Enhanced Oil Recovery comes up as the field ages.
Description of Oilfield Processing Equipment

Let us now give a look at all the equipment mentioned in
Figure 8.5 with a little more detail. For easier installation at
remote oilfields, these are normally combined with necessary
piping, instrumentation and control system. The whole equipment
system with the ancillaries is mounted on easily transportable
skid. These are known as Skid Mounted Oilfield Process Systems.
Separators
These are pressure vessels whose function is to separate oil, gas
and water. A simple sketch of a separator was presented earlier.
The operating pressure of the separators could be very high (say 50
to 60 atmospheres) or lower depending on the reservoir pressure.
Besides the simple design of separator shown, there could be wide
variety of designs, some of them of proprietary make:
z Horizontal separator
z Vertical separator
z Cyclone type separator
A skid mounted separation system is shown in Figure 8.6.
92
Stabilization system for crude oil is a series of separators in
Notes
sequence (normally 3 to 4) where pressure of the well fluid is
___________________
brought down in each stage.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 8.6: Skid Mounted Separators
Dehydration of Crude Oil

The water in oil can be present in two forms:
z Free water: It is in droplet form and separates easily.
z Emulsion water: It is in emulsion form, often very tight.
Most of the free water comes out of the crude oil in the separators.
But the emulsion water remains dispersed in the crude. There can
be as high as 30 to 40% emulsion water in some crude oils after the
separator. Special equipment called Electrostatic Treater or
Heater Treater is used to dehydrate the crude oil to a level of below
0.5% water content. While Electrostatic Treater treats the crude by
coalescing the water particles in emulsion by creating an electro
static field, the Heater Treater also heats the crude oil in the same
equipment reducing the viscosity of crude oil and facilitating
dropping down of water particles.
A sketch of Heater-Treater is shown in Figure 8.7. It has two
chambers. First crude oil enters the heating chamber where it is
heated by a fire tube which is fired with oil or gas burners. Some
water droplets settle down in this chamber itself. Then the crude
passes through the treater section where an electrostatic field is
created by a high voltage transformer. Here the electrically
charged emulsion water particles coalesce, settle down at the
bottom and drained.
93
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 8.7: Heater Treater
___________________
Dehydration of Gas
There are a number of processes for dehydration of gas as
described later. These could be Dry Bed Adsorbent process, where
moisture is adsorbed on the porous surface of the drying medium,
which are solid particles. For example beads of Silica Gel or
Molecular Sieves are used as drying medium. Some of these
processes are used to dry the gas to ‘bone dry’ level.
The other type of processes are based on absorption of the moisture
from the gas by scrubbing (washing) the gas with a liquid drying
agent, which is a good absorbent of moisture. These units are
easier to operate but not suitable for getting the gas totally dry
(bone dry). In oilfield, absorption type of process is more commonly
used. Water is removed from the gas by contacting the wet gas
with an absorbent liquid which absorbs the water (Figure 8.8).
Generally Glycols are used as absorbent. Tri-ethylene glycol (TEG)
and ethylene glycol (EG) are the two most commonly used glycols
in natural gas dehydration.
TEG is used in about 95% of glycol dehydrators. Dehydration with
TEG is most widely used in oil/gas field processing.
Dehydration of gas takes place in a column (Absorber Column)
with trays or packing inside to facilitate contact between glycol
absorbent and the wet gas. The gas fed at the bottom part of the
column goes up and the dry glycol (lean glycol) fed at upper part of
the column comes down the column absorbing water out of the gas.
Absorbent containing water absorbed from gas (rich glycol) is
94 regenerated by heating and stripping out the water in the

Notes regeneration section of the unit. The regenerated absorbent is
___________________ circulated back.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 8.8: Gas Dehydration Unit Using Glycol
Such systems are widely used in offshore and onshore fields for
dehydration of gas. Gas dehydration unit is also skid-mounted
with piping and ancillary equipment for easy installation in the
field.
Produced Water Treatment

A simple schematic diagram of produced water treatment is given
in Figure 8.9. Produced water is separated from various separators
and oil treaters in the oilfield. It has to meet specifications for
discharge of water as per environment regulations. It contains oil
and sand/silt which need to be removed. The water is taken to an
oil skimmer first. Oil from the skimmer is transferred to a slop oil
tank, from where it is pumped to the suction of Main Oil Line
Pump (refer Figure 8.5). Water passes through Cyclone to separate
solid material like sludge. Fine emulsion of oil in water is still left
in the produced water. Normally desired specification before
discharge of the water is oil concentration of less than 20 ppm.
This is achieved by an equipment called Induced Gas Floatation
Unit. Low pressure gas is bubbled through a sparger in a floatation
cell to separate the emulsion and coalesce the particles. Oil layer
comes out from the top.
95
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 8.9: Produced Water Treatment
___________________
Water is taken to a settling tank where the quality is monitored
___________________
before discharging the water. In offshore platforms water is sent to
an equipment called Caisson. It resembles a cylindrical well dipped
into the sea. This allows for an additional guard before the water
goes into the sea. The last traces of water that separate out at the
Caisson are pumped to the slop tank.
Flare System
Flare system is an important facility in any plant processing oil or
gas. It is essentially a tall stack made of steel pipe along with a
flare tip (burner) at top and ancillary equipment.
It burns out any hydrocarbon released during processing due to
overpressure in any of the equipment. Normally, the plant
facilities have safety release valves which release the contents of
an equipment if the pressure rises beyond a safe operating limit.
The flare system prevents such flammable hydrocarbon releases to
get into the plant area and surroundings by burning out such
releases.
It is also used to burn out any excess gas produced. This situation
can occur when a customer downstream suddenly stops taking the
gas due to any operating problem in his plant. It may take some
time for the oilfield operator to cut down the gas production.
During this period the gas is diverted to flare, to avoid any kind of
accident.
Also in a field producing crude oil, the associated gas produced
may be more than the gas demand in the market. Then the excess
gas will need to be flared.
96
Elevating the flare can prevent potentially dangerous conditions of
Notes
high radiation at the operating area of the plant. The height and
___________________
distance of the flare stack from the plant area is fixed to limit heat
___________________ radiation within acceptable limits.
___________________ Further, the products of combustion can be dispersed above
___________________ working areas. This helps to reduce the effects of noise, heat,
smoke, objectionable odours and limits ground level concentration
___________________
of pollutants from flare.
___________________
In the onshore production facility, a tall flare stack (structurally
___________________
supported) is provided 50 to 100 meters away from the plant area
___________________ as shown in Figure 8.10.
___________________ In offshore production facility, flare is provided in two possible
___________________ configurations:
z An inclined structure directed away from the platform
supports the flare at one edge of the platform. This is called
flare boom.
z A separate flare tripod structure, away from the platform
Figure 8.10: Onshore Flare Stack Chemical Injection System
Oilfield facilities require a variety of chemicals to be injected to the

oil and gas streams in small dozes (20-100 ppm):
z Corrosion inhibitors to control corrosion in the equipment
and piping.
z Defoamers are used to control foam. Some oils have tendency
to foam as the gas bubbles through and separates out in the
gas oil separators. This creates inefficiency in the separation 97

system. Notes
z Demulsifier chemicals are used to break emulsions of water ___________________

in oil or oil in water. ___________________
z Bactericide is used to prevent growth of bacteria, fungi and ___________________

sea weeds inside pipeline and equipment.
___________________
z Oxygen scavenger is used for the same purpose. ___________________
z Flow improver is used for viscous crude oil to improve ___________________
transportation efficiency.
___________________
Production Configuration for Gas Field ___________________
The configuration of a gas field could be different. Here again there ___________________
will be gathering or collection of gas from various wells to Gas ___________________
Gathering Station (GGS) or Gas Collection Station (GCS) as the
nomenclature may be according to the operating company’s norms.
Normally gas is associated with some amount of condensate in the
reservoir. The processing done at the GGS (Figure 8.11) are:
z The well fluid is gathered from the wells by flow lines into a
manifold at GGS.
z Condensate (or NGL) is separated in Separator equipment.
z Condensate is stabilized, stored and then despatched to the

customer.
z Gas is dehydrated, compressed and metered before being sent

for gas processing.
The gas processing complex could be several hundred Kilometres

away from the gas field. The processing facilities at the gas
processing plant have been described in detail later. The major
units in the gas processing complex are:
z Gas Sweetening if there is hydrogen sulfide in the gas. Gas

sweetening is normally accompanied with conversion of
hydrogen sulfide to sulfur.
z Dehydration of gas - this is needed because sweetening

process makes the gas wet with moisture again. Sweetening
agents are normally in solution with water.
z Fractionation of chilled and condensed gas to recover LPG

and petrochemical feedstock (ethane and propane).
98
z Conversion of the gas to LNG if needed for transportation
Notes
purposes.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 8.11: Gathering and Processing of Gas
Check Your Progress

Fill in the blanks:
1. A ………………….. is essentially a tall stack made of
steel pipe along with a flare tip at top and ancillary
equipment.
2. ………………….. chemicals are used to break emulsions
of water in oil or oil in water.
Summary
Certain amount of processing needs to be done at the oilfield before
the oil and gas are transported to refineries or gas processing
plants. This unit described what are the processing done,
schematics and equipment for such processing.
Typical configuration of an oil field with wells, gathering of well
fluid and processing stations were described for both onshore and
offshore fields.
Lesson End Activity

Show the gathering and processing of gas diagrammatically on a
chart paper.
Keywords 99
Notes
Separator: It is essentially a vessel having some internals to
___________________
facilitate separation.
Crude Oil Dehydration: The process of removal of water from ___________________
crude oil is called crude oil dehydration ___________________
Dry Bed Adsorbent: This is a process, where moisture is absorbed ___________________

on the porous surface of the drying medium, which are solid
___________________
particles.
___________________
Flare System: An important facility plant processing oil or gas. It
is essentially a tall stack made of steel pipe along with a flare tip ___________________
(burner) at top and ancillary equipment. ___________________
Demulsifier Chemicals: There are used to break emulsions of ___________________

water in oil or oil in water.
___________________

1. Explain the typical Field Configuration for Production of
hydrocarbons with the help of a diagram.
2. Why does an oilfield need to be processed?
3. What is the Production configuration for a Gas field?
4. How does a Flare system work?
Further Readings
Books
Maurice Stewart, Ken Arnold, Emulsions and Oil Treating
Equipment: Selection, Sizing and Troubleshooting, Technology &
Engineering, 2008
Hussein K. Abdel-Aal, Mohamed Aggour, M. A. Fahim, Petroleum
and gas field processing, Technology & Engineering, 2003
Maurice Stewart, Ken Arnold, “Gas-liquid and liquid-liquid
separators”, Technology & Engineering, 2008
Web Readings
www.pennwellbooks.com › Petroleum Books › Production
hw.tpu.ru/en/short-courses/sc/Sc_PTSF/Oilfield/
www.egpet.net/vb/showthread.php?...Oilfield-Processin... - United
States
100
www.amazon.com › ... › Engineering › Chemical Engineering
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 9: Offshore Oilfield Processing
Unit 9
101
Notes
Activity
Offshore Oilfield Processing

___________________
FPSO.
___________________
___________________
Objectives
___________________
topics: ___________________
\ Overview of various types of offshore production facilities like ___________________

platforms, FPSO
___________________
\ Logistics involved in production of oil and gas
\ Configuration and design of offshore facilities ___________________
___________________
Introduction ___________________
The oilfield facilities are installed in the oilfield whether it is an

onshore or offshore field. So far we had focused on the
configuration of onshore facilities. We explained how oil and gas
are gathered in Group Gathering Stations and processed.
In this unit, we will talk about offshore oilfields.
Offshore Production Facility

The processing requirements and schemes in offshore field are very
similar to onshore processing system. But in certain areas, the
configuration and design of offshore facilities differ a lot:
z Field configuration and terminologies used in offshore
facilities are to a certain extent different. For example at
onshore one can drill a number of wells spread all around the
field. But offshore drilling is expensive. So a number of wells
are drilled from a single drilling platform and a number of
drilling platforms (also called well platform) are spread around
the field. Gathering and processing are done at Production
Platform or Central Process Platform.
z Construction technology and operating philosophy in
offshore facility are also different.
z Due to cost of space created at offshore platform and its
isolation from infrastructure, the layout (tight and compact)
and safety considerations in design of the facilities are
different.
102
Both exploration and installation of production/processing facilities
Notes
are more expensive offshore.
___________________
___________________ Offshore Facilities Description

___________________ Offshore installations could be fixed platform or floating facility
(FPSO). Floating productions systems are getting more prevalent
___________________
due to cost factors under certain conditions. FPSO (Floating
___________________ Production, Storage and Offloading), generally a large tanker or
___________________ vessel with production and storage facility, has found wide
application today where putting up a platform is uneconomic.
___________________
A descriptive picture of an offshore platform is given in Figure 9.1.
___________________
___________________
___________________
Figure 9.1: Offshore Platforms
A number of fixed platforms, or floating facilities, subsea

installations or a combination of them can make an offshore
production complex.
Platforms are named according to the type of processing or
function it is meant for. The types of platform normally
encountered at offshore are:
Drilling and Well Platform: Normally more than one well is
drilled from the well platform. Quite often 4 to 8 wells are drilled
from a single platform. All the well heads are manifolded into a
single pipe which goes down to the sea bed and leads to a
Production Platform or Process Platform.
Production Platform: Production platform contains certain
minimum processing facility like separation and stabilization of
crude oil.
103
Process Platform: Process platforms have the complete process
Notes
facilities described earlier. They are the biggest platforms in an
offshore complex, which is equivalent to a GGS onshore. They are ___________________
also referred as Central Process Platform. ___________________
Utilities Platform: For large facilities the utilities like power ___________________
generation, instrument air system, etc. are installed in a separate
___________________
platform.
___________________
Living Quarters Platform: The production and maintenance
___________________
personnel for an offshore facility stay for long periods of shifts (in
terms of weeks) in an offshore platform. For safety, the living ___________________
quarters for personnel are made in a separate platform. ___________________
Flare Tripod: If the flare has a large gas flaring capacity, it is ___________________
installed away from a platform to minimize heat radiation to the ___________________
operating area of the platforms. It is installed in a tripod structure
piled into the sea. Some times flare is put in the platform itself as
an inclined flare boom directed away from the platform.
Several other platforms are installed with the requirement of
Enhanced Oil Recovery as the reservoir pressure depletes. These
could be Water Injection Platforms, Gas Injection Platforms and so
on.
Offshore platforms can be rigid structures that extend all the way
from above the water surface and piled to the seabed. They can be
supported on single leg (Monopod), three legs (Tripod), four legs,
eight legs or multiple legs. In a common type of platform, the legs
are piled into the sea bed. The platforms can be supported by steel
or concrete structure. For a bigger surface area at the top of the
platform, more number of legs are provided.
Some designs of the platforms are not fixed into the sea bed. They
float near the water surface.
Table 9.1: Types of Platform
Building platforms in sea is very expensive and the well production

rate has to be much higher than onshore field for economic
104 justification. For example an onshore field can be justified with per
Notes well production rate of even a few hundred bbl/day. But in offshore
___________________ field it has to be in thousands of bbl/day for economic exploitation.
___________________ A well platform in Mumbai high costs anything between US$ 20
___________________ Million to 50 Million. A process platform costs around few
hundreds of Million Dollars. In contrast a GGS onshore (albeit
___________________
with much lower production) will cost around five Million Dollars
___________________ only.
___________________
Configurations of a Major Offshore Field
___________________
Production at offshore requires a fixed or floating facility or a
___________________
subsea production system and means for transportation of oil and
___________________ gas to the consumer at shore. The transportation of oil could be by
___________________ offloading it to an oil tanker or by pipeline. But for gas, pipeline is
normally the only option. Another option that has developed now is
floating LNG Plants to liquefy and transport the gas directly by
tanker from offshore.
The configuration of an offshore facility could be developed based

on any of above or a combination depending on the location, water
depth and production profile.
Study and decision of the optimum economic configuration is one of

the prime skills in developing an offshore production facility.
Figure 9.2 shows a simple configuration of a small offshore

production complex. This is a concept based on fixed platforms. It
is similar to the concept of development of Mumbai High Field.
In the first phase (Phase-1), when the potential of the field can not
be predicted accurately, a few well platforms and a small
production platform can be installed just to separate the oil and
flare the gas. A storage tanker anchored next to it to store the oil
produced. It offloads the oil to another shuttle tanker.
Once the potential of the field is established, the Phase-2 starts.

More well platforms and Central Process Platforms are installed
for gathering and processing the well fluid. Oil and gas pipelines
are laid to the shore to transport them and the tanker becomes a
standby option.
Once the pressure of the reservoir drops, to boost production, a

number of water injection platforms are installed and water
injection well platforms are put around the periphery of the field.
Later more platforms can crop up due to the changing production 105
profile and EOR requirements. Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 9.2: Offshore Field Configuration
FPSO
Floating Production and Storage Offloading (FPSO) is one of the
most popular systems for offshore production. The first floating
system started production in North Sea in 1975. Its design has
been adopted to wide variety of production situations and
environment. FPSOs are operating today all over the world. It can
operate down to 2000 meters of water depth.
FPSOs have been effectively used in large producing fields, deep

sea and marginal fields. Its economic advantage comes because:
z It avoids need for large and costly fixed installation and

infrastructure. This is particularly advantageous in deep sea,
say at 1000 meters depth.
z It can be modified easily for different production conditions by

bringing it to the yard.
z It has the flexibility to move from one field to another, unlike

fixed platforms. It can be used for production from a number of
marginal fields with short field life.
106
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 9.3: FPSO
Normally large supertankers are converted to FPSO. The bare

surface at the top of the tankers provides space for process
equipment system and infrastructure. The storage capacity of the
tanker is used to store oil. The oil is offloaded to a shuttle tanker
from time to time. The gas can be connected to gas pipeline, sent to
another floating unit with gas processing facility or flared.
A typical configuration of an FPSO producing oil in deep sea is
given in Figure 9.3. The FPSO anchors in the selected location
where, one or more subsea wells are already drilled and vaulved at
the bottom of the sea. The well is connected to the production
facilities on the deck of the FPSO by flexible well piping called
umbilical. The wells are controlled by remote control from the
FPSO through control cables going down below the sea to the
wells.
Offshore Platform Construction Technology

Offshore construction is a challenging task, quite different from
construction of an onshore plant. Let us look into the construction
of a typical four legged platform.
Legs can be of tubular structure of large diameter. A construction
barge carries pieces of the leg to the selected location in deep sea
for installation. The pieces are welded together, lowered till it
reaches sea bed. Then piles are hammered through it into the sea 107
bed to fix the legs on the sea bed. Notes
Fabrication of rest of the platform is done meanwhile in a shore ___________________

based construction yard. A rectangular three dimensional piece of ___________________
steel structure called jacket is fabricated to hold together the four
___________________
legs. The finished structure is then skidded on to the
transportation barge, taken to the location and placed on top of the ___________________
legs to hold them together. Also the platform decks are fabricated ___________________
in the yard, brought by the barge to the location and placed on top ___________________
of the jacket. Process equipment along with piping and ancillaries
___________________
are also fabricated in different shops on shore as modular skid
mounted units. They can be placed on the decks beforehand at the ___________________
yard itself or brought by barge to the location and placed by crane ___________________
on top of the decks.
___________________
Figure 9.4: Construction Barge Anchored Along Side

Platform under Construction
There are several interesting techniques of installation of such

facilities. There is a lot of sub-sea construction work including
welding under water is involved. An offshore facility requires the
services of trained divers for construction as well as maintenance
work below the sea.
Concrete platforms are constructed in a different way.
Construction is carried out in a dry dock near the sea. The concrete
structure (hollow) is built vertically upwards. At a certain point,
the dock is flooded, and the structure is floated. Further
construction takes place while it is floating. It is then towed to the
108 location, and filled with sea water so that it can sink down to its
Notes
Activity final position on the seabed. Such structures can weigh hundreds
Discuss how the Logistics of
___________________ of thousand tons.
off-shore oilfields is taken care
of. ___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 9.5: Offshore Construction
Check Your Progress

Fill in the blanks:
1. ………………….. platforms are also referred as Central
Process Platform.
2. ………………….. platforms can be rigid structures that
extend all the way from above the water surface and
piled to the seabed.
Offshore Field Operation and Logistics

With several platforms in a remote offshore field, the operating
philosophy and logistics support requirement is quite complex
compared to any plant onshore.
Operating Philosophy
Special features of operating philosophy in offshore platform are:
Safety: Being far away in a remote area, operating safety and
emergency planning for containment of disaster and evacuation of
personnel are important features in design and operation of an
offshore platform. This involves:
z Special safety instrumentation for safe shutdown of production
facilities in case of emergency situation, redundancy of
equipment and instrumentation wherever needed for safety 109

reasons. Notes
z Special seaworthy Escape Capsules for operating personnel in ___________________

case of emergency. ___________________
z Safety training of the operators for working in marine ___________________
environment and regular practice drills.
___________________
Remote Control and Monitoring: In a large offshore complex, the
___________________
process platforms may be fully manned but the well platforms are
generally unmanned and remote operated. Several wells and other ___________________
facilities need to be monitored from control room in the Central ___________________
Process Platform. Also there is need for coordination between
___________________
offshore facilities, pipeline operation, and onshore facilities like gas
processing plant or crude storage terminal at shore. This is done by ___________________
telemetering and telecontrol system known as Supervisory Control ___________________

and Data Acquisition (SCADA). This involves remote transmission
of operating data and computer based data acquisition and
monitoring system by communication with optical fibre cables,
microwave or satellite. Such systems will be covered in detail in the
section on “IT Applications in Oil and Gas Industry”.
Shift Schedule: Onshore plants normally have three shifts of
operators, changing every eight hours a day. In offshore the
logistics problem for such rotation will be enormous if people have
to be taken every eight hours to remote areas far away from town
and brought back.
The shift pattern in offshore vary from seven days to fifteen days
in one shift. That means the operators have to live in the offshore
platform for shift period of seven to fifteen days depending on the
shift cycle decided by the management. After the period, operators
for the next shift are flown by helicopter and the operators of the
earlier shift return.
That is why the platforms need to have safe and well equipped
living quarters.
Logistics
Logistics management is very important for successful operation of
offshore production facility.
Logistics support requirements are personnel related, maintenance
related and equipment related.
Logistics relate to:
110
z Movement of operators and maintenance personnel
Notes
z Movement of divers for sub-sea maintenance and operation
___________________
z Catering, medical and other services for the personnel
___________________
z Supply of maintenance equipment and spare parts as and
___________________ when needed
___________________ z Carrying out work-over operations on the wells in the well
___________________ platforms
To provide for these, the production companies maintain an
___________________
offshore supply base at shore and arrange contractors to operate
___________________
fleet of supply boats and helicopters.
___________________
Check Your Progress
___________________
Fill in the blanks:
___________________
1. …………………. relates to Movement of operators and
maintenance personnel.
2. …………………. involves remote transmission of
operating data and computer based data acquisition and
monitoring system by communication with optical fibre
cables, microwave or satellite.
Summary
This unit described what are the processing done, schematics and
equipment for such processing. Typical configuration of an oil field
with wells, gathering of well fluid and processing stations were
described for offshore fields. How the concept of an oilfield at offshore
changes and develops with time was described from real life example.
Lesson End Activity

Prepare a presentation to show how the concept of an oilfield at
offshore changes and develops with time.
Keywords
Production Platform: Production platform contains certain
minimum processing facility like separation and stabilization of
crude oil.
Process Platform: Process Platforms are the biggest platforms in
an offshore complex, which is equivalent to a GGS onshore.
111
Utilities Platform: For large facilities the utilities like power
Notes
generation, instrument air system etc. are installed in a separate
platform called Utilities platforms. ___________________
Living Quarters Platform: They are the living quarters for ___________________
production and maintenance personnel for an offshore facility who ___________________

stay for long periods of shifts in an offshore platform.
___________________
Flare Tripod: If the flare has a large gas flaring capacity, it is ___________________
installed away from a platform to minimize heat radiation to the
___________________
operating area of the platforms and is installed in a tripod
structure piled into the sea. ___________________
___________________
Questions for Discussion ___________________
1. An offshore field produces sour gas and a large amount of ___________________

condensate. Draw a block diagram showing different process
systems that need to be installed in the platform.
2. Make a list of various types of offshore production installations
with brief description of the same.
3. Write a short note on Supervisory Control and Data
Acquisition (SCADA).
Further Readings
Books
Maurice Stewart, Ken Arnold, “Emulsions and Oil Treating
Equipment: Selection, Sizing and Troubleshooting”, Technology &
Engineering, 2008
Hussein K. Abdel-Aal, Mohamed Aggour, M. A. Fahim, “Petroleum
and gas field processing”, Technology & Engineering, 2003
Maurice Stewart, Ken Arnold, “Gas-liquid and liquid-liquid
separators”, Technology & Engineering, 2008
Web Readings
www.pennwellbooks.com › Petroleum Books › Production
hw.tpu.ru/en/short-courses/sc/Sc_PTSF/Oilfield/
www.egpet.net/vb/showthread.php?...Oilfield-Processin... - United
States
www.amazon.com › ... › Engineering › Chemical Engineering
112
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 5: Case Study
Unit 10
113
Notes
Case Study
___________________
___________________
___________________
Objectives
___________________
___________________
___________________
Case Study: Southeast Asia Offshore Oil Drilling Problem
___________________
Our client, Petro-Oil, is a mid-sized oil and gas exploration and
production company with major areas of exploration located in ___________________
South America, Gulf of Mexico, Western Africa, China, Eastern
___________________
Europe, and several other countries.
The Board of Petro-Oil has just set an ambitious goal to be

completed in the next five years: To be the largest oil and gas
producer in Asia by the end of 2017. A quick market research
inquiry shows three major competitor companies (Table 1) that
are larger than our client. To support their new aspirations, our
client just purchased Ceylon-II, a large deepwater oilfield offshore
in the South China Sea.
Table 1: Benchmark Results (million barrels of oil equivalent)
Proven Annual
Reserves Production
Competitor A: PetroChina 15,000 1,500
Competitor B: Petronas 8,000 800
Competitor C: Pertamina 7,500 750

Client: Current Producing 6,000 450
Assets
Client: Ceylon-II (newly 6,000 0
acquired deepwater asset)
Petro-Oil’s management team has hired your company to do a

diagnostic of the company’s current portfolio, operations, and
organization to help them understand what they need to do to
achieve this goal.
Key Points and Assumptions:
z Production is generally correlated with reserves.
z Assume the reserves of each of the assets are exactly at the

same rate of depletion.
Contd…
114
z Assume that all competitors continue to seek additional
Notes
reserves in the Pacific region.
___________________
z The current existing production rates in the area are
___________________ significantly higher than the client’s production rate.
___________________ Analysis:
___________________
___________________
___________________
___________________
___________________
___________________
___________________
The current extraction rate of Competitors A, B and C are much

higher than our client and hold, at a minimum, 10% extraction
rate. The client’s current production rate needs to increase and
the new asset has to meet the current standard of 10% extraction
rate.
Further exploration in the area to gain new assets for additional

production is key for growth and to increase the extraction rate.
Even with these two current assets, the client’s current reserves
are still less than the region’s the largest producer.
Questions
1. Develop a strategy for the same.
2. What initial recommendations would you give to the client?
3. What further analysis would you recommend to the client?

Source: http://chenected.aiche.org/tools-techniques/management-case-study-southeast-asia-offshore-oil-
drilling-problem/
UNIT 11: Gas Processing
115
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
BLOCK-III
116
Notes
UNIT 11: GAS PROCESSING
___________________ UNIT 13: PETROLEUM REFINING
___________________
z Characteristics of Natural Gas z Why Refining
___________________
z Overview of Gas Processing z Product Specifications
___________________
z Process Description z Refinery Processes Overview and History
___________________
UNIT 12: LIQUEFIED NATURAL GAS (LNG)
___________________ UNIT 14: REFINERY REQUIREMENTS
___________________
z The LNG Cycle z Refinery Configurations
___________________
z LNG Project Economics z Description of Overall Facilities
___________________
z The Indian Scenario
___________________ UNIT 15: CASE STUDY
Unit 11
117
Notes
Gas Processing
___________________
___________________
___________________
Objectives
___________________
topics: ___________________
\ Properties and the characteristics of natural gas ___________________

\ Objectives for processing the gas and configuration of a gas processing ___________________
complex
\ Processing schemes for various gas processing units ___________________
___________________
Introduction ___________________
Natural Gas processing is a complex industrial process designed to

clean raw natural gas by separating impurities and various
non-methane hydrocarbons and fluids to produce what is known
as pipeline quality dry natural gas.
Natural Gas processing begins at the well head. The composition of
the raw natural gas extracted from producing wells depends on the
type, depth, and location of the underground deposit and the
geology of the area. Oil and natural gas are often found together in
the same reservoir. The natural gas produced from oil wells is
generally classified as associated-dissolved, meaning that the
natural gas is associated with or dissolved in crude oil. Natural gas
production absent any association with crude oil is classified as
“non-associated.”
Characteristics of Natural Gas

The following are the characteristics of Natural gas:
Physical Properties
Natural Gas is gaseous at any temperature over –161°C (258°F).
Since that is a very cold temperature, we normally consider
natural gas as a gas. Natural gas boils at atmospheric pressure
and a temperature of –161°C, exactly like water turns into a
vapour (steam) at +1000C. Natural gas is handled in a wide range
of operating conditions – as a liquid below -161°C (LNG) and also
as compressed gas at 200 Bar (3,000 psi) for automobile (CNG).
118
In its pure state, natural gas is odourless, colourless, and tasteless.
Notes
For safety reasons, however, an odorant called Mercaptan is added,
___________________
so that any leak can be easily detected because of the typical smell.
___________________
Concept of Volume and Weight
___________________
z The volume of natural gas is measured in cubic meters (M3) or
___________________
cubic feet (cu.ft. or cft).
___________________
z Its flow in M3/hr or cu.ft./hr or cfh at operating condition.
___________________
z The production figures are normally given in Standard Cubic
___________________
Meters per Day (SCMD) or Standard Cubic Feet per Day
___________________ (SCFD).
___________________ z Since the quantity of gas per unit volume is highly sensitive to
___________________ pressure and temperature of the gas, the volumetric capacity
is always referred to a standard reference temperature and
pressure. In metric unit 1 SCMD means 1 cubic meter of gas at
a standard condition of 0°C and 1 atmosphere pressure.
Similarly 1 SCFD means 1 cubic foot of gas at 60°F and 1
atmosphere pressure.
z One SCMD equals 37.8 SCFD.
z One cubic meter (SM3) of natural gas weighs roughly 0.8 Kg.
Comparatively one M3 of oil weighs about 800 Kg.
z Because of large volume the gas occupies, its transportation is
more expensive than oil for equivalent weight.
z For transportation across the seas, Natural gas is condensed to
LNG and put into marine tankers. This reduces the volume
more than 600 times.
z That means 600 cubic meters (M3) of gas (which is roughly 480
Kg) is made into 1 cubic meter of LNG.
The Composition of Natural Gas

The composition of natural gas varies widely from one field to the
other. The main constituents of natural gas are the lightest
hydrocarbons i.e. Methane, ethane, propane, butane, and traces of
heavier components like pentane. However, methane is generally
the largest component. Methane is normally between 85% to 95%
of the total volume. Other components like nitrogen, carbon
dioxide, oxygen, hydrogen sulfide and traces of other gases can be
present.
119
Hydrogen sulfide (H2S) and carbon dioxide (CO2) are often present
Notes
in the gas. CO2 is corrosive to the pipeline and equipment in
___________________
presence of water. H2S is both corrosive and very toxic (hazardous
to health). ___________________
___________________
Important Physical Properties of Natural Gas
___________________
Calorific value of a hydrocarbon is measure of heat released by
___________________
burning unit volume or weight of the hydrocarbon. Heavier the
gas, lower is the calorific value per unit weight of the gas and ___________________
higher the calorific value per unit volume of the gas. ___________________
Specific gravity of a gas is defined as the weight of a given volume ___________________

of the gas compared to the weight of the same amount of air at the ___________________
same temperature and pressure, where air weight is taken as
___________________
reference (= 1).
z Specific gravity of air = 1.00
z Specific gravity of methane = 0.55
z Specific gravity of natural gas = typically 0.60
z Specific gravity of propane = 1.56
z Specific gravity of butane = 2.00
This means that natural gas being lighter than air will rise if
escaping, thus dissipating from the site of a leak. This important
characteristic makes natural gas safer than most fuels.
Natural gas does not contain any toxic component; therefore there
is no health hazard in handling of the fuel. Heavy concentrations,
however, can cause drowsiness and eventual suffocation.
Chemical Properties
The air-to-fuel ratio (AFR) indicates the amount of air relative to
the amount of fuel used in combustion. The minimum amount of
air relative to fuel for complete combustion is called the
stoichiometric ratio. The stoichiometric ratio for natural gas (and
most gaseous fuels) is normally indicated by volume. The air to
natural gas (stoichiometric) ratio by volume for complete
combustion is 9.5:1 to 10:1. This ratio is approximate only because
of the variations in fuel composition.
The Lower Explosive Limit (LEL) and the Upper Explosive Limit
(UEL) determine the range of lammability. For natural gas, the
120 LEL is 4%, while the UEL is 14%. It means that a natural gas
Notes
Activity mixture ignites within a range of 25:1 to 7:1 air-to-fuel ratio by
Make a chart on the process
___________________ volume. By comparison, a propane mixture ignites within a range
of Gas Processing. 2% LEL to 10% UEL. It means a gas leaner or richer outside the
___________________
explosive limits is not explosive.
___________________
Natural gas has a very high octane number, approximately 130. By
___________________
comparison, propane is approximately 105 and gasoline 92 to 94 at
___________________ best. This means that a higher compression ratio engine can be
___________________ used with natural gas than gasoline. Indeed, many racing cars use
the high octane rating of natural gas to give them more power.
___________________
___________________ Processing and Utilization

___________________ At the oil/gas fields, a number of processing steps are put in place
___________________ before the gas is sent to the consumer. These include:
z separation to remove liquids (oil or condensate), and water
z dehydration to minimize moisture
z compression to meet destination pressure and
z if necessary Sweetening to remove Hydrogen sulfide and
Carbon dioxide
The transportation of natural gas is normally done by long
distance cross-country pipeline. When the cost of laying a pipeline
is prohibitive or it is not practicable due to technical, socio-political
or any other reason, gas is liquefied as LNG and transported over
the high seas by LNG tankers.
The further processing of gas for its utilization and valorization is
described in this section.
Check Your Progress

Fill in the blanks:
1. Natural gas is gaseous at any temperature over
………………………… °C.
2. The volume of natural gas is measured in ………………
or cubic feet.
Overview of Gas Processing

In this we will get a basic overview of Gas processing.
Why Gas Processing 121

Notes
The purpose of gas processing operation is three fold:
___________________
z Removal of impurities like moisture, hydrogen sulfide, carbon
dioxide etc. to make it suitable for transportation and ___________________
consumer acceptability. ___________________
z Liquefaction and recovery of hydrocarbon components like ___________________

ethane, propane, LPG, generally by low temperature
___________________
refrigeration or cryogenic processes. These go as feedstock for
___________________
petrochemical manufacture.
___________________
z Liquefaction of the entire gas to LNG under cryogenic
temperatures (–160°C) for transportation purposes. ___________________
A gas processing plant may be built to meet one or more of the ___________________
above objectives. Now let us get an overview of the gas processing ___________________
facilities in terms of block diagrams.
Removal of Impurities
The main impurities present in the gas are moisture, carbon
dioxide, hydrogen sulfide, nitrogen, mercury.
Some of these need to be removed totally (to a few ppm level),
while some need to be brought down in concentration.
Gas Dehydration: The gas need to be dehydrated because:
z Moisture causes corrosion in the pipeline particularly when
carbon dioxide or hydrogen sulfides are present. Also any
condensation reduces pipeline efficiency.
z Natural gas forms hydrates during low temperature gas
processing operations. As explained earlier, hydrates tend to
choke or block the equipment.
Gas Sweetening: Removal of carbon dioxide and hydrogen sulfide
from gas is called gas sweetening. Gas bearing hydrogen sulfide is
called acid gas.
Why carbon dioxide need to be removed:
z Carbon dioxide corrodes pipeline and equipment
z It forms ice during cryogenic processing
Why hydrogen sulfide need to be removed:
z It is very toxic
z It is highly corrosive
122
Mercury removal: In some of the gas fields, the gases carry
Notes
mercury. Removal of mercury is necessary as it damages the steel
___________________
equipment in gas processing.
___________________
Recovery of Hydrocarbons
___________________
The objective is to recover hydrocarbons like ethane, propane,
___________________
butane by condensing them at very low temperatures and then
___________________ purifying by fractionation. The word ‘cryogenic’ is used for low
___________________ temperature processing.
___________________ The operating conditions for recovery of the hydrocarbons in gas
___________________ are:
___________________ z Recovery of NGL : +5 to 10°C at high pressure
___________________ z Recovery of LPG : -35 to -45°C at 12 Kg/cm2

z Recovery of Ethane : -65 to -75°C at 30 to 40 Kg/cm2.
Liquefaction of Gas
For liquefaction of gas for transportation purpose (LNG),
temperature below –160°C is required at atmospheric pressure.
During liquefaction normally LPG and ethane are recovered when
temperature levels mentioned above are reached. The remaining
bulk of the gas, mainly methane, is transported as LNG. As
mentioned later, LNG by itself is a large and complex industry.
There could be processing at lower temperatures for helium
recovery or nitrogen rejection for gases containing high amount of
nitrogen.
Essentially to recover any component, the gas needs to be chilled to
a temperature at which the component will condense.
The flow diagram and brief description of the processes are given
later.
An overall block diagram of the processing steps in a gas
processing plant is given in Figure 11.1.
Gas received from pipeline often comes along with ‘slugs’ of liquid
(NGL). This is trapped in ‘Slug catcher’. The liquids are separated
in the slug catcher. The gas is first sweetened to remove H2S (if it
is a sour gas). Some amount of carbon dioxide also gets removed
along with H2S. Normally H2S is not allowed to be discharged into
the atmosphere. It is converted to sulfur in a sulfur recovery plant.
Sulfur comes out as a by-product.
123
Gas is then compressed to the desired pressure and dehydrated to
Notes
bone dry (below 1 ppm water) state for cryogenic processing.
Presence of moisture in the gas can create hydrate formation. ___________________
If cryogenic processing is not done, dehydration requirement is still ___________________
there, but less severe.
___________________
Cryogenic processing of the gas is then carried out for separation of
___________________
the hydrocarbons into:
___________________
z LPG for use as domestic fuel
___________________
z NGL for sale to refinery or petrochemical plant
___________________
z Ethane/propane mix as feedstock for petrochemical plant
___________________
z Methane is used to generate power or make fertilizers and ___________________
other chemicals.
___________________
There are two possible ways the methane rich gas after recovery of
heavy hydrocarbons is transported to the user:
z Through pipeline
z Converting the gas to LNG and exporting by marine tankers
Figure 11.1: Gas Processing
If LNG is to be made, a deeper cryogenic process will be needed to

bring the temperature of the gas to –160°C. LNG is normally
exported after recovering the LPG out of the gas.
Part or whole of the gas can be sent by pipeline to the consumers if
transportation by pipeline is feasible. Before sending to the
pipeline, the gas is chilled to the lowest temperature it will face in
its route to the destination. This helps to drop out and separate the
124 NGL or condensate which would otherwise drop off in the pipeline
Notes
Activity as liquids, reducing pipeline efficiency and capacity to transport
Find___________________
out using the Internet the gas.
why Dry bed processes are
more___________________
difficult to operate This process of chilling the gas to moderately low temperatures to
compared to the Glycol
___________________ prevent further condensation in the pipeline is called Dew Point
Dehydration process. Depression or Dew Point Control. Literally, it means processing to
___________________
prevent formation of hydrocarbon dews in the pipeline due to
___________________ cooling.
___________________ Condensates from various units of gas processing plant (C5+
___________________ components) are passed through separators to drop the pressure
___________________
and stabilize it. Condensate is sold to a refinery or a petrochemical
feedstock. The refineries distill it as blending stock for gasoline
___________________
and kerosene.
___________________
Condensate could be a good feedstock for the petrochemical plant
also for
z cracking to olefins and
z polymerization of the olefins to plastics.
Thus gas processing plant essentially prepares the feedstock for
further processing at refinery and petrochemical plants.
Check Your Progress

Fill in the blanks:
1. The word ……………… is used for low temperature
processing.
2. The process of chilling the gas to moderately low
temperatures to prevent further condensation in the
pipeline is called ……………… .
Process Description
This section talks about the process of Gas processing.
Gas Dehydration
There are two types of gas dehydration processes:
Adsorption Processes: These are solid bed processes using
reagents like Molecular Sieve or Alumina as adsorbents.
Absorption Processes: These use liquid absorbents which absorb
the moisture from the gas.
125
Normally Absorption Process using liquid absorbents is used in the
Notes
oilfield dehydration of natural gas. In the oil/gas field gas is
saturated with water vapour. To prevent corrosion in the pipeline ___________________
caused by moisture in presence of other contaminants like carbon ___________________
dioxide, the gas need to be dried to a level of moisture content of ___________________

7 lbs/Million Standard Cubic Feet (about 120 ppm). This is ___________________
suitably achieved by Absorption Process using Glycols as the
___________________
reagent for absorbing moisture from gas. Normally Tri-Ethylene
___________________
Glycol (TEG) is used as the reagent. A flow diagram of the process
is given in Figure 11.2. ___________________
___________________
___________________
___________________
Figure 11.2: Gas Dehydration Using TEG (Glycol Dehydration)
Wet natural gas is introduced in the Absorber (also called

Contactor) at the bottom and goes up through contactor plates in
the column. It contacts lean glycol solution fed at the top of the
column and travelling down the column. The moisture from the gas
is absorbed by the glycol and the dry gas leaves the absorber for
further processing. The rich glycol (glycol with absorbed water) is
drawn from the bottom.
The rich glycol (glycol plus water) is then regenerated in a

stripping column at near atmospheric pressure using heat to boil
off the moisture at around 200°C.
The absorption column operates at high pressure (at pressure of

the gas) in the range of 30 ata to 70 ata while the stripper is
126 operated at near about atmospheric pressure. There is a heat

Notes exchange between rich glycol and hot regenerated lean glycol
___________________ which reduces the energy requirement in the stripper and cools the
___________________ lean glycol before it is recirculated to the absorber.
___________________ The dry bed processes are not normally used in offshore or onshore
___________________ oilfield due to more complexity of operation and solid handling
___________________
requirement.
___________________ Dry bed processes using molecular sieve granules as drying agent
is used to make the gas bone dry (below 1 ppm moisture) before
___________________
processing at low temperatures.
___________________
Molecular sieves are zeolite granules manufactured under
___________________
controlled conditions to create microscopic pores at its surface.
___________________
These pores have affinity for water molecules and moisture gets
into the surface of the molecular sieve at its pores. This process is
called adsorption.
Complete drying of the gas is necessary because at low sub-zero

temperatures, under the pressure of gas, the slightest presence of
moisture in the gas can create hydrate formation.
Hydrates are snow like compounds of hydrocarbons and water (e.g.

methane hydrate) which choke the equipment and piping during
low temperature processing of gas. Once that happens, the
hydrates have to be disintegrated by injecting small dozes of
methanol into the equipment.
Normally two dryers containing beds of molecular sieve are used.

One of the dryers is used for drying and the other is meanwhile
regenerated by removing absorbed water from the molecular sieve
bed by heating Figure 11.3. The dryers are alternately switched
over from drying mode to regeneration mode.
For regeneration, normally dry natural gas heated in a fired heater

is passed through the bed of the dryer.
Dry bed processes are more difficult to operate compared to the

Glycol Dehydration process.
127
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 11.3: Dry Bed Gas Dehydration
___________________
Normally in oilfields offshore and onshore, where specification of
gas for transportation by pipeline is not as stringent, Glycol
Dehydration units are used.
Gas Sweetening
Hydrogen sulfide, carbon dioxide and mercaptans can be removed
from natural gas by several processes. The various processes for
sweetening used are:
z Amine as absorbents (shown here) utilizing mono
ethanolamine (MEA), diethanolamine (DEA), DGA.
z MDEA (methyl diethanolamine) and MDEA based proprietary
amines (for all three – effectiveness varies for Mercaptans) as
absorbents.
z Molecular Sieves (removes H2S and mercaptans only)
z Batch processes such as Iron Sponge, Sulfa Check and

z Sweet (for H2S removal)
z Physical solvents such as Sulfinol and Ifpexol

z Membrane process to remove H2S
The choice of sweetening process depends a number of factors such

as:
z Hydrogen sulfide and carbon dioxide content
z Specification of treated gas
128
z Temperature and pressure of gas
Notes
___________________
z Volume of gas
___________________ z Requirement of converting the hydrogen sulfide to sulfur
___________________ Gas sweetening using an amine solution is among the most widely
used method. Figure 11.4 represents a simple amine treating
___________________
facility. Sour gas is introduced in the absorber at the bottom and
___________________
goes up through contactor plates in the column. It contacts lean
___________________ amine solution (amine solution of high concentration, free of H2S
___________________ and CO2) fed at the top of the column and traveling down the
___________________ column.
___________________ The acid gas components, H2S and CO2, are absorbed by the amine
___________________ solution and the sweet gas leaves the absorber for further
processing. The rich amine (amine with dissolved hydrogen sulfide
and carbon dioxide) is drawn from the bottom.
The absorption column operates at high pressure (at pressure of
the gas) in the range of 30 ata to 70 ata while the stripper is
operated at closer to atmospheric pressure. The temperature at the
absorption column is close to the ambient temperature (30-40°C).
Figure 11.4: Amine Sweetening Process
The rich amine is sent to a flash tank to drop the pressure and
absorbed hydrocarbons exit as the flash-tank vapour. The rich
amine flows through the lean/rich amine heat exchanger
increasing the temperature to above 100°C.
Fine particles, resulting from wear and tear of the piping and other
equipment, collect in the amine solution, which ultimately lead to
blocking and foam generation in the column. So there is a amine
filtration step before the regeneration in the stripping column.
129
The rich amine (amine with dissolved hydrogen sulfide and carbon
Notes
dioxide) is separated (regenerated) in a later step using steam in
the stripping column. From the top of the regeneration column ___________________
mainly hydrogen sulfide and carbon dioxide mixture with a little ___________________
quantity of hydrocarbons absorbed by the amine come out.
___________________
The hot rich amine is stripped at low pressure removing the
___________________
absorbed acid gases, dissolved hydrocarbons, and some water.
___________________
Considerable amount of energy is required to strip the amine. Heat
is supplied by a firetube type reboiler. The temperature at the ___________________
bottom of the stripping column can be over 200°C. ___________________
The stripped or lean amine is sent back through the lean/rich ___________________
exchanger decreasing its temperature. A pump boosts the pressure
___________________
such that it is greater than the absorber column. Finally, a heat
___________________
exchanger cools the lean solution before entering the absorber. The
lean amine entering the absorber is usually 40 to 45°C.
Liquefaction and Recovery of Hydrocarbon

The objective is to recover hydrocarbons like ethane, propane,
butane by condensing them at very low temperatures and then
separating by fractionation. As indicated earlier, the temperature
to which gas need to be chilled depends on what we are trying to
recover. LPG can be recovered by chilling to –15 to –35°C. To make
the gas to LNG, chilling is required below –160°C. Condensation of
part of the gases takes place at these temperatures. Fractionation
of the condensed liquid is carried out to separate the components.
To chill the gas, refrigeration is required. There are three types of
processes:
(i) Processes using refrigeration supplied by external
refrigeration systems to chill the gas. Normally some
component of natural gas itself like ethane or propane is used
as refrigerant using conventional compression refrigeration
equipment.
(ii) Processes using expansion of the gas itself to attain cooling.
Gas chills when its pressure is dropped just as it gets heated
when it is compressed. Turbo-expander process is used to
expand the gas while doing the work of driving a turbine like
equipment called turbo-expander. Thus it attains cooling by
losing its internal energy by expansion as well by driving the
turbo-expander machine.
130
(iii) Processes using a combination of external and internal
Notes
refrigeration.
___________________
A simple conceptual diagram of an external refrigeration process
___________________
for LPG Recovery is depicted in Figure 11.5. The important steps
___________________ in the process are:
___________________ z Natural gas coming from the source at high pressure is first
___________________ dried in molecular sieve dryers.
___________________ z It is then chilled by exchanging heat with the chilled gas
___________________ coming out after LPG Recovery.
___________________ z The gas is further chilled to around –35°C using external

propane refrigeration package.
___________________
z At each of the two stages of chilling there are separators to
___________________
collect the condensed liquids from the gas. At –35°C, almost all
C4 and C5+, most of C3 and some amount of C2 and C1
components condense.
z This liquid need to be fractionated to take the light ends (C1
and C2) out to meet the LPG specifications. LPG and C5
(NGL) are also separated by the fractionation system.
Generally this is done in a series of two fractionating
columns.
Figure 11.5: External Refrigeration Process for LPG Recovery
When C2 also need to be condensed and separated, lower

temperatures (–50 to –60°C) are needed and more than two
fractionation steps may become necessary. The lower temperatures
are obtained by expanding the gas to lower pressures and by using
external ethylene as refrigerant.
Lower temperatures can be achieved by using external ethylene
refrigeration cycle or by Turbo-expander process shown in
Figure 11.6. The diagram actually shows a combination of external 131

refrigeration and turbo-expander. The energy given to the turbo- Notes
expander is used to re-compress the outgoing gas. But due to the ___________________
efficiency factor of turbo-expander process, it can be recompressed
___________________
to a pressure much lower than its original pressure.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 11.6: Turbo-expander Process for LPG Recovery
By an appropriate combination of external refrigeration and turbo-

expander process, very low temperatures can be factors like:
z Pressure of the gas
z Temperature to which the gas need to be chilled and
components to be recovered
z Pressure requirement of the outgoing gas by the customer.
Check Your Progress

Fill in the blanks:
1. ………………….. are solid bed processes using reagents
like Molecular Sieve or Alumina as adsorbents.
2. ………………….. use liquid absorbents which absorb the
moisture from the gas.
Summary
In this unit we learnt about the Physical properties and
characteristics of Natural gas. We also learnt about its Chemical
properties and its composition. The entire process of Gas
Processing is also explained.
132
Lesson End Activity
Notes
Prepare a chart paper to show the entire process of Gas Processing
___________________
with the help of Diagrams.
___________________
___________________
Keywords
___________________
Calorific Value of a Hydrocarbon: It is the measure of heat
___________________ released by burning unit volume or weight of the hydrocarbon.
___________________
Dew Point Depression: It is the process of chilling the gas to
___________________ moderately low temperatures to prevent further condensation in
___________________ the pipeline.
___________________ Adsorption Process: These are solid bed processes using reagents
___________________
Absorption Process: These use liquid absorbents which absorb

1. What is Natural Gas? State its physical and Chemical
properties.
2. What is the purpose of Gas processing?
3. What is Gas sweetening? Explain.
Further Readings
Books
Arthur J. Kidnay, William R. Parrish, Dan McCartney,
Fundamentals of Natural Gas Processing, Second Edition
Dominic C. Y. Foo, Mahmoud M. El-Halwagi, Raymond R. Tan,
Recent Advances in Sustainable Process Design and Optimization
Web Readings
en.wikipedia.org/wiki/Natural-gas_processing
www.linde-india.com/.../Natural%20Gas%20Processing%20
Plants.pd...
www.bv.com/Downloads/Resources/.../rsrc_ENR_Gas
Processing.pdf
ftp://ftp.eia.doe.gov/pub/oil_gas/...gas/.../ngprocess/ngprocess.pdf
UNIT 12: Liquefied Natural Gas (LNG)
Unit 12
133
Notes
Activity
Liquefied Natural Gas (LNG)

With___________________
the help of the Internet,
list the Chemical components
___________________
of LNG.
___________________
Objectives
___________________
topics: ___________________
\ LNG Cycle ___________________

\ Technical aspects of LNG business ___________________
\ Indian Scenario on LNG
___________________
Introduction ___________________
___________________
Natural Gas is a highly desirable energy source: it burns cleanly,
with little pollution, it is often inexpensive to produce and can be
transported easily through pipeline like any other petroleum
product. The demand for natural gas is growing at a fast pace as a
source of energy and petrochemicals.
The LNG Cycle

LNG, or liquefied natural gas, consists mostly of methane and is
cooled to approximately –256 degrees Fahrenheit so that it can be
transported from countries that have more natural gas than they
need to countries that use more natural gas than they produce. In
its liquefied state, natural gas takes up 1/600th of the space,
making it much easier to ship and store when pipeline transport is
not feasible. As world energy consumption increases, experts
anticipate that the LNG trade will grow in importance.
At present, however, the technology does not exist to build long
distance pipelines through the depths of the ocean. So moving
natural gas between continents requires an alternative approach.
Conversion of natural gas to Liquefied Natural Gas (LNG) is a
proven commercial technology for transporting large volumes of
natural gas across oceans by marine tankers. The utility of
liquefying Natural Gas is the substantial volume reduction gained
by liquefaction (1:620). This volume reduction makes the
transportation and storage of the gas much more convenient.
Typical composition and characteristics of LNG is presented in
Table 12.1.
134 Table 12.1: LNG Characteristics

Notes LNG Composition (Typical Mol %)
___________________ N2 → 01.0 %
Methane → 85.1 96.7 % (Lean)
___________________ Ethane → 1.9 8.6 % (Rich)
Propane → 0.68 4.1 %
___________________ i- Butane, nButane Traces
→
Mol. Wt. → 16.8 19.3 (Rich)
___________________
Gross Heating Value → 10.450 Kcal/NM3
___________________ S. G. → 0.455
z Methane in Natural Gas does not liquefy under pressure. To

___________________ make LNG Natural Gas must be liquefied through refrigeration.
___________________ z Becomes liquid at -160 deg C at atmospheric pressure.
z Volume reduces by 620 times when liquefied.

___________________
z Spilled LNG will crack a steel plate like boiling water hitting
___________________ frozen glass.
___________________ LNG Composition (Typical Mol %)

N2 → 01.0 %
Methane → 85.1 96.7 % (Lean)
Ethane → 1.9 8.6 % (Rich)
Propane → 0.68 4.1 %
i- Butane, nButane → Traces
Mol. Wt. → 16.8 19.3 (Rich)
Gross Heating Value → 10.450 Kcal/NM3
S. G. → 0.455
z Methane in Natural Gas does not liquefy under pressure. To

make LNG Natural Gas must be liquefied through refrigeration.
z Becomes liquid at -160 deg C at atmospheric pressure.
z Volume reduces by 620 times when liquefied.
z Spilled LNG will crack a steel plate like boiling water hitting
frozen glass.
The LNG industry is economic when liquefaction and the

transportation of LNG are done in very large volumes (say above 5
Million SCMD and above). This involves a number of major
investment and contractual activities including:
z Liquefaction by the producer of the gas
z Storage facilities at producer end
z Loading in tankers and Transportation
z Receiving/unloading terminal and storage at buyers end
z Re-vaporization of LNG to gas, and
z Distribution to the consumers with a cross country pipeline
network.
135
This is depicted in Figure 12.1 and is known in the industry as the
Notes
LNG Cycle. This was developed for conceptualizing one of the LNG
projects planned with the LNG Receiving terminal planned in the ___________________
eastern coast of India. This would involve buying of LNG from one ___________________
of the South East Asian countries or Australia Fertilizer plant and
___________________
power plant, which are large consumers of gas was proposed to be
installed near the receiving terminal. The balance gas was ___________________
proposed to be transported by pipeline with a northern grid of ___________________

pipeline and a southern grid to various parts of India. The ___________________
magnitude of investment in such a project is very large.
___________________
___________________
___________________
___________________
Figure 12.1: The LNG Cycle
The facilities at the producer end of the cycle is called LNG

upstream and the buyer end is called LNG downstream.
LNG upstream comprises of gas treatment and liquefaction steps
as explained earlier in this section along with LNG loading facility
for loading in marine tankers. This is shown schematically in
Figure 12.2.
The down stream section comprises of unloading from tankers,
storage, pumping, re-vaporization, and transportation by pipeline.
This is shown schematically in Figure 12.3.
136
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________ Figure 12.2: LNG Upstream
___________________
___________________
Figure 12.3: LNG Downstream
Storage of Liquefied Gases

Storage and handling of gases is dealt with in later sections. But it
is important to know at this stage that there are two ways
liquefied gases are stored;
z Pressurized storage where gas is in liquid phase under
pressure at ambient temperatures.
z Cryogenic or low temperature storage (generally at
atmospheric pressure).
LPG is often stored in pressurized containers although it is also
stored under cryogenic conditions. Figure 12.4 shows two types of
pressurized LPG storages – sphere and bullet.
LNG is always stored under cryogenic conditions (below –160°C) at
atmospheric pressures. At such temperatures, steel becomes brittle
like glass. The storages are made of special nickel steel as normal 137
steel becomes brittle at that low temperature. Notes
They are heavily insulated to minimize heat leakage from the ___________________
atmosphere into the tank. They are often double walled with ___________________
concrete outer shells utilized as additional resistance to tank
___________________
damage and as containment in the unlikely event of tank leakage.
This type of tank with containment of leakage is the most costly, ___________________
and has most often been used for the storage of LNG. ___________________
Some leakage of heat does take place from the surrounding ___________________
atmosphere into the storage tanks. There is some amount of liquid ___________________
vaporization and boil-off. The vapours are compressed, condensed
___________________
by refrigeration and put back into the tank.
___________________
The tankers carrying LNG also have spherical domed storage
___________________
tanks along with refrigeration system for boil-off vapours.
LNG tanks could be on ground or mounded under earth. Figure
12.5 depicts an LNG receiving terminal with an LNG tanker, jetty
and LNG storage facility.
The LNG tankers can have a carrying capacity from 20,000 cubic
metres to 135,000 cubic metres. A large LNG storage tank can be
holding around 100,000 cubic meters of LNG. For this capacity, the
tank would be about 70 meters in diameter. Japan is the world’s
largest importer of LNG and imports 94% of its gas as LNG.
Figure 12.4: LPG Storage
Figure 12.5: LNG Receiving Terminal

138
LNG Project Economics
Notes
Basic gas price at source for LNG facilities are relatively cheap,
___________________
based on large and easily produced reserves. Processing
___________________ (Liquefaction) and transportation equipment is capital intensive
___________________ and highly specialized, requiring large investment for each new
___________________
facility. For each million cubic feet of gas delivered to end use, less
than 30 percent of the cost is associated with the raw material
___________________
price (gas price at source). The balance is the cost associated with
___________________ processing and transportation.
___________________ Liquefaction is a very energy-intensive process. Typically, about
___________________ 8 to 9 percent of the natural gas delivered as raw material at an
___________________
LNG plant, is used as plant fuel for liquefaction. The number of
tankers required is a function of the distance between the export
___________________
terminal and the import terminal and the number of days it takes
to move between the source of gas and destination. The unit cost of
marine transport is primarily a function of the capital cost of the
tanker, distance, the financing terms and acceptable rate of return
for the tanker owners.
Complexity of an LNG Project

The complexity of an LNG project is due to:
z Sheer size of the project. Liquefaction, transportation and

re-vaporization of LNG can be economic at a very large
capacity, at least 5 to 10 Million SCMD. This requires
investment on billions of Dollars.
z Large number of ‘operations blocks’ or projects of diverse

technologies need to be developed simultaneously, integrated
and planned together. For example Liquefaction plant,
Loading facilities, Unloading facilities and re-vaporization
facility along with large consumers have to come up
simultaneously.
z Numerous locations covering countries and states.
z Numerous agencies, consumers involved.
z Market Development for the LNG by the buyer.
z Strong technology base and support required.
z Numerous contract negotiations.

139
z Long-term Contract between LNG supplier and buyer.
Notes
Activity
Long-term Contract between LNG buyer and transporter.
Do ___________________
further research on the
Long-term Contracts between LNG buyer and LNG users reason for the large gap
___________________
between demand and supply
like Power Plant, Fertilizer Plant, etc.
of gas in India.
___________________
Because of enormous effort required on planning and development
___________________
of the project and numerous contracting involved, the gestation
period of an LNG based grass-roots project is normally quite long ___________________
(4 to 6 years). ___________________
Due to the immense costs of each link in an LNG cycle, such ___________________
projects can be undertaken only by large organizations with great
___________________
financial capacity and project management skills. A successful
___________________
project requires cooperation and selling of the idea to:
___________________
z The government of the country having gas source
z The company that owns the natural gas
z The government in the consuming country
z Consuming organizations
z Financiers
Check Your Progress

Fill in the blanks:
1. LPG is often stored in ………………… containers.
2. The utility of liquefying Natural Gas is the substantial
………………… gained by liquefaction.
The Indian Scenario

If we consider the Indian scene with respect to LNG, we can see:
Recovery of LPG and Petrochemical Feedstock

Gas processing facilities in India started with the commissioning of
ONGC’s Uran gas processing facilities. This was based on gas from
Mumbai High as feedstock, Uran at Maharashtra being the first
onshore terminal. Later Uran was expanded to more than double
the capacity and ethane along with propane was recovered from
the gas to provide feedstock for a petrochemical complex
(Maharashtra Gas Cracker Complex at Nagothane). Later with a
bigger gas processing terminal at Hazira, ONGC became a major
140 producer of LPG. Currently ONGC is producing over 1.2 million

Notes tons per year of LPG. ONGC produces close to 1 million tonnes of
___________________ LPG at its Uran and Hazira terminals.
___________________ Another major player emerged once Gas Authority of India Ltd
___________________ (GAIL) was formed to transport and distribute the gas. Currently
GAIL has extensive network of gas pipeline gas processing
___________________
complexes to produce LPG, and one to produce propane as
___________________ feedstock for a petrochemical complex. It also own a petrochemical
___________________ complex based on feedstock it generates from its own gas.
___________________
LNG Facility
___________________
There is a large gap between demand and supply of gas in India.
___________________ In the nineties ambitious plans were drawn out by the government
___________________ as well as private sector Indian and Multinational companies to
import LNG and build LNG terminals in India. The government
facilitated formation of Petronet LNG Ltd. in the public sector to
lead the drive to import LNG and boost gas supply in the country.
Most of the plans have not materialized.
As stated earlier, the success of LNG projects depends on a number
of factors: reliable and continuous supply of LNG in large volumes,
constant technological support, reliable long-term market demand
and ability to finance. Many of the companies who intended to
enter into the LNG business, has got into such detailed planning.
As a result, most of the LNG projects planned have failed to take
off.
The first LNG terminal in India was built by Enron for its Dabhol
power plant.
The next LNG projects that are likely to see the light of the day are
the projects of Petronet LNG and Shell. Petronet LNG project at
Dahej is ahead of another LNG project being implemented by Shell
at Hazira.
Dahej LNG import terminal was also completed and Five million
tonne gas (20 million metric standard cubic metres) are supplied to
users along HBJ Pipeline.
The large discovery of gas in 2002 off Andhra Coast by Reliance
and ONGC’s discovery at Vasai and near Surat are expected to
give further boost to the gas supply and gas processing industry.
It should be noted that India being LNG importing country, the
LNG facilities planned fall under the category of LNG upstream.
For the import of LNG, the long-term tie-ups are with producers in 141
the Middle East. Notes
___________________
Check Your Progress
___________________
Fill in the blanks:
___________________
1. …………………… was formed to transport and
___________________
distribute Natural gas.
___________________
2. The first LNG terminal in India was built by Enron for
its …………………… power plant. ___________________
___________________
Summary ___________________
Basic properties and characteristics of natural gas was described ___________________

in the beginning. ___________________
This was followed by highlighting the need or objectives of
processing natural gas – namely – removal of impurities and
separation of the components of gas. Various processes used in gas
purification was described with simple flow diagram. The
importance of gas dehydration and gas sweetening was
highlighted.
Liquefaction of the gas to LNG and separation of various
components of gas were described with simple flow diagrams.
Various methods of getting low temperatures for condensation of
gas was described.
Lesson End Activity

Prepare an assignment on the approximate levels of temperature
required to recover ethane, LPG from natural gas. How these
temperatures are obtained. Prepare a chart to describe a low
temperature LPG Recovery process with flow diagram.
Keywords
Calorific Value: Calorific Value of a hydrocarbon is measure of
heat released by burning unit volume or weight of the
hydrocarbon.
Specific Gravity of a Gas: Specific Gravity of a Gas is defined as
the weight of a given volume of the gas compared to the weight of
the same amount of air at the same temperature and pressure,
where air weight is taken as reference (= 1).
142
Notes
from gas is called gas sweetening.
___________________
Adsorption Processes: These are solid bed processes using
___________________
reagents like Molecular Sieve or Alumina as adsorbents.
___________________
Absorption Processes: These use liquid absorbents which absorb
___________________ the moisture from the gas.
___________________
Molecular Sieves: These are zeolite granules manufactured
___________________ under controlled conditions to create microscopic pores at its
___________________ surface.
___________________
___________________
___________________
1. What are the objectives of gas processing? Name the various
gas treatment or purification processes.
2. Write down a brief description of gas dehydration process with
simple flow diagram.
3. What do you understand by an LNG Cycle? Describe with a
schematic diagram.
4. Describe upstream and downstream of LNG facility.
Further Readings
Books
Web Readings
www.linde-india.com/.../Natural%20Gas%20Processing%20
Plants.pd...
Processing.pdf
UNIT 13: Petroleum Refining
Unit 13
143
Notes
Activity
Petroleum Refining
Do ___________________
further research on
Naphtha and its different uses.
___________________
___________________
Objectives
___________________
topics: ___________________
\ Important specifications of petroleum products and their significance ___________________

\ Refinery process configurations used to meet the specifications and ___________________
market demand
\ Basic process schematics of important processes used in a refinery ___________________
\ Infrastructure requirement and broad economics of refinery operation ___________________
___________________
Introduction
What does a petroleum refinery do? Why do we need refining?
These are some of the questions that this unit will try to answer. It
will also trace the history of development of the various processes
in the refining industry.
Why Refining
In a nutshell the main functions of a refinery are:
Primary Separation: Crude oil is a mixture of around 500
components. They need to be separated into useful products. The
separation is not done to recover individual components but as
products which are mixtures of suitable boiling ranges. This is
done by distillation, where various cuts or fractions are taken out
as gasoline, kerosene, diesel etc. which are essentially raw
material or intermediate products.
Processing to Meet Quality Specifications: Typical examples of
this type of processes are those used for improvement of octane
number to meet gasoline specification. Raw gasoline cut or
naphtha as it comes out of distillation has low octane number (may
be around 40 to 60 ON). But for the market we need octane
numbers of 87 and above. Processes are used to improve the octane
number by converting the low octane components of gasoline to
high octane components. For example, Catalytic Reforming process
converts straight chain paraffin in the raw gasoline to aromatics
144 which have high octane number. Similarly isomerisation process

Notes converts normal paraffin components of naphtha to iso-paraffins
___________________ which have higher octane number.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 13.1: Refinery under Construction
Processing to Meet Environment Related Specifications: The

most common processes of this type revolve around removal of
sulfur. Typical process units are Hydro-desulfurization of kerosene
and diesel oil to meet the sulfur related specifications in the
product.
Conversion of Residual Products: The residues or heavy cuts
from the distillation or other process units of a refinery can not be
used as value added product like gasoline or diesel. Molecules of
such stocks are broken into lighter molecules to get products like
diesel or gasoline by conversion processes called cracking.
Figure 13.2: Refinery Complex from Different Angles

Finishing and Blending Operations: This step involves getting 145
the product in finished form by treatment to get good marketable Notes

Activity
colour, blending with intermediate products from the refinery, Using the Internet, find out
___________________
putting additive to enhance certain properties. more information about the
___________________
Indian Standards Institute (ISI)
and its functions.
Check Your Progress ___________________
Fill in the blanks: ___________________
1. Molecules of residual products of refineries are broken ___________________
into lighter molecules to get products like diesel or ___________________

gasoline by conversion processes called ………………… .
___________________
2. Raw gasoline cut or naphtha as it comes out of ___________________
distillation has a low ………………… number.
___________________
___________________
Product Specifications
The product specifications for products to be refined in a refinery
are as follows:
Quality Related Specifications

Since most of the operations in the refinery are to meet certain
specification of products, it is necessary to know of certain
important specifications and their significance. Normally each
country has its own institutions to define the standards and
specifications. There are several items of specifications for each
product. The more important heads are stated below. The detailed
specification of some of the products as per Indian Standards
Institution (ISI) is given in the Annexure. There are standard
laboratory procedures and methods under controlled conditions to
measure these specifications for a product.
Table 13.1: Important Specifications for Main

Refinery Products
146
Vapour Pressure: It is a very important property of LPG for
Notes
safety and handling, particularly as it is handled at home as
___________________
cooking gas. It restricts maximum pressure a cylinder can develop
___________________ and helps to set the design pressure for the cylinder. Propane
___________________ being more volatile of the other constituent (butane) of LPG, it can
___________________ develop more pressure and hence its content in LPG is limited by
___________________
specification.
___________________ Flash Point: It is the minimum temperature at which the product

generates enough vapour to form an explosive mixture with air.
___________________
___________________ Flash point is significant to the safety during storage. During

storage it can form explosive mixture in the empty part of the tank
___________________
above the liquid surface. It is preferable to store a product below
___________________
its flash point. Each country has its own specification of flash point
depending upon the climatic conditions of the country.
Octane Number (ON or O.N.): This signifies ignition quality of

the gasoline in automobile engines. The engine has cylinders with
pistons where the fuel (gasoline) and air mixture is injected. The
cylinders of an automobile pass through a cycle of expansion,
compression and ignition for movement of the pistons, which drive
the wheels through a crankshaft. For optimum delivery of power to
the engine, the fuel air mixture injected to the engine should ignite
at the right timing. Due to heat of compression, the temperature in
the cylinder goes high and there could be mistimed ignition of the
fuel due to the heat generated by compression. A high octane
gasoline is better for ignition. A mistimed ignition creates knocking
in the engine and this results in loss of power.
The different hydrocarbon content in gasoline (like in crude oil)

are: straight chain paraffin, isoparaffins, naphthenes and
aromatics. Normally for the same carbon number and size of the
molecule straight chain paraffins have the lowest octane number.
Branched chain paraffins (isomers) and naphthenes have the
higher octane number. Olefins also have high octane number but
they are undesirable in gasoline because they tend to polymerize to
form resins or gum in the tank.
Typical octane number of various constituents is given in the

table 13.2.
Table 13.2: Octane Number of Some Hydrocarbons 147

Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Octane Number (ON) is defined as the percent volume of ___________________

iso-octane in a mixture of iso-octane and normal heptane that gives ___________________
the same knocking as that of the fuel when tested under defined
conditions.
Iso-octane is assigned a value of 100 and normal heptane is given
the value of zero. Other octane numbers emerge as relative
ignition quality or antiknock quality of the component.
Aromatics: Although it has high ON, its content in gasoline is
being limited by specification due to its carcinogenic nature.
Pour Point: When heavy petroleum products like fuel oil or diesel
containing wax are cooled to certain temperatures, the wax
separates out from them making the oil immobile. It becomes
difficult to move or pump the oil. The temperature at which the oil
becomes immobile is termed as pour point. It happens because
separated wax forms honeycomb like structures.
High wax crude oils like Mumbai High have high pour point (30 to
35OC). Many of the South East Asian crude oils have high pour
point.
Boiling Range: The volatility of oil is indicated by its boiling
range and distillation characteristics. The oil should have suitable
boiling range (volatility) so that it can be used in a particular
application. For example, Motor Gasoline has certain boiling range
specifications.
In case of naphtha, a specific boiling range is chosen for use as
feedstock for petrochemical plant. For example aromatics like
Benzene, Toluene and Xylene are good feedstock for petrochemical
148 manufacture. A boiling range of naphtha is chosen where

Notes concentration of these components will be high.
___________________ Smoke Point: It is the length of flame in a standard laboratory
___________________ test, which produces smoke. It is an important property of
___________________
kerosene. Smoke point depends on the type of hydrocarbon
constituents of the fuel. Paraffins have high smoke points followed
___________________
by naphthenes and then by aromatics. Higher smoke point means
___________________ less smoky.
___________________ Cetane Number: While the octane number indicates ignition
___________________ quality of engines using spark ignition (gasoline fuelled cars), this
test is applicable to diesel fuels which use ignition by compression.
___________________
___________________
Cetane number is defined as the percent by volume of n-cetane in a
mixture of n-cetane and alpha methyl naphthalene that would give
___________________
the same ignition quality and engine performance as that of the
fuel under test.
This test has reverse characteristics of octane number, which gives
low value to fuels which self ignite easily. Unlike octane number,
normal paraffins have higher cetane number followed by
naphthenes, iso-paraffins, olefins and aromatics.
Sulphur: Sulphur is corrosive to the fuel systems and also is a
pollutant to the environment. The specifications on sulfur content
in petroleum products are becoming more and more stringent
world wide. Sulphur specification is applicable to all products.
Considerable investments are taking place every year in the
refineries to improve sulfur related specifications.
Viscosity: Viscosity is the resistance to flow. It indicates
pumpability of the product. Viscosity is an important property for
lube oils because higher viscosity is required to prevent wear and
tear in the moving parts of a machine. For fuel oils, it gives flow
properties which are needed for pump selection for transporting.
Viscosity is measured in several ways. The most common units are
centi-stokes (cst), centi-poise (cp) and SSU (Saybolt Seconds Unit).
Viscosity Index: This specification signifies change of viscosity
with temperature. This is an important specification for
Lubricating oils. In the machinery, friction generates heat. For any
petroleum product, viscosity is lower as the temperature increases.
The lube oil viscosity should not go down too much with heating as
it will lose its lubricating property. Higher the Viscosity Index less
is the effect of temperature on viscosity.
149
Carbon Residue: Fuel as it burns, forms a carbon deposit. This
Notes
carbon deposits on burner tips or cylinders reduces efficiency. Activity
Carbon residue test gives an indication of the amount of carbon Chart out the evolution of the
___________________
Refinery industry.
that would form when the oil is cracked and burned. ___________________
There are several other specifications like colour, copper corrosion ___________________
test, bromine number etc. all of which have some significance on
___________________
the quality of the products.
___________________
More details about the specifications are given in the annexure at
___________________
the end of this volume.
___________________
Fill in the blanks:
___________________
1. …………………. test gives an indication of the amount of ___________________
carbon that would form when the oil is cracked and
burned.
2. Viscosity is the …………………. to flow.
Refinery Processes Overview and History
Types of Processes
Refining comprises of four types of processes:
z Primary Separation: The first step in refinery is
atmospheric and vacuum distillation of crude oil. Various
product cuts or fractions like LPG and gasoline come out of the
top of distillation column. The medium heavy liquids like
kerosene, ATF and diesel come out next in the lower part of
the column. The residue left is vacuum distilled to separate
heavier liquids, called gas oils. These products do not meet
the specifications. To meet the specifications they require
further processing. For example some of the gas oil from
vacuum distillation form base stock to make lubricating oil for
further processing. Other products are also treated to meet
certain specifications. For acceptance as high-value products,
such as gasoline, much more additional processing is required
as given below.
z Conversion Processes: Conversion processes are essentially
breaking and rearranging of the molecules of the intermediate
products to convert them to high value products meeting
specification. We can put such processes in two sub-groups:
150
(a) Product upgradation: Certain products like gasoline are
Notes
processed to meet octane number or other specifications.
___________________ Examples of such processes are catalytic reforming,
___________________ isomerisation, etc. These processes are essentially
restructuring of molecules to improve the specifications.
___________________
(b) Conversion of heavy residues to light products: This is
___________________
done by cracking of the large heavy molecules into smaller
___________________ and lighter molecules under high temperature, and
___________________ pressure with or without a catalyst. The cracking
processes covert residues and heavy gas oils to light
___________________
products like gasoline, kerosene and diesel resulting in
___________________ value addition.
___________________
z Treatment Processes: To meet environment related
___________________ specifications and for giving finish to the products further
treatments are required. This is the final step before the
products are tested to meet quality and dispatched by tanker or
pipeline to the market. Examples of such processes are Hydro-
desulfurization of distillation products to remove sulfur,
sweetening of gasoline to remove traces of sulfides, Hydro-
finishing of lube oil to give right colour with mild
hydrogenation.
z Processing for Lube Oils: Processes to remove wax, asphalt
etc. from the lube oil base stocks to meet the quality
requirement of lubricants.
Processes for making lube oil is made into a distinct category
because lubricating oils can not be produced from all types of crude
oils. When a crude oil is suitable for producing lubricating oil,
specific cuts called lube oil base stocks are distilled during primary
separation step and passes through a series of processes to make
lube oil.
A common terminology used for a refinery, which does not produce
lube oils, is Fuels Refinery. One which produces lube oil is called
Lube Refinery.
History
Let us trace the history of development of the various processes in
the refining industry (Table 13.3).
It can be seen from the table that at first only separation processes
were used. Then came gasoline upgradation processes to meet
motor gasoline specification and conversion of heavies to lighter
products like gasoline to meet the increased demand of light 151

products. Finally the drive was environment related specifications Notes
– processes to meet strict specification on sulfur, and other ___________________
specifications like aromatic content and lead removal, etc.
___________________
As we can see from Table 13.3, almost all the current processing in
___________________
the refineries came into existence by the fifties. Later the changes
and innovations were related mainly to minimizing residues in the ___________________
refinery and to meet sulfur and other environment related ___________________

specifications. ___________________
Table 13.3: History of Refining ___________________
___________________
___________________
___________________
Figure 13.3: Distillation Columns in a Refinery
Primary Separation
Let us discuss Primary Separation in greater detail. It is done by
Atmospheric Distillation and Vacuum Distillation. This is
diagrammatically represented in Figure 13.4
Atmospheric Distillation
Atmospheric Distillation is the first step in the refinery processing
to separate out the raw products (cuts) by distillation under
pressures above atmospheric pressures (Atmospheric Distillation).
152
Atmospheric Distillation is done to separate the light cuts by
Notes
heating the crude oil to 350-370°C at pressures close to
___________________
atmospheric pressures.
___________________
At these temperatures light and white products like motor
___________________ gasoline, kerosene, Aviation Turbine Fuel (ATF), diesel, etc. are
___________________ distilled out as raw products for further processing. Residue which
is left behind at the bottom of the distillation column after
___________________
atmospheric distillation is called long residue. The next step in
___________________ distillation is Vacuum Distillation of the long residue.
___________________
Vacuum Distillation
___________________
The limitation of distilling at higher temperatures is because
___________________
deterioration of crude oil starts at temperatures above
___________________ 350- 370°C. Crude oil starts ‘cracking’ at high temperatures i.e. the
heavier molecules start breaking into smaller molecules.
Uncontrolled cracking process results in coke formation and
production of unstable olefinic (double bonded) hydrocarbon
products.
Vacuum distillation unit yields vacuum gas oil as distillate which
are used as feedstock for cracking to lighter products. Vacuum gas
oil also can form the base oil for processing into lubricating oils.
In vacuum distillation, the residue from atmospheric distillation is
heated to around 350-370°C and distilled under vacuum
conditions.
With vacuum distillations, cuts like vacuum gas oil (feed for
cracking or lube oil manufacture) and bituminous residue etc. are
generated as shown in Figure 13.4. One or more gas oil cuts can be
drawn out of vacuum distillation. The residue which is left after
vacuum distillation is called short residue.
Atmospheric and Vacuum Distillation Cuts
Figure 13.4: Primary Separation

Conversion Processes 153

Notes
Primary separation processes are essentially physical separation of
the raw products by distillation. Conversion process means change ___________________
of the molecules of the raw products obtained from distillation by ___________________
reaction process under heat, pressure, along with or without a
___________________
catalyst, from one type of molecule to another.
___________________
As mentioned earlier, there are two types of conversion processes:
___________________
z Conversion for upgradation of product quality.
___________________
z Conversion to change heavy residual products into light and
___________________
high value products like gasoline and diesel. These are called
cracking processes. ___________________
Discussion on both the types of conversion processes follow. ___________________
___________________
Gasoline Upgradation
Gasoline upgradation is a typical example of conversion process to
meet specification of the product. Octane Number of gasoline cut
from distillation is low. Octane levels need to be raised to the
desired specification for engine performance requirements.
In the sixties and seventies, Catalytic Reforming was the most
prevalent process to increase Octane Number. The process
essentially converted paraffin in the gasoline cut into aromatics,
which have high ON. For further boosting the octane number, small
dosage of Tetra Ethyl Lead (TEL - Octane Booster) was added.
Aromatics generated by reforming process were found to be
carcinogenic and Lead was found to be health hazard.
With lead addition eliminated, new octane boosters (ethers like
MTBE or other oxygenated compounds) were developed.
With stricter aromatics specification in gasoline, use of reformate
gasoline (product from catalytic reforming) as gasoline blending
stock was reduced. New processes were developed for converting
naphtha to high-octane gasoline. Some such processes are:
z Isomerisation to convert straight chain paraffins to branched
chain isomers.
z Alkylation to combine paraffin components with butane to
form isomers.
z Polymerisation to transform some lighter hydrocarbons into
high octane gasoline.
154
z Fluid Catalytic Cracking (FCC) units also became one of the
Notes
main sources of high-octane gasoline.
___________________
Conversion of ‘Heavies’ to ‘Light Oils’
___________________
Conversion of heavy cuts (e.g. gas oil from vacuum distillation) and
___________________ residues which are dark coloured, low value products to light and
___________________ valuable products are important for refinery economics. This is
done by Cracking Processes.
___________________
Cracking essentially breaks the large heavy molecules into a
___________________
number of smaller lighter molecules. The process generates gases
___________________ and white products by cracking the heavy vacuum distillates and
___________________ residues.
___________________ A typical reaction in cracking process:
___________________
Catalyst and heat (450-500 oC)
C16H34 = C8H18 + C8H16
There are several components of the heavy oils undergoing such
reactions generating light products as well as gases.
The common cracking processes are thermal cracking, fluid
catalytic cracking and hydrocracking.
z Thermal Cracking is done with heat alone at high
temperatures. Depending upon severity of reaction conditions
and nature of feedstock, the thermal cracking processes are
named as
Visbreaking
Coking etc.
z Fluid Catalytic Cracking (FCC) is carried out with a fluidized
bed of catalyst. FCC yields gasoline of higher octane number
along with gases, kerosene and diesel fractions. Some heavy oil
is also produced from FCC called cycle oil.
z Hydrocracking is cracking under heat, pressure and presence
of hydrogen. It takes wider variety of feedstock and gives
stable, good quality product.
Treatment Processes
Sulfur Removal
Hydro-desulfurization is one of the processes to remove sulfur by
reaction of hydrogen with sulfur bearing components of oil. This
produces hydrogen sulfide, which is also toxic. Hydrogen sulfide is 155

converted to sulfur in the refinery by a process known as Claus Notes
Process. ___________________
With stringent specifications for sulfur in production, deeper and ___________________
deeper Hydro-desulfurization is coming into application.
___________________
Finishing of Products ___________________
The final polishing of products is done to remove traces of ___________________

contaminants, to have the right colour of products and stability by ___________________
treating with hydrogen or other reagents. Examples of such
___________________
processes are Hydrotreating, Hydrofinishing, and Merox
Sweetening of LPG and gasoline. ___________________
It is important to note that hydrogen finds extensive use in a ___________________
modern refinery. ___________________
In addition to the basic processes mentioned above, there are a few

other important operations in the refinery of today:
Petrochemical Feedstock Generation

Propylene, naphtha and aromatics are separated or extracted out
of the refinery products as feedstock for production of
petrochemicals.
Formulating and Blending

Formulating and blending is the process of:
z Mixing and combining the various cuts or fractions from
distillation, cracking and other process units. The multiplicity
of processing units in a refinery creates a number of
intermediate products of the same boiling range which are
finally blended to get the right amount of product of right
quality.
z Dozing of the products with additives (chemicals to give
stability, storage life, performance etc.).
Formulating and blending gives the final finished products, which
are tested and marketed.
Lube Oil Manufacture

Lubricating oils need to be viscous, have stability during the heat
generated by friction of the machine, and the viscosity should not
fall sharply with the rise in temperature due to friction. These
156 qualities are met by vacuum gas oils i.e. high boiling cuts distilled
Notes by vacuum distillation of crude oil. These gas oil cuts are called
___________________ lubricating oil base stocks.
___________________ All crude oils do not give good lube base stock. For example waxy
___________________ crude oils like Mumbai High or some South East Asian crude oils
are not good for lube oil manufacture. Yield of suitable lube base
___________________
stocks are lower in these cases (as the oil is light) and wax creates
___________________ a lot of operational problems during lube extraction process. Some
___________________ of the medium heavy Middle East Crude oils give good quality lube
base stocks.
___________________
___________________
The various processing steps are:
___________________ De-asphalting Unit: Here asphalt from the lube base stock is
removed by solvent extraction process because asphalt is not good
___________________
to meet lube oil specifications.
Aromatics Extraction: Aromatic hydrocarbons are removed by
solvent extraction process to improve viscosity.
De-waxing: This is another solvent extraction process which
removes wax from the lube base stock. This is also solvent
extraction process.
Hydro-finishing: After these series of extraction processes, the
lube oil base stock is treated with hydrogen (hydro-finishing
process) to improve colour and give stability.
Check Your Progress

Fill in the blanks:
1. ………………………. process means change of the
molecules of the raw products obtained from distillation
by reaction process under heat, pressure, along with or
without a catalyst, from one type of molecule to another.
2. Hydrogen sulfide is converted to sulfur in the refinery
by a process known as ………………………. .
Summary
Bride oil needs to be separated into useful products. The
separation is not done to recover individual components but as
products which are mixtures of suitable boiling ranges. This is
done by distillation, where various cuts or fractions are taken out
as gasoline, kerosene, diesel, etc. which are essentially raw 157

material or intermediate products. Notes
Refining comprises of four types of processes: Primary Separation, ___________________

Conversion Processes, Treatment Processes and Processing for ___________________
Lube Oils.
___________________
___________________
Lesson End Activity
___________________
Prepare a presentation on the various types of refining processes.
___________________
___________________
Keywords
___________________
Flash Point: It is the minimum temperature at which the product
___________________
generates enough vapour to form an explosive mixture with air.
___________________
Octane Number: This signifies ignition quality of the gasoline in
automobile engines.
Octane Number: It is defined as the percent volume of iso-octane
in a mixture of iso-octane and normal heptane that gives the same
knocking as that of the fuel when tested under defined conditions.
Smoke Point: It is the length of flame in a standard laboratory
test, which produces smoke.

1. List out the products produced with petroleum raw materials
as the base.
2. Why does Crude oil need to be refined? What does a Refinery
do?
3. What are the Product specifications for products to be refined
in a refinery?
4. Explain the different treatment processes.
Further Readings
Books
158
Web Readings
Notes
___________________
www.linde-india.com/.../Natural%20Gas%20Processing%20Plants.
___________________
pd...
___________________
___________________ Processing.pdf
___________________ ftp://ftp.eia.doe.gov/pub/oil_gas/...gas/.../ngprocess/ngprocess.pdf
___________________
___________________
___________________
___________________
___________________
UNIT 14: Refinery Requirements
Unit 14
159
Notes
Activity
Discuss in groups about the
Refinery Requirements
___________________
differences in the Refinery
___________________
configuration of the 60’s and
that of modern refineries.
___________________
Objectives
___________________
topics: ___________________
\ Refinery process configurations used to meet the specifications and ___________________

market demand
___________________
\ Basic process schematics of important processes used in a refinery
\ Infrastructure requirement and broad economics of refinery operation ___________________
___________________
___________________
Introduction
We will have a look at how the refinery configuration looked in the
sixties. There has been other health and environment related
specifications like limitation of aromatics in the automotive fuels.
As a result, there have been huge investments to meet the product
quality with respect to sulfur and other environment related
specifications, lowering the margins.
A modern refinery has a number of process units. A list of various
types of process units in a petroleum refinery is given in Table
14.1. The refinery may have various combinations of process units
out of the list given here. A detailed description of the process and
plants and technologies are given later. At this point it is
important to know the description of the overall facility in a
refinery complex.
Refinery Configurations
The previous section gave an overview of various types of processes
used in the refinery. The process units in the refinery and their
capacities are determined by:
Product Demand
Product Prices
Product Specifications
Crude Oil Characteristics
160
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 14.1: Lube Processing Schematic
___________________
The investor arrives at optimum selection of process units and
their capacities by economic optimization techniques. The
techniques as described later are based on investment and
operating costs of various units and yield and quality of products
from them. The combination of the process units is called refinery
configuration.
Configuration of the Sixties

Out of the parameters mentioned above, the product specifications
have started changing the refinery configuration a lot since the
1960s.
Let us first have a look at how the refinery configuration looked in
the sixties. Figure 14.3 depicts a typical configuration of a refinery
in the sixties.
The crude oil was first distilled at pressures close to atmosphere
(Atmospheric Distillation) to separate out raw cuts of naphtha,
gasoline, kerosene and diesel oil. The residue left was being used
as a component of fuel oil.
Gasoline was processed in Catalytic Reforming Unit to boost its
Octane Number. Finally Tetra-ethyl Lead was added to the
gasoline in small doses as Octane Enhancer.
Sulfur specifications were not very stringent those days. Wherever
the sulfur content exceeded the specification (diesel in the flow
diagram), Hydro-Desulfurization Unit was used to remove the
sulfur.
161
Fuel oil always fetched a low value, sometimes lower than the
Notes
crude oil resulting in negative return. A part or all of it was
distilled under vacuum to generate vacuum gas oil cuts, which go ___________________
as feedstock for lubricating oil manufacture. In the Lube Plant, ___________________
processes like dewaxing, and other extraction processes like
___________________
de-asphalting were used to produce lubricating oils meeting
specifications. Mild hydrogen treatment of the lube oils in the lube ___________________
plant was done to meet the final specifications and improve the ___________________
colour. ___________________
Gas oil cuts from vacuum distillation unit were also taken to Fluid ___________________
Catalytic Cracking Unit (FCC) to produce more of gasoline. FCC
___________________
unit was designed to produce gasoline as well as kerosene and
diesel. Some gases were also produced as a result of cracking. ___________________
___________________
Residue from vacuum distillation unit was often mildly cracked in
a Thermal Cracking Process called Visbreaker for use as fuel oil.
These units also produced some gases, gasoline and kerosene.
Gasoline, kerosene and diesel were made by blending the stocks
from crude distillation unit, and the various cracking and other
conversion units.
This is a typical configuration, simple and without any integration
with any other kind of facility.
Figure 14.2: Refinery Complex
Configuration of a Modern Refinery

As stated earlier, strict specifications on sulfur content in finished
refinery product resulted in substantial investment in deep
desulfurization. Whereas in the sixties 0.5 to 1.0% sulfur was
tolerable in some of the products like diesel or gasoline, now the
specifications are at the level of 25 to 50 ppm (parts per million)
162 sulfur in many parts of the world. Moreover, the desulfurization

Notes processes generate hydrogen sulfide (H2S) which is not allowed to
___________________ be vented as per current environment regulations. This has lead to
___________________ extensive use of Sulfur Recovery Units in the refineries. Further
H2S bearing tail gases from the sulfur recovery units are also
___________________
treated to remove traces of sulfur before being discharged to
___________________
atmosphere.
___________________
___________________
___________________
___________________
___________________
___________________
Figure 14.3: Refinery Configuration of the Sixties
There has been other health and environment related

specifications like limitation of aromatics in the automotive fuels.
As a result, there have been huge investments to meet the product
quality with respect to sulfur and other environment related
specifications, lowering the margins.
Lower margins and stricter product specs are changing refinery
configuration. Today a stand alone refinery complex is not
economically viable. Many of the refineries in the west are shutting
down. For survival and profitability, the configuration of today’s
refinery has changed.
Low margins call for minimizing fuel oil (residual stock and heavy
components) by converting them to high value products. This has
given to more extensive use of cracking processes like
hydrocracking and coking.
Lowering aromatics specification in gasoline results in
addition of units like isomerization to get high octane gasoline.
The reforming unit which produces a lot of aromatics serves to
act as source for aromatic feedstock for the petrochemical
industry.
163
Integration of petrochemical plant to increase margin is quite
Notes
common today.
___________________
Lower sulfur specs increases hydrotreating application and
___________________
generates need for a large hydrogen plant for the refineries.
___________________
Integration with a cogeneration power plant with coke and fuel
___________________
oil produced at the refinery has found favour to increase
margin. ___________________
___________________
A typical configuration of a modern refinery taking into
consideration above trends is given in Figure 14.4. ___________________
___________________
___________________
___________________
Figure 14.4: Modern Refinery Configuration
The points to note in this configuration are:
Extensive application of hydrogenation processes like

Hydrodesulfurization, Hydrotreatment, etc.
Combination of cracking processes by bringing in new units

like Hydrocracking.
Use of isomerisation and other processes to get high octane

gasoline due to limitation of aromatics blending in gasoline.
Use of catalytic reforming products to extract aromatics like
Benzene, Toluene and Xylene (BTX) for use as feedstock for
petrochemical manufacture. This brings in higher value of the
products.
The cracking processes generate propylene and butanes which

can be separated and sold as feedstock for petrochemical
manufacture.
164
It is worth noting that the refinery configuration as shown is still
Notes
not economically attractive. The trend today is integration with
___________________
petrochemical manufacture using the aromatics or olefins.
___________________
Later we shall show some examples of such integration done in the
___________________ industry.
___________________
Balancing the Gases
___________________
Some gases come out of the crude during distillation. These are
___________________
mainly ethane, propane and butane, a part of which is taken out as
___________________ LPG. The cracking units generate some olefins like propylene and
___________________ butylenes which become valuable feedstock for making
___________________ petrochemicals like polyproylene, polybutylene, etc. So, recovery of
the olefins becomes important for value addition to refinery
___________________
products. The balance of gas is consumed in the refinery as fuel.
Figure 14.5 shows the same configuration as shown in Figure 14.4

without the main liquid streams. It shows the gaseous streams in a
refinery. It can be seen that hydrodesulfurization generates some
amount of hydrogen sulfide gas (H2S) which is toxic. The H2S
bearing gases are sweetened remove H2S, which is finally
converted to sulfur. Thus sulfur becomes a product in the refinery
by default.
The hydrogenation processes to remove sulfur, other hydrotreating

processes and hydrocracking process require a lot of hydrogen.
Catalytic Reforming process, which converts paraffins in naphtha
to aromatics by de-hydrogenation of paraffins, generates some of
the hydrogen required in the refinery.
The balance hydrogen is supplemented by installing a hydrogen

plant in the refinery. Thus, the processing requirements of the
gaseous streams are met by:
Gas sweetening unit
Sulfur plant
Propylene recovery unit
Hydrogen plant
165
Notes
Activity
Utility and offsite facilities
___________________
may cost more than 50%
___________________
of the total cost of the
project.
___________________
Utility and offsite facilities
___________________
occupy more than 60% of
the space in a refinery
___________________
layout.
___________________
Discuss thses two facts, in
Groups.
___________________
___________________
___________________
Figure 14.5: Balancing the Gases ___________________
Check Your Progress

Fill in the blanks:
1. Lowering aromatics specification in gasoline results in
addition of units like isomerization to get high
…………………. .
2. The hydrogenation processes to remove sulfur, other
hydrotreating processes and hydrocracking process
require a lot of …………………. .
Description of Overall Facilities

The process plant requires utilities like fuel gas, power, steam, water
etc. Also infrastructure is required to provide logistics and other
support. It also requires facilities to store the raw materials, QA/QC
of products and facilities to handle and transport them by pipeline or
tankers. These are known as utilities and offsite facilities.
The facilities of a refinery complex can be categorized into process
units, utility blocks, storage and product movement, buildings and
waste treatment facilities.
166 Table 14.1: Process Units in a Refinery

Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Utility and Offsite Facilities

Table 14.2 presents a list of utilities and offsite facilities in a
refinery complex.
With the process units and other facilities listed above, a refinery
is a very huge facility requiring investments in terms of a few
billion Dollars. Optimization of the operation of process units and
offsite facilities, logistics of product movement is and overall
management system in a modern refinery is very important to
refinery economics. This has been dealt with in the section on ‘IT
Applications in Oil and Gas Industry’.
Table 14.2: Utility and Offsite Facilities

Utility Facilities 167

Notes
A list of utility facilities is given in Table 14.2. Some of the
facilities are relatively small packaged units supplied by the ___________________
equipment vendors e.g. Instrument Air System comprising of ___________________
instrument air compressor and dryer to remove moisture from air.
___________________
But items like power generation, steam system and cooling water
system have large equipment system and spread throughout the ___________________
plant by piping network. ___________________
For optimum use of energy, power generation and steam ___________________

generation are combined together in what is known as combined ___________________
cycle. For example high pressure steam can be used to drive a
___________________
steam turbine to generate power and the steam at lower pressure
coming out of the turbine can be used as utility steam for heating ___________________
various process streams. The exhaust from a gas turbine can be ___________________
used to generate high pressure steam.
Cooling Water System comprises of cooling towers, large cooling
water pumps and a network of piping to supply cooling water to
product coolers. The products generally come out hot after
processes like distillation and the final cooling is done in heat
exchangers by the cooling water. In the process, the cooling water
gets heated. The hot streams of cooling water are returned to the
cooling towers, where they are cooled by air cooling in cooling
towers.
Figure 14.6: Utility Facilities

168
Storage and Handling of Crude and Products
Notes
This is one of the major operations beyond the process units in a
___________________ refinery. This involves:
___________________
Receipt and storage of crude oil
___________________
Storage of intermediate products, base oils and blending
___________________ stocks.
___________________ Blending and finishing of products.
___________________
Storage and despatch of products.
___________________
A refinery is often located in coastal area. It can also be landlocked
___________________ far beyond coastal areas. In coastal refineries, crude oil is received
___________________ by marine tankers. Depending on the capacity of the refinery,
crude tanker size suitable for draft at the jetty and the size of
___________________
storage tanks are decided. In landlocked refineries, receipt of
crude is normally by pipeline. Road tankers, railway tankers,
marine tankers and pipeline are used for transportation of
products.
Millions of tons of crude and products as well as blending stocks is
handled or transported to several destinations by tankers or
pipeline. The storage and product movement area of a refinery
presents a major logistics and operations management problem in
the refinery.
Figure 14.7: Refinery Storage Facilities
Product Blending Operations

As described earlier, numerous intermediate product streams are
formed in the various processing units of a refinery. They are
finally blended into finished products. The activities involve:
storage of intermediate products,
analysis of the intermediate products,
169
blending operations,
Notes
dozing with ‘additive chemicals’ wherever required and
___________________
storage and analysis of the final blended products to ensure
___________________
quality requirements.
___________________
Control Room ___________________
Each of the refinery processes as well as the utility facilities ___________________
requires a large number of process parameters to be controlled to
___________________
meet the quantity and quality of products. Earlier there used to be
control room in each process unit with analog controllers. ___________________
In modern refineries computerized digital control system with ___________________

dynamic real time process models are quite common.
___________________
Typical room of a centralized control room of a refinery is ___________________
presented in Figure 14.8. A more detailed discussion on the subject
is given in the section on IT Applications.
Figure 14.8: Control Room
Check Your Progress

Fill in the blanks:
1. For optimum use of energy, power generation and steam
generation are combined together in what is known as
……………………. .
2. In coastal refineries, crude oil is received by
…………………… .
Summary
In this unit, the history of development of the refining process and
refinery configuration was explained. The process units and
utility/offsite facilities required in a refinery was summarized.
170
Lesson End Activity
Notes
Visit a refinery and find out how Storage and Handling of Crude
___________________
and Products are done.
___________________
___________________
Keywords
___________________
Utility: It is the state of being useful, profitable, or beneficial.
___________________
Control Room: It is a room housing any kind of control
___________________ equipment.
___________________ Catalytic Reforming: It is a chemical process used to
___________________ convert petroleum refinery naphthas, typically having low octane
ratings, into high-octane liquid products called reformates which
___________________
are components of high-octane gasoline.
___________________

1. What do you understand by thermal cracking of petroleum?
2. Define the Octane Number of gasoline. Name the processes
that give high octane gasoline.
3. State any two properties of crude oil that decrease the quality
and efficiency of the oils. How are they improved?
4. Write a note on the differences in the refineries in the 60s and
the modern refineries.
Further Readings
Books
Web Readings
www.linde-india.com/.../Natural%20Gas%20Processing
%20Plants.pd...
Processing.pdf
UNIT 5: Case Study
Unit 15
171
Notes
Case Study
___________________
___________________
___________________
Objectives
___________________
___________________
___________________
Case Study: Gas Processing at LLC
___________________
Leak Imaging, LLC performed a leak detection survey using an
optical gas imaging camera for a company in East Texas at one of ___________________
their gas processing facilities. The company was aware of the
___________________
new regulations coming and wanted to see what it would entail
and what they should do to prepare for it since they have never
had any leak detection program in place. The results were
amazing.
The gas processing facility was less than a year old and we were
assured that there were no gas leaks to be found. The field
superintendent explained how all the equipment at the location
was new, properly installed and no wearing of the equipment
would have taken place in this short period of time. At the time of
the study, this facility was processing gas at a spot rate of 12,500
mcf per day. After processing the natural gas, the daily
production volume being delivered to market was approximately
95%, with 5% accounted for as line loss and/or fuel use.
In less than 30 minutes, the first leak was detected with several
more following. In all, 6 leaks were detected which were
inexpensively rectified. Using the criteria and emissions factors
from the EPA, they were losing 200 mcf a day in gas. The worst
leak detected was coming from the storage tanks where the valve
was constantly malfunctioning and releasing gas from the vent
stack.
After the repairs were made, the company began seeing an extra
$600/day ($219,000/year) at today’s gas prices which they were
losing at just one facility.
The leak detection study just goes to show that the industry’s
acceptance of 5% for line loss and fuel use just turned the corner
with new technology. Line loss doesn’t necessarily tell the whole
story. It doesn’t matter whether a facility is old or new there is
Contd…
172 always the possibility for fugitive gas leaks and the potential to
Notes increase revenues.
___________________ Question
___________________ Critically analyse the case study
___________________ Source: http://leakimaging.com/gas-processing-case-study/
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 16: Distillation in Refineries
173
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
BLOCK-IV
174
Notes
UNIT 16: DISTILLATION IN REFINERIES
___________________ UNIT 18: PRODUCTION OF PETROCHEMICALS
___________________
z Optimization of Refinery Operations z Feedstock to Products in Petrochemical Industry
___________________
z Description of Process Units z Production of the Base Petrochemicals
___________________
z Vacuum Distillation z Ethylene Production by Steam Cracking
___________________
z Steam Reforming
UNIT 17: PETROCHEMICAL INDUSTRY
___________________
z Aromatics Production
z Introduction
___________________ z Intermediate and Derivative Petrochemicals
z Polymerization Basics
___________________
z Some Common Polymer Plastics UNIT 19: TRANSPORTATION OF OIL, GAS AND
___________________ PRODUCTS: PIPELINES
z Petrochemicals in Our Lives
___________________ z Introduction
z High Impact Plastics
z Modes of Transportation
z Types of Plastics
z Pipeline Systems
z Pipeline Project Implementation
UNIT 20: CASE STUDIES

Unit 16
175
Notes
Activity
Distillation in Refineries
Find___________________
out more about LP
Modelling and its use in
___________________
different fields.
___________________
Objectives
___________________
topics: ___________________
\ Optimisation of Refinery Operations ___________________

\ Description of Process units ___________________
\ Vacuum Distillation
___________________
___________________
Introduction ___________________
The basic software for optimization is available in the market

along with data bank on crude oil, possible refinery configuration,
cost data, process models, etc. One needs to define and give input
data on the specific problem and define what need to be optimized.
Let us now look into some of the process units in greater detail. We
will understand a generic processing system for refineries and
petrochemical plants and Vacuum Distillation.
Optimization of Refinery Operations

A refinery is a highly capital intensive plant. High prices of crude
oil and low margins on product prices require optimization of the
refinery during design stage as well as optimization of its
operation.
In the design and conceptual stage, the optimization of a
configuration is carried out in order to:
z Develop the best possible configurations of process units and
their capacities depending on market demand and
specification of products. This should meet the market demand
pattern at minimum cost.
z Select crude oil depending on its price, characteristics and
ability to give the desired products at optimum cost.
Let us look at the fixed parameters and variables for optimization
as given below. The number of variables like type of process units,
176 choice of crude, products to be manufactured etc. are very large –

Notes may run into hundreds. In this kind of situation, the optimization
___________________ is carried out by Linear Programming (LP) modelling.
___________________ The major input required to develop a LP model and optimize the
___________________ configuration are:
___________________ Crude Assay: Crude characteristics and properties are fixed

parameters for crude selected for a refinery. If there is choice of
___________________
more than one crude, it becomes a variable. Yields of products from
___________________
distillation and other process units depend on the crude
___________________ characteristics and properties. An extensive laboratory study
___________________ report on crude characteristics and properties of various cuts taken
out of it is called crude assay. This is fed as data to the
___________________
optimization model.
___________________
Product Demand Pattern: The refinery need to be optimized not
to exceed a specific product demand pattern of the market. This is
normally a fixed parameter and called ‘constraint’ in LP Modelling.
Product Specification: It is fixed for a particular country or

region, depending on the standard specification of salable products
in the market. These are also called ‘constraints’ in modelling for
optimization.
Selection of Process Units and their Capacity: This gives the

largest sets of variables. There is a wide range of choice of the
processing units. Each gives a particular yield of products and
particular properties of the products to meet the specifications. The
final product quantities are arrived at by blending the
intermediate products from various process units to meet the
product specification.
Investment Costs: It will depend on the selection of process units,

as each process unit will have different investment costs
proportionate to its capacity.
Operating Costs: This again will depend on the selection of

process units, each of which will have different operating cost
heads like utility consumption, manning requirement, etc.
LP modelling is carried out in the following manner:

z Mass balance equations between process units, overall product
balance and heat balance are expressed in linear equations.
177
z Constraint equations such as product demand and
Notes
specification by blending of components (intermediate products
from the process units) are also used as linear equations. It ___________________
defines the constraints of which products should be produced ___________________

in the refinery and in how much quantity. ___________________
z Process unit models predicting yield and quality of products ___________________

based on crude oil characteristics, are built into modern LP ___________________
optimization software.
___________________
z Equations for capital cost variation with capacity of the
___________________
process units, cost of operation of each unit.
___________________
z Overall cost optimization equations form the complete matrix
___________________
of equations.
___________________
Non-linear models of processes (to give yield of products and
product properties) and blending correlation for the properties
form separate modules.
The parameter to be optimized normally is investment or profit

margin.
Versatile LP software with built-in database and process models

are available today.
Such models give option to change:
z Crude oil and product prices
z Product specifications
z The quantity of products
z Plant sizes and operation modes
Thus a lot of business sensitivity factors can be studied using such

models.
LP Models are today used for:
z Optimization of configuration of new refineries
z Planning daily, weekly, monthly and long-term operation of

existing refineries
z Optimization of operation of individual units
z Evaluation of different types of crude oils

178
Check Your Progress
Notes
Activity
Fill in the blanks:
Make a chart on the Desalting
___________________
process.
___________________
1. A refinery is a highly …………………. intensive plant.
___________________ 2. Crude characteristics and properties are ………………….

parameters for a crude selected for a refinery.
___________________
___________________
Description of Process Units
___________________
___________________ Generic Process Schematic

___________________ Having described refinery configuration, let us now look into some
of the process units in greater detail. First let us understand a
___________________
generic processing system for refineries and petrochemical plants.
___________________
Figure 16.1: LP Software Structure
A process plant processing liquid and gaseous material (which is

commonly done in refineries) would normally have the following
components:
z Pumping (for liquids) or compression (for gases) of the feed to
the processing unit.
z Heating to provide energy for the reaction to take place. Some
times cooling is needed if the reaction is exothermic i.e. if it
generates heat. Heating also includes recovery of heat from
the outgoing hot products by heat exchange with incoming cool
feedstock or raw material.
z Reactor vessel which gives time for the reaction to take place.
179
z Separation and purification of products of reaction. These are
Notes
physical separation processes like distillation, extraction etc.
___________________
The Figure 16.2 depicts the concept in the form of a process where
two raw materials (feedstock) A and B are processed to get ___________________
products C and D. A and B are pumped through heat exchangers ___________________

which recover heat from outgoing hot products C and D. Then, A
___________________
and B are mixed and heated in a furnace to the desired
___________________
temperature. Reaction at high temperature takes place in the
reactor producing C and D as products. C and D are separated by ___________________
distillation and sent out to be stored as product. ___________________
___________________
___________________
___________________
Figure 16.2: Generic Diagram of a Process Plant
Most processes will have similar configuration. The physical

separation processes like distillation or extraction does not have
the reactor part. Most reaction processes have the configuration of
Figure 16.2.
The primary separation processes in a refinery, atmospheric and

vacuum distillation do not have a reactor. It is a pure physical
separation process. Such processes where no reaction is involved
and revolve around separation of products are called ‘open art
process’ as there is no license involved in the technology, design
and operation of such processes. Normally most reaction processes
are licensed processes, where one has to pay a fees or royalty for
the purchase and use of then technology.
Pictures of the some of the process equipment described here are

180
Notes
___________________
___________________
___________________
___________________
Liquid Outlet Heater
___________________
___________________
___________________
Liquid inlet
Motor
___________________
Pumps
___________________ Hot Fluid
___________________
Out Cold Fluid
Shell Tubes
Out
Heat Exchanger
Figure 16.3: Process Equipment
With this generic description in mind, let us now get into the flow
diagram and description of some of the important processes in the
refinery.
Desalting
Crude oil arriving from oilfield generally contains around 1%
saline water and organic salts. The salinity of the water could be in
the range of 15,000 to 30,000 ppm. In the refinery, the crude oil is
heated and distilled. Part of the salts contained in the crude oil,
particularly magnesium chloride, tends to undergo hydrolysis at
temperatures above 120°C. Upon hydrolysis, the chlorides get
converted into hydrochloric acid and corrode the distillation
column’s overhead and condenser. A desalter is normally installed
in the preheat section of crude distillation unit of a refinery, before
the distillation column. Its function is to reduce the salt content to
around 20-40 ppm and water content to below 0.1%.
Description
As described in the next section on crude distillation, desalters are
normally integral part of distillation plant.
181
The desalter is normally installed in between the heat exchangers
Notes
of the pre-heat section of Crude Distillation Unit to operate at
temperatures between 120-150°C. The desalting operation is ___________________
carried out by flushing the crude with fresh water of low salt ___________________
content. The desalter carries out dehydration of the crude by use of
___________________
electrostatic field to facilitate coalescence of charged particles of
water into large drops. ___________________
___________________
Thus it involves the following steps:
___________________
z Washing of the crude resulting in dilution of saline water
present in the crude ___________________
z Removal of the water under electrostatic field. ___________________
___________________
Normally saline water is present in emulsion form, so Demulsifier
chemicals (20-40 ppm) are also injected in the crude. This aids in ___________________
breaking the emulsion by changing the surface tension properties
of oil-water interface.
Figure 16.4: Desalter
Upstream of the desalter, the crude oil containing around 1% of

emulsion water is mixed with a fresh water stream, typically about
4-6% on feed. Intense mixing takes place over a mixing valve where
high pressure drop is provided for to give turbulence. The water added
to the crude flushes the whole crude and dilutes the concentration of
salt in the saline water carried with the crude. The desalter, a large
vessel, containing an electrostatic grid, uses an electric field to coalesce
the water droplets, which drop at the bottom. It operates between 120-
1500C, hence it is conveniently placed somewhere in the middle of the
preheat train of the distillation column.
In case of high salt content and viscous crude, often multistage
desalters in series are used with water addition and dehydration
repeated through two stages.
Desalter can remove over 90% of the salt in raw crude.
182
Crude Distillation
Notes
Atmospheric Distillation of the crude is the first step in the
___________________ processing of crude oil in a refinery. It is physical separation of oil
___________________ components at slightly higher than atmospheric pressure by
heating to around 350°C + and subsequently distilling into
___________________
fractions (raw product cuts).
___________________
As crude oil starts cracking at temperatures higher than
___________________
370-380°C, the residue from Atmospheric Distillation is
___________________ subsequently distilled under vacuum at similar temperatures. This
___________________ is called Vacuum Distillation. Distillation produces some gases
(LPG, Fuel Gas) and raw cuts of light products like gasoline,
___________________
naphtha, kerosene and diesel.
___________________
The residue from the bottom of the Atmospheric Distillation
___________________
Column is vacuum distilled to produce heavy gas oil, which form
the base stock to produce lubricants. The gas oil is also sent to
Cracking Unit to produce further light products.
Description
The fractionating column where multi-component distillation takes
place is the heart of the process. The crude needs to be heated up
before entering the fractionation column. This is done at first in a
series of heat exchangers where heat is taken from outgoing
products from the column, which need to be cooled before being
sent to storage. Heat is also exchanged against condensing streams
from the top of the column. Optimum design of this heat recovery
train or pre-heat train is extremely important for energy efficient
operation of the column. Typically, the crude will be heated up in
this way up to a temperature of 200-280°C by heat recovery alone,
before entering a furnace.
As the raw crude oil received from oilfields contains water and salt,
it is normally sent for salt removing first, in a piece of equipment
called a desalter. This has been discussed in the preceding section.
The desalter is put midway in the pre-heat train at temperature of
around 130°C.
Downstream the desalter, crude is further heated up with heat
exchangers, and starts vaporizing at about 200-280°C. Then, the
crude enters the furnace where it is heated up further to about
330-370°C. The furnace outlet stream is sent directly to the
fractionation column. Here, it is separated into a number of
fractions, each having a particular boiling range.
183
At 350°C, and about 1 barg, crude oil is partly vapourized and the
Notes
vapours rise up along the column through trays. The vapours come
into contact with liquid coming down from the top of the column. ___________________
The different fractions are gradually separated from each other on ___________________
the trays of the fractionation column. The heaviest fractions
___________________
condense on the lower trays and the lighter fractions condense on
the trays higher up in the column. At different elevations in the ___________________
column, with special trays called draw-off trays, fractions are ___________________
drawn out by gravity through pipes, for further processing in the ___________________
refinery.
___________________
At the top of the column, vapours are routed to an overhead
___________________
condenser, typically cooled by water or air coolers. At the outlet of
overhead condenser, vapours are condensed into liquid (naphtha) ___________________
and gases are separated in an Accumulator at around 40°C. Gases ___________________

are routed to a compressor for further recovery of LPG (C3/C4),
while the liquids (gasoline or naphtha) are pumped to a stabilizer
column. Part of the cold, condensed liquid is put back at the top if
the column as reflux.
This method of cooling the top part of the column and providing
heat at the bottom creates a temperature gradient along the
column. Top temperature remains close to 40°C and the bottom
temperature of the column is around 350°C.
The products are also drawn from different trays of the column.
These are called side draw-offs. The lightest side draw-off from the
fractionating column is a fraction called kerosene, boiling in the
range 150-280°C, which flows into a smaller column called side-
stripper. The purpose of the side stripper is to remove some light
hydrocarbons by using steam injection or an external heater called
‘reboiler’. It essentially helps to meet the properties specified for
kerosene, since in a multi-component distillation there is overlap of
constituents of various cuts.
The second and third (optional) side draw-offs from the main
fractionating column are diesel or gas oil fractions, boiling in the
range 200-400°C, which are ultimately used for blending the final
diesel product. Similar as with the kerosene product, the gas oil
fractions (light and heavy gas oil) are first sent to a side stripper
before being routed to further treating units.
At the bottom of the fractionation column a heavy, brown/black
coloured residue is drawn off.
184
All the top and side draw-offs go for further treatment to meet
Notes
Activity product specifications. The residue is vacuum distilled (see section
Find___________________
out about Carbon-to-
on Vacuum Distillation).
carbon bonding. In which all
___________________
areas can you find it?
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 16.5: Flow Diagram of Atmospheric

Distillation Column
Check Your Progress

Fill in the blanks:
1. Crude oil arriving from oilfield generally contains
around ……………….% saline water and organic salts.
2. ………………. Distillation of the crude is the first step in
the processing of crude oil in a refinery.
Vacuum Distillation
As crude oil cracks above a range of 350-370°C after atmospheric
distillation, it is distilled under vacuum to distillation unit recover
additional distillates from atmospheric residue (also termed long
residue). The objective is to minimize the residual stock and
maximize yield of useful products.
Vacuum gas oil cuts are produced in the vacuum distillation unit
for use as lubricating oil base stocks and/or feedstock for
conversion (cracking). The residue from vacuum distillation
(referred as short residue) can be used as feedstock for to produce
bitumen or as fuel component. It can also sometimes be cracked
further to produce light oils.
Description 185
Notes
The process configuration is somewhat similar to atmospheric
distillation. The long residue is first preheated in a heat recovery ___________________
train to recover heat from the outgoing hot products. Then it is ___________________
further heated in a furnace before entering the Vacuum ___________________
Distillation Column. Vacuum Gas oil cuts are taken from top and
___________________
side of the column and cooled before dispatch to storage.
___________________
Vacuum is maintained with vacuum ejectors and sometimes also
___________________
with liquid ring pumps. Lowest achievable vacuum in lower part of
___________________
the column is in the order of 10 milli bar.
___________________
Wet Vacuum Units use steam in the column to reduce partial
___________________
pressure of the oil. Dry Vacuum Units use deeper vacuum with less
or no steam. ___________________
Two types of vacuum units for long residue upgrading are:
(i) Feed Preparation Units: Takes out deep cuts out of long
residue for cracking in FCC or Hydrocracker. This is done
because most of such cracking units can not take the heaviest
residual part of the crude as feedstock.
(ii) Lube Base Stock Units: These are high vacuum units from
where heavy gas oil cuts are drawn out as lube base stocks.
The lube base stocks are further processed to make lubricating
oils. For Bitumen production, the residue from vacuum
distillation called short residue, is treated to make bitumen or
road tar.
Figure 16.6: Vacuum Distillation Unit

186
Catalytic Reforming
Notes
Catalytic reforming is a high temperature catalytic process to
___________________ convert low-octane naphthas into high- octane gasoline blending
___________________ components called reformates. Most straight run naphthas from
primary distillation of crude comprises of a lot of low octane
___________________
components like normal paraffins and five and six carbon
___________________
naphthenes. Reforming involves:
___________________
z Isomerisation of paraffins
___________________
z Dehydrogenation of naphthenes like cyclohexanes to aromatic
___________________ hydrocarbons
___________________
z Dehydrocyclisation of paraffins i.e. making them to cyclic
___________________ hydrocarbons and dehydrogenating them to aromatics.
___________________ This gives high octane gasoline blending stock. Also hydrogen is
generated as by-product.
Reforming process is also a source for feedstock for petrochemical
plants. Reformates can be produced with very high concentrations
of toluene, benzene, xylene, and other aromatics useful both for
gasoline blending and petrochemical processing. Hydrogen,
produced from dehydrogenation and dehydrocyclisation reactions
is separated from reformate for recycling and use in other refinery
processes like hydrodesulfurisation.
The typical operating conditions are 500-530°C and 20-25 kg/Sq.cm
pressure.
Description
The first step is hydrodesulfurisation of the naphtha feed. Then
the actual reforming process starts.
A typical flow diagram is presented in Figure 16.7. The reforming
process has three sections:
z Reaction section comprising of heat recovery, furnace and
reactors
z Hydrogen separation and recirculation
z Product recovery section (distillation)
In the reaction section, the naphtha feedstock is mixed with
hydrogen generated by reaction process itself, vaporized, and
passed through a heat recovery train from outgoing reaction
products. Then it passes through a series of alternating furnace
and fixed-bed reactors containing a platinum catalyst or bimetallic 187

(Pt- Rh) catalyst. Notes
The effluent from the last reactor is cooled and sent to a separator ___________________
to remove the hydrogen-rich gas stream. Hydrogen is recirculated ___________________
with a compressor and the excess hydrogen product is sent to other
___________________
users in the refinery.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 16.7: Catalytic Reforming Unit
The liquid product from the bottom of the separator is sent to a

fractionator for product recovery. It makes a bottom product called
reformate; butanes and lighter hydrocarbons go overhead and are
sent to the other users.
The catalysts require regeneration after certain time period.
Depending on catalyst type and severity of reaction, the cycle time
and method of regeneration varies. Some catalytic reforming
systems continuously regenerate the catalyst.
Thermal Cracking
Thermal cracking is used for conversion of residues into more
useful products by cracking the large hydrocarbon molecules into
smaller ones, at a temperature level of 450-500°C. The degree of
cracking can be controlled by controlling temperature and time of
reaction (residence time). Long chain paraffinic hydrocarbon
molecules break down into a number of smaller ones by rupture of
a carbon-to-carbon bond.
188
Cracking also generates double bonded hydrocarbons (olefins).
Notes
Other side reactions like condensation and polymerization
___________________
reactions of olefins and of the aromatics also take place. Thus
___________________ thermal cracking process leads to undesirable products like
___________________ unstable olefins and tar like polymerization products. The type of
products depends on severity of cracking.
___________________
The olefins tend to polymerize and form gum or resin like polymers
___________________
due to their unstable double bond structure. That is why gasoline
___________________ or diesel blend produced from thermal cracking processes need to
___________________ be treated with hydrogen (Hydrotreating) to make them stable
___________________
usable product.
___________________ The thermal cracking is used either to reduce the viscosity for
blending with fuel oil (Visbreaking Process). Visbreaking, though a
___________________
mild form of thermal cracking, produces some of light liquids like
gasoline and gas oil.
There is a more severe cracking to produce coke, as well as useful
light products like gasoline called Coking Process. Besides a good
yield of light products and gas, it yields good quality coke.
By selection of the type of unit, feedstock and operating conditions,
the yields and quality of the various products can meet market
requirements, of course .with some limitations.
In modern oil refineries Visbreaking and Coking (Delayed Coking)
are extensively used.
Visbreaking
Visbreaking is a mild thermal cracking process. The objective is to
reduce the viscosities and pour points of vacuum distillation
bottoms to meet fuel oil specifications. Refinery production of
heavy oils can be reduced by 30% by Visbreaking. Visbreaker also
produces gas, gas oil stock and gasoline which go for further
processing.
The principal reactions which occur during the Visbreaking are:
z Cracking of the side chains attached to Cycloparaffin and
aromatic rings.
z Cracking of resins to light hydrocarbons (primarily olefins)
z Some cracking of Naphthalene rings under higher
temperatures of operation (500°C).
Description 189
Notes
There are two types of Visbreaking operations:
___________________
z Coil Cracking
___________________
z Soaker Cracking
___________________
Coil Cracking uses higher furnace outlet temperatures of around
___________________
500°C. It uses a reaction time of one to three minutes. All the
cracking takes place in a dedicated portion of the coil in the ___________________
furnace itself. Due to high temperature of operation and avoidance ___________________
of soaker drum, it offers the advantage of greater ease of operation.
___________________
The cracked products are separated by fractionation.
___________________
Soaker Cracking is a similar process but uses lower furnace outlet
___________________
temperatures of around 450°C and reaction times of over five
minutes. In this case some conversion takes place at the furnace ___________________
coil but major part of conversion takes place at the soaker drum
after the furnace (see flow diagram). Soaker cracking is more often
used due to its lower energy consumption as a result of less severe
temperatures.
Figure 16.8: Coil Visbreaker
Figure 16.9: Soaker Visbreaker

190
Delayed Coking Unit
Notes
Delayed coking is a thermal cracking process in which a heavy
___________________ hydrocarbon feedstock, mainly residue, is converted to lighter and
___________________ more valuable products and coke.
___________________ The main advantage of the process is that it can take residual
___________________ stock from a wide variety of process units in a refinery. Coking
Furnace and Coking Drums are the key elements in the process.
___________________
Cracking is initiated in the furnace tubes where short residence
___________________ time is allowed. Coking of the feed material is “delayed” until it
___________________ reaches large coking drums with longer reaction time, downstream
of the heater. Three physical structures of petroleum coke: shot,
___________________
sponge, or needle coke can be produced by delayed coking. These
___________________
physical structures and chemical properties of the petroleum coke
___________________ determine the end use.
Description
The feedstock gets preheated by exchange of heat from outgoing
products and is partially vaporized in a specially designed coking
furnace. Mild cracking takes place in the furnace where thermal
cracking temperatures of 485 to 505°C are reached. From the
furnace, the liquid-vapour mixture goes to one of the two coking
drums operating in batch. The vapours undergo cracking as they
pass through the coke drum. The heavy hydrocarbon liquid
trapped in the coke drum is subjected to successive cracking and
polymerization until it is converted to vapours and more coke.
The cracked products go to fractionation facilities downstream
where cracked gas, naphtha, kerosene and gas oil are separated.
The petroleum coke is formed in the drum due to high residence
time of cracking in the drum.
The feed stream is regularly switched between drums with one
operating and the other under decoking process. Decoking is done
using high pressure water jets. This generally follows a 12-16 hour
cycle.
Fluid Catalytic Cracking (FCC)

Basic reaction processes are similar to thermal cracking. Normally
vacuum gas oil from Vacuum Distillation unit is the feedstock for
cracking. The cracking reaction takes place in fluidized catalyst
bed. The reactions are directed more towards formation of useful
products like gasoline or diesel by suitable choice of the catalyst.
191
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 16.10: Delayed Coking
___________________
Description
___________________
Catalytic Reactor and Regeneration systems followed by
Distillation to separate cracked products are the key steps. Hot
feed, together with some steam, is introduced at the bottom of the
reactor via distribution nozzles. Here it meets a stream of hot
regenerated catalyst from the regenerator flowing down the
inclined regenerator standpipe. The oil is heated and vaporized by
the hot catalyst. The cracking reactions take place at 500°C. The
vapour, initially formed by vaporization and successively by
cracking, carries the catalyst up a riser in the reactor. At the outlet
of the riser the catalyst and hydrocarbons are separated. The
catalyst, partly deactivated by coke deposit and the vapour enter
the reactor. The vapour passes an overhead cyclone separator for
removal of entrained catalyst before it enters the fractionators for
product separation. The catalyst then descends into the stripper
where entrained hydrocarbons are removed by injection of steam.
Figure 16.11: Process

192
Air is supplied to the regenerator by an air blower and distributed
Notes
throughout the catalyst bed. The coke deposited is burnt off and
___________________ the regenerated catalyst passes down the regenerator standpipe to
___________________ the bottom of the riser, where it joins the fresh feed and the cycle
recommences.
___________________
The flue gas leaving the regenerator entrains “fines”, dust formed
___________________
by mechanical rubbing of catalyst particles taking place in the
___________________
catalyst bed. Before leaving the regenerator, the flue gas therefore
___________________ passes through cyclone separators where the bulk of the “fines” are
___________________ entrained catalyst is collected and returned to the catalyst bed.
___________________
Hydrocracking
___________________ As the name implies, hydrocracking is cracking in presence of
___________________ hydrogen. It is a catalytic process at high temperature and high
pressure. The initial development of the process had the limitation
of operation at very high pressures (above 200 bar). The
development of improved catalyst made it possible to operate the
process at considerably lower pressure, about 70-150 bar at
temperatures of 350 to 430°C.
The main advantages of hydrocracking process are:
z Its flexibility with respect to production of gasoline and middle
distillates
z Quality of its products
z Ability to handle a wider range of feedstock like cycle oils from
other cracking units
z Does not yield any coke as by-product
z Better conversion of the gas oil and residues into useful
products.
Although more expensive than other cracking processes, it is
competitive and often advantageous compared to other cracking
processes depending on market parameters.
Hydrocracker Reactions
The main reactions in hydrocracking are:
z Cracking
z Saturation of aromatics by hydrogenation
z And further cracking of it.
193
The other reactions occurring are:
Notes
z Saturation of any olefinic material present in feedstock.
___________________
z The reaction of desulphurisation, denitrogenation and
___________________
deoxygenation.
___________________
The latter reactions are essentially treating processes, which are
___________________
used as a separate processing step when other types of cracking
units are used. Thus there are two steps of reactions in ___________________
Hydrocracking: cracking step and treating step. As a result, the ___________________
product quality is superior.
___________________
A combination of catalysts is used. The cracking function is
___________________
provided by Silica Alumina catalyst or Zeolite catalyst.
___________________
Zeolite catalyst permits operation at lower temperatures for the
___________________
same conversion. Tungsten oxide or nickel oxide catalysts promote
hydrogenation reaction.
Description
When the cracking and treating step is combined in one reactor,
the process is called a Single-Stage Process.
This simplest of the hydrocracker configuration finds application in
cases where only moderate degree of conversion (say 60% or less) is
required. The single stage process can also be used for full
conversion, but with a limited reduction in molecular weight. An
example is the production of middle distillates from heavy
distillate oils.
In a multi-stage Process, the cracking reaction mainly takes place
in an added reactor. There could be two stage or three stage
hydrocracker. These processes were developed to overcome the
limitations of single stage process – the limitations of conversion as
well as catalyst poisoning by undesirable components. In the two
stage process, the undesirable compounds are removed from the
unconverted hydrocarbons in the first reactor. In the first reactor,
desulphurisation and denitrogenation occurs besides a limited
amount of hydrocracking. These are exothermic reactions. The
catalyst is arranged in a number of fixed beds. Reaction
temperatures are controlled by introducing part of the recycle gas
as a quench medium between beds. The liquid from the first
reactor is fractionated to remove the product made in the first
reactor.
194
Unconverted material, with a low nitrogen and sulfur content, is
Notes
taken out from the bottom of fractionation section. After, heat
___________________
exchange with reactor effluent and mixing with heated recycle gas,
___________________ it is sent to the second reactor. Here most of the hydrocracking
___________________ reactions occur. Effluent from the second reactor is cooled and joins
first stage effluent for separation from recycle gas and
___________________
fractionation. Saturation of any olefinic material is present in
___________________ feedstock.
___________________
Check Your Progress
___________________
Fill in the blanks:
___________________
1. The objective of ………………. is to minimize the
___________________
residual stock and maximize yield of useful products.
___________________
2. When the cracking and treating step is combined in one
reactor, the process is called a ………………. Process.
Summary
In this unit, the process units and utility/offsite facilities required
in a refinery was summarized. An overview of application of Linear
Programming techniques for refinery optimization was presented.
A generic description of typical refinery process was given
highlighting the basic system and equipment involved. This was
followed by description of some of the important processes used in
the refinery along with flow diagram.
Lesson End Activity

Explain the difference between a Single-stage Process and a Multi-
stage Process of cracking.
Keywords
Specific Gravity of a Gas: It is defined as the weight of a given
volume of the gas compared to the weight of the same amount of
air at the same temperature and pressure, where air weight is
taken as reference (= 1).
from gas is called gas sweetening.
Molecular sieves: These are zeolite granules manufactured under
Questions for Discussion 195

Notes
1. “Internal Combustion Engines – caused major developments
___________________
in petroleum refining”, Explain the statement.
___________________
2. Explain the term “Fractions”. Give an account on Fractional
___________________
composition of crude oil.
___________________
3. Write a brief note on manufacture of lubricating oils.
___________________
4. Discuss the different types of catalytic cracking plants.
___________________
5. Draw a neat flow diagram of a fluidized bed Catalytic ___________________
Cracking Process.
___________________
6. Write a note on Catalytic Reforming of Naphtha.
___________________
7. What are the petrochemical feedstocks produced in a refinery ___________________
and what are the process units where they are generated?
Further Readings
Books
Web Readings
www.linde-india.com/.../Natural%20Gas%20Processing %20Plants.
pd...
Processing.pdf
196
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 17: Petrochemical Industry
Unit 17
197
Notes
Petrochemical Industry
___________________
___________________
___________________
Objectives
___________________
topics: ___________________
\ What are petrochemicals ___________________

\ What are the various feedstock and products – overall configuration of ___________________
a petrochemical complex
\ What are base petrochemicals, intermediates and derivatives ___________________
\ Key elements in planning and integration of a petrochemical complex ___________________
___________________
Introduction
Petrochemicals are usually plastic products and chemicals that are
derived from petroleum or natural gas and are made on a large
scale. The petrochemical industry means manufacture, supply and
distribution of plastics, fibres and chemicals which are produced
from one of the petroleum products as starting material or
feedstock. Petroleum products from refinery and natural gas,
supply over 50% of the feedstock for the entire chemical industry
and more than 50% of organic chemicals.
The petrochemical industry can use other organic or inorganic
material as feedstock along with feedstock of petroleum origin. For
example polythene is made only with feedstock of petroleum origin
(naphtha or ethane as feedstock). But PVC, another petrochemical
product, besides having naphtha or ethane as feedstock, also uses
chlorine as another raw material in its manufacture.
It is amazing how much oil and gas has penetrated into our lives
today. Oil is not just petrol or diesel. The toothbrush we use to
start the day, the suit we wear, the fuel we use in our vehicles, the
car interiors, back home with cosy furniture, tapestry, and
mattress of the bed we sleep on - petrochemicals have got into our
lives everywhere.
Petrochemicals consume only a tiny fraction (5 to 6%) of the
world’s oil production to give high value products.
198
Notes
___________________
___________________
___________________
Polyester Clothing Nylon Can
___________________
___________________
___________________
___________________
PVC Pipes Acrylic Carpet
___________________
___________________ Figure 17.1: Petrochemicals in Our Lives
___________________ As one can see below, petrochemical industry starts with this
feedstock of petroleum origin, undergoes processing to generate
intermediate chemicals. These intermediate chemicals are further
processed mostly through polymerization, but also some times
through other synthesis processes to generate finished products.
A vast majority of the petrochemical products are polymers, whose
molecular size and structure are tailored by reaction process to suit
specific characteristics or properties.
Most of the petrochemical products are polymers, which means
molecules formed by combination of several (in thousands) small
molecules of olefins called monomers. Polymers are essentially
used as plastics or fibres as shown in Table 17.1.
Table 17.1: Polymers in Petrochemical Industry
Plastics Fibers
Polythene Polyester
Polypropylene Polypropylene
Polystyrene Nylon
PVC Polyurethane
Polycarbonate Cellulose
Polyester Polyacrylonitrile
Polymerization Basics
Here we will talk about the basics of Polymerization.
Monomers and Polymers

Some organic molecules with double or triple bond have tendency
to join together several times to form a large molecule. Such
molecules are called monomers. Monomers are tiny molecules e.g. 199
ethylene (mol. wt. 28). The end product is a large molecule called Notes
Polymer. A polymer could be of molecular weight of thousands or ___________________
million.
___________________
‘A’ is a monomer that combines to form a polymer. ___________________
When another different monomer ‘B’ join the same ___________________

polymer chain, the polymer is called co-polymer
___________________
A–A–A–A–A–A–A
___________________
A–A–A–A–A–A–A
___________________
B B B
___________________
Figure 17.2: Monomers and Polymers
___________________
Example: Propylene Polymerization ___________________
Monomer in this case is Propylene: CH2 = CH – CH3
A number of propylene molecules chemically combine to form
Polypropylene molecule as depicted below:
_
CH2 – CH – CH2 – CH – CH2 – CH – CH2 – CH –CH2 – CH –
CH3 CH3 CH3 CH3 CH3
If ‘n’ molecules of propylene combine to form a polymer, its

chemical formula is depicted as:
It creates numerous possibilities of molecules of different sizes and

configuration. The polymer molecule can be tailor made to suit
specific application. By selecting the catalyst and operating
conditions for polymerization, one can tailor the size and structure
of the polymer molecule.
Co-polymer
When a polymer is made by linking only one type of small
molecules or monomers together, it is called a homo-polymer.
When two different types of monomers are joined in the same
polymer chain, the polymer is called a co-polymer. Two monomers
A and B can join together in different manner to form co-polymers:
200
Alternating Co-polymer: A – B – A – B – A – B – A – B – A – B –
Notes
Activity
Find___________________
out using the Internet Random Co-polymer: A – B – A – A– A – B –B – A– A– A –
which is the thinnest and
___________________
thickest form of Polythene in Block Co-polymer: A – A – A – A – A – B –B – B –B – B –
use ___________________
in our daily lives.
Graft Co-polymer: A – A – A – A – A – A –A – A –A – A –
___________________ | |
B B
| |
___________________
B B
| |
___________________ B B
___________________ Again it creates numerous possibilities to generate polymers with
___________________ different characteristics.
___________________ z Number of molecules of ‘A’ that can be combined together to

form various polymers – it can be 2000, 5000, 10,000 or some
___________________
other number.
z Various combinations of copolymers.
z Number of molecules of ‘A’ and ‘B’ that can form the co-
polymers.
Thus polymer chemists can develop polymers of different molecular
sizes with varying properties to suit a particular application.
In other words, to a certain extent, the polymers are tailor made.
In the next section, a wide range of polymer products are
described. This gives an idea of the wide range of chemicals that
are made.
Check Your Progress

Fill in the blanks:
1. ………………….. are organic molecules with double or
triple bond that have a tendency to join together several
times to form a large molecule.
2. When a polymer is made by linking only one type of
small molecules or monomers together, it is called a
………………….. .
Some Common Polymer Plastics

In this section some common polymer plastics are described along
with examples of how they are tailored to suit a particular product
application.
Polythene 201
Notes
Polythene is among the most widely used polymers. It has simple
structure with several ethylene molecules forming a chain. In this ___________________
case ethane or naphtha is cracked to make ethylene, which is then ___________________
polymerized.
___________________
Examples of polythene products are – grocery bags, shampoo
___________________
bottles, toys, and even bullet proof vests.
___________________
Sometimes some of the carbons, instead of having straight chains
___________________
of ethane monomers joining together, have branches of a number of
monomers together. This is called branched, or low-density ___________________
polyethylene, or LDPE. ___________________
When there is no branching, it is called linear high density ___________________

polyethylene, or HDPE. HDPE is much stronger than branched
___________________
polyethylene, but branched polyethylene finds special application
for making low cost products (polythene bags) as it is cheaper.
Linear polyethylene is normally produced with molecular weights
in the range of 200,000 to 500,000. This means polymer with 7,000
to 17,000 ethylene monomers joining together. Polyethylene with
molecular weights of three to six million is referred to as ultra-high
molecular weight polyethylene, or UHMWPE. UHMWPE is so
strong that it is used for making bullet proof vests.
LLDPE Film Rolls HDPE Container

and Extruder for films and carry bag
Figure 17.3: Polythene Products
PVC
Polyvinyl chloride is the plastic commonly known as PVC. It finds
wide applications in PVC pipes for transportation of water.
PVC is made from vinyl chloride as monomer. Vinyl chloride is a
copolymer of acetylene and chlorine. Acetylene is of petroleum
origin produced by cracking of ethane or naphtha.
PVC is useful because it resists two things:
z It resists water
z It resists fire
202
It is used for making water resistant such as raincoats, shower
Notes
curtains, water pipes and floorings etc. It has flame resistance too,
___________________
because it contains chlorine. When PVC catches fire, chlorine
___________________ atoms are released, and chlorine atoms inhibit combustion.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 17.4: Vinyl Floorings
Synthetic Rubber
In the middle of nineteenth century, scientists cracked natural
rubber molecules into oil, tar and a volatile compound– which they
called ‘spirit’. The spirit molecule was identified as C5H8 and
named Isoprene.
Manufacture of Synthetic Rubbers is reverse process of above.
Synthetic rubbers are polymer products from monomers (e.g.
Isoprene) obtained from processing of feedstock from petroleum.
In 1960s, Bayer developed two types of synthetic rubber by
polymerizing Butadiene and named ‘Buna’:
z Buna S – styrene butadiene rubber, SBR
z Buna N – butadiene acrylonitrile rubber, NBR
The other major elastomers (polymers with elastic properties like
rubber) developed during mid-twentieth century are poly-
chloroprene and butyl rubber (poly isobutylene). Development of
new elastomers is taking place continuously.
203
TREAD OF TYRE: Notes
made of random copolymers
of styrene and butadiene. ___________________
SIDE WALLS:
made of polyisoprene. ___________________
INNER LINER:
___________________
made of polyisobutylene.
___________________
___________________
___________________
Polyisoprene
___________________
___________________
___________________
Figure 17.5: Automobile Parts ___________________
Check Your Progress

Fill in the blanks:
1. ………………. is the plastic commonly known as PVC.
2. Synthetic rubbers are polymer products from …………. .
Petrochemicals in Our Lives

As explained in the beginning, there are numerous plastic
polymers of petroleum origin playing major role in our lives. Let us
take a quick overview of some more plastics of petrochemical
origin.
Automobile Parts
Auto body parts are made of polymer like acrylonitrile-butadiene-
styrene plastic, called ABS.
Figure 17.6: Car Body Part Made of ABS Plastic
Electronic Industry Components

Electronics industry is based on materials like copper which are
good conductors. For effective functioning, all conductors need good
insulators.
204
Polymers being good insulators, cables are insulated with polymers
Notes
like polyethylene and polyisoprene.
___________________
For wires that get heated up, insulation made from a fireproof
___________________
polymer called polyvinylidene fluoride is used.
___________________
These are other examples of how polymers are tailor made to suit a
___________________ particular application.
___________________
___________________
___________________
___________________
___________________
___________________ Figure 17.7: Cables, Wires and Connectors
Fabrics and Fibres

Fibre industry forms another stream of the petrochemical
industry. Many of the fibres start with aromatics like Benzene and
Xylene extracted from naphtha as the starting material. The
aromatics pass through a number of processing and synthesis steps
to form plastics like:
Poly-ethylene terepthalate (PET) which are glass like material
used to make transparent bottles.
Polyester fibres, Nylon etc. which get into our clothing.
Polycarbonates which are hard and can be used as engineering
plastics to make items like gear in our car speedometers.
Sweaters : acrylics, like Dresses :polyester
polyacrylonitrile or rayon
Socks have same polymers like nylon

(and cotton/ cellulose) and spandex a kind
of polyurethane.
Figure 17.8: Fabrics and Fibres

Sweaters: Acrylics, like polyacrylonitrile or rayon 205

Notes
Dresses: Polyester
___________________
Socks have same polymers like nylon (and cotton/cellulose) and
___________________
spandex a kind of polyurethane.
___________________
Fill in the blanks:
___________________
1. Auto body parts are made of polymer like ………………. ___________________
plastic.
___________________
2. ………………. are hard fibres and can be used as
___________________
engineering plastics to make items like gear in car
speedometers. ___________________
___________________
High Impact Plastics

Generally telephone or mobile phone dropping to the ground still
works. That is because it is made of plastics which are hard and
can take impact. The outside casing is made from a special kind of
high-impact polystyrene. It is a copolymer of polystyrene with a
rubbery polymer, polybutadiene. It is much less brittle than
regular polystyrene.
This again is an example of tailoring a polymer molecule to suit a
specific application.
Many of the toys for kids, which have to bear the impact of falling
from hands and still work, are made from polystyrene.
Figure 17.9: High Impact Plastic

206
Foam
Notes
Fast food often comes in boxes made of polystyrene foam.
___________________
Napkins are made of paper, which is a form of a polymer called
___________________
cellulose.
___________________
Polystyrene again comes from aromatics as starting material.
___________________
Each of such petrochemicals passes through transformation into
___________________ other intermediate chemicals and then polymerization into final
___________________ products. Aromatic called ethyl benzene is one of the starting
materials to make polystyrene.
___________________
___________________ Another variety of foam is polyurethane foam. These are commonly

used to make mattresses.
___________________
___________________
Figure 17.10: Foams
Polypropylene
Polypropylene as the name suggests is a polymer of propylene.
Propylene is made by cracking petrochemical feedstock like
propane, butane or naphtha. The usefulness of propylene comes
from its ability to stand rain and humidity.
It is used for carpeting indoor and outdoor, making containers,
water pipes, stationary and file covers.
Figure 17.11: Polypropylene Products

Polymethyl Methacrylate 207

Notes
z Blended with aluminium oxides becomes heat resistant – sold
as laminating material for furniture ___________________
z Used as kitchen countertop ___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 17.12: Kitchen Countertop
Capsule Tray
and
Capsules
First Aid Kit
Disposable Surgery Kit
Figure 17.13: Pharmacy Products

208
Pharmacy and Cosmetics
Notes
Activity
Petrochemicals have invaded in this industry also in the form of
Give some examples of waste
___________________ numerous products like:
from manipulated Polymers
___________________
being reclaimed and z Capsule shell
remolded.
___________________
z Disposable syringes
___________________
z Containers for medicines
___________________
z Packaging for medicines
___________________
___________________ Check Your Progress

___________________ Fill in the blanks:
___________________ 1. High impact ……………….. is a copolymer of polystyrene

with a rubbery polymer, polybutadiene.
___________________
2. ……………….. is made by cracking petrochemical
feedstock like propane, butane or naphtha.
Types of Plastics
Now having identified plastic materials let us look at broad
classification based on its thermal (transformation by heat or
moulding) properties:
Thermoplastics
Organic long chain polymers that can be soft when heated are
suitable for moulding. As explained earlier, the polymers can have
different properties and application by manipulating molecular
weight. Typical examples below are of polythene (also called
polyethylene):
z LLDPE (Linear Low Density Polyethylene): Used to make
thin films
z LDPE (Low Density Polyethylene): Films, sheets, moulded
articles
z HDPE (High Density Polyethylene): Bottles, moulded
containers, pipes
z Polypropylene: Moulded articles, coarse fibres
z Polystyrene: Car interiors, disposable food containers
z PVC: Table cloth, shower curtain, shoes, auto upholstery
Waste from these can be reclaimed and remolded.
Thermosetting Resins 209

Notes
Plastics of these types undergo changes during processing such
that they can not be softened and remolded. Hence it is difficult to ___________________
reclaim such plastics. Examples of this type are: ___________________
z Phenol formaldehyde resins: glues, plywood industry, ___________________
z Urea formaldehyde resins: Storage vessels ___________________
___________________
Check Your Progress
___________________
Fill in the blanks:
___________________
1. …………………….. is used to make bottles, moulded
containers and pipes. ___________________
___________________
2. …………………….. is used to make Car interiors and
disposable food containers. ___________________
Summary
It is amazing how much oil and gas has penetrated into our lives
today. Oil is not just petrol or diesel. The toothbrush we use to
start the day, the suit we wear, the fuel we use in our vehicles, the
car interiors, back home with cosy furniture, tapestry, and
mattress of the bed we sleep on - petrochemicals have got into our
lives everywhere.
Lesson End Activity

Give the chemical formula for formation of Polythene.
Keywords
Petrochemicals: They are usually plastic products and chemicals
that are derived from petroleum or natural gas and are made on a
large scale.
Monomers: They are organic molecules with double or triple bond
which have a tendency to join together several times to form a
large molecule.
Propylene: It is made by cracking petrochemical feedstock like
propane, butane or naphtha.
210
Notes
1. What are Monomers, polymers and Co-polymers?
___________________
___________________
2. List the different kinds of Polymers in use.
___________________ 3. What are High impact plastics? Explain the different types.
___________________ 4. What are the various Thermoplastics in use? Give examples.
___________________
___________________
Further Readings
___________________ Books
___________________ Arthur J. Kidnay, William R. Parrish, Dan McCartney,
___________________ Fundamentals of Natural Gas Processing, Second Edition
___________________ Dominic C. Y. Foo, Mahmoud M. El-Halwagi, Raymond R. Tan,

Web Readings
www.linde-india.com/.../Natural%20Gas%20Processing%20Plants.
pd...
Processing.pdf
We
UNIT 18: Production of Petrochemicals
Unit 18
211
Notes
Production of Petrochemicals
___________________
___________________
___________________
Objectives
___________________
topics: ___________________
\ Petrochemicals ___________________
\ The various feedstock and products – overall configuration of a ___________________
petrochemical complex
\ Base petrochemicals, intermediates and derivatives ___________________
\ Key elements in planning and integration of a petrochemical complex ___________________
___________________
Introduction
This unit summarizes various feedstock of petroleum origin,
intermediate step of processing the feedstock and the end product.
This is further elaborated in the form of a macro-level diagram of
the whole petrochemical industry.
Feedstock to Products in Petrochemical Industry

The petrochemical industry comprises of a number of processing
steps:
The feedstocks are:
z Refinery products such as naphtha, gas oil
z Refinery gases containing olefins
z Ethane, propane, butane and NGL separated from natural gas.
Methane, which forms the bulk of the natural gas, is also a
source for petrochemicals.
The first step is to produce the base petrochemicals or primary
petrochemicals e.g. olefins (ethylene, propylene) which are
monomers, aromatics which are starting point for fibre industry,
and synthesis gas (CO and H2) which is the starting point of urea
fertilizer and methanol manufacture.
Petrochemical intermediates are generally produced by chemical
conversion of base petrochemicals to form more complicated
derivative products.
212 Table 18.1: Various Feedstock of Petroleum Origin

Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 18.1: The Petrochemical Industry
Petrochemical derivative products can be made in many ways–

directly from base petrochemicals; through intermediate products
which are based on only carbon and hydrogen; and through
intermediate products which add chlorine, nitrogen or oxygen in
the finished derivative.
Some typical petrochemical intermediates are:
z Vinyl chloride for polyvinyl chloride (PVC) resin manufacture.
z Ethylene glycol for polyester textile fibres.
z Styrene which is important in rubber and plastic
manufacturing.
213
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 18.2: Natural Gas to Petrochemicals
Then, there are polymerization and other synthesis processes to

make the bulk plastics (polymers), fibres and other bulk
petrochemicals.
There are numerous intermediate chemicals and derivatives often
needing each other to make final product. Cross flow of chemicals
take place to various process units to get into the end products.
Figure 18.3: Naphtha to Petrochemicals
Simple schematic diagram of petrochemical industry based on

natural gas route and naphtha route are given in Figure 18.3 and
Figure 18.4.
Steam reforming of methane gives intermediates to manufacture
urea fertilizer and methanol. Cracking of ethane, propane, LPG
214 etc. give olefins as intermediates, which are polymerized into

Notes
Activity plastics.
Show the chemical reactions
___________________
taking place in steam
The naphtha route has two sub-routes – the cracking route which
___________________
processing when natural gas, produces olefins to give polymer plastics and the aromatics route
methane or naphtha is taken
___________________ which gives intermediates to produce fibres.
as feedstock and synthesis
gas ___________________
(CO+H2) is produced.
Check Your Progress
___________________
1. Petrochemical intermediates are generally produced by
___________________ ……………………. of base petrochemicals to form more
___________________ complicated derivative products.
___________________ 2. The ……………………. route has two sub-routes: the

cracking route and the aromatics route.
___________________
Production of the Base Petrochemicals

The three main units to generate the base petrochemicals are:
Steam Cracking of Gases and Naphtha

In this unit, the feedstock is cracked in presence of steam under
high temperature. It takes ethane, propane, LPG, NGL, naphtha or
gas oil as feedstock and produces olefins such as ethylene,
propylene, butylene, butadiene and other intermediates by cracking.
If naphtha is cracked, besides olefins, pyrolysis gasoline containing
benzene and other chemicals are formed. Naphtha cracker also has
the advantage compared to ethane crackers that due to numerous
components of naphtha being cracked, a wider range of olefins are
formed as intermediate products. This gives the opportunity to
produce a wider range of petrochemicals compared to
ethane/propane cracker, which gives mainly ethylene and some
propylene as intermediates for making polymers.
On the other hand investment cost for naphtha cracker is higher
than that of ethane cracker.
Aromatics Extraction Unit

This unit takes reformate product from the catalytic reforming
unit of a refinery and pyrolysis gasoline from Naphtha Cracker as
feedstock. The reformate is rich in aromatics. By solvent extraction
process, the aromatics are extracted out of the reformate. Then
fractionation is done to separate the aromatic components to
produce BTX (Benzene, Toluene and Xylenes). The BTX forms the 215
intermediate product to manufacture synthetic fibres. Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure18.4: Production of the Base Petrochemicals
Steam Reforming
Takes natural gas, methane or naphtha as feedstock and produces
synthesis gas (CO+H2), which become precursors to urea fertilizers
and other petrochemical products. Methanol is an intermediate
product from which other petrochemical products like
formaldehyde and acetic acid are manufactured.
The next section describes how the base chemicals lead to
products.
Check Your Progress

Fill in the blanks:
1. Investment cost for naphtha cracker is higher than that
of …………………… cracker.
2. …………………… takes natural gas, methane or
naphtha as feedstock and produces synthesis gas, which
becomes precursors to urea fertilizers and other
petrochemical products.
Ethylene Production by Steam Cracking
Cracking to Produce Olefins

A block diagram of the process is presented in Figure 18.5. The
feedstock (e.g. ethane, naphtha) is cracked in tubular furnace at
216 high temperature (~850°C) in presence of steam. The extent of

Notes cracking and product slate depends on operating conditions and
___________________ feedstock used. Cracking produces olefins and other products.
Ethane as feedstock will produce mainly ethylene while naphtha
___________________
cracking will produce a wide array of olefins like ethylene,
___________________ propylene, butylene, and butadiene. Some pyrolysis gasoline, rich
___________________ in aromatics, is formed when naphtha is cracked.
___________________ At the reaction temperature the products are in gaseous state.
Cracked gases are rapidly quenched with water to control the
___________________
reaction. Further steps are:
___________________
z Removal of heavy components like pyrolysis gasoline
___________________ z Compression of the gases.
___________________ z Removal of acid gas and bulk water
___________________ z Drying
z Liquefaction of the gases by cryogenic (sub-zero temperature)
processing.
z Fractionation of the liquid to separate the olefins.
Thermodynamic and kinetic considerations require following
process conditions:
z Very short retention time to minimize the development of
slower condensation processes.
z Effective quench of the reactor effluents to fix the composition
and prevent any subsequent reactions.
Figure 18.5: Cracked Gas Processing
Feedstock pricing and product demand determines the selection of

feedstock for cracking to olefins.
Effect of Feedstock
The effect of feedstock on the yields of intermediates is shown in
Table 18.2. As stated earlier, naphtha and gas oil yield a wider
range of intermediates including aromatics compared to ethane.
Table 18.2: Influence of Feedstock on 217

Steam Cracker Yields (% wt)
Notes
Activity
Find___________________
out what the components
of urea fertilizer are, with the
help___________________
of the Internet.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Check Your Progress

Fill in the blanks:
1. The extent of cracking and product slate depends on
………………….. and ………………….. .
2. Feedstock pricing and ………………….. determines the
selection of feedstock for cracking to olefins.
Steam Reforming
Methane or naphtha is steam reformed to produce synthesis gas,
which is essentially a mixture of carbon monoxide, hydrogen and
carbon dioxide. CO and H2 form the basic material from which urea
fertilizer and methanol are made.
Natural gas is first treated to remove traces of H2S. Then, a
mixture of purified natural gas and steam is superheated to 850ºC
in a furnace (reformer), where it is converted to synthesis gas
consisting of hydrogen, carbon monoxide and carbon dioxide.
The reactions involved in steam reforming are:
z CH4 + H2O = CO + 3H2
z CO + H2O = CO2 + H2
218
When hydrogen is the desired product, the reforming reaction is
Notes
followed by the well-known water gas shift reaction to convert
___________________
essentially all of CO to CO2. This is done when the process is
___________________ meant for manufacture of ammonia, which is an intermediate step
___________________ for making urea fertilizer.
___________________ Various steps in the process are:

___________________ z Methane-rich gas (feed) at around 40 to 50 bar pressure is
___________________ preheated by reformer flue gas or out going process synthesis
gas.
___________________
z Preheated feed then enters the desulfuriser to ensure removal
___________________
of H2S and other sulfur compounds to a specification of
___________________
0.1 ppm.
___________________
z Steam is added to desulfurised feed and further heated to
850ºC before entering the primary reformer.
z Product gas is cooled to 340-455oC and the gas enters high
temperature shift reactor containing a catalyst.
z Removal of CO2 to get hydrogen.
To make ammonia, nitrogen produced by liquefaction of air and

distillation, is reacted with the hydrogen. Further reaction of
ammonia with carbon monoxide produces urea.
Methanol Synthesis
There are two main chemical reactions which occur in this process
step:
z CO + 2H2 = CH3OH
z CO2 +3H2 = CH3OH + H2O
These reactions are also carried out over a catalyst at around

130ºC.
The net effect of these reactions is the production of a crude
methanol stream which is about 80% methanol and 20% water.
Crude methanol from the reactor is fed to the product purification
section. This section consists of a topping column and a refining
column. Hot reformer gas provides heat for distillation. The
product methanol specification is for a water content of less that
0.10 wt %.
219
Flue Gas
Notes
Activity
Find___________________
out what the
H2O
CH4 Reformer To hydrogen comsumption of BTX in India
Natural Gas Steam To Burner consumer
is. ___________________
CO+H3 ___________________
CO+H
2 2 Methanol H2 Methanol
Converter
Synthesis Gas Purge Gas ___________________
CHOH/HO
3 2
___________________
Methanol/Water Distillation
___________________
___________________
Water
___________________
Figure 18.6: Methanol from Synthesis Gas
___________________
Fill in the blanks:

1. Methane or naphtha is steam reformed to produce
……………………. .
2. CO and H2 form the basic material from which
……………………. and ……………………. are made.
Aromatics Production
Key Aromatic Intermediates

As described earlier the main products are benzene, toluene and
xylenes (BTX), which go as feedstock for manufacture of synthetic
fibres like nylon, polyesters, etc.
Figure 18.7: World Consumption of Benzene-2010

220
Composition of Reformate and Pyrolysis Gasoline
Notes
Pyrolysis gasoline comes from the steam cracking of naphtha for the
___________________ production of ethylene, propene and higher olefins. As indicated in
___________________ Table 18.3, pyrolysis gasoline is quite rich in aromatics.
___________________ Table 18.3: Composition of Reformate and Pyrolysis Gasoline
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Aromatics Recovery Process
The first process unit for production of aromatics is Catalytic
Reforming of naphtha. As described earlier, this unit is normally
located in a refinery. To produce the key components (BTX), a
naphtha cut is prepared in the refinery which is in the boiling
range of BTX and then it is sent for reforming process. Reforming
converts paraffins and naphthenic components of naphtha to
aromatics.
The next step is Aromatics Extraction. Benzene, toluene and
xylenes are taken out of the reformer product by solvent extraction
process.
A series of distillation columns follow to separate out the benzene,
toluene and xylene components.
Benzene and toluene are distilled out in the first three columns.
Xylenes fraction, which is a mixture of the isomers ortho-xylene,
meta-xylene and para-xylene are sent to the next series of columns
to separate them.
Check Your Progress

Fill in the blanks:
1. ……………….. comes from the steam cracking of
naphtha for the production of ethylene, propene and
higher olefins.
2. The first process unit for production of aromatics is
……………….. .
Intermediate and Derivative Petrochemicals 221

Notes
Activity
The next step is to create a number of other chemicals called
Give another example of a
___________________
derivative chemicals from the base petrochemicals. derivative chemical formed
The idea is to create new products with various permutation and from___________________
its base petrochemical.
combinations of reaction between the intermediate chemicals. ___________________
It is like kaleidoscope creating different symmetrical images ___________________

through combination of bits of glasses of different colour. The
___________________
intermediates are like the bits of glasses. The finished plastics are
the end images. ___________________
Let us see some typical examples. The ideal example is the ___________________
ethylene derivatives or intermediate petrochemicals based on ___________________
ethylene.
___________________
A simple configuration of petrochemicals based on ethylene is
___________________
presented in Figure18.7. Here the primary processing of cracking
generates the base petrochemical (ethylene).
From base petrochemical, the intermediate petrochemicals are
synthesized, e.g. Vinyl chloride monomer and styrene.
The final products in the block diagram polythene, VCM are
ethylene derivatives.
Figure 18.8: Reforming and BTX Production Process
Figure 18.9: Ethylene Chain

222
Processing for End Products – Polymerization
Notes
So far we looked into the various methods to produce the base
___________________ petrochemicals. The base petrochemicals pass through a number of
___________________ processing steps to produce the end products.
___________________ The products are numerous. So are the processes. Let us look at a
___________________ few examples to understand the various steps leading to end
products.
___________________
___________________ Polymerization
___________________ Polymerization is the final step in getting commercial grade
plastics or fibres. Polymerization processes are carried out in the
___________________
presence of a catalyst. There are various techniques of initiating
___________________
and controlling the polymerization reaction. Polymerization could
___________________ be in vapour phase or liquid phase or with suspension of catalysts
in a liquid medium. The operating temperatures and pressures
vary widely from process to process.
Generally the reaction is highly exothermic. Hence removal of heat
during the reaction is important in controlling the reaction.
Polymers are formed as granules in the reactor. They are
separated, dried and finally packed as bulk product.
Polythene Production
Ethylene is fed to the reactor bed reactor where polymerization
occurs. The temperature is controlled by circulation of the contents
of the reactor through a cooler. The polyethylene are withdrawn
from the reactor, and treated to stop residual catalyst activity.
Depending on the requirement of the polyethylene grade and end
product application, the polyethylene is either conveyed to the
extruder systems where additives are combined to produce natural
pelletised grades or to the compounding facility, where the product
is combined with dedicated colour master batches to form fully
formulated compounds.
The resins are then dried, homogenized and bagged for delivery.
223
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 18.10: Processing for End Products ___________________
___________________
Polyvinyl Chloride (PVC)
___________________
Polyvinyl Chloride is a chlorinated hydrocarbon polymer. It is
produced from vinyl chloride monomer (chemical formula
CH2=CHCl). The monomer is called VCM.
It is one example where besides feedstock of petroleum origin, an
inorganic compound also is one of the raw materials. Vinyl
Chloride Monomer (VCM) is produced from the raw materials of
ethylene and chlorine.
For the production of PVC, VCM need to be produced first. VCM is
produced in three steps in figure 18.11
Direct chlorination: Ethylene and chlorine are combined in a
continuous process to form Ethylene Dichloride (EDC).
EDC cracking: EDC is thermally decomposed into VCM and
hydrogen chloride.
The hydrogen chloride is recycled as feedstock to a further stage,
the oxychlorination. Unconverted EDC is separated and recycled.
The VCM is purified for use in PVC production.
Oxychlorination: Recycled hydrogen chloride is reacted with
further ethylene feedstock in the presence of copper chloride
catalyst and oxygen. This produces further quantities of EDC,
while excess hydrogen is oxidized to form water.
VCM thus produced is taken to the next step, which is
polymerization to PVC.
224
Hydrogen Chloride Recycle
Notes Ethylene EDC Recycle
Oxychlorination
___________________ Oxygen
EDC Purification EDC Cracking VCM
Ethylene
___________________
Direct Chlorination
Chlorine
By Product
___________________ Water
___________________
Figure 18.11: Process for VCM
___________________
___________________
___________________
___________________
___________________
___________________
Figure 18.12: PVC Process
Check Your Progress

Fill in the blanks:
1. Polyvinyl Chloride is a chlorinated …………………
polymer.
2. For the production of PVC, ………………… needs to be
produced first.
Summary
In this unit, an overview of the processing steps in the
petrochemical industry was presented with macro-level block
diagram, defining the feedstock and the final products. The steps
were further elaborated for each of the major feedstock like
naphtha and ethane.
The primary petrochemical units like steam cracker, steam
reforming and aromatics unit were described with flow diagram.
The base petrochemicals produced by the primary units were 225

defined. Notes
The processing steps required converting the base petrochemicals ___________________

into derivative petrochemicals and final products were described. ___________________
___________________
Lesson End Activity
___________________
Make an integrated block diagram of a petrochemical complex with ___________________
both naphtha and ethane as feedstock.
___________________
___________________
Keywords
___________________
Petrochemical Industry: Means manufacture, supply and
___________________
from one of the petroleum products as starting material or ___________________
feedstock.
PVC: Polyvinyl chloride is the plastic commonly known as PVC. It
finds wide applications in PVC pipes for transportation of water.
Polyethylene terepthalate (PET): They are glass like material

1. What is the feedstock for petrochemical production and how is
the feedstock generated? Trace from the oil and gas as starting
material with block diagram.
2. Identify 10 items of daily use of petrochemical origin and
identify the base petrochemical from which they are made.
3. Describe with a block diagram use of methane as feedstock.
4. Describe ethane cracking process with block diagram.
5. Draw a block diagram tracing the origin of polythene from the
gas field.
6. What is polymerization? What are copolymers? Describe the
process to make PVC.
8. Expand the following:
(a) PVC
(b) VCM
(c) LLDPE
226
9. Describe thermoplastic and thermosetting resins with
Notes
examples.
___________________
___________________
Further Readings
___________________
___________________
Books
Albert V. Hahn, Roger Williams, Herman Zabel, “The
___________________
petrochemical industry: market and economics”, Technology &
___________________
Engineering, 1970
___________________
Alain Chauvel, Gilles Lefebvre, 1989, Petrochemical Processes:
___________________ Major Oxygenated, Chlorinated and Nitrated
___________________ Klaus Weissermel, Hans-Jürgen Arpe, Industrial organic
___________________ chemistry, Science
Web Readings
en.wikipedia.org/wiki/Petrochemical
www.cci.in/pdf/surveys.../chemical-petrochemical-industry.pdf
www.chemtech-online.com/.../01/indian-petrochemical-
industry.php
info.shine.com › Industry Information
UNIT 19: Transportation of Oil, Gas and Products: Pipelines
Unit 19
227
Notes
Transportation of Oil, Gas and

___________________
___________________
Products: Pipelines ___________________
___________________
Objectives ___________________
___________________
topics:
___________________
\ Basic configuration of pipeline and its hardware components
\ Special technologies used in pipeline like SCADA, Intelligent Pigging, ___________________
etc.
___________________
\ Salient features of offshore and on-land pipeline
___________________
Introduction
Hydrocarbons need to be transported from the place where it is
produced, to the different users. This unit talks about the different
forms of transportation of such Hydrocarbons through pipelines.
Modes of Transportation
Hydrocarbons, liquid or gas can be transported from the source of
generation to the bulk user in different ways depending on the
location of the source and the user; whether they are located at
land or sea, the distance and terrain between the two and the
quantity to be transported.
Bulk transportation is done by:
Pipeline
Marine Tankers and Barges
Road and Railway Tankers Pipeline
Pipeline is used for transportation on land (onshore pipeline) and
also along the bed of sea (subsea or offshore pipeline), up to a few
hundred meters of water depth. For bulk movement of hydrocarbon,
pipeline is often the most economical way of transportation. Long
distance pipeline is also termed as cross country pipeline, since the
pipeline crosses through several hundred kilometres of land across
the country or covering a number of countries. Land based pipeline
228 is far more economic. Subsea pipeline is used where either pipeline
Notes has got to cross the sea or the land is inaccessible due to unfriendly
___________________ terrain or other reasons.
___________________
Marine Tankers and Barges
___________________
Marine tankers and barges are used for bulk supply across the sea,
___________________ where for some reason transport by subsea pipeline is either not
___________________ economical (e.g. due to depth of sea) or technically or politically not
feasible. Supply of the cargo is effected in batches and not continuous.
___________________
___________________ Road and Railway Tankers

___________________ Road and railway tankers are used for transport where the bulk
___________________ quantity of the cargo is comparatively less, transport is on land
and the distances are also comparatively less.
___________________
Oil and Product Transportation in India

A vast network with combination of marine tanker, pipeline, road
and rail transportation mode is used:
Crude oil from indigenous sources is brought to the refinery by
pipeline. For imported crude oil, import up to the port terminal
is by marine tankers and it is taken further by pipeline.
The products distribution network from refineries to depots is
by road, railway and also product pipeline. Marine
transportation is also used for products.
Transportation to the retail outlets from depots is normally
done by road tankers.
Transportation of gas is normally by pipeline. LNG is transported
by marine tankers. LPG can be transported by pipeline, marine
tankers, road and railway tankers.
Figure 19.1: Modes of Transportation

229
Check Your Progress
Notes
Fill in the blanks: Activity
Find___________________
out using the Internet
1. For bulk movement of hydrocarbon ………………… is which are the Major Gas
___________________
often the most economical way of transportation. pipelines in India.
___________________
2. Long distance pipeline is also termed as ……… pipeline.
___________________
Pipeline Systems ___________________
___________________
Pipeline is the most preferred option to transport oil, gas or
products in bulk. It could be thousands of km long, branched and ___________________
networked. ___________________
Configuration of both oil and gas pipeline are very similar. A cross
___________________
country oil or gas pipeline system normally starts with pumping of
oil or compression of gas to develop the requisite pressure to travel ___________________
a long distance. The pressure required for pumping of oil or

compression of gas depends on pipeline length, pipe diameter, and
destination pressure requirements. For long pipelines (hundreds of
km), booster compressors for gas pipeline and booster pumps for oil
pipeline are required along the length.
Gas or oil (or any other liquid being transported) is distributed
along the length to many customers. Normally the following
minimum processing facilities are required upstream at the
oilfield, which has been described earlier:
Separation of oil, condensate and free water
Compression of gas, if necessary to deliver at required
pressure at shore
Pumping of oil
Dehydration of gas to protect the pipeline from corrosion
Sweetening, if necessary, to remove H2S
Metering
Corrosion inhibitor injection
Configuration of Cross Country Pipeline

A typical cross country pipeline system starting from an offshore
field has the following facilities along its route as shown in Figure
19.2:
An offshore platform where the oil or gas is produced.
PLEM near the platform (Pipeline End Manifold) from where
the pipeline starts (or a Despatch Terminal on land).
230
An SPM (Single Point Mooring) connecting the subsea pipeline
Notes
to a tanker, if oil is transferred from a tanker instead of
___________________
platform.
___________________
Pig Launcher.
___________________
Subsea pipeline reaching shore at what is called Landfall
___________________ Point.
___________________
A Receiving Terminal at the landfall point. It has equipment
___________________ like pig receiver, filter, storage for oil, pumping for gas,
___________________ processing of gas, compression and dehydration. The
description of the various equipments is given in later part of
___________________
this unit.
___________________
From the receiving terminal oil or gas is sent through cross
___________________ country pipeline, which could be hundreds of kilometres in length
to several customers along the route. There could be several
customers along the routes like power stations, fertilizer plants or
other industries.
For distribution to each customer, there will be a Distribution
Terminal having filter, meter, etc.
Normally, there are booster stations with booster compressors for
gas and booster pumps for oil after every few hundred kilometres
to compensate for the pressure loss in the pipeline.
The entire facility is monitored and managed by SCADA system.
SCADA is a central monitoring system, which monitors the entire
pipeline parameters over several hundred kilometres by telemetry
and telecontrol.
Normally, LPG and petrochemical feedstock like ethane/propane
are taken out before giving the gas to the industrial consumer. The
bulk of the remaining gas is mainly methane (above 90% by
volume).
Figure 19.2: Pipeline Configuration

Example of Cross Country Pipeline 231

Notes
There are several pipelines in Europe and the Americas over
thousand kilometres long, carrying gas, or oil or products. In India ___________________
the longest pipeline so far is the HBJ Pipeline (Named after the ___________________
land route Hazira-Bijapur- Jagdishpur) along with its origin at the
___________________
offshore fields at the west coast.
___________________
The line originates at offshore, carrying associated gas from
Mumbai High and free gas from South Bassein fields to Hazira. It ___________________
is a 36 inch diameter pipeline. It was designed to carry ___________________

20MMSCMD of gas, expandable to 30 MMSCMD capacity. After ___________________
treatment of gas at Hazira, the HBJ pipeline starts with
___________________
compression of the gas. Its first phase was 1700 KM long, traveling
through Gujarat, Rajasthan, Madhya Pradesh to UP and North ___________________
India. Along its entire route, it provides feedstock to a number of ___________________
fertilizer plants and power plants at a number of places (Guna,
Vijaipur, etc.) LPG plants extract the LPG before the gas is given
to the buyer. Also there are six booster stations.
Figure 19.3: HBJ Pipeline
Pipeline Facilities Description

Now let us look at the some of the equipment described in the
previous section in order to get a better understanding.
232
PLEM and SPM
Notes
Figure 19.4 shows offshore platform linked to a PLEM, from where
___________________ the pipeline starts. PLEM means Pipeline End Manifold, which is
___________________ essentially a set of valves and flanges along with pipe header
supported by steel structure, from where the pipeline carrying oil,
___________________
gas or any other material starts. Piping from the platform carrying
___________________
oil or gas is joined at the PLEM, which is fixed at the sea bed by
___________________ piling.
___________________ PLEM also has pig launcher, the function of which will be
___________________ explained later.
___________________
___________________
___________________
Figure 19.4: Offshore Platform and PLEM
Figure 19.4 also shows a tanker being loaded with the oil produced
in the platform. For this a floating manifold called SPM (Single
Point Mooring) is utilized. A more detailed picture of an SPM is
It essentially is a floating manifold in a buoy, connected by flexible
hose to the PLEM, and permanently anchored in the seabed. An oil
tanker can be anchored near the SPM, get connected to the
manifold at the SPM and receive the oil through the PLEM.
Figure 19.5: Tanker Receiving Oil from an SPM
SPM (also known by various trade names like SBM i.e. Single
Buoy Mooring) can also be used to unload from a tanker and take
oil and product to storage terminal at shore. In such cases where 233
product or oil is imported by tanker, the tanker anchors near the Notes
shore, as near as it can come with available draft in the sea. An ___________________
SPM is anchored at that point connected to a PLEM. PLEM has
___________________
pipeline leading to the shore terminal.
___________________
Pigging and Pig Launcher/Pig Receiver ___________________
Long distance pipelines need cleaning and monitoring from time to
___________________
time, which is done by Pigging. A pig is a cylindrical or spherical in
___________________
shape, made of metal or plastic with or without brushes at the edge
and having diameter close to the pipe diameter. It is pushed inside ___________________
pipeline through a pig launcher normally at the pumping or ___________________
compression station. Originally it was developed for cleaning and
___________________
pushing the condensate out of pipelines.
___________________
Pigging is primarily the processes or activities of sending a Pig
through a pipeline. It may also include defining the purpose of
pigging, selection of suitable Pig, launching and receiving the Pig
and tracking the Pig as it passes through the pipeline. The main
purpose or functions of pigs are:
To clean and remove debris.
For pre-inspection and certification of newly built pipeline.
To maximize efficiency and ensure continuous operation by
removing pipeline deposits.
To monitor corrosion and damage on the internal surface of
the pipeline.
Today intelligent pigging is an accepted way of pipeline monitoring
and maintenance. Intelligent pigs have electronic device that scans
and monitors pipeline inner surface and thickness and records the
data. They are also known as smart pigs.
Pictures of various types of pigs are presented in Figure 19.6.
Figure 19.6: Pigs of Various Types

234
Pig Launcher is used for launching and despatching pigs to the
Notes
outgoing pipeline. The launching station is located at oil/gas
___________________ source. The launching station comprises of a pig launcher. After
___________________ the pig is launched into the pipeline, it is trapped at the other end
of the pipeline by Pig Receiver.
___________________
___________________ Metering and Quality Measurements

___________________ Metering is very important equipment in oil and gas pipeline
___________________ distribution system. They have to be accurate, standardized and
calibrated. It has to be certified and accepted by both oil/gas
___________________
producer and the customers, since the huge financial transaction
___________________ takes place based on quality and quantity of the oil or gas being
___________________ distributed.
___________________ Along with the meter to measure the quantity of oil or gas being
transferred, there has to be an instrument for online measurement
of quality. For example, for oil it is important to measure water
content. Also temperature and pressure need to be measured for
volume standardization.
For gas, the temperature and pressure are measured to quantify
the gas under standard conditions. The composition is measured
online for the quality of gas in terms of calorific value and
contaminants.
Storage and Pumping of Oil

Storage and pumping of oil in the terminals or booster stations in
the oil pipeline system is one of the most important facilities. Often
a large Storage Terminal is built for the refinery. A typical flow
diagram of oil, storage, pumping and pig launcher facility is shown
in Figure 19.7. Normally there is a booster station every few
hundred kilometres. There are pig receivers and pig launchers
besides storage and pumping system.
Gas Compression Facility

As in case of the oil, besides compression at the source, for a cross
country gas pipeline, booster stations are required every few
hundred kilometres to maintain the pressures in the pipeline.
Normally, pipeline pressures are maintained above desired
pressure as the additional compression provides some for gas
storage in the pipeline.
235
Notes
___________________
___________________
___________________
___________________
___________________
___________________
Figure 19.7: Oil Storage and Pumping ___________________
Filter/Coalescer ___________________
In gas pipelines, Gas Filter Coalescer is used for the cleaning of the ___________________
arriving gas from dust particles and for removal of any entrained ___________________
liquid from the gas. Normally, there will be two filters arranged in
parallel in the system – one in operation and the other in standby
condition.
Pressure Reducing Station

Often gas has to be delivered at specific pressures, which may be
lower than the pipeline pressure. Pressure Reducing Station is
used for reducing the pressure of the incoming upstream gas to the
required downstream pressure.
Burial Philosophy – Onshore Pipelines

Onshore pipelines should be buried to protect them from
mechanical damage, fires and tampering. A depth cover of 0.8 M to
1 M would be adequate in most cases. The location of buried
pipelines should be clearly identified by markers.
In areas where the risk of interference by mechanical excavators is
high, a warning tape should be installed in the excavation above
the pipeline to further lower the risk.
Burial Philosophy – Offshore Pipelines

The section of the pipeline within the shore approach should be
buried to a depth to ensure that it is not exposed due to erosion of
sand. There is otherwise no requirement to trench or bury offshore
pipelines, unless necessary in order to achieve pipeline stability,
mechanical protection or thermal insulation.
236
It should be noted that protection against dragging anchors from
Notes
large ships, particularly in soft soils, requires significant burial
___________________
depths.
___________________
Special Features and Systems for Pipeline Installations
___________________
___________________ Pipeline Corrosion Control

___________________ Pipeline facility requires huge investment and carries large bulk of
___________________ oil and gas resources vital to the economy of a country. Protection
of pipeline from corrosion and corrosion control are vital for
___________________
preservation of the asset. It should be noted that most pipelines
___________________ are buried more than 1.5 meters deep for safety and environmental
___________________ considerations.
___________________ There are two types of corrosion in the pipeline:
Internal Corrosion due to chemical reaction of metal with
corrosive components of the gas like CO2, H2S.
External Corrosion due to the external environment of the

pipeline i.e. soil, water, etc. Caused by electrochemical process.
The internal corrosion (due to the presence of CO2, H2S) is
prevented by ensuring that there is no condensation of moisture in
the pipeline. Both CO2 and H2S become corrosive when water in
liquid form is present. This is generally accomplished by
dehydrating gas at supplier’s end and corrosion inhibitors can also
be injected in the pipeline.
The external corrosion can be quite severe as shown in Figure 19.8.
Figure 19.8: Corrosion on Unprotected Buried Pipe
External corrosion in a buried pipeline is electrochemical type of

corrosion and takes place due to formation of anodic and cathodic
sites on the body of the pipeline. Anodic and cathodic sites form for 237
many reasons: Notes
Impurities or inclusions in the metal ___________________
Localized stresses ___________________
___________________
Grain size or composition differences
___________________
Discontinuities on the surface
___________________
Differences in local environments (e.g., temperature, oxygen,
or salt concentration) ___________________
___________________
Cathodic protection is a procedure by which an underground
metallic pipe is protected against corrosion. A direct current is ___________________
impressed onto the pipe by means of either a sacrificial anode or a ___________________
rectifier (DC Source). Corrosion will be reduced where sufficient
___________________
current flows onto the pipe.
Pipeline Coating
All buried pipelines are coated externally (Figure 19.9) by a
suitable anti-corrosion coating, supplemented by cathodic
protection which covers any damaged or deteriorated area of the
coating. For each specific pipeline system the selection of the
coating material is based on the specific corrosion problems to be
encountered. Coating material used for the external protection of
oil and gas transmission pipeline systems are:
Hot applied asphalt or coaltar enamels
Polyethylene coatings (PE)
Fusion bonded epoxy coatings (FBE)
Plastic tape wrappings
Asphalt mastic coatings
Cold applied epoxy coal tar coatings.
Figure 19.9: Coating Being Applied on Pipeline

238
Flare and Venting
Notes
___________________ The pipeline system is provided with flare and venting system,
which handles the relief and blow-downs of the contained
___________________
hydrocarbon in the system.
___________________
___________________
Control and SCADA
___________________ Control of pipeline spanning several hundred kilometres poses a

difficult challenge. The monitoring and critical control is done from
___________________
Master Control Station using SCADA System. The SCADA System
___________________ provides the operational interface to support the operation of
___________________ natural gas pipeline system. The interface provides the capacity to
acquire pipeline and pipeline facilities operation conditions and
___________________
status.
___________________
SCADA stands for Supervisory Control and Data Acquisition.
A simple schematic representation of SCADA System is given in
Fig. 19.10 and 19.11.
It refers to the combination of the fields of telemetry and data
acquisition. SCADA encompasses the collection of the information,
the method of transfer from the remote site, the analysis and
control of the system and display of the received information.
It is done with measurement of data and parameters at various
locations and transmission using communication medium like
optical fibre or microwave or satellite communication linked to
computers.
Figure 19.10: SCADA System
SCADA facilitates the capability to monitor and control network

operations in real time. SCADA systems are distinguished from
traditional control systems by their extensive use of telemetry to
link physically isolated measurement and control points.
239
The use of SCADA system facilitates:
Notes
Activity
Operation and Maintenance
Using the Internet, find out
___________________
Planning more about Right of Way
___________________
(ROW).
Safety Management ___________________
Accounting ___________________
SCADA is also used for Leak Detection along with flow modelling ___________________
software. Dynamic Fluid Dynamic models for pipeline flow of oil
___________________
and gas can monitor the flow measurements at various locations in
___________________
the pipeline, match them with the supply volumes and consumer
withdrawals and predict leakages and approximate location of the ___________________
leakage. ___________________
___________________
Figure 19.11: Pipeline Real-Time Telemetry System
Check Your Progress

Fill in the blanks:
1. SCADA facilitates the capability to monitor and control
network operations in ……………… time.
2. Cathodic protection is a procedure by which an
underground metallic pipe is protected against ……… .
Pipeline Project Implementation

Like any other project, a cross country pipeline project too passes
through various phases of implementation from feasibility study to
design, construction and operation as shown in Figure 19.12. But
240 like any other industry, there are certain special aspects that need
Notes to be taken care of in a pipeline project.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 19.12: Pipeline Project Implementation
Safety and reliability in design and construction is important as

pipeline carries a huge reservoir of explosive substance through
environmentally sensitive areas.
Also since access is required on the land through which the
pipeline passes, legalities involved in getting Right of Way (ROW)
is a very important.
Some of these aspects will be discussed in this section.
Pipeline Design Features
Basic Parameters
The pipeline is designed taking into consideration the operating
conditions and requirements over its entire projected life cycle
including final abandonment, i.e.
The maximum planned throughput and turn-down
The characteristics of the fluids to be transported
The pressure and temperature requirements
The mode of operations
The geographic location, and the environmental conditions.
Hydraulic Design 241

Notes
In order to determine the possible range of operational parameters
of the pipeline, a hydraulic analysis should be performed. ___________________
For a given pipe size, fluid properties and flow rate, the hydraulic ___________________
analysis should provide the pressure and temperature profiles all ___________________
along the pipeline for steady state and transient conditions.
___________________
Full account should be taken of possible changes in flow rates and
___________________
operational modes, over the complete operational life of the
___________________
pipeline.
___________________
The hydraulic analysis should provide information on: surge
pressure during shutdown of a liquid line, turn-down limitations ___________________
and inhibition or insulation requirements to prevent wax or ___________________

hydrates deposition, effect of flow conditions on the efficiency of
___________________
corrosion inhibitors, liquid hold-up and slug control requirements
at the downstream end of two phase lines.
Three most important end results of design are:
Material of pipeline
Diameter of the pipeline
Wall thickness
Pipe Material Selection

The selection of the pipeline material type is a fundamental issue
to be decided at the conceptual design stage of a pipeline project.
The most frequently used pipeline materials are carbon steel.
When the fluid is corrosive, due to presence of hydrogen sulfide,
carbon dioxide, or oxygen, special steel is used. The potential long-
term impact of corrosion has to be considered during design and it
can be demonstrated that the pipeline can remain fit-for- purpose
throughout its lifetime.
Diameter of the Pipeline

The diameter depends on:
Available pressure drop i.e. the difference between starting
pressure (P1) and desired delivery pressure (P2)
Actual pressure drop depends on design flow rate (Q) selected

and friction factor.
Static head adds up to pressure differential in case of liquids.
242
Actual pressure drop should be less than available pressure
Notes
drop
___________________
___________________ Wall Thickness

___________________ Wall thickness of the linepipe depends on the strength of pipe
material and the internal pressure of the fluid inside the pipeline.
___________________
___________________ Pipeline Risks

___________________ The most common pipeline threats which may lead to the loss of
___________________
technical integrity are given below:
___________________ Internal corrosion and Hydrogen Induced Cracking (HIC)
___________________ Internal erosion.
___________________ External corrosion and bi-carbonate stress corrosion cracking

Mechanical impact, external interference.
Fatigue, e.g. sudden surges of pressure in the fluid
Hydrodynamic forces
Geo-technical forces
Growth of material defects
Over-pressurization
Thermal expansion forces
Environmental Impact Assessments (EIA)

The factors which are critical to public safety and the protection of
the environment should be analysed over the entire life of the
pipeline, including abandonment. The risk should be reduced to as
low as reasonably practicable, with the definite objective of
preventing leaks. The level of risk may change with time, and it is
likely to increase to some extent as the pipeline ages.
An environmental impact assessment is carried out for all
pipelines or groups of pipelines. EIA is a process for identifying the
possible impact of a project on the environment, for determining
the significance of those impacts, and for designing strategies and
means to eliminate or minimize adverse impacts.
Pipeline Routing
The selection of the route is done by taking full account of the
associated risks, particularly safety and environmental risks, the
accessibility for maintenance and inspection, as well as normal 243

direct cost considerations. Notes
___________________
Pipeline Construction
___________________
Pipeline construction is performed in accordance with the relevant
sections of the ANSI/ASME Codes, and has to comply with any ___________________
additional criteria resulting from the design. The construction ___________________

procedures ensures that the pipeline is installed safely, on time
___________________
and with minimum impact on the environment.
___________________
Steps in onshore pipeline construction are:
___________________
Survey and Route Selection
___________________
Securing Right of Way (ROW)
___________________
Site Preparation ___________________
Coating and Delivery of Pipe Pieces at Site
Welding and Stringing
Inspection and Testing
Laying of Stringed Pipe
Hydro-testing
Mechanical Completion
Site Restoration
Survey and Route Selection

The selection of the route is done by taking full account of the
associated risks, particularly safety and environmental risks, the
accessibility for maintenance and inspection, topography, soil data,
river crossings, road crossings as well as normal direct cost
considerations. This involves a lot of surveys and analysis of
possible routes based on maps, aerial surveys, satellite imagery,
GPS (Global Positioning System) and other techniques.
Securing Right of Way

For the most part, cross country pipelines are not visible because
they are located under the street or are buried in rights-of-way
(ROW) secured by an easement. Easement implies right held by
one person to make use of the land of another person for a limited
purpose, right of way, license or permit.
244
Before a pipeline is constructed, ROW is obtained to secure the
Notes
land rights necessary to construct, operate and maintain the
___________________
pipeline. The ROW agreement restricts the landowner’s rights
___________________ within the ROW corridor to uses that are compatible with the
___________________ operation and maintenance of the pipeline.
___________________ The ROW width is normally 30 meters for construction and 15

meters for operation.
___________________
___________________ Site Preparation

___________________ The route is cleared of trees and plant life, the topsoil removed and
___________________ all material stockpiled for re-instatement (clear and grade). Pipe is
delivered by truck and laid along the route (see Figure 19.13 and
___________________
Figure 19.14).
___________________
Coating of Pipeline
Exterior of pipes is generally coated at the shop or site. But at the
time of stringing coating may be partly damaged. The coating is
repaired and welded joints are freshly coated for corrosion
protection.
Stringing
The pipelines themselves are fabricated from 12 metre pipe
lengths. They are then welded into 250 metre lengths, known as
strings. The pipe is then lowered into the trench. Backfill material
is added beneath and around the pipe to secure it in place.
When the pipe is covered to a depth of at least one meter,
restoration of the area begins.
If necessary, the pipe is bent to follow the natural contour of the
land. Welds are stringently tested to ensure their integrity. This is
done while laying the pipeline in a string (see Figure 19.14).
Inspection and Testing

1. Non-Destructive Testing (NDT): Pipelines are tested by
NDT methods. The two techniques most used are:
Radiography Testing (RT): X-ray plates are obtained using
Gamma isotopes for all weld joints.
Ultrasonic Testing (UT): In this method high-frequency
sound waves are used to detect imperfections or changes
in a material. Reflections or echoes are returned from
spots in the material, where the density is lower (weld 245

penetration is inadequate). Notes
Other methods of NDT are: ___________________
Magnetic Particle Testing (MPT) ___________________
___________________
Liquid Penetrant Testing
___________________
2. Hydro-Testing: After full length of the pipeline is laid, the
Hydrotesting of the pipeline is normally conducted from end to ___________________
end. ___________________
___________________
___________________
___________________
___________________
Figure 19.13: Laying of Pipeline
Figure 19.14: Pipeline Right of way

246
Operating and Monitoring of Pipeline
Notes
There are three important features of operation and monitoring of
___________________ pipelines:
___________________ (1) Overall control and monitoring of pipeline by SCADA
___________________ system from a Master Control Station (MCS) as described
___________________
earlier.
___________________
The types of instrumentation in a pipeline system can
comprise the following:
___________________
Flow, pressure, temperature measurements (Flow
___________________
indicators, Pressure indicators, Temperature indicators)
___________________
Quality measurements
___________________
Safety systems
___________________
Supervisory Control And Data Acquisition (SCADA)
systems.
Leak detection systems.
The data is transmitted from various locations in the cross
country pipeline system to the MCS from where the whole
pipeline operation is monitored.
The SCADA system is also used for leak detection by
comparing mass flow rates through the pipeline at various
locations along the route. It can detect leak up to 0.5-1.0% of
the total flow and locate it .
Other applications of SCADA system are:
Pipeline efficiency monitoring
Monitoring movement of pigs
Pipeline integrity monitoring and leak detection
Gas quality monitoring
Early warning of adverse operating condition
(2) Inspection and Surveillance all along the Route (ROW)
Inspection and maintenance of the pipeline and accessories all
along the ROW is carried out at regular intervals.
The pipeline can be swiftly shutdown if control centre
operators observe abnormal conditions. Automatic shutdown is
also prompted by the SCADA system when preset safety limits
are exceeded.
247
Surveillance and protection along ROW is carried out by:
Notes
Using aircraft, land vehicle or foot patrol, to look for
___________________
potentially damaging activities such as unauthorized
digging and construction. ___________________
___________________
Using high resolution satellite imagery for outside
intervention and sabotage attempts. ___________________
Adding traffic barriers to above ground equipment near ___________________

roadways. ___________________
Reviewing locations of, and supplementing where ___________________

appropriate, to the existing ROW markers.
___________________
Increasing ground surveillance of lines in densely ___________________
populated areas.
___________________
(3) Monitor and Protect the Pipeline from Corrosion
Intelligent pigging with sensors in the pig, transmitting data
on pipeline inside surface is used for:
Corrosion monitoring – Curvature monitoring – Leak
detection
Metal-loss/corrosion detection
Photographic inspection;
Crack detection
The cathodic protection system for the external corrosion of
the pipeline also needs regular monitoring.
Cost Comparison of On-Land and Sub-Sea Pipelines

The major cost of on-land pipeline will comprise of:
Survey of Route
Acquiring ROW
Line Pipe
Wrapping and Corrosion Coating
Welding of Line Pipe
Trenching
Laying of Pipes
Backfilling and Restoration
248
Cathodic Protection by Impressed Current System
Notes
___________________
Placement of Route Markers
___________________ The major cost of subsea pipeline will comprise of:
___________________ Survey of seabed route including measurement of current and

wave
___________________
___________________
Line Pipe
___________________ Concrete Coating for Weight Enhancement
___________________ Cathodic Protection by Sacrificial Anodes
___________________ Laying of Pipes by Laybarge

___________________ Welding of Line Pipes (partly on barge)
___________________ Installation of Pipe Risers (vertical line from the platform to
sea bed)
The cost of line pipe may be almost the same for the same quantity
of fluid flow (except in case of subsea pipe line the thickness may
be increased for stability and safety). The major difference between
on-land pipeline and subsea pipeline is the cost of concrete coating,
cathodic protection (sacrificial anode is much costlier than
impressed current system), and the pipeline laying method.
The on-land pipeline is laid by side boom tractors, whereas for the
subsea pipeline the laying is by lay-barge. The rates for lay-barge
is much higher than rates for side-boom tractors.
Check Your Progress

Fill in the blanks:
1. ………………….. is a process for identifying the possible
impact of a project on the environment, for determining
the significance of those impacts, and for designing
strategies and means to eliminate or minimize adverse
impacts.
2. The most frequently used pipeline materials are
………………….. .
Summary
In this unit, the various modes for bulk transportation of
hydrocarbon resources were described at the beginning. This was
followed with a detailed description of pipeline transportation 249

facilities. At first a system description of a cross country pipeline Notes
starting from an offshore or onshore oilfield was given. ___________________
Subsequently each component of the system such as terminals,
___________________
pigging, pumping or compressor stations etc. was described in
detail. ___________________
A macro-level description of parameters taken into account in ___________________
design and optimization of a pipeline was given. Also various steps ___________________
in implementing pipeline projects and construction of cross country ___________________
pipeline was described. This was elaborated with an example of a
___________________
cross country pipeline project. Various factors taken into
consideration for a grass roots project example (HBJ Pipeline) were ___________________
elaborated. ___________________
___________________
Lesson End Activity
Write a short essay on Supervisory Control and Data Acquisition
(SCADA) systems.
Keywords
SCADA: It is a central monitoring system, which monitors the
entire pipeline parameters over several hundred kilometres by
telemetry and telecontrol.
Pipeline End Manifold(PLEM): It is essentially a set of valves
and flanges along with pipe header supported by steel structure,
from where the pipeline carrying oil, gas or any other material
starts.
Pig: A pig is a cylindrical or spherical in shape, made of metal or
plastic with or without brushes at the edge and having diameter
close to the pipe diameter.
Pigging: It is primarily the processes or activities of sending a Pig
through a pipeline.

1. Which are the different modes of transportation of
Hydrocarbons?
2. Pipeline is the most preferred option to transport oil, gas or
products in bulk. Why?
250
3. Explain the configuration of a Cross-country pipeline.
Notes
___________________
4. Explain the following terms:
___________________ (a) SCADA
___________________ (b) PLEM
___________________ (b) SPM

___________________ 5. Explain the process of Pigging.
___________________ 6. What is Pipeline Project Implementation? Explain.
___________________
___________________ Further Readings

___________________
Books
___________________
Jean Masseron, “Petroleum Economics”, Technology & Engineering
H. K. Abdel-Aal, Bakr A. Bakr, M. A. Al-Sahlawi, “Petroleum
Economics and Engineering”, Technology & Engineering, 1992
Alberto Clô, “Oil Economics and Policy”, Business & Economics,
2000
M.A. Adelman, (1962-1993), “The Economics of Petroleum Supply”,
Technology & Engineering - 1962
Ian Lerche, Sheila Noeth, (2004), Economics of Petroleum
Production: A Compendium, Volume 2
Web Readings
www.youtube.com/watch?v=AuvvaZrUDe4
reaccess.epu.ntua.gr/LinkClick.aspx?fileticket... tabid=579&mid
www.careersinoilandgas.com › ... › Occupational Summaries
UNIT 5: Case Study
Unit 20
251
Notes
Case Studies
___________________
___________________
___________________
Objectives
___________________
After analyzing these cases, the student will have an appreciation of the
___________________
___________________
Case Study 1: Loading Arm
___________________
As one of the few Australian companies with Loading Arm
experience, Camco was contracted by a major gas producer to ___________________
refurbish their Condensate Loading Arms. The Loading Arms
___________________
were removed by our team and transported Perth for
refurbishment. The overhaul of the Loading Arms required a
significant commitment of workshop facilities and available
engineering disciplines.
Problem:
The Loading Arms were in poor condition and needed a dedicated

team backed by technical support with a specialised facility to
repair and manufacture components. Adding to the complexity of
the repairs was the difficult task of removing the Loading Arms
from the wharf between ship movements whilst unpredictable
weather conditions prevailed.
Question
Critically analyse the case.

Source:http://www.volunteeringaustralia.org/files/1E8H8EVUL8/Case%20Studies.pdf
252
Case Study 2: LNG Unloading Arm Installation at Kochi
Notes Seashore
___________________ The project site, LNG (Liquefied Natural Gas) receiving and regas
(regasify) terminal, is a part of newly created Special Economic
___________________
Zone located on the sea shore of south-western India. To meet the
___________________ civil and industrial demand of natural gas in this deficit area
___________________ where no piped natural gas is available, the first LNG terminal in
south India was formed in 2007 using reclaimed land with
___________________
dimensions of 840 m X 400 m and a 330m long x 5m wide jetty
___________________ trestle extending from the land at the south side.
___________________ At the end of the trestle, a reinforced concrete unloading platform

was built to accommodate four sets of Unloading Arms (ULA)
___________________
which serve to unload the LNG from the cargo ship to the LNG
___________________ storage tank via cryogenic pipelines. The unloading arms are the
___________________ most important and critical units installed in the LNG receiving
terminal, which require a higher stability for their installation to
avoid any potential damages or leakage during the unloading of
LNG from ship.
It was planned to finish the unloading arms installation from the

landside using a temporary bund before arrival of the summer
monsoon, however it didn’t happen due to logistic reasons. To
meet the schedule it was decided to install the unloading arms
using a floating barge with a mounted crane, trying to finish the
installation by the end of May 2011.
However, when the ULA risers were installed on 27 May 2011,

the summer monsoon (southwest monsoon) arrived from the
Indian Ocean, sweeping the south of India with abundant rainfall
and wind. The floating barge was hit by the waves and winds, and
the 250 ton crane could not be kept steady to install the ULA
main units. To secure the ULA, the management decided to
suspend the installation and transport the ULA to the safe place
for temporary storage.
Questions
1. Bring out the critical points in this case.
2. Do you think the management’s initial decision was right?
3. What should the management do next?

Source: http://www.isope.org/publications/proceedings/ISOPE/ISOPE%202012/data/papers/vol1/2012-
LKC-07Khetarp.pdf
UNIT 21: Transportation of Oil, Gas and Products: Other Modes
253
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
BLOCK-V
254
Notes
UNIT 21: TRANSPORTATION OF OIL, GAS AND
___________________ UNIT 23: IT APPLICATIONS IN HYDROCARBON
PRODUCTS: OTHER MODES INDUSTRY
z ___________________
Introduction z Introduction
z Transportation by Marine Tankers

___________________ z Application of Information Technology
z Road and Railway Transportation

___________________ z IT Application in Design and Engineering
z Storage of Liquids and Gases

___________________ z IT Application in Operation
___________________ z Maintenance Management Software

UNIT 22: HEALTH, SAFETY AND ENVIRONMENT
___________________ z Enterprise Resource Planning and Management
z Introduction (ERP)
z
___________________
Hazards – Definitions, Causes and Types
___________________ UNIT 24: ECONOMICS AND TECHNOLOGY
z Chemical Hazards
TRENDS
z Safety Management Techniques in Plant Life Cycle
___________________ z Introduction
z Natural Gas Trends
z Coal vs. Natural Gas
z Petrochemical Business Scenario
UNIT 25: CASE STUDY

Unit 21
255
Notes
Activity
Name one Indian Crude
Transportation of Oil, Gas and
___________________
Carrier and one Clean
___________________
products carrier with the help
Products: Other Modes of the Internet.
___________________
___________________
Objectives ___________________
___________________
topics:
___________________
\ Overview of transportation by road and railways
\ Overview of Transportation by marine tanker ___________________
\ Methods of storage of Liquids and Gases ___________________
___________________
Introduction
In the earlier unit, you learnt about transportation of Oil and Gas
through pipelines. In this unit, you will learn about transportation
through Marine Tankers and by Road and Rail transport.
Transportation by Marine Tankers

The following paragraphs talk about Transportation of Oil and Gas
by Marine tankers.
Oil and Product Tankers

Oil tankers come in two basic types, the crude carrier and the
clean products carrier. The crude carrier normally carries crude oil
and the other type carries the refined products, such as petrol,
gasolene, aviation fuel, kerosene and paraffin. Tankers range in all
sizes, from the small bunkering tanker (used for refuelling larger
vessels) of 1000 DWT (Dead Weight Tons) to the real giants: the
VLCC (Very Large Crude Carrier) of between 200,000 to 300,000
DWT and the ULCC (Ultra Large Crude Carrier) of over 300,000
DWT.
Typical sizes for oil carrying tankers are given in Table 21.1.
A picture of an oil tanker is shown in Figure 21.1.
256 Table 21.1: Oil Tanker Sizes

Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 21.1: VLCC Tanker
LNG Transportation by Marine Tankers

The shape of the LNG carrier is quite unmistakable, with the
spherical thermo-flask like shape of the Moss tanks visible along
the deck (Figure 21.2). Although, the carriage of huge quantity of
explosive liquefied gas - kept at below freezing temperatures as an
unstable liquid appears extremely hazardous, however LNG
carriers have the best safety record of all maritime vessels. The
vessels themselves are maintained meticulously, and renewed
frequently. There have been accidents involving LNG/LPG
carriers, but where such events have occurred, so far, they have
been successfully managed to vent off the cargo into the
atmosphere, thus rendering the lethal cargo harmless.
Figure 21.2: LNG Carrier

Tanker Loading and Unloading Systems 257

Notes
Oil, LNG and products are normally loaded and unloaded with the
tanker berthed alongside a Jetty, having loading arms and ___________________
unloading arms (Figure 21.3). Once the tanker berths, the loading ___________________
arm or unloading arm is connected to the tanker. For unloading, a
___________________
pump in the tanker pumps out the oil or products. A tanker may
carry a number of products, which can be pumped out in batches, ___________________
separated by pigs. ___________________
Oil and products are also loaded or unloaded by SPM connected to ___________________
a pipeline to the shore termina. ___________________
___________________
___________________
___________________
Figure 21.3: Loading and Unloading System
Figure 21.4 depicts picture of a tanker unloading at a jetty with

blown-up figures of the loading arms.
All large coastal storage and handling terminals have this kind of
facility. Where there are limitations of draft for the size of the
tanker, use of SPM is made for loading and unloading.
Figure 21.4: Crude Loading and Unloading Facility

258
Check Your Progress
Notes
Activity
Fill in the blanks:
Make a presentation on Road
___________________
Transportation of Oil and Gas. 1. Oil, LNG and products are normally loaded and
___________________
unloaded with the tanker berthed alongside a
___________________ ………………., having loading arms and unloading arms.
___________________
2. Once the tanker berths, the ………………. arm is
___________________ connected to the tanker.
___________________
___________________ Road and Railway Transportation

___________________
Road Tanker Loading Systems
___________________
Two systems exist for the loading of bulk road tanker:
___________________
Top Loading: In traditional top loading the product is loaded by
inserting a loading arm from the top through the open manhole in
the tank compartment of the vehicle.
Bottom Loading: In bottom loading the product is loaded by

connecting the loading arm/hose to a dedicated self-sealing
coupling at the bottom of the vehicle.
The displaced vapours are evacuated via a second arm/hose

connected to the vapour collection coupling at the bottom of the
vehicle.
Typical facilities for tanker loading comprise:
z Loading pump pumps the product to the gantry to one or more

loading arms
z Emergency Shut Down (ESD) valve to isolate the system

rapidly in an emergency
z A filter to ensure product cleanliness and to protect the flow

meter
z A flow meter
z A flow control valve to control the flow
z The loading arm connected to a dry-break coupling
z The vapour return hose
z The overfill protection sensor to give a signal if the road

vehicle is overfilled
259
z The earthing connection (combined with overfill protection
Notes
connection) to discharge the static electricity which is
generated during loading ___________________
z The interlock system in order to check if all conditions for safe ___________________
operation are fulfilled (e.g. earth connected, no overfill, ___________________

vapour return hose connected, etc.).
___________________
Top loading has been predominant. The system is very flexible; ___________________
almost any type of vehicle can be loaded through an open manhole
___________________
and dedicated (often specific) couplings as needed in bottom
loading are not required. ___________________
The system is also relatively simple; the personnel can follow the ___________________
loading operation through the open manhole and fill to a level ___________________
indicator in the tank compartment. For bottom loading, level ___________________
sensors are necessary.
However, increasingly the trend is towards bottom loading, due to
environmental legislation on vapour emissions both at loading
terminals and retail outlets. Bottom loading should be employed
for solvents and common white oil products from safety
considerations.
Figure 21.5: Hose Type Loaders: Examples of Mounting

Arrangement to Facilitate Crossovers
260 LPG Transportation by Road Tankers

Notes
The storage and transportation of LPG (Liquefied Petroleum Gas),
___________________
imposes stringent technical requirements. The material must be
___________________ carefully selected, continual quality checks must be performed
___________________ during manufacturing and comprehensive tests must be performed
on completed tanks. The LPG carriers could be truck mounted.
___________________
Figure 21.6 shows the two types with capacities mentioned.
___________________
___________________
___________________
___________________
___________________
___________________
Figure 21.6: LPG Road Tankers
Railway Tankers
The railway tankers are similar in design as road tankers except
that several rakes together form one train. Hence loading or
unloading facility should have several loading arms or unloading
arms in a row along the railway line inside the battery limit of the
plant or storage terminal.
Figure 21.7 (a): Railway Tanker

261
Notes
___________________
___________________
___________________
___________________
___________________
___________________
Figure 21.7 (b): Railway Tanker ___________________
___________________
___________________
___________________
Figure 21.8: Railway Tanker Loading Facility
The railway wagons normally carry 20 to 25 tons of cargo. Size of

the wagon is such that it can be fitted on a standard (4 wheel and
8 wheel) railway wagon.
There are 4 wheeler and 8 wheeler tank wagons used to transport
LPG all over India. These tank wagons are operational both on
broad gauge and meter gauge of Indian Railway.
Several tankers are hauled in tandems are called rakes. The
number of tankers in a rake is dependent on the hauling capacity
of the engine.
Some of the tankers (handling crude oil, fuel oil) have tank
cleaning facility to remove congealing.
Tank wagon loading gantries are available at PSU facilities only.
No private marketeer has tank wagon loading gantry facilities.
Public sector refineries have large railway yard with loading bays.
There are approximately 2600 tank wagons operational. IOC
controls maximum number of tank wagons.
262
From safety considerations the following rules are followed:
Notes
Activity
Create models of different
___________________
z Tank wagon should be loaded and dispatched within one
liquid storage tanks. calendar day.
___________________
z Overnight stay at the depots is generally not permissible by
___________________
the industry.
___________________
z The loading system has automation with a lot of system safety
___________________
features.
___________________
z There are vapour losses during loading/unloading operations.
___________________ To minimize such losses modern refineries have got vapour
___________________ recovery system.
___________________
Check Your Progress
___________________
Fill in the blanks:
1. Tank wagon loading gantries are available at
……………….. facilities only.
2. Size of the wagon is such that it can be fitted on a
standard ……………….. .
Storage of Liquids and Gases
Liquid Storage
Normal liquid petroleum and product storages are made of steel.
But depending on the nature, corrosivity and operating conditions,
special steel or alloys can be used. Various types of storages used
in the petroleum industry are summarized below:
Rectangular Tanks
The rectangular tanks are the simplest tank for atmospheric
pressure service of non-hazardous liquids like water.
Cone Roof Tanks

These types of tanks are very widely used for storing oil, products
and chemicals at atmospheric pressures. These are designed for
low internal pressures as per API 650 code with design pressure of
maximum 2.5 psig and normally with a few inches of water as
design pressure. These tanks can not tolerate pressure or vacuum.
These are normally equipped with pressure-vacuum relief.
Floating Roof Tanks 263

Notes
These are atmospheric tanks improved over normal cone roof
tanks. These are widely used for the storage of many petroleum ___________________
and chemical products. These tanks may be of an open top ___________________
(external) design or may include a fixed roof to aid in the
___________________
protection of the (internal) floating roof. As the roof floats over the
liquid, it prevents vapour losses and atmospheric pollution. ___________________
___________________
Dome Roof Tank
___________________
Used for highly volatile liquid, that can boil at normal ambient
___________________
pressures and temperatures e.g. pentane, Condensate, NGL, etc.
Operating pressures of such tanks is slightly higher than conical ___________________
roof. ___________________
___________________
Figure 21.9: Liquid Storages
Storage of Gases and Liquefied Gases
Storage of Gas
Gases occupy very large volume and it is uneconomic to build
storage for very large volume of gases. Existing caverns or depleted
reservoirs are often used as underground storage of gas.
264
A long distance pipeline over several hundred kilometres has very
Notes
large hold-up of gas. Compressing the gas above required pressure
___________________
along the pipeline can create a large hold-up of gas. This is called
___________________ packing the line with gas.
___________________ In view of the fact that building a gas storage is not economic,
___________________ normally gas is stored either under high pressure or in liquefied
form. For very large volumes, liquefied gas storage is more
___________________
economic.
___________________
Ethane, Propane, Ethylene or LPG can be stored under pressure.
___________________
The storages are either cylindrical (bullets) or spherical in shape
___________________ (spheres).
___________________
Storage of Liquefied Gas
___________________
The same gases mentioned above are also stored in liquefied form.
Choice of type of storage is a matter of economic evaluation. As a
thumb rule, larger the storage requirement, more economic is the
liquefied storage.
As described in Gas Processing, LNG is transported and stored in
liquid form at below –160°C. LNG storage is made of special Nickel
alloy to withstand such low temperatures where most metals
become brittle. Also special insulation and safety features put into
an LNG tank makes it very expensive.
Liquefied gas storages are often buried under the ground with just
the roof protruding out of the earth for safety reasons. Such buried
storages are called mounded tanks. Many operating companies
have preference for mounded tanks for liquefied gas storage.
Figure 21.10: Liquefied Gas Storages

265
Notes
___________________
___________________
___________________
___________________
Figure 21.11: Storages and Storage Terminals ___________________
___________________
Check Your Progress
___________________
Fill in the blanks:
___________________
1. ………………… are atmospheric tanks improved over
normal cone roof tanks. ___________________
2. LNG is transported and stored in liquid form at below ___________________
…………………°C.
Summary
The unit included description of transportation system by marine
tankers and brief description of road and railway wagon as means
of transportation.
Also, the various types of storages used for petroleum and
products, both liquid and gas were described.
Lesson End Activity

Make small models of Liquefied Gas Storages.
Keywords
SCADA: Supervisory Control and Data Acquisition
connecting the loading arm/hose to a dedicated self-sealing
Cone Roof Tanks: These types of tanks are very widely used for
storing oil, products and chemicals at atmospheric pressures.

1. Which are the different marine tankers used for
transportation of oil and gas?
266
2. What are road tanker loading systems?
Notes
___________________
3. How are gases and liquids stored?
___________________
Further Readings
___________________
___________________ Books
___________________ Petroleum economics, Jean Masseron, Technology & Engineering
___________________ Petroleum economics and engineering, H. K. Abdel-Aal, Bakr A.
___________________ Bakr, M. A. Al-Sahlawi – Technology & Engineering – 1992
___________________ Oil economics and policy, Alberto Clô – Business & Economics –
2000
___________________
___________________
The economics of petroleum supply: Papers by M.A. Adelman,
1962-1993 Morris Albert Adelman – Technology & Engineering –
1962
Economics of petroleum production: A compendium, Volume Ian
Lerche, Sheila Noeth – 2004
Web Readings
www.youtube.com/watch?v=AuvvaZrUDe4
reaccess.epu.ntua.gr/LinkClick.aspx?fileticket... tabid=579&mid
www.careersinoilandgas.com › ... › Occupational Summaries
UNIT 22: Health, Safety and Environment
Unit 22
267
Notes
Activity
Health, Safety and Environment
___________________
different kinds of hazards in
___________________
Hydrocarbon processing.
___________________
Objectives
___________________
topics: ___________________
\ Health and environment hazards involved in the industry ___________________

\ What is hazard and how to identify and minimize risks ___________________
\ Causes of accident
___________________
\ Sources of environment pollution and method to treat them
___________________
___________________
Introduction
Hydrocarbon (oil and gas) and petrochemical products pose hazard
to the environment if not handled in a safe manner. Health, safety
and environment considerations start from conceptual stage of a
project to operation and abandonment stage.
Oil and gas are highly flammable material that can cause
explosion if not handled properly. Also a lot of toxic chemicals are
handled during processing, particularly in the downstream
facilities.
That is why a lot of importance is given today on learning and
implementing methods to take care of Health, Safety and
Environment (HSE) all over the hydrocarbon industry. HSE norms
and practices are followed at every stage of the plant life cycle. A
lot of investment in hardware and services is essential today to
take care of HSE.
Hazards – Definitions, Causes and Types
Definitions of Hazards
Dictionary meaning of hazard is danger, risk or peril either to
health, safety or to environment. In the process industries, the
following terms are used:
Hazards: These are defined as having the potential to cause
harm, including ill health and injury, damage to property, products
or the environment, production losses or increased liabilities.
268
Threats: These are possible causes that could potentially release
Notes
the hazard and produce an incident.
___________________
Incidents: These are defined as an unplanned event or chain of
___________________
events, which have caused or could have caused injury, illness and
___________________ or damage (loss), to assets, the environment, or third parties.
___________________
Causes and Types of Hazards
___________________
The hazards encountered in a hydrocarbon process plant are
___________________
primarily due to loss in containment (i.e. leakage) of the hazardous
___________________ material, which may then lead to hazard. Resulting hazard can be
___________________ divided into three categories:
___________________ Hazards resulting in fire and explosion,
___________________ Hazards resulting from the toxic properties of materials

handled (chemical hazard), and
Hazards associated with the physical operations in the plant
(unsafe operations).
The Fire Triangle

For fire or explosion to take place, the presence of all the three
items mentioned below simultaneously is essential:
Flammable material
Air or oxygen
Source of ignition
The presence of the three together makes what is called fire
triangle.
Large storage tanks present one of the potential threats of fire and
explosion (Figure 22.1). If a flammable mixture of vapour and air
exists inside a storage tank and a source of ignition is also
available, a fire and/or explosion may result. It is the vapours left
behind after liquid removal or those rising from the surface of a
flammable liquid which ignite and burn. Static electricity
accumulated could be a source of ignition, causing spark.
269
Notes
___________________
___________________
___________________
___________________
___________________
Figure 22.1: Refinery Tank Fire
___________________
Obviously the methods of prevention of fire and explosion hazard is
___________________
elimination of one or two of the items in the fire triangle or
preventing all the three being present together. For example, if a ___________________
source of ignition can be excluded or oxygen levels surrounding can ___________________
be kept below certain limits as explained below, a fire or explosion
___________________
cannot occur.
Flammable Material
Mixtures of hydrocarbon vapours and air will ignite only if the
hydrocarbon to air ratio is within certain limits. If the mixture is
too lean (too low concentration of hydrocarbon) nor too rich (too
high concentration of hydrocarbon and shortage of air), then the
ignition does not occur. The Lower Flammable Limit (LFL) and the
Upper Flammable Limit (UFL) for most hydrocarbon mixtures are
typically at about 1% and 10% by volume hydrocarbon vapour in
air respectively. However, ‘rich mixtures’ (above the UFL) may be
locally diluted to within the flammable limits by air entering the
tank at tank openings, such as manways, hatches, vents, etc.
Similarly, lean mixtures may be enriched locally due to a pocket of
hydrocarbons, or application of heat. If a source of ignition is
present in such areas, explosion and/or fire is likely to occur.
Check Your Progress

Fill in the blanks:
1. …………………. are defined as having the potential to
cause harm, including ill health and injury, damage to
property, products or the environment, production losses
or increased liabilities.
2. …………………. are possible causes that could
potentially release the hazard and produce an incident.
270
Chemical Hazards
Notes
___________________ Major Chemical Hazards

___________________ Chemical hazards can arise from:
___________________ Skin contact with the hydrocarbon liquid.
___________________
Inhalation of hydrocarbon vapours.
___________________
Accidental swallowing of liquids or solids.
___________________
A number of chemically hazardous substances are handled in the
___________________
hydrocarbon industry. Hydrogen Sulfide and sulfur dioxide are
___________________ more common in the oil production and refining industry. In the
___________________ petrochemical industry, there are numerous hazardous chemicals
___________________ handled due to the multiplicity of raw materials and products.
Examples of some of the toxic chemicals handled are given below:
Hydrogen Sulfide (H2S): is a highly toxic gas. At low

concentrations it has the odour of rotten eggs, although this can
be masked by the presence of other vapours. H2S quickly deadens
the smell at about 100 ppm and higher and this may lead to a
false sense of security, since the disappearance of the smell after
it has been first recognized may be due to an increase, rather
than a decrease in the atmospheric concentration. All petroleum
products and crude oils contain sulfur in varying amounts,
usually combined with hydrogen and/or carbon. Some crude oils
contain free sulfur and H2S. Sulfur is an undesirable element in
petroleum products and various processes exist to remove it,
whereby H2S is often formed during intermediate stages. Whilst
the H2S is subsequently removed, certain amounts may still be
present in the product.
Polycyclic Aromatic Hydrocarbons: Some heavy refinery

streams or products may contain small amounts of polycyclic
aromatic hydrocarbons (PCAs). Typical streams are gas oils, fuel
oils, catalytic cracker recycle oils and vacuum distillation residue.
The toxicity of PCAs will differ, depending on the structure.
Frequent and prolonged contact with these can lead to a variety of
skin disorders.
271
Table 22.1: Effect of Hydrogen Sulfide Concentration
Notes
___________________
___________________
___________________
___________________
___________________
Benzene: Benzene is an aromatic hydrocarbon, which can be ___________________
present in very low concentrations in some crude oils. It is often ___________________

produced in certain refinery processes. It is also manufactured as a ___________________
finished product in the petroleum industry. The chief route of entry
___________________
by benzene into the body is by inhalation of the vapour. Whether
as the pure compound or as part of a mixture such as gasoline, ___________________
benzene may give rise to the following health hazards:
Inhalation of high concentrations of benzene vapour (above
700 ppm) can lead to loss of consciousness and, if allowed to
continue, respiratory failure and death will result.
It may also cause bone marrow damage, leading to blood
disorders of varying severity which are usually reversible after
removal from exposure, and,
More rarely, leukaemia (cancer of the blood), which may occur
long after exposure has ceased.
Other Toxic Chemicals

Numerous other toxic chemicals are handled in the oil, gas and
petrochemical industry. Some examples are:
Chlorine for manufacture of PVC
Methanol
Hydrogen Cyanide in the manufacture of acrylates, etc.
Causes of Accidents
The various causes of accidents are:
Defect in Design
Defect in Construction
Defect in Material of Equipment
Faulty Operation or Maintenance
Lack of Monitoring
272
Defect in Design: Sometimes adequate design factors have not
Notes
been provided while doing the design. Design factors are essential
___________________
component in order to give a margin of safety in the design. Design
___________________ factors may be appropriate in either the mechanical engineering
___________________ design or in the process design where factors are often added to
allow some flexibility in process operation. For mechanical and
___________________
structural design the magnitude of design factors should allow for
___________________ uncertainties in material properties, corrosion, design methods,
___________________ fabrication and operating loads. It is also possible that appropriate
material for equipment and piping has not been specified leading
___________________
equipment failure or piping failure resulting in the release of
___________________
hazardous or flammable or toxic material.
___________________
Defect in Construction: Defect in material for equipment and
___________________ piping, defect in manufacturing, fabrication and defect in
construction or installation including improper inspection and
testing may lead to equipment or piping failure. Release of
hazardous or flammable or toxic material can occur as a result.
The “Sinking of P-36 Platform”, depicted in Figure 22.2 is one of
the examples which could be due to defects both in the design and
installation. Considerable cost reduction was done for P-36 during
design and construction stage.
Figure 22.2: P-36 Disaster
Faulty Operation and Maintenance: Erroneous operation and

maintenance like not following correct procedure may lead to
accident. Inadequate maintenance also can be cause of accident, for
example:
Failure to interchange operating and standby equipment as
and when required.
Lack of attention to the special instrument like vibration
monitor, corrosion monitors, gas humidity analyzer, etc.
273
An example of accident due to not following the procedure during
Notes
maintenance is the collapse of a storage tank shown in Figure 22.3.
The tank collapsed because a plastic bag with which the tank vent ___________________
was covered during painting of the tank was not removed before ___________________
operation. When the product was pumped out of the tank during
___________________
operation, vacuum was created as the vent was blocked with the
plastic bag. The steel tank collapsed but the plastic bag did not ___________________
break. ___________________
Covering of the vent valve during tank painting is fairly standard ___________________
practice. Unfortunately leaving it covered when drawing out of the ___________________
tank is very non-standard practice. This was an expensive,
___________________
embarrassing mistake that could be entirely preventable. For
some, it is hard to believe that the plastic over the vent valve is ___________________
stronger than the steel tank under the vacuum conditions that are ___________________
created when drawing product out of the tank.
Figure 22.3: The Power of the Plastic Bag
Another common example of accident due to faulty maintenance

procedure is explosion due to pyrophoric deposits in distillation
columns (Figure 22.4). These are highly explosive deposits that
take place in the column during periods of operation with crude oil.
Once the unit is shut down for maintenance and the column
manholes are open, pyrophoric deposits, which are highly
flammable, come into contact with air and catch fire immediately.
Again there are procedures that need to be followed to prevent
such accidents.
274
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 22.4: Destruction by Pyrophoric Fires
Human Error: Human error, often due to inadequate training

causes accident. For example:
Opening or closing wrong valves without fully understanding
operating instructions, may lead to rise in pressure,
temperature or flow in the system and resulting in the release
of hazardous or toxic material.
Operator taking wrong reading of parameter indicators
(pressure, temperature, flow etc) and taking wrong actions
which may lead to accident.
Adjusting the set point of a control to a wrong value, thus
leading to accident.
There could be several other causes of accidents:
Natural calamities like earth quake.
Lack of monitoring.
Lack of training.
It is difficult to avoid accidents due to natural calamities, unless
the impact of natural calamities has been considered during
selection of the site and designing of the facilities to withstand the
impact. Even then unforeseen events may occur. It is very
important to have an Emergency Response Plan and mitigation 275

plan for such contingencies. Notes
Activity
Lack of monitoring as per operating and maintenance procedures Using the Internet, find out
___________________
more about ALARP.
are often cause of accidents. As a simple instance, let us take the ___________________
case of a long distance cross country pipeline carrying
___________________
hydrocarbons. Regular surveillance of the pipeline is very
important to avoid unauthorized work along the pipeline route, ___________________
digging, sabotage etc. Normally this is done by use of helicopters, ___________________

automobiles, satellite images etc. Still a surprisingly high number ___________________
of accidents occur in gas pipelines due to unauthorized digging.
___________________
Training is a very important aspect for minimizing the risk of
___________________
accidents. Training is needed for all disciplines and levels and for
all aspects of management and operation of the facilities. While ___________________
developed countries pay a lot of attention to it, in developing ___________________

countries like India it is often ignored and overlooked. In case of an
accident, cost of loss in assets and human lives can be so large that
expenditure on training can always be justified.
Drill also forms part of training. An emergency response plan can
fail totally if drill is not carried out at regular intervals. In the
developed countries, even in commercial office buildings, a fire
incident drill is carried out at regular intervals by sounding fire
alarms to ensure that:
All equipment and facilities for fire fighting are working,
People know how to use them, and
People are aware of building evacuation plan.
Safety Management Techniques in Plant Life Cycle

In the entire life cycle of a process plant, starting with the project
conceptual and engineering design phase, there is considerable
scope to remove or minimize hazards. It is during this phase that
provision can be made to reduce the risks associated with a
process, system or facility to a level that is as low as reasonably
practical (ALARP).
This can be achieved in a number of ways. In order of preference
these are:
Removal of hazards in design phase.
Reducing the probability of hazardous events occurring.
276
Minimizing the risk of escalation in case a hazardous event
Notes
occurs.
___________________
Once the hardware has been installed, retroactive implementation
___________________
becomes relatively more difficult and considerably more expensive.
___________________ It is crucial therefore that the opportunities available for
___________________ minimizing risk in the design and engineering phase are not lost.
___________________
Concept Development
___________________
It is during this phase that most of the major hazards and effects
___________________ will be identified and an initial assessment of their importance will
___________________ take place. In this phase there is considerable scope for removing
potential hazards. As an example, even site selection is important
___________________
for HSE.
___________________
HSE Aspects of Site Selection
The importance and vulnerability of various components in the
existing environment should be assessed. These include:
People living in the vicinity who could be exposed to noise,
vibrations, dust and gaseous contaminants, or other health
effects associated with water and food contamination.
The potential consequences of accidents (fire, explosion, escape
of toxic materials) must be considered.
Wildlife and natural habitats which could be damaged during
the clearance and construction stages or later when the project
is operational. Examples are forest damage by air pollution
and death of fish or other aquatic organisms by effluents. A
key component is consideration of the amount of damage that
may be tolerated by the habitats and species concerned.
Resources (agricultural and others) which may be susceptible
to damage from the project in a similar manner to natural
habitats.
It is necessary to use environmental specialists to conduct a
baseline study to describe the physical and biological status of
environmental components which are likely to be affected.
In less industrialized areas, where local restrictions may still be
limited, it is important to be aware of potential future
developments. In industrialized areas, local regulations
determined by authorities often define the environmental
conditions for the project during construction and operations.
277
The project should consider various operations and the predicted
Notes
flow rates of pollutants in gaseous emissions and aqueous
discharges, together with physical nuisances such as noise and its ___________________
impact on health, safety and environment in the neighbourhood. ___________________
The selection of site should also include consideration of wastes. ___________________

These include industrial waste, in particular hazardous waste in
___________________
the form of liquids, solids and semisolid materials. The manner in
___________________
which these wastes are handled could be a significant factor in the
overall impact of the operational activities on the environment. ___________________
The tragedy at Bhopal due to toxic gas leakage from Union Carbide ___________________
plant is an example of tragedy due to faulty site selection for a ___________________

plant handling lethal chemicals.
___________________
Techniques of Hazard Identification (HAZID) ___________________
What is HAZID?
HAZID (HAZard IDentification) is a technique for early
identification of potential hazards and threats. The technique has
two styles, Conceptual and Detailed and should be applied at the
very outset of a new venture or during the early stages of the
project. It is therefore likely to be the first formal HSE related
study for any new project. The major benefit of HAZID is that early
identification and assessment of the critical HSE hazards provides
essential input to project development decisions. This will lead to
safer and more cost-effective design options being adopted with a
minimum cost of change penalty.
HAZID study addresses the layout and operation of the entire
system under review. A HAZID study uses a guideword driven
methodology based on a comprehensive list of typical hazards. The
installation or subject of review is divided into areas of a similar
nature (e.g. process area, utilities) based on the location of these
areas and their function. The broad nature of the guide words help
in the identification of the hazard. For each identified hazard the
potential consequences are described and the control/mitigation
measures are listed.
Why Use HAZID

HAZID has been developed specifically to reflect the importance of
HSE issues on the fundamental (and often non-HSE-related)
decisions that are made at the inception of all development projects
278 (e.g. design concept and location). HAZID is the first opportunity to
Notes collect experienced line and HSE staff together to address, in a
___________________ short time frame, the issues surrounding a new venture or
development.
___________________
___________________ The benefits of using HAZID include:
___________________ Full recognition of the importance and interdependence of all

HSE aspects at the outset of the development.
___________________
Identification of specific hazards and threats within a project
___________________
life-cycle phase or during operation.
___________________
Identification of all the intended continuous emissions from
___________________
the facility. This will focus design effort on the minimization of
___________________ such emissions as well as compliance with company and third
___________________ party requirements.
When to Use HAZID
Normally HAZID is carried out during conceptual and

development phase of the project. There are two types of HAZID –
Conceptual and Detailed.
Conceptual HAZID
The optimum (early) timing of a conceptual HAZID study
inevitably means that the formal documentation available to the
team will be minimal and at conceptual or policy level. Some of the
key documents or information used for conceptual HAZID are:
Project Initiation Notes
Policy Statements
Feasibility Studies
Key (development) Discussion Papers
Project Development Plans
Relevant Company Group Standards
Project Design Basis
Description of Operational Environment
Key Legislative Documents
Key Philosophy Documents (e.g. Operations Philosophy, Safety
Logic, etc.)
Environmental Regulations
279
Detailed HAZID
Notes
The detailed study is conducted later in the engineering design
___________________
process, once design options have been identified but before any
final decisions have been made. A significant number of additional ___________________
documents and drawings will be available. The additional ___________________

documents would include, for each design option, preliminary
___________________
issues of:
___________________
Process Flow Schemes (PFS) – with possibly Process
___________________
Engineering Flow Schemes (PEFS) at block diagram level with
mass balance information (for each competing design option) ___________________
Plot Plan and Layouts ___________________
___________________
Process description including all planned operating cases
___________________
Project description including all options, life cycle issues and
planned plant flexibility
Safety philosophy
Operating philosophy
Raw material and product handling
Environmental assessment
HAZOP and Fault Tree

Special techniques like HAZOP, Fault Tree Analysis, FMEA, What
If are used at this stage.
Figure 22.5: Hazard Identification at Design Stage

280
They show outcomes in all possible situations and tell how likely
Notes
they are to occur. What this means for the decision makers is that
___________________ they finally have, if not perfect information, the most complete
___________________ picture possible. They could see what could happen, how likely it is
to happen, and therefore be able to judge accordingly which risks
___________________
to take and which ones to avoid. Design need to be modified as per
___________________ outcome of the process (Figure 22.5).
___________________
The essential features of a HAZOP study are:
___________________
It is systematic and detailed. A series of guide words is
___________________ repeatedly used to ensure consistency and repeatability.
___________________ It is conducted by a team who know most about the project or
___________________ facility, typically those who designed and those who must
___________________
operate it.
It concentrates on exploring the consequences of deviations
from the usual operating conditions.
It is an audit of the completed part of a design.
Traditionally the HAZOP procedure examines process equipment
on a system by system basis, reviewing the process parameters
using a checklist of guide words, which suggest deviations from the
normal operating conditions.
Safety Audit – A Key to Safe Operation

Safety Audit is the act of verifying the existence and
implementation of elements of safety and health system and for
verifying the system’s ability to achieve defined safety objectives. It
checks the design, selection/construction and maintenance of
premises, plant, equipment and substances. It monitors
performance of the system and compares actual performance with
the standards or appropriate performance indicators. It performs
quality management and environment management. It identifies
data critical to the management of health and safety. It is periodic
in nature.
Objectives of the safety audit are to identify:
Design deficiencies
Weaknesses which might have cropped up during
modifications /additions
Fire protection arrangements and safety systems
281
Operating /maintenance procedures-degraded with time
Notes
Training methods, adequacy and implementation
___________________
Preparedness for handling emergencies
___________________
In summary, safety audit is a systematic independent review to
verify conformance with established guide lines or standards. It ___________________
employs well defined review process to ensure consistence and to ___________________

allow the auditor to reach conclusions.
___________________
Due to complexity of a large plant, use of IT is made for
___________________
implementing such an audit.
___________________
Safety Facilities in Process Plant ___________________
For safe operation and control of a plant a number of safety
___________________
features are put in the design stage. Some examples of typical
___________________
systems for safe management of the production process are:
The Process Control System (PCS) – which maintains the
process within defined operating limits of flow, temperature,
level and pressure. Completely computerized digital systems
with graphics of the plant is used for process plants.
Process Shutdown System (PSD) – designed to shutting
down of selected equipment and control devices on the
platform that will stop production totally but will not blow
down the hydrocarbon contents of the equipment. This
shutdown is initiated either automatically or manually
through field instrumentation, for conditions like gas
detection, or any unusual operating situation.
Emergency Shutdown System (ESD) – designed to shutting
down of all process facilities and utilities (except emergency
facilities such as firewater system) accompanied by blow down
of hydrocarbon/chemicals contained in all process facilities. This
type of shutdown is initiated automatically through detection
devices upon detection of fire or smoke. It can also be manually
activated through shutdown hand stations (push buttons).
Pressure Safety Valves mounted on equipment, which will
relieve over pressure, letting the released process fluid to go to
the flare.
Temporary Shutdown (TSD) – which will occur on a limited
number of process inputs and will cause production to stop,
but will leave the systems in such a state as to facilitate a
prompt restart.
282
Gas Detection, Smoke Detection and Fire Detection
Notes
Systems are installed which can not only detect but also
___________________ trigger alarm system or shutdown system as per design
___________________ specifications of the plant.
___________________
Fire Fighting Facilities are provided which include Fire
Water System, Foam Tenders, Halon System, etc.
___________________
It is imperative that an operating company develop its own safety
___________________ philosophy, which can form the basis of safety considerations in
___________________ the design stage itself.
___________________
Construction Safety
___________________ The duration of the construction phase for a typical process plant
___________________ such as oil, gas processing or refinery complex is much shorter than
___________________
the facility’s subsequent operational life. But the nature of the
activities involved and the total manhours spent in a typical
construction project can expose the construction workforce to a level
of risk higher than that of the personnel involved in the subsequent,
longer operational phase. In addition a high proportion of
construction activities take place on ‘brown field’ sites (meaning sites
where plant is already operating), where hydrocarbons are likely to
be present, thus increasing the potential consequences of incidents.
The difficulty in implementing HSE norms in construction phase is
due to the nature of the circumstances under which construction
contracting is carried out:
High turnover of personnel, often new to the country and not
familiar with the work culture.
Communication difficulties between people from countries
with language and cultural differences.
Pressure to work in short time horizons and comply with the
“fast-track” approach.
Diversity of parties involved (contractors) and resultant long
communication lines and frequent use of subcontractors.
This in turn can result in the following effects:
Low priority on construction planning at an early
enough stage: There is often a perception that all
construction activities are similar. There is therefore a
tendency to believe that the next project can be treated like
the last one with much of the planning work done once
contracts are awarded and site work commences.
283
Use of inappropriately qualified contractors: Often this is
caused by a change to the management and/or workforce of a Notes
previously acceptable contractor. ___________________
Inadequate training (e.g. workers unaware of hazards): ___________________

Sometimes by external pressures to accept locally resourced ___________________
contractors who may not have the highest levels of training
___________________
and expertise. This is because of low priority on training,
mobilization of construction workers at a short time span and ___________________
lack of in-house expertise on HSE with the contractor. ___________________
Short-cuts in order to meet ambitious schedules ___________________
Hazardous nature of construction sites ___________________
The potential for the occurrence of injuries and fatalities can be ___________________
high due to:
___________________
The close proximity of large numbers of personnel to heavy
equipment and movement of materials.
Need to carry out activities in arduous weather conditions.
Long working hours, particularly when trying to meet
ambitious deadlines.
Working in locations that present extra risk (e.g. at height,
over water, underwater, in confined spaces etc.).
Handling of toxic and hazardous substances.
Perception by the workforce of it being satisfactory to ‘bend the
rules’ to achieve faster progress with little risk of incidents in
‘routine’ tasks and operations.
Surveys of incidents in the construction industry generally show
that a large proportion of injuries and fatalities occur, during the
performance of normal, routine general workplace practices (e.g.
scaffolding, welding, use of power tools), This is purely due to lack
of HSE System.
Thus induction of contractors having a sound HSE Policy or
training the contractors on owners HSE Policy is of paramount
importance. HSE policy is now rigorously implemented in most
developed countries. It has not yet come in a big way in India.
Safety Layers in a Plant

It must be remembered at this stage that the plant is designed
with safety in mind. As the final layer of design safety, Safety
284 Instrumented Systems (SIS) are built in which cause shut down of
Notes the plant in unsafe situations.
___________________
SIS is a system composed of sensors, logic solvers, and final control
___________________ elements for the purpose of taking the process to a safe state when
___________________ predetermined conditions are violated.
___________________ But 100% safety is not possible and failures do occur. There are
multiple independent safety layers and SIS in the plant as shown
___________________
in Figure 22.6.
___________________
___________________
___________________
___________________
___________________
Figure 22.6: Safety Layers
As shown in the figure, the final layer is that of emergency

response. Every major hydrocarbon facility must have an
Emergency Response Plan.
Elements of an Emergency Response Plan

The Owner must develop an emergency response plan for
emergencies which must address the following as a minimum:
Pre-emergency planning and coordination with outside parties.
Emergency Command System
Personnel roles, lines of authority, training, and
communication in the command system.
Emergency recognition and prevention.
Safe distances identification.
Site security and control.
Emergency medical treatment and first aid.
Emergency alerting and response procedures.
List of emergency equipment and their location
Emergency response organizations may use the local
emergency response plan or the state emergency response plan
or both, as part of their emergency response plan to avoid
duplication.
Environmental Aspects 285

Notes
The environmental aspects can be stated as follows:
___________________
Sources of Pollution
___________________
The overall block diagram from oil well to petrochemical is ___________________
presented in Figure 22.7. The effluent or pollutant it generates is
___________________
presented alongside in Figure 22.8.
___________________
___________________
___________________
___________________
___________________
___________________
Figure 22.7: The Oil and Gas Chain
Hazardous waste is a waste which because of its physical, chemical

or infectious characteristics has the potential to cause harm to
human health or the environment when handled, stored,
transported, treated or disposed of.
The gaseous emissions, aqueous and gaseous effluents and
discharges of hazardous waste materials from operating units are
the major sources of pollution are known to have a negative impact
on the environment.
The effluents could be solid, liquid or gaseous. Some of the major
sources of effluent are summarized in the table below.
The effluents are emitted in three ways:
(a) during the processing of oil and gas
(b) when we consume them as fuel
(c) when we consume the end products
286 Table 22.2: Solid, Liquid and Gaseous Effluent

Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________ The hydrocarbon industry is thus a major source of pollution in the

world. The three parties involved – the industry, the government
___________________
and the consumers have to partner together to control the effects of
pollution.
What the governments are doing:
Stringent product specifications for reducing environment
impact by consumption of the product.
Setting of stringent effluent discharge specifications
Enacting environment related laws and enforcement
What the industry is doing:
Investing in technology and treatment plants to meet the
specifications
Improving the processing scheme to reduce pollutant
generation
Developing new technologies to treat the effluents
What the consumers can do:
Reduce wasteful consumption of products
Reduce wasteful consumption of energy
In the next section we shall cover some major sources of pollutants
in the industry, the technologies for treatment of waste.
Figure 22.8: The Effluents – Oil Well to Petrochemicals

Waste from Oil Production 287

Notes
Produced water accounts for about 98% of the total waste in the
oilfield. The water coming out with the oil can be as high as ___________________
60-70% of oil in a depleted field. Hence the volume of produced ___________________
water to be treated can be very large. For example in the USA,
___________________
about 21 billion barrels per year of produced water has to be
treated. ___________________
The other waste in oilfield is mainly drilling waste i.e. wastes that ___________________
come out of the well during drilling before completion of well. The ___________________
drilling waste is mainly mud with oil and chemicals used during ___________________
drilling. These are often discharged in a pit at the well site.
___________________
Toxic drilling wastes fill an open reserve pit is shown in
___________________
Figure 22.9. Such pits are often abandoned by oil companies
without treating or cleaning it. ___________________
Figure 22.9: Drilling Waste
The major contaminants in the produced water are:

Dissolved solids (primarily salt and heavy metals)
Suspended and dissolved organic materials (hydrocarbons, oil)
Hydrogen Sulfide/ Carbon Dioxide
The produced water is treated in the following step:
Removal of oil by skimming and use of floatation cells, where
oil particles are moved to surface by dispersing gas through
the produced water.
Removal of dissolved hydrocarbons by biological process,
precipitation, ultraviolet irradiation and oxidation.
Removal of suspended solids by gravity separation, filtration
and coagulation.
288
Removal of dissolved solids by ion exchange, precipitation,
Notes
reverse osmosis, evaporation and biological process.
___________________
___________________ Pollutants during Transportation

___________________ One of the biggest pollution hazards facing the world today is oil
spill from large oil tankers carrying crude oil. Oil spillage occurs
___________________
when the ship leaks due to crashing in a reef or rock, any other
___________________ type of accident with the ship. Leakage can also occur during
___________________ loading/unloading and normal movement of the ship.
___________________ Oil spills cause enormous damage to ecosystem and marine life.
___________________ There are two stages of dealing with an oil spill – containment and
___________________ recovery.
___________________ Containment is done by containment booms, which could be of

floating type or inflatable type. These are laid around the spill area
by high speed boats (Figure 22.10).
Figure 22.10: Containment Boom
Once contained, the oil layer is recovered by skimmers (Figure

22.11) or by adsorbents or by using microorganisms for
biodegradation of the hydrocarbons. The skimmed oil is put in a
temporary storage and treated for reuse.
For oil coming over to the beaches other methods including
vacuum cleaning is used.
Figure 22.11: Recovery of Oil Spill by Skimmer

Wastes from refinery include free and emulsified oil from leaks, 289
spills, waste caustic, caustic and acid sludge, tank bottom sludge, Notes
acid water, waste catalyst etc. ___________________
Crude oil storage tanks also are a large contributor to refinery waste. ___________________
It includes oily water, organic sulfur compounds, suspended matter, ___________________
insoluble and soluble salts, asphaltic compounds, H2S and Co2.
___________________
Most of the refinery waste come into the drainage headers along ___________________
with the waste water in various parts of the refinery and are
___________________
collected for treatment in the effluent treatment plant.
___________________
Petrochemical plant wastes are more complex due to wide range of
raw materials, intermediate chemicals and products. The design of ___________________
the Effluent Treatment Plant has to tailor made to suit the ___________________
effluent characteristics and discharge specifications. Wide range of ___________________
effluent processes are available to treat different types of effluents.
Waste Water Treatment

In this section, the discussion will be limited to normal waste
water treatment facility.
A typical generic schematic diagram for waste water treatment is
shown in Figure 22.12. Of course the specific treatment method will
vary depending on the characteristics of the effluent. Some of the
equipment needed for the treatment are shown in Figure 22.13.
The major steps are:
Removal of free oil particles by skimming
Removal of emulsion particles by floatation of oil particles
aided by purging with gas or air bubbled from the bottom of
floatation cell.
Oxidation of the organic material by aeration and bacterial
method using activated sludge.
Finally filtration to remove suspended solids.
Figure 22.12: Treatment of Waste Water

290
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 22.13: Waste Water Treatment Equipments
Check Your Progress

Fill in the blanks:
1. Oil spills cause enormous damage to ecosystem and
……………… life.
2. ……………… is a system composed of sensors, logic
solvers, and final control elements for the purpose of
taking the process to a safe state when predetermined
conditions are violated.
Summary 291
Notes
Health, Safety and Environment aspects have gained tremendous
___________________
importance in the entire plant life cycle. A plant can be made safe
if safety aspects are looked into and managed from conceptual ___________________
stage to operation and dismantling. ___________________
In this unit, at first the types of hazards, both fire/explosion and ___________________
release of toxic material were identified. Some accident cases were ___________________
presented to highlight the importance of management of safety at ___________________
all stages of plant life cycle.
___________________
This was followed by hazard identification techniques. Overview of
___________________
techniques like HAZOP were presented.
___________________
Safety aspects during plant operation and maintenance were
___________________
highlighted.
Lastly various sources of pollution and release of hazardous

material in the hydrocarbon industry were identified. Some major
pollutants were described and a few generic methods of combating
pollution were described.
Lesson End Activity

Make a presentation on HSE System.
Keywords
or the environment, production losses or increased liabilities.
or damage (loss), to assets, the environment, or third parties.
Benzene: Benzene is an aromatic hydrocarbon, which can be
present in very low concentrations in some crude oils.
HAZID (HAZard IDentification): It is a technique for early
identification of potential hazards and threats.
292
Notes
___________________ 1. List the various causes of accident in a hydrocarbon

processing facility.
___________________
___________________
2. What is a fire triangle? Give example from an actual plant.
___________________ 3. Name two very toxic chemicals that oil and gas processing
industry has to handle and identify with block diagram at
___________________
what stages of processing there are likelihood of hazard from
___________________ these chemicals.
___________________
4. What is HAZOP? For what purpose it is used? Briefly describe
___________________ the technique.
___________________ 5. Explain with block diagram various sources of solid, liquid
___________________ and gaseous pollutants from the entire chain of hydrocarbon
industry from oil field to petrochemicals.
Further Readings
Books
Fundamentals of Oil & Gas Accounting, Charlotte J. Wright,
Rebecca A. Gallun – Business & Economics – 2008
Introduction to the Global Oil & Gas Business, Samuel Van Vactor
– Business & Economics
Oil and gas production in non-technical language, Martin
Raymond, William L. Leffler – Technology & Engineering – 2005
Web Readings
ww.api.org/ehs/
www.touchoilandgas.com/health-safety-c7.html
www.ogp.org.uk/pubs/254.pdf
www.ogj.com/blogs/health-safety-and-environmental.html
UNIT 23: IT Applications in Hydrocarbon Industry
Unit 23
293
Notes
IT Applications in Hydrocarbon
___________________
___________________
Industry ___________________
___________________
Objectives ___________________
___________________
topics:
___________________
\ Plant life cycle in the Oil and Gas Industry
\ Overview of the application of Information Technology during various ___________________
phases of project
___________________
\ Types of software used and their capabilities
___________________
Introduction
Like most of the other industries, the hydrocarbon industry is also
facing the pressure and challenges from expanding global
competition. Further, there have been huge investments and
expenditure arising out of the stringent environment and pollution
regulatory controls and greater concerns for safety. This is driving
the hydrocarbon industry towards more consistent higher quality
products involving stricter requirements on the traditional plant
operation.
Application of Information Technology

To be profitable in the venture, every industry is looking for cost
effectiveness in the total life cycle of the process plant in all
business sectors and professional disciplines. In order to achieve
these objectives and meet the challenge, the Process Industry in
Hydrocarbon area is endeavouring to reap the benefits of
computing technology. In that respect the role of software
programs can never be over emphasized.
Plant Life Cycle

The Plant Life Cycle (Figure 23.1) starts with exploration for oil,
and its production. This is followed by development of numerous
294 downstream plants. The life cycle comprises of their design,

Notes operation, production, maintenance, safety, profitability, revamp
Activity
___________________ and expansion. It is a complex series of technical, commercial and
FEED.
___________________ management activities, requiring high level of technological skills,
___________________
improvement of operating efficiency, information generation,
information management and overall management skills.
___________________
Information technology and use of computers plays an extensive
___________________
role in the design, operation and management of hydrocarbon
___________________ industry.
___________________
Substantial developments have taken place in the application of IT
___________________ in Process Industries, due to the collaborative efforts from process
___________________ engineers, professionals from all engineering disciplines and
___________________ software program developers. Use of IT during various phases of
plant life cycle is summarized in Figure 23.1.
Project Cost Estimation and Feasibility Study

Cost estimate is an assessment of the cost of a project based on the
facts available on the project and historical records of similar
projects. The better and more precise the facts, the more accurate
is the estimate.
Cost estimates of progressively increasing accuracy are required at

every stage of project since they provide the basis for economic
analysis, management decisions, approval of budgets and cost
control.
With larger projects, it is common to ask for phased approval of

expenditure because of the limited technical definition against
which preliminary estimates are often prepared. At first a ball-
perk type or order of magnitude type of estimate may be required.
For budgetary approval to pursue the project, a feasibility study is
required. If the preliminary estimate (feasibility report) looks
attractive, funds may be sanctioned to allow Front End
Engineering Design (FEED) to take place. A more definitive
estimate is based on FEED.
FEED allows for accurate sizing and layout of the equipment and
facilities in the plant and get more accurate and detailed cost
estimate from past data on similar equipment or fresh quotations
on the equipment and facilities.
295
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 23.1: IT Application during Plant Life Cycle
The final approval for a project to proceed is usually given on the

basis of this detailed estimate.
In short, there are two types of estimate done before start of a
project:
z Feasibility Study
z Detailed Feasibility Report (Also called Detailed Project
Report or Definition of Facilities).
In feasibility study stage often the accuracy is defined as ±25 or
±30% estimate. In such cases factored cost figures are used. In
Detailed Feasibility Report or Project Definition Report a more
definitive cost (±10% accuracy) is required and more accurate
estimation of hardware and services are required and factoring is
minimized.
Key Features of Cost Estimate Software Programs

Software programs are available where estimates are broken down
and structured in such a way that they reflect the project
organization, the requirements of any applicable budgetary
control, accounting requirements and agreements. The structure of
such a software is given in Figure 23.2. The programs generally
have the following features:
z Breakdown the project into cost heads (Table 23.1) and to a
level of detail appropriate for the type of estimate required.
296 For example these could be equipment cost, hardware or bulk

Notes material (piping, cables etc.) cost, services cost, financial cost
___________________ etc.
___________________ z Further breakdown of each cost head into discrete project

activities, unit rates for each activity covering the entire
___________________
project span and scope.
___________________
z One of the key elements is to estimate the equipment and
___________________ hardware cost as accurately as possible. Depending on the
___________________ accuracy required, it could be taken from an existing cost data
base, related to specification of the major equipments. Again
___________________
depending on the accuracy of the equipment required,
___________________ approximate sizing or engineered specification of equipment is
___________________ done.
___________________ z Cost database in the software contains collection of data

obtained from records of plants built earlier. Data base are
correlated and updated from time to time. Usually the input
data is cost of equipment and major items obtained from
quotations or records.
z Major equipment cost forms the base cost for various types of
estimates. For feasibility study estimates, other cost heads are
often factored. It estimates cost of erection, piping,
instrumentation, electrical items, civil etc. by adding a series
of factors over the equipment cost. Inflation indices are
introduced.
z When an engineered detailing of the plant is done, often for
the sake of accuracy, current quotations and rates are taken
from vendors as input to the software database.
z Add appropriate allowances and contingencies to the
individual estimates at Hardware Item or Project Function
level.
z Phase the components of the total cost estimate to obtain
expenditure profile which reflects the project schedule.
z Develop the complete estimate by adding up all the cost heads
from the definition of scope, through the definition of
quantities/services and the application of unit cost rates to the
final estimated-cost of the project.
z Most of the software have additional features like carrying out
cash flow calculations, financial analysis and profitability
based on the estimates made and inputs on financial cost and
operational cost.
297
It is possible to use these programs along with design or flow-sheet
Notes
simulation programs to optimize and estimate. Thus by use of
modern cost estimate software, design and costing can be brought ___________________
together. There is an immediate feedback on information on ___________________
improved design and lower costs.
___________________
Table 23.1: Major Cost Heads for Process Plant
___________________
Some of the major cost heads for capital cost are:
___________________
z Equipment and Material Cost
z Land Development Cost ___________________
z Infrastructure Cost
z Construction Cost ___________________
z Commissioning Cost ___________________
z Project Management Cost
z Engineering and Design Cost ___________________
z Cost of Financing
___________________
z Contingency Allowance
Some of the cost heads can be factored based on equipment cost.
Linear Programming Applications in Process Plant

Linear Programming (LP) application software is used for process
plant cost optimization or optimization of production plan. It is
designed to provide plants with an economic advantage in today’s
highly competitive environment. This system uses feedstock
properties, plant models, and economic considerations to help
planners maximize profitability over a broad operating range–both
in conceptual and design stage as well as to optimize the operation.
It takes into consideration of all the constraints and variables
expressed in the form of linear equations. The ideal application of
LP model is where:
z There are many potential solution
z Certain objectives to be optimized
z Interconnectedness between the variable elements of the
system.
Oil refineries face an enormous number of options in their
operations:
z Which crude oils to refine
z What processing conditions to use
z Which products to sell
z How to blend them from the intermediate components
298
There is a straightforward objective to arrive at optimized
Notes
Activity
solutions: the profit. The operations of the refinery are intrinsically
Write a report on Autocad
___________________
Software.
interconnected: it is a sequential process with one decision
___________________ affecting the other; for example, choosing to process one crude
___________________ means that you have less processing capacity available for others.
Thus the problems which a refinery faces have the characteristics
___________________
of a LP solution.
___________________
A typical structure of LP software for optimization of a refinery
___________________ (conceptual stage) as well as optimization of operation of existing
___________________ refinery is shown in Figure 23.2.
___________________
___________________
___________________
Figure 23.2: LP Software Structure
Check Your Progress

Fill in the blanks:
1. ……………….. is an assessment of the cost of a project
based on the facts available on the project and historical
records of similar projects.
2. ……………….. application software is used for process
plant cost optimization or optimization of production
plan.
IT Application in Design and Engineering
Process Design and Engineering

In the process industry, the design phase starts with the Process
Design and followed by Engineering Design for other disciplines.
299
Two of the most important drawing documents in this stage are:
Notes
A Process Flow Diagram (PFD) shows all equipment in the process
scheme like pumps, compressors, heater, reactor and distillation ___________________
column that is required for processing, and links them up in the ___________________
form of a flow diagram showing materials flow and heat flow ___________________
through each of the equipment.
___________________
Simulation and optimization of the flow diagram is carried out by
___________________
making use of process simulation software available from reputed
software companies like SimSci, Aspentech, Hyprotech and others. ___________________
These enable the Process engineers to design new processes, ___________________
evaluate alternative plant configurations and arrive at the
___________________
optimum design.
___________________
The other most important drawing is Piping and Instrumentation
Diagrams (P&IDs) showing all interconnecting pipe sizes, pipe ___________________
specifications, control systems and control instrument

specifications. It also gives major equipment sizes and performance
specification.
In earlier days, P&IDs were being conceived and drafted totally
manually. Now P&ID software programs provide the capability to
build schematics intelligently as well as perform design checks for
consistency and compatibility of components. Once the process
simulation is done, the actual drafting works are carried out by
software programs like AutoCAD, Microstation and other software.
A typical P&ID generated by process design and drafted by
Autocad software is given in Figure23.3.
Figure 23.3: A Typical P&ID

300
Detailed Engineering Using 3-D Model
Notes
Once the process design is over, a multi-disciplinary engineering
___________________ team starts what is known as detailed engineering. While
___________________ mechanical engineers carry out the mechanical design and
___________________ drawings of the equipment, electrical engineers estimate the power
requirement in the plant and start making drawings for cable
___________________
layout and power distribution. Similarly piping engineers make
___________________
piping layout drawings and civil engineers start foundation and
___________________ structural drawings. For each discipline, there are specific design
___________________ tools (software).
___________________ The drawings were generally done earlier using

___________________
2-Dimension drafting software like AutoCAD, Microstation, etc.
___________________ With the complexity of integrating multi-disciplinary designs and

drawings, 2-D systems for drafting and modeling had become
inadequate. A number of good 3-D modeling for engineering design
of process plants along with data management and a lot of other
options are available now. Examples of such software are PDMS,
PDS, AUTOPLANT, etc. Some of the features in these software are
described below.
The 3-D software allows interaction between all disciplines in the
3D design workflow by allowing a comprehensive set of integrated
applications covering all engineering disciplines at its core.
Through the design, standard and automated deliverables can be
generated directly from the model. The in-built linkages within the
software allows for updating of sequential designs or drawings for
any changes in the input, minimizing the possibility of errors,
when a series of drawings are generated.
Typical 3-D model generated by such software is shown in Figure
23.4. Such software allows the projects to be executed within an
unlimited, multi-user, multi-site access environment globally using
low bandwidth technology on multiple platforms.
The major advantages of the 3-D software provides over
conventional 2-D software are:
z Saving in time
z Saving in material as the impact on bill of material for
changes in design is taken care of more effectively by this kind
of software.
301
z Visualization of the 3-D model, which helps in better
Notes
judgement in design and operability. In the specialized world
of plant design, it is called “immersive group visualization”– a ___________________
theatre style system enabling a group of engineers and their ___________________
customers to take a big-screen ride through a proposed new
___________________
plant.
___________________
Figure 23.4 presents typical networking for a global engineering
___________________
design operation.
___________________
With the improvements in software system and communication,
engineering services outsourcing is gradually getting as common ___________________
as outsourcing in the IT industry. ___________________
___________________
___________________
Figure 23.4: Typical Networking for a Global Engineering Design

Operation
Check Your Progress

Fill in the blanks:
1. ……………………… show all interconnecting pipe sizes,
pipe specifications, control systems and control
instrument specifications.
2. Piping engineers make ……………………… drawings.
IT Application in Operation
Nowadays computer and software application are extensively used
for operation, control and monitoring of a process plant.
302
First let us understand what kinds of functions are required for
Notes
optimum and safe operation of a plant. The main functions to be
___________________
carried out in a plant are:
___________________
z Local plant control and management
___________________
z Plant optimization functions.
___________________
z Communication system between plants and between plant and
___________________
a central control station and management of the
___________________ communication
___________________ z Plant maintenance functions
___________________ z Overall production planning, monitoring and control
___________________
z Management functions.
___________________
To do all these functions a lot of plant operating data and other
parameters need to be collected and processed. Let us understand
what kind of data is collected:
z Normally, an oil gas related plant is a complex of several
process units spread over a large area.
z In each process unit, there are numerous measurements of
operating conditions in various equipments which affect the
plant operation. Some of the parameters are pressure,
temperature, flow rate, level of liquid, composition of
feedstock, composition of products, properties of feed and
products and numerous other information.
z For optimum and safe operation of the plant many of the above
parameters need to be monitored and controlled.
Also in each plant numerous equipment oriented data are collected
such as:
z Equipment status (on-off, in line, isolated, on maintenance)
z Equipment health parameters (vibration, bearing
temperature, corrosion status)
For all these functions to be effectively done a lot of measurement
and recording of data, data processing, optimization and control of
operating conditions to meet the production are required. Till 1960
it was done either manually or through local control. Later with
increasing computer application, a completely centralized control
system was developed. But after mid-seventies, with the
development of powerful micro-processors, Process Control System
(PCS) and software technology, modern distributed control system 303

(DCS) gained ground. Now Advanced Process Control System are Notes
used, which combines DCS with process dynamic model and ___________________
management information system into one.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Notes:
APC: Advance Process Control
DCS / DDCS: Distributed Control System / Digital Distributed Control System
Figure 23.5: Advanced Process Control Hierarchy
Figure 23.5 depicts visualization of a typical control of a petroleum

product storage and despatch system. Here a large number of
parameters and logistics are to be managed and controlled:
z Filling of the tanks by products from the plant or raw material
from external sources,
z Emptying the tanks during loading in tankers or pumping to
pipeline,
z Measuring and monitoring the material received and
despatched,
z Quality of the various products and raw material are to be
maintained.
304
In a large storage terminal with a number of storages, pumps,
Notes
loading racks, tanker movements, it becomes a complex operation
___________________
and may have logistics problems. Today the whole operation is
___________________ carried out by DCS system using software to manage the logistics.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 23.6: Automation of Storage and Handling of Products
For monitoring and control of facilities laid over long distances and
integrated together (e.g. pipeline) SCADA system was developed.
Enterprise Resource Planning software (ERP) now sits above DCS
and other software for overall planning and asset management.
Description of some of these IT applications is given below.
Distributed Control System (DCS) in Process Plant

Distributed Control System for plant operation and management is
very popular nowadays. It is so called, because in a large complex
of plant facilities the data is stored where they have been created
and where they will be needed. Similar principles hold for the
control and operating functions also. But certain information and
functions are centralized. Typically:
z Local control and supervision of plant is located next to the

plant instrumentation.
z Processing of data for higher purposes (optimization,

calculations of set point value, etc.) is allocated in central
control room.
305
z Production planning and plant management is located closer
Notes
to the relevant plant management staff.
___________________
As shown in Figure 23.7, the operator’s console in the control room
___________________
is connected through a shared communication facility to several
distributed local control units. ___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 23.7: DCS System
DCS has three essential features:

1. DCS distributes its functions into smaller sets of semi-
autonomous sub-systems covering specific process or
geographic areas of the plant complex.
The functions generally are:
Data Collection
Process Control
Process Analysis and Supervision
Storage and Retrieval of Information
Presentation of Information and Reports
2. The second is to automate the manufacturing process by
integrating advanced regulatory control logic and procedural
languages with advanced application packages, expert
systems, including information to support such manufacturing
enterprise application as:
Production scheduling and dispatching
Preventive and predictive maintenance scheduling
Information exchanges with business and logistics
application
3. The third characteristic is the system aspect of the DCS, which
organizes information flow between the constituent parts so
306 that a single automation system unifying the semi-

Notes autonomous sub-systems is created.
___________________ DCS has been used extensively for all round application in
___________________ operation, process control, maintenance, equipment availability
etc. A typical imprint from the monitor of a control room with DCS
___________________
is shown in Figure 23.8.
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 23.8: Monitor Imprint from Control Room
Dynamic Simulation Model and Advanced Process Control (APC)

Building the system model involves entering the details about each
item in the process system. Much of the information needed to
build the model is obtained during the design stage. It is always
best to create the model during the design stage and keep the
model current through start-up and operation.
Dynamic model predicts responses of various equipment and
process parameters due to any change in:
z Feedstock quality or quantity
z Operating conditions
z Utility parameters (e.g. fuel gas quality for the furnace)
z Price of products.
The software can have in built process optimization system. It
calculates the new sets of operating conditions required for each
part of the flow system to get the requisite yield and quality of
products in the most economic way.
The program allows the operator to calculate new control set points
to achieve optimum performance, carry out studies and determine
where problems are occurring and what the reasons are.
In Advanced Process Control System, the model transmits the
corrective actions required to the plant control system, which
automatically resets the plant operating parameters.
Training Simulators 307

Notes
Plant operating personnel need to know how the plant will operate
during a variety of conditions. They can either gain that experience ___________________
by actually putting the plant into that condition, or they can ___________________
simulate the operation using training simulators. Using software,
___________________
an operator can safely simulate the operation of the process system
in these infrequent or potentially dangerous system-operating ___________________
conditions. Thus a plant operator gains experience in system ___________________

operation without affecting the operation of the physical plant.
___________________
The program allows the operator to determine optimum product ___________________
distributions based on current economic conditions, calculate new
___________________
control set points to achieve optimum performance, carry out
studies and determine where problems are occurring and why. ___________________
___________________
SCADA System
SCADA stands for Supervisory Control and Data Acquisition. It
refers to the combination of the fields of telemetry and data
acquisition. It is extensively used in facilities covering very large
area (e.g. cross country pipeline or a complex of offshore platforms)
monitoring, control, operations, maintenance and management.
SCADA encompasses the following:
z Collection of the information
z The method of measurement and transfer of the information
from the remote site by telemetry and telecommunication.
z The analysis and control of the system and display of the
received information. SCADA facilitates the capability to
monitor and control network operations in real time.
SCADA systems are distinguished from traditional control systems
by their extensive use of telemetry to link physically isolated
measurement and control points. SCADA systems are
predominantly used in Oil, Gas and Petrochemical Processing and
pipeline industries. Basic SCADA structure comprises:
z Master Terminal Unit (MTU) or Master Control Station (MCS)
for processing of the data and presenting it to console
operators.
z Communication System for transmitting remote data to the
MTU and control commands to the remote sight for device
controlling.
308
z Remote Terminal Unit (RTU) for acquisition of device status
Notes
and data at remote sites.
___________________
The communication could be through optical fibres, radio, cable or
___________________
satellite. But for its functioning extensive range of software are
___________________ used. Besides Operating System Software, the following are
___________________ essential for SCADA system:
___________________ Application software related to a specific application. For example,
___________________ for a typical pipeline SCADA system, the application software will
be transient model of pipeline dynamic flow operations including
___________________
real-time leak detection and location software.
___________________
The modules to be included are:
___________________
z Flow measurement
___________________
z Meter proving
z Batch tracking
z Interface detection/composition tracking
z Pig tracking
z Over or under pressure protection module
z Pipeline efficiency module
z Predictive module
SCADA software comprises System and database configuration:
z Generation of current raw database and processed data base
(telemetered information)
z Generation of historic data for trending and archival
z Alarm handling including information display and print out
z Generation, storage, presentation of mimic diagrams with
dynamic information (presented on VDUs)
z Display management for alarm, mimic diagrams, analog and
digital values, trend graphs, bar charts in high resolution
colour graphic modes
z The calculation software package
z Free format report generation storage and print out
z Transmission of control commands and configuration
parameters to out stations in system with fast update of
related information on Man Machine Interface (MMI).
309
Check Your Progress
Notes
Activity
Fill in the blanks:
___________________
1. ………………… Unit in SCADA is for acquisition of different Maintenance
___________________
device status and data at remote sites. Management Software
available.
___________________
2. ………………… Unit is for processing of the data and
presenting it to console operators. ___________________
___________________
Maintenance Management Software ___________________
The following are the different Maintenance Management ___________________

Software available: ___________________
___________________
Computerized Maintenance Management System (CMMS)
___________________
CMMS integrates routine maintenance, preventive maintenance,
work orders, inventory and purchasing in an intuitive interface.
Specifically designed to be easy and powerful, minimizing operator
input during startup and normal operations.
Planned as well as Preventive Maintenance Tasks are scheduled
by Days, Shifts or Meter readings. Any maintenance tasks that are
not completed are rescheduled for the next week. A critical
preventive maintenance work order is never missed because they
are automatically regenerated until completed.
Field condition and process information data are accumulated and
passed on to Computerized Maintenance Management System
(CMMS) software for analysis. However, this information can’t tell
the user what actually went wrong or how severe the problem is.
Specialized condition-monitoring equipment e.g. corrosion
monitoring to identify corrosion problems in piping and vessels,
vibration monitoring to identify rotor dynamic and bearing faults,
and performance monitoring to identify performance degradations,
are needed.
Condition Monitored Maintenance Software

Intelligent field devices and smart chips combined with maintenance
management software are now helping process industry companies
move toward predictive maintenance in their plants.
It collects data generated by “smart” field instruments, organizes
this data for various maintenance functions, and monitors for early
warning signs of field device stress or deterioration so that
corrective action can be taken before a serious equipment failure
310 occurs. There are diagnostic software to actually carry out the
Notes diagnosis of the problem and recommend preventive actions.
___________________
The program reduces overall maintenance costs and increases
___________________ process uptime by providing advanced warning about potential
___________________ equipment failures. Automating work order creation and
eliminating manual data entry further reduce the chance for human
___________________
error in handling maintenance information. By combining these
___________________ important maintenance tools, the user can establish a predictive
___________________ maintenance environment to keep the plant running at top
efficiency. Potential problems are corrected before serious damage
___________________
occurs, and the cost of maintenance is reduced significantly.
___________________
Direct interfaces between the Computerized Maintenance
___________________
Management System (CMMS) and other diagnostic and monitoring
___________________ systems such as compressor and pump automation, predictive
maintenance, and product quality testing equipment can assist
greatly in streamlining the maintenance process. It allows
maintenance personnel to respond to early warning signals before
they escalate into critical repair problems. CMMS build upon these
types of interfaces to automatically create work orders and update
equipment histories based upon alarms and test results received
through these interfaces.
CMMS provides maintenance professionals with:
z An easy-to-use library of possible problems for major capital
expenditure assets and critical patient care items
z Problem diagnosis techniques
z A recommendation to repair the cause of the problem and
avoid repeated wasting of money treating its symptoms rather
than the actual cause.
Check Your Progress

Fill in the blanks:
1. ………………….. integrates routine maintenance,
preventive maintenance, work orders, inventory and
purchasing in an intuitive interface.
2. Field condition and process information data are
accumulated and passed on to ………………….. software
for analysis.
Enterprise Resource Planning and Management (ERP) 311

Notes
Activity
What is ERP? Write a report stating the
___________________
different uses of ERP in any
Earlier, most of the large process plant complex used to maintain two ___________________
sectors, along with
independent information centre/databank for individual functions examples.
___________________
like Planning, Operation, Maintenance Management, Finance and
Marketing. However, now software programs integrate ___________________
information from those activities. But modern Enterprise Resource ___________________

Planning software (ERP) combines information, data and reports
___________________
from all departments together into a single, integrated software
___________________
program with a single data base, from which all can share
information and communicate with each other. ___________________
Members of staff of different departments see the same ___________________
information and can update it. Accountability, responsibility and ___________________

communication are the major benefit of the ERP.
In short, ERP consists of the following modules:
z Asset Management,
z Controlling,
z Financial Accounting,
z Human Resources,
z Industry Specific Solutions,
z Plant Maintenance,
z Production Planning,
z Project System,
z Quality Management,
z Sales and Distribution,
z Materials Management,
z Business Work Flow.
Major Benefits of ERP

ERP consists of the following benefits:
z Integration of financial information: ERP integrates and
creates a single version of format that cannot be questioned
because everyone is using the same system.
312
z Integration of customer order information: ERP systems
Notes
manages all information from enquiry to ordering, shipping,
___________________
delivery and payment. By having this information in one
___________________ software system, rather than scattered among many different
___________________ systems, companies can keep track of orders more easily, and
coordinate production, inventory and shipping. It helps in
___________________
reducing inventory.
___________________
z Standardize HR information: Especially in companies with
___________________ multiple business units, ERP can provide a unified, simple
___________________ method for tracking employees’ time, utilization, and
___________________
communicating with them about benefits and services.
___________________ z Integration with Operation: ERP systems provide a

platform that links sales, inventory and quality with the
___________________
production data, operation and production planning. The inter-
phasing with the plant operation is done by interaction with
DCS system by transmitting key production and operating
information for the management.
By providing the link between ERP and plant operation, the
program enables true plant optimization.
Integration with Maintenance: Like integration with operation,
ERP can sit over and inter-phase with the maintenance software
also.
Essentially through modern ERP system, all departments covering
management functions, production functions, maintenance
functions, marketing functions and safety functions are managed
and monitored.
Project Management
Discussion on IT application is incomplete without mention of
project management software like Primavera, MS Project etc. Such
software are extensively used to meet specific objectives to make
the project on time, within budgeted cost and meeting quality.
Such software have both text and graphic interfaces to carry out
functions like:
z Planning and scheduling: Gantt Chart, PERT Chart, Bar
Chart
z Cost control: Ordering, purchase order, budget vs. actual
z Resource Management
313
z Progress Monitoring: Engineering progress, ordering
Notes
progress, vendor shop status, delivery schedules, construction
progress, projected and actual progress curves (S-Curves). ___________________
Such software have the capability of integrating the project related ___________________
activities of the entire company (Figure 23.9) ___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Figure 23.9: Enterprise Project Management
Check Your Progress

Fill in the blanks:
1. ……………………. integrates and creates a single
version of format that cannot be questioned because
everyone is using the same system.
2. ……………………. software combines information, data
and reports from all departments together into a single,
integrated software program with a single data base,
from which all can share information and communicate
with each other.
Summary
This unit gave a complete overview of IT application in the
hydrocarbon industry. The entire operation in a project life cycle
from conceptualization of the project to the project feasibility
study, design, construction, operation, maintenance and
management has extensive application of IT.
The project life cycle and application of IT in various phases of
plant life was at first identified. This was followed by description of
software application in each of the above phases. Examples of IT
application in design, operation and maintenance were explained
314 in detail. Capabilities and uses of modern ERP software were

Notes explained.
___________________
___________________ Lesson End Activity

___________________ Using the Internet, find out more information on Gantt Chart,
___________________ PERT Chart and Bar Chart.
___________________
___________________
Keywords
___________________ SCADA: It stands for Supervisory Control and Data Acquisition. It
refers to the combination of the fields of telemetry and data
___________________
acquisition.
___________________
Computerized Maintenance Management System (CMMS):
___________________
Enterprise Resource Planning-software (ERP): It combines
information, data and reports from all departments together into a
single, integrated software program with a single data base, from
which all can share information and communicate with each other.

1. What are the various phases in plant life cycle where IT
application is commonly used?
2. Explain the extent of integration in IT application for

management, operation and maintenance in the hydrocarbon
industry.
3. Expand the following terminologies:
(a) ERPLP
(b) P&ID
(c) PFD
(d) DCSAPC
(e) SCADA
(f) FEED
(g) DFRDPR
315
4. What is Condition Monitored Maintenance (CMM) and how is
Notes
it used for the purpose?
___________________
5. What is SCADA? Explain a SCADA system for a cross country
___________________
pipeline.
___________________
___________________
___________________
Further Readings ___________________
___________________
Books
___________________
Applied homogeneous catalysis with organometallic compounds:
A ..., Volume 1 Boy Cornils, Wolfgang A. Herrmann - Science – ___________________
1996 ___________________
Handbook of Industrial Hydrocarbon Processes James G. Speight

– Technology & Engineering – 2010
Classics in hydrocarbon chemistry: Syntheses, concepts,
perspectives Henning Hopf – Science – 2000
Organic electrochemistry Henning Lund, Ole Hammerich – Science
– 2001
Web Readings
www.geosocindia.org/Goldenjubilee/lucknowseminar.pdf
vinci.celuga.net/images/contenu/documents/Rock%20Eval% 206.pdf
316
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 24: Economics and Technology Trends
Unit 24
317
Notes
Activity
Economics and Technology
___________________
FEED.
___________________
Trends ___________________
___________________
Objectives ___________________
___________________
topics:
___________________
\ Trends on prices and business cycles
\ Strategies being adopted by major companies for competitiveness and ___________________
to overcome Troughs in the business cycles
___________________
\ Trends on innovation and emerging technologies
___________________
Introduction
Oil and natural gas dominate as main source of energy due to low
cost and ease of handling compared to other commercially viable
energy sources.
Coal is cheaper as raw material but more difficult to transport.
Coal has lower calorific value, lower efficiency of combustion and
greater environment pollution problem.
Technology of non-conventional sources of energy like solar energy,
wind energy, ocean energy or fuel cells are getting more attractive
but still a far cry for bulk production. At currently prevailing
prices of oil and gas, any major shift towards other sources of
energy is not expected in the near future.
Between oil and natural gas, the latter is cleaner and more
efficient fuel. But it is difficult to transport, difficult to store and to
fill in automobiles. Till now gas played second fiddle to oil as a
resource. Natural gas being a clean and efficient fuel and due to
improvements in the economics of liquefaction and re-gasification
technology, natural gas is gradually increasing its share in the
world energy supply.
Price fluctuation, competitiveness and changing business cycles
are characteristics of hydrocarbon industry. The huge turnovers
often in billions of dollars by major players and large profits during
318 upswing period of business cycle, generates enough funds to

Notes
Activity innovate and improve technology to remain competitive.
___________________
To get the feel of business in hydrocarbon area, it is necessary to
International Gas price
___________________
scenario. know the various trends in pricing, business trends, economic
___________________ trends and technological changes. Some of these aspects are
highlighted in this unit.
___________________
___________________
Natural Gas Trends
___________________
The emergence of natural gas as fuel had been slow mainly due to
___________________
transportation costs. For example gas pipelines are 3 to 4 times
___________________ more expensive than oil. Improvements in economics of
___________________ liquefaction and transportation have created large market for
___________________ LNG. Also very large reserves of gas have been discovered in
places like Qatar, Indonesia and elsewhere, substantially
enhancing the availability of gas. Also stricter environmental
regulation both for product specification and effluent discharge has
made use of gas more attractive.
The price of gas, availability of gas, environmental regulations and

efficiency of gas as fuel makes natural gas fuel for the immediate
future.
The price of gas at the source varies from place to place. Earlier
the stress was on exploration of oil. The gas fields found in course
of exploration were capped and not exploited. These are called
stranded gas in the USA. Such gases are often given negligible
value at source. The netback or profit comes after the gas is
exploited and distributed to the consumer through pipeline
network. As a result, gas has always been valued at a price much
lower than crude oil for equivalent amount of energy value.
Natural gas price unlike oil is expressed traditionally in terms of

calorific value as US$ per Million BTU or in short US$ per
MMBTU. One million BTU equivalent of gas is roughly equal to
0.182 barrels of crude (thumb rule conversion). That means to
convert US$/MMBTU to US$ per barrel, the conversion factor will
be roughly 1.0 divided by 0.182 or 5.5. Thus we can use a factor of
5.5 to multiply US$ per MMBTU to get equivalent US$ per Bbl
price for natural gas for comparison to oil price.
International Gas Price Scenario 319

Notes
It is interesting to note that, the USA in spite of having large
resources of gas available at a low price is looking into ___________________
supplementing its gas requirement by import of LNG. ___________________
In the early nineties, the price of LNG has been high compared to ___________________
the price of gas in the United States. Costs of delivery were around ___________________
$2.50 to 3.00 per MMBTU (not including the netback price to the ___________________
owner of the stranded gas reserves). Assuming a US$
___________________
1.00/MMBTU netback to the producer, a total deliverable gas price
___________________
of around $3.50 to $4.00/MMBTU could possibly be attained on a
cost basis. ___________________
___________________
Now due to competition and improvements in technology, the total
cost of LNG production and re-gasification has been reduced. ___________________
This LNG price is almost $1.00/MMBTU less than a decade ago.

This is a thumb-rule price, which will actually depend on the price
at source, distance of transportation, volume of supply and type of
contract.
Relationship between Oil Price and Gas Price

The price of gas has some effect on the change in the price of oil.
Only around 5 to 10% of the gas comprising of ethane, propane and
some of the methane goes into production of petrochemicals. Most
of the gas is used for generation of power and for heating in the
developed countries.
The other fuel used for these purposes are fuel oil and naphtha
from the crude. There are impacts of crude price variation on the
naphtha and fuel price. Natural gas for power plant needs to be
priced so that it is competitive with the naphtha price.
It is important to understand that there has to be a link between

oil price and LNG price. Japan, which is one of the largest buyers
of crude oil as well as LNG, has a definite correlation between the
two. This is presented in Table 24.1
320
Figure 24.1: Relationship – LNG Price and Oil Price at Japan
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
One of the biggest anomalies in the North American natural gas

market over the past year has been how disconnected natural gas
prices have become from those of its close substitutes – oil and
coal. The historical relationship between the price of natural gas
and oil, which has averaged 10:1 over the past two decades, has
now moved to approximately 20:1.
Changes in environmental regulations that favour use of natural
gas over coal as feedstock for electricity generation facilities
coupled with a spike in coal prices, have caused natural gas to
trade below the “coal floor” for more than a year. The coal floor is
the price at which electrical utilities shut down coal plants and
increase use of natural gas fired power plants.
In this section you will examine the connection between natural
gas prices and those of oil and coal from a variety of angles. Also,
it will show that while a number of factors may move prices beyond
historical norms in the short-run, there still exist powerful forces
that will revert these relationships back to the mean in the long-
term. A reversion to historical pricing norms is strongly bullish for
natural gas prices.
It provides several ways to profit from this trend. While there has
been much written about the correlation between gas and oil prices
over the years, no authors have presented the relationship more
succinctly than Stephen Brown and Mine Yucel, two researchers at
the Federal Reserve Bank of Dallas. In their 2007 white
paper/presentation entitled, “What Drive Natural Gas Prices?” the
authors present a very thorough review of three of the most 321

commonly used rules of thumb when comparing oil and gas prices. Notes
They are as follows: ___________________
10-to-1 rule: Under the 10-to-1 rule, the natural gas price is one- ___________________
tenth the price of oil. For example, a $50 price for a barrel of WTI
___________________
crude oil would indicate that natural gas should trade at $5.00 per
million BTU at Henry Hub. The 10-to-1 gas/oil relationship has ___________________
been the most accurate rule of thumb over the past 10 years as ___________________
evidenced by the below figure: ___________________
___________________
___________________
___________________
___________________
Figure 24.1: The 10-to-1 gas/oil relationship

6-to-1 rule: Another common rule of thumb for the relationship
between gas and oil prices reflects the energy content of the two
commodities. Since one barrel of oil contains the energy equivalent
of the 5.825 million BTU of natural gas, the 6-to-1 rule was
developed. Applying this rule, should oil prices trade at $50 per
barrel of WTI, natural gas should trade at $8.58. Brown and Yucel
observed that although the 6-to-1 rule is less accurate than the
10-to-1 rule over long observation periods, in times of rising gas
prices, the 6-to-1 rule is a more accurate predictor of natural gas
prices. In periods of declining natural gas prices however, the
10-to-1 rule is a more accurate predictor.
Burner Tip Parity: The burner tip party rule is more complex
than either of the two previously discussed rules in that it takes
into account the relationship between natural gas and the
petroleum production with which it competes at the burner tip.
According to Brown and Yucel, the burner tip parity rule “shows
322 natural gas pricing yielding parity with residual fuel at the burner
Notes tip, and the price at Henry Hub adjusting to whatever is necessary
___________________ to achieve burner-tip parity.” Since a barrel of residual fuel has an
energy content of 6.287 BTU, and historically residual fuel is
___________________
priced at 95% of WTI, the burner tip parity rule would suggest that
___________________
a $50 price per barrel of WTI would result in a $7.06 per million
___________________ BTU price for natural gas.
___________________ In addition to the above three rules for describing the correlation
___________________ between oil and natural gas prices, Brown and Yucel also discuss
other factors that impact the oil-gas price relationship. One little
___________________
discussed influence on U.S. natural gas prices is the worldwide
___________________
price of petrochemical products. The authors point out that since
___________________ the U.S. petrochemical industry relies heavily on natural gas as a
___________________ feedstock, while a significant portion of the international
petrochemical industry uses oil as a feedstock in its manufacturing
processes, a pricing arbitrage exists during periods of low gas
prices in the U.S. Therefore, should U.S. natural gas prices
remain below their historical norms for an extended period,
petrochemical imports into the U.S. will decline and domestic
manufacturing will expand and increase demand for natural gas.
Another factor influencing the oil to gas price relationship in the
U.S. is the price of Liquefied Natural Gas (LNG). With an
increasing percentage of the world LNG pricing linked to world oil
prices (exporters are now demanding oil linked pricing), LNG
imports into the U.S. will remain at very depressed levels unless
natural gas prices rise substantially. Imports into the U.S. are
currently approximately 1 billion cubic feet per day (bcf/d) despite
approximately 12 bcf/d of import capacity. However, if we look at
gas prices in the U.K., a country which has seen domestic gas
production fall and now relies more heavily on LNG imports, we
see a much closer link between oil and gas prices. On 1/26/2011
spot natural gas in the U.K. was priced at $8.64 per million BTUs
and Brent crude priced at approximately $95. Therefore, the
current gas-to-oil ratio in the U.K. is approximately 11:1. Since
the U.S. imports virtually no natural gas via LNG on a long-term
fixed contract basis and the UK will likely continue to offer the
best terms for spot cargoes in the Atlantic Basin due to further
declines in domestic production, there will be no increase in LNG
imports into the U.S. until spot prices are well over $8.00US per
million BTUs.
323
Brown and Yucel’s final reason oil prices drive natural gas prices is
Notes
the reallocation of drilling funds by natural gas producers away
from natural gas projects and towards oil projects. In today’s ___________________
world of approximately $89US per barrel WTI oil prices and ___________________
$4.35US per thousand cubic feet (mcf) natural gas prices, operators
___________________
are aggressively redirecting funds towards oil projects. It comes
as no surprise that most independent operators are now ___________________
concentrating on their oil projects given that oil and gas wells cost ___________________
about the same to drill and oil wells generate nearly three times ___________________
the revenue on a barrel of energy equivalent basis. The focus on
___________________
oil projects and liquid rich natural gas projects has led to a drop off
in the natural gas directed rig count in recent months and a ___________________
concurrent increase in the oil directed rig count. We see the ___________________
preference for oil drilling over natural gas drilling displayed very
___________________
clearly in the weekly Baker Hughes rig counts. The below graph
shows the large upswing in both gas and oil directed drilling over
the past two years as well as the recent fall off in natural gas
directed drilling:
There are two important reasons oil directed drilling will continue
to rise and natural gas directed drilling should continue to fall.
First, a significant portion of today’s natural gas directed drilling,
as much as 25%, is being conducted to hold soon to be expiring
leases. Many leases in the Haynesville and Fayetteville shale were
signed with terms stipulating that to maintain the lease in good
standing; a well must be drilled within three years of lease
signing. With much of the prospective acreage already held by
production (HBP) in these two shale plays, operators have begun
reducing operations in these areas until economics improve.
According to Baker Hughes, Louisiana and Arkansas, home to the
Haynesville and Fayetteville shale plays, have fewer rigs operating
than at the same time last year due to declines in shale directed
drilling. While rig efficiency gains, such as pad drilling will reduce
drilling time per well and will certainly offset fewer rigs active in
natural gas shale plays, drilling more shale wells closer together
will not grow shale gas production enough to offset an expected
10% decline in conventional US natural gas production this year.
A final reason oil prices are now driving natural gas prices is that
inflation in oilfield services, especially pressure pumping, have
driven up drilling costs to the point where most natural gas wells
are uneconomic at today’s prices. Pressure pumping is the
324 pumping of water and sand into a wellbore that has been
Notes perforated to prop open fractures to allow hydrocarbons to flow to
___________________ the wellbore. With new unconventional oil plays coming online in
___________________ the past year and operators drilling more and longer lateral wells
___________________
requiring more fracture stimulation jobs than ever before, demand
for pressure pumping services has risen dramatically.
___________________
___________________ Check Your Progress

___________________ 1. The …………………. rule shows natural gas pricing
___________________ yielding parity with residual fuel at the burner tip, and
the price at Henry Hub adjusting to whatever is
___________________
necessary to achieve burner-tip parity.
___________________
2. Under the …………………. rule, the natural gas price is
one-tenth the price of oil.
Coal vs. Natural Gas

A number of factors have distorted the traditional relationship
between coal and natural gas prices to unsustainable levels. Since
most of America’s utilities have the ability to employ natural gas
fired power plants in lieu of coal fired power plants when natural
gas is priced advantageously, utilities have been ramping up
natural gas consumption and reducing their usage of coal. With the
price of Central Appalachian (CAPP) coal currently trading at $73
per ton, up from $60 per ton for much of last year, a recent study
by Credit Suisse (CS) indicates that natural gas prices would need
to rise to approximately $6.30 per mcf before coal and natural gas
trade at parity for electricity generation. As you can see from the
below graphic, natural gas is well below parity for not just 2011
but also for the next several years:
With such a large gap between coal and gas pricing parity, we have
already seen a substantial amount of switching by utilities from
coal to natural gas. According to CS, in October 2010, natural gas
usage for electricity generation was up 6% year over year while
consumption of coal for electricity generation was down 4% year
over year. More importantly, CS sees even more switching to
natural gas in the months and years ahead as tighter
environmental rules make coal usage increasingly expensive. For
example, CS sees natural gas demand increasing 5 bcf/d should 325

new EPA rules regarding release of nitrogen oxides, sulfur oxides Notes
and mercury by coal fired power force the closure of all small coal ___________________
fired power plants without environmental controls (60 GW of 340
___________________
GW total) by 2017 and a potential 10.2 bcf/d should all small and
large dirty coal plants (100 GW total) be closed by 2017. ___________________
Despite the all of the evidence that today’s natural gas prices are ___________________
unsustainable in relation to oil or coal, many of today’s biggest gas ___________________

traders are still betting big that the recent jump in prices to $4.75 ___________________
per mcf on the NYMEX was just a fluke. No natural gas futures
___________________
contract on the NYMEX trades over $5.00 until January 2012.
While shorting natural gas has been a very profitable strategy over ___________________
the past two years, and a very popular one as well, the ___________________
fundamentals of natural gas will soon get the long Awaited rally in
___________________
natural gas started. When shorts start covering we will see a
spectacular rally in natural gas. There are many great ways to
participate in the bull market for natural gas such as the several
gas-weighted equities in my newsletter Model Portfolio as well as
several commodity ETFs.
As a result of all this the following changes have taken place in
LNG trade:
z LNG contracts in the eighties were very rigid with stringent

penalty clauses for failure to supply as well as failure to lift
agreed quantities. They were also long term contracts so that
huge investment needed for production (seller) and utilization
of LNG (buyer) get paid out. LNG contracts are now gradually
becoming less rigid and more flexible.
z New long term contracts between seller and buyer specify a

relatively smaller commitment of supply which can be later
supplemented by short term contracts for additional
requirements. Thus it is more flexible.
z Short term contracts as a result have grown from 1% in the

early nineties to around 10%.
The future is going to see increased activity in LNG trading to

satisfy the increasing energy needs of some countries. There are
today 150 LNG tankers with another 50 plus tankers under
construction to be added in near future.
326
India and China are going to become major buyers of LNG.
Notes
European countries which do not have major gas resources and
___________________
USA will also be the major players in LNG downstream.
___________________
___________________
Indian Scenario
___________________ Gas Demand and Supply

___________________ The demand of gas has been projected by various estimates
___________________ depending on assumed user pattern at figures between 150 to 200
million SCMD. Major consumption of Natural Gas in India will be
___________________
in the Power and Fertilizer sectors. Thus there is a large gap to be
___________________
filled.
___________________
A major part of the gap is expected to be filled by LNG. Petronet
___________________ LNG Ltd. was formed by participation of PSUs. Petronet has
entered into agreement with Ras Gas (Qatar) for import of LNG.
Their terminal at Dahej is nearing completion and another will
come up at Kochi. Shell is constructing a LNG Terminal at Hazira
with Shell Oman as supplier of LNG. A number of other projects
are expected to come up.
Other possibility of gas import is directly by pipeline from Iran,

Turkmeinistan, Bangladesh or Myanmar and connecting them to
existing gas grid like HBJ Pipeline.
Indian Pricing Scenario

The pricing of natural gas in India is currently based on a pooling
concept, with the consumer price being fixed by the Government.
The consumer price of natural gas is currently subsidized, with the
subsidy being borne entirely by the nationalized oil companies,
which receive sub-optimal prices for their production of natural
gas. The private sector joint ventures receive international prices
for the natural gas they produce.
This was feasible as long as the gas ownership and distribution
was by public sector companies. However, this pricing mechanism
is set to change due to:
z The recent gas finds in the Krishna-Godavari Basin by
Reliance
z Commencement of LNG imports.
327
Natural gas from these two sources would have cost structures
Notes
quite different from that for the existing sources of supply. The
supply from these sources would also be of substantial volume ___________________
exceeding the current availability of gas. This would lessen ___________________
government control on gas pricing and would force changes in the
___________________
pricing mechanism.
___________________
Perhaps in the long run, the market forces will settle the gas price
___________________
in India.
___________________
Energy Source – Trends
___________________
Hydrocarbon will continue to maintain its base as prime energy
___________________
source for at least the next 20 years. Between oil and gas, their will
be substantially increased share of gas as energy source for two ___________________
reasons: ___________________
z Natural gas is clean and environment friendly fuel

z There have been very large finds of natural gas in recent times
(e.g. Qatar, Indonesia). In future too greater proportion of gas
finds (compared to oil) are expected.
Dominance of natural gas as fuel had been slow mainly due to
transportation costs. For example gas pipelines are 3 to 4 times
more expensive than oil. Improvements in economics of
liquefaction and transportation have created large market for
LNG. Price of gas, availability of gas, environmental regulations
and efficiency of gas as fuel makes it fuel for the immediate future.
Synfuel as Alternative to LNG

The key thing is to solve the transportation aspect by converting
gas to liquids. There are choices now for conversion liquid –
Convert it to methanol, LNG or Synfuel. With oil price crossing
US$ 30 per barrel, two important sources of energy may start
gaining ground:
z Synfuel - It is essentially natural gas converted to light oil by
reaction processes with gasoline and diesel as products.
z Fuel cell - Which converts fossil fuel directly to power.
Synfuel technology is also called GTL (Gas to Liquid). A number of
technologies are available such as Fischer Tropsch technology,
Mobil, Haldor Topsoe, etc. The Fischer Tropsch route has the
steps:
328
z Steam reforming at 800°C: CH4 +H2O = CO + 3H2
Notes
___________________ z Conversion of CO and H2 to long chain hydrocarbons by
___________________
reaction between the carbon atom of CO and H2.
___________________
Fuel Cell
___________________
A fuel cell is an electrochemical energy conversion device, similar
___________________ to a battery.
___________________ It provides continuous DC power, which converts the chemical
___________________ energy from a fuel directly into electricity and heat.
___________________ When operated directly on hydrogen, the fuel cell produces this
___________________
energy with clean water as the only by-product.
___________________ Unlike a battery, which is limited to the stored energy within, a

fuel cell is capable of generating power as long as fuel is supplied.
Hydrogen is the primary fuel source for fuel cells. Reforming
process is used for the extraction of hydrogen from more widely
available fuels such as natural gas and propane or any other
hydrogen containing fuel. There is R&D effort going on to extract
hydrogen from water.
Fuel cell systems offer the potential for reliable, efficient, and cost-
effective energy generation. Capable of operating on multiple fuels,
such as natural gas, propane and hydrogen, fuel cell systems can
be deployed to operate in parallel with the grid, as independent
energy sources or to complement solar and wind power generating
systems.
With a higher efficiency than conventional power generation, little
or no pollution and greater flexibility in installation and operation,
they will offer commercially viable alternatives to existing power
sources.
Check Your Progress

Fill in the blanks:
1. Major consumption of Natural Gas in India will be in
the ……………….. and ……………….. sectors.
2. ……………….. is the primary fuel source for fuel cells.
Petrochemical Business Scenario 329

Notes
In the paragraphs given below we will learn about the
___________________
Pertrochemical business scenario right now.
___________________
Petrochemical Business Cycle
___________________
It has been noticed that the petrochemical business follows a
___________________
definite business cycle. These cycles follow a span of around 7 to 10
years. ___________________
___________________
There is a set pattern. Most operating companies in the
hydrocarbon process industry study the business cycle and trends ___________________
thoroughly and expand the petrochemical business, matching the ___________________
construction of new facilities during the lean period. As a result,
___________________
the new projects start-up during peak period. This results in over
saturation. Consequently, supply exceeds demands resulting in ___________________
dropping of margins after a period. Other sectors of the industry

too undergo difficult times. The industry had been through the
lean period till 2003 and upswing is expected now. But many large
naphtha/ethane/propane crackers are in the offing and the political
scenario is changing. These too affect the cycle.
This has lead to a situation where companies have evolved
strategies to survive the lean period and make profits in the
up-swing period.
The Ethylene Based Petrochemical Industry

Ethylene is called the king of petrochemicals. Ethylene based
petrochemicals have the largest share of the petrochemical
industry. Ethylene demand determines the petrochemical business
cycle.
Polythene, Ethylbenzene (EB- goes to make Polystyrene),
Ethylene Oxide (EO- leads to Ethylene Glycol), Ethylene
Dichloride (EDC), PVC and many other useful petrochemical are
ethylene derivatives. Polythene takes the major share of
ethylene based petrochemicals and is perhaps the most
important petrochemical.
The growing economies of China and India still have relatively
small share and is expected to determine the growth of the
industry.
330 Global Trend

Notes
Earlier the ethylene business was more regional limited to trade
___________________
within European region, the Americas and the Asia Pacific region.
___________________ Now global players are emerging in the ethylene and derivative
___________________ market. The Middle East is emerging as large manufacturing base
to supply globally. China is emerging as a major producer.
___________________
However, most of the big players are still making a profit, just not
___________________
as big as the profits they made over the past two or three boom
___________________
years. Other positive factors include lower oil prices meaning lower
___________________ feedstock prices and the drop in the cost of raw materials has
___________________ meant that many companies have been able to trim billions of
dollars from major projects.
___________________
___________________ Planning for Competitive Edge

Business Strategy
With the low margins in the refining industry and fluctuation of
fortunes in the petrochemical industry, the major investors and
companies have adopted strategies to make the industry attractive
using the well known principles:
z Economy of scale
z Integration under same ownership
z Mergers
z Proximity of raw material provider, and user
z Shared infrastructure and shared utilities
z Shared effluent treatment
z Technological innovation and energy audit
Integrated Refinery and Petrochemical Complex

In the 1970s and 80s, the oil companies were mainly in the
refinery business besides oil production. With the low margins in
the refinery industry, integration with petrochemicals has become
one of the key strategies for major companies. One tries to
integrate as much as the business environment permits and
availability of funds and market.
One of the best examples of integration is Reliance Industries, who
started as a fabric company. Later they step by step integrated
vertically to fibres, then to petrochemicals to make the fibres,
refinery to make the petrochemicals and then to oil and gas 331
production. In India the PSUs also are trying to integrate into Notes
their non-traditional areas. For example, companies like IOCL and ___________________
BPCL are planning to get into both petrochemicals and oil/gas
___________________
exploration. Similarly, ONGC is investing in refineries.
___________________
Mergers and Acquisitions ___________________
Integration of operation between upstream and downstream and ___________________
mergers have been the major consolidation done by many major
___________________
organizations in order to get a competitive edge. Some examples of
merger are: ___________________
z Exxon and Mobil- merged to form ExxonMobil ___________________
z BP/Amoco/Arco merged. BP acquired other companies like ___________________
Erdoel Chemie ___________________
z Total/Fina/Elf Aquitaine merged to form TotalFinaElf

z Chevron/Texaco
z Dow/UCC
z Montell/Targor/Elenac merged to form Basell
z Chevron/Phillips merged chemical interests
z Dow/UCC merged
Each of them has a wide portfolio of a range of oil, gas,
petrochemical and chemical business areas. One can see that oil
companies have integrated their business into refinery and
petrochemicals.
Check Your Progress

Fill in the blanks:
1. Exxon and Mobil merged to form ................. .
2. Total, Fina and Elf Aquitaine merged to form ............... .
Future Developments
Given below are the future developments that have been planned
in this area.
Hydrates as Energy Source
Hydrates are unstable compounds of hydrocarbons like methane
and water. They are solid and look like ice. In natural gas, the
332 saturation level moisture contained forms hydrates at moderate

Notes temperatures (5 to 20°C) at high pressure.
___________________
In many parts of the world huge deposits of hydrates have been
___________________ identified below the sea. Natural gas that seeped out of the
___________________ deposits below the earth, under pressure of water at certain depths
of sea, at the prevailing temperature formed hydrates. The
___________________
quantities are huge and research is going on how to mine them
___________________ from sea bed.
___________________ Another application of hydrates could be in the transportation of
___________________ natural gas by converting gas to hydrates in stead of liquefying to
___________________
LNG.
___________________ Norwegian University of Science and Technology has carried out

R&D in this area and found that:
___________________
1. Large-scale and long-distance transport of natural gas at
atmospheric pressure in hydrate form is feasible.
2. Experimental studies in Norway and Russia have shown that
natural gas hydrates are stable for up to two years when
stored at -15 to -5°C at atmospheric pressure, compared to
LNG at -160°C.
3. The estimated total capital cost of hydrate production and
melting processes was approximately one-quarter less than
LNG’s equivalent liquefaction and re-gasification processes.
4. For the same natural gas carrying capacity, the capital cost of
seven Natural Gas Hydrate ships was also estimated at
approximately one-quarter less than that of three LNG ships.
Gasification of Refinery Residues
Refineries always look for elimination of the residues which are
difficult to dispose off as fuel due to environmental regulations.
Integrated Gasification Combined Cycle (IGCC) is gaining ground
for the utilization of refinery residues to generate power.
Refineries in the USA and Europe have taken lead in the IGCC
projects. The IGCC process essentially converts the residue into
synthesis gas (mixture of carbon monoxide and hydrogen) by
reaction with steam at high temperatures. The acid gas bearing
sulfur is removed to purify the synthesis gas.
Synthesis gas generated through the gasification of refinery offers
scope to manufacture chemicals like methanol as co-production
and get further downstream into petrochemicals. Larsen and
Toubro has carried out some work in this direction and proposed 333
integrated approach for co-production of methanol and acetic acid Notes
along with power generation. ___________________
Smart Chips ___________________
Use of microchips for equipment conditions and health is expected ___________________

to find widespread application. There could be smart chips
___________________
embedded in various parts of equipment conveying many aspects of
___________________
equipment status, health, functioning, warnings and even
diagnosis of problems. ___________________
Business Diplomacy to Overcome Politics ___________________
Till the recent past, oil and gas have generated politics, power ___________________
struggle and war. But in South Asia, diplomatic moves are on to ___________________
overcome the politics that divides the subcontinent with gas as the ___________________
driving force behind it.
India is hungry for energy supply, with current annual average
growth, expected to go up. Turkmenistan and Iran have huge
reserves of gas, which they want to transmit to India by pipeline
through Pakistan. But 50 years of quarrel and suspicion is the
obstacle towards its implementation.
Bangladesh and Myanmar have gas and India is their nearest
market. But politics in Bangladesh is trying to prevent sale of gas
to India. A pipeline from Myanmar through Assam (a gas rich
state) makes good business sense.
Major multinationals have their eyes on these potential
mega-projects. They are also beneficial to each of the participating
countries. To quote “The Times of India”, “The great game– or the
potent mix of oil, gas and diplomacy in Central Asia – has reached
India. ......The three pipelines have the potential to metamorphose
the geopolitical and economic topography of Central and South
Asia...”
The economic need of the countries involved, pressure from the
multinationals and vested interest of some major countries is
generating business diplomacy, which could spur growth in
Central and South Asia and give peace a chance in the Indian sub-
continent.
South East Asia had set the trend of looking into business as the
driving force giving politics a back seat. China is following the
same path. Could the Indian subcontinent be the next?
334
Check Your Progress
Notes
Fill in the blanks:
___________________
___________________
1. ………….. are unstable compounds of hydrocarbons like
methane and water.
___________________
2. Experimental studies in Norway and Russia have shown
___________________
that natural gas hydrates are stable for up to two years
___________________ when stored at …………..°C at atmospheric pressure.
___________________
___________________ Summary
___________________ We started with the description of history and trends in the prices
___________________ of oil and natural gas. Emergence of natural gas as a source of
energy in the immediate future was noted. The growth in LNG
___________________
trade for supply of natural gas to both developed countries and
emergent economies of China and India was described.
Hydrocarbon resources being limited, major companies are
working towards developing new sources of energy. Gas to Liquid
technology, Hydrates and Fuel cells as a future source of energy
was identified.
The economics of the refining industry was discussed and low
margins in the industry were identified. This was followed with
description of the business cycle in the petrochemical industry was
described.
The strategies adopted by major companies to be competitive and
overcome the low periods of business cycle were stated with
examples.
Lesson End Activity

Using the Internet, write a short note on Brown and Yucel.
Keywords
Synfuel: It is essentially natural gas converted to light oil by
Fuel Cell: It is an electrochemical energy conversion device,
similar to a battery
Personal Protection Equipment (PPE): Equipment/clothing
which offers protection against risks to health and safety.
335
Integrated Gasification Combined Cycle (IGCC): It is gaining
Notes
ground for the utilization of refinery residues to generate power.
___________________
Injury Frequency (IF): Number of injuries per million man hours
worked. ___________________
___________________
Injury Rate (IR): Number of injuries per one hundred employees.
___________________
Questions for Discussion ___________________
1. What are the factors that affect crude oil price? ___________________
___________________
2. Why is natural gas emerging as major source of energy
supply? ___________________
3. What are hydrates? What are the new ideas coming up with ___________________
respect to the hydrates? ___________________
4. Describe the principles of fuel cells. Explain with sketch.

5. What are the principles adopted to make oil, gas and
petrochemical business competitive? Explain with examples.
6. Name five petrochemical products based on ethylene.
Further Readings
Books
May 2003 An Outlook for Natural Gas Market in the APEC Region
- Symposium on Pacific Energy Cooperation(SPEC) 2003, Tokyo,
Yonghun Jung, Ph.D, Vice President, Asia Pacific Energy Research
Centre,
LNG Projects & Gas Transportation Infrastructure in India- Dr U
D Choubey, General Manager, Gas Authority Of India Ltd. , Indo-
US Conference, April 17th2002
Web Readings
www.plugpower.com
www.indialpg.com
336
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
UNIT 25: Case Study
Unit 25
337
Notes
Case Study
___________________
___________________
___________________
Objectives
___________________
___________________
___________________
Case Study: BP Oil Spill
___________________
The Gulf of Mexico is bordered by five of the United States:
Florida, Alabama, Mississippi, Louisiana, and Texas. It is also ___________________
bordered by Mexico and is the location of Cuba. The gulf itself
___________________
covers an expanse of 600,000 square miles and has a developed a
circulation pattern for the waters (General Facts about the Gulf of
Mexico, 2011). Water enters the Yucatan Strait, flows through the
Loop Current, and exits through the Florida Strait (2011). The
way in which the water flows creates the well-known current, the
Gulf Stream. The Gulf Coast acts as a major drainage pool for the
thirty-three major rivers and two-hundred and twenty-seven
estuaries from the United States alone (2011).
The states that line the Gulf have excellent opportunities to take
advantage of the resources the gulf has to offer. With 16,000 miles
of coast in the United States alone, the Gulf provides easy access
to fishing, natural resources, and recreation opportunities (2011).
The population of the Gulf is expected to hit 61.4 million by 2025
with Florida and Texas expected to house most of the new
population (2011). Tourism boosts the economy by $20 billion each
year and seven of the top-ten seaports are located along the Gulf
Coast (2011). The Gulf “yields more finfish, shrimp, and shellfish
annually than the south and mid-Atlantic, Chesapeake, and New
England areas combined,” and is home to about 45,000 bottlenose
dolphins (2011).
About the Oil Spill
On April 20, 2010, a tragic disaster hit the Gulf Coast. British
Petroleum’s (BP) Deepwater Horizon rig exploded spewing crude
oil into the ocean from the three major cracks in the rig. It rivaled
the 1989 Exxon Valdez spill within days of exploding (Gerstein,
2010). A few years earlier, BP was fined $20 million for neglecting
to prevent leaks in a pipeline in Alaska’s Prudhoe Bay (2010).
From June 5, 2010 to June 14, 2010, BP had collected 127,000
Contd…
338 barrels of oil in their containment cap alone; while it is believed

Notes that a total 60,000 barrels of oil a day are gushing into the Gulf
(Gerstein, 2010). The oil slick can be seen from space and covers
___________________
an area of 130 miles by 70 miles even though BP has dumped
___________________ 50,000 barrels of heavy mud on the leaks to help stop the flow of
___________________ oil (2010). After the insistence from government officials, BP
began drilling a relief well that will intersect with the original
___________________
well and will pull up oil so that BP can dump more mud and
___________________ concrete into the old well and retire it for good (Walsh, 2010).
During the period between the explosion and BP’s decision to drill
___________________
the relief well, they had attempted to use a variety of tactics to
___________________ quell the leaks.
___________________ How the Spill has Affected the Gulf
___________________ “‘I’m not too worried about oil on the surface,’ says one scientist.
___________________ ‘It’s the things we don’t see that worry me the most’” (Begley,
2010). The oil that has been leaking from the well has done more
than float to the surface and become an eyesore; it has also been
trapped beneath the surface of the waves and carried methane to
other parts of the Gulf (2010). At first officials (both for the
government and BP) attempted to dispel these finding, however,
the independent scientists who boldly made these claims have
been proven correct (2010). Not only has the oil spill affected the
shorelines and marshes, it has also seeped into unexplored ocean
and could possibly disrupt the natural ecosystems that thrived
there before the spill (2010). Louisiana State 2 University
chemist, Ed Overton, said, “‘It's [the oil spill] going to cause very
substantial and noticeable damage–marsh loss and coastal
erosion and impact on fisheries, dead birds, dead turtles–but we'll
know what that is. It's the things we don't see that worry me the
most. What happens if you wipe out all those jellyfish down there?
We don't know what their role is in the environment. But Mother
Nature put them there for a reason,’” (2010). The dispersants that
are used to help break up oil spills are making the environment
under water even worse by “‘changing the chemistry and physics
of the oil,’ says biological oceanographer Ajit Subramaniam of
Columbia University's Lamont-Doherty Earth Observatory. ‘They
are creating micro layers of oil that are being carried by the deep
currents.’ Even without dispersants, the crude gets broken into
zillions of droplets suspended in the water column and corralled
there, prevented from rising to the surface” (2010). Two main
plumes of the oil and methane mix have been found and the
largest is 22 miles long, 6 miles wide, and 3,000 miles thick
(2010). Not only do the plumes deprive the areas of oxygen but
they also suffocate marine-life by clogging up their respiratory
systems with oil (2010).
Contd…
UNIT 25: Case Study
339
If large marine animals are not affected directly as a result of the
oil spill, their dietary needs will eventually harm them as an Notes
indirect consequence of the oil spill. Plankton will likely ingest ___________________
the oil and as one of the lowest organisms on the food chain, the
___________________
oil they ingest will find its way up to the top of the food chain; and
linchpins (organisms that act as the garbage collectors ___________________
underwater) will fail to clean up the dead organisms that will pile
___________________
up on the ocean floor, therefore, depriving other creatures of
nutrients that are by-products of the disposal of the dead ___________________
organisms (2010). The list of marine-life that could potentially be ___________________
affected by the oil spill goes on and on, anything from coral reefs
___________________
to fish to crustaceans to tube worms (2010).
___________________
The costs of the spill are overwhelming: 12,000 people from
Louisiana alone have applied for unemployment since the spill, ___________________
most from the southern part of the state; the cost of the spill for
___________________
BP as of June 14, 2010 was $1.6 billion; it is estimated that the
spill will cost taxpayers $1.5billion because the government had
put a $75 million cap on oil company liability for oil spills (though
this cap may be raised to $10 billion); and as of June 14, 2010,
26,500 Gulf residents have been paid $62 million in tax claims
due to the oil spill (Gerstein, 2010). It is estimated that four
hundred species are going to be affected by the spill; at least
thirty species of birds will be affected due to the spill also
coinciding with breeding season; 25 million migrating birds could
potentially be scarred by the spill (2010).
It is not just wildlife being affected by the spill. The tourism

industry has also been pummeled. Oil coming onto shores has
caused authorities to advise people against going to the beaches
for swimming and people have been cancelling their trips to the
Gulf. For Mississippi, it could mean a loss of $120 million in
revenue from tourism (Jervis, 2010). A big fear for tourism
agencies in the Gulf is that previous repeat tourists who were
forced to travel somewhere new for the summer will continue to
go to new places in future years (2010). This in turn will continue
to decrease revenue brought in by tourism.
Questions
1. For the states affected by the oil spills, what would be some
ideas on how to invigorate their tourism numbers? What types
of strategies could be employed?
2. Has BP done enough to help the Gulf Coast? Why or why not?
Source: http://www.castonline.ilstu.edu/hurd/KNR378/Articles/BP%20Oil%20Spill%20case_class.pdf
340
Notes
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
___________________
Glossary
Glossary
341
Notes
___________________
Absorption Process: These use liquid absorbents which absorb ___________________

___________________
Adsorption Process: These are solid bed processes using reagents ___________________
___________________
Aromatics: They are compounds having a ring of six carbon atoms
___________________
with alternating double and single bonds and six hydrogen atoms.
___________________
Benzene: Benzene is an aromatic hydrocarbon, which can be
___________________
present in very low concentrations in some crude oils.
___________________
connecting the loading arm/hose to a dedicated self-sealing ___________________
Calorific Value of a hydrocarbon is measure of heat released by
burning unit volume or weight of the hydrocarbon.
Calorific Value of a Hydrocarbon: It is the measure of heat
released by burning unit volume or weight of the hydrocarbon.
Catalytic Reforming: It is a chemical process used to
convert petroleum refinery naphthas, typically having low octane
ratings, into high-octane liquid products called reformates which
are components of high-octane gasoline.
Christmas Tree: It is a primary production facility comprising a
Manifold on top of the well.
Compressed Natural Gas (CNG): This is natural gas in highly
compressed form but not liquefied.
Computerized Maintenance Management System (CMMS):
Cone Roof Tanks: These types of tanks are very widely used for
storing oil, products and chemicals at atmospheric pressures.
Control Room: It is a room housing any kind of control
equipment.
Crude Oil Dehydration: Removal of water from crude oil. This
process is called crude oil dehydration
342
Crude Oil: It is predominantly made of hydrocarbons. It is
Notes
composed of three main hydrocarbon groups: Paraffins,
___________________
Naphthenes, and Aromatics.
___________________
Demulsifier Chemicals: Are used to break emulsions of water in
___________________ oil or oil in water.
___________________ Dew Point Depression: It is the process of chilling the gas to
___________________ moderately low temperatures to prevent further condensation in
the pipeline.
___________________
___________________ Downstream: Includes Gas Processing, Refinery, Petrochemicals,

Power Plants and other gas based industries
___________________
___________________
Dry Bed Adsorbent: is a process, where moisture is adsorbed on
the porous surface of the drying medium, which are solid particles.
___________________
Enterprise Resource Planning-software (ERP): It combines
information, data and reports from all departments together into a
single, integrated software program with a single data base, from
which all can share information and communicate with each other.
Ethylene: It is made by cracking ethane.
Exploration Costs: include the cost of seismic surveys and
difficult and production per well is low.
Flare System: An important facility plant processing oil or gas. It
is essentially a tall stack made of steel pipe along with a flare tip
(burner) at top and ancillary equipment.
Flare Tripod: If the flare has a large gas flaring capacity, it is
installed away from a platform to minimize heat radiation to the
operating area of the platforms and is installed in a tripod
structure piled into the sea.
Flash Point: It is the minimum temperature at which the product
generates enough vapour to form an explosive mixture with air
Fuel Cell: is an electrochemical energy conversion device, similar
to a battery
from gas is called gas sweetening
Glossary
343
Notes
or the environment, production losses or increased liabilities. ___________________
HAZID (HAZard IDentification) is a technique for early ___________________
identification of potential hazards and threats. ___________________
HBJ Pipeline: It provides feedstock to numerous fertilizer plants, ___________________

power plants and petrochemical plants on its route. ___________________
Horizontal Drilling: An important technology which makes oil ___________________

production more economic.
___________________
In Situ Combustion: This method of EOR is used for very viscous ___________________
crude oils.
___________________
___________________
or damage (loss), to assets, the environment, or third parties.
Industrial Revolution: The rapid development of industry in
Britain in the late 18th and 19th centuries, brought about by the
introduction of machinery.
Injury Frequency (IF): Number of injuries per million man hours
worked.
Injury Rate (IR): Number of injuries per one hundred employees.
Integrated Gasification Combined Cycle (IGCC) is gaining
ground for the utilization of refinery residues to generate power
Liquefied Natural Gas (LNG): This is bulk of the natural gas in
liquefied form and is re-vaporized after receiving it at its
destination from tankers, to be used as natural gas.
Liquefied Petroleum Gas (LPG): It is the propane/ butane
component of the natural gas is liquefied under moderate
pressures and is supplied as cooking gas fuel.
Living Quarters Platform: They are the living quarters for
production and maintenance personnel for an offshore facility who
stay for long periods of shifts in an offshore platform.
Molecular Sieves are zeolite granules manufactured under
Monomers: They are organic molecules with double or triple bond
which have a tendency to join together several times to form a
large molecule.
344
Natural Gas Liquids (NGL): It is formed during production or
Notes
transportation of gas, when the heavy components such as pentane
___________________
or hexane, condense due to natural cooling and separate out as
___________________ liquids.
___________________ Octane Number: It is defined as the percent volume of iso-octane
___________________ in a mixture of iso-octane and normal heptane that gives the same
knocking as that of the fuel when tested under defined conditions.
___________________
This signifies ignition quality of the gasoline in automobile
___________________ engines.
___________________
Oilfield Processing: The well fluid is processed in or in the
___________________ vicinity of the oilfield.
___________________
Organization of Petroleum Exporting Countries (OPEC): It is
___________________ an organization formed in 1961 to administer a common policy for
the sale of petroleum.
Personal Protection Equipment (PPE): Equipment / clothing
which offers protection against risks to health and safety.
Petrochemical Industry: means manufacture, supply and
from one of the petroleum products as starting material or
feedstock.
Petrochemicals: They are usually plastic products and chemicals
that are derived from petroleum or natural gas and are made on a
large scale.
Petroleum: It essentially comprises of naturally occurring
Pig: A pig is a cylindrical or spherical in shape, made of metal or
plastic with or without brushes at the edge and having diameter
close to the pipe diameter.
Pigging: It is primarily the processes or activities of sending a Pig
through a pipeline.
Pipeline End Manifold (PLEM): It is essentially a set of valves
and flanges along with pipe header supported by steel structure,
from where the pipeline carrying oil, gas or any other material
starts.
Polyethylene terepthalate (PET): They are glass like material
Glossary
345
Primary Production: It is the kind of production of oil on its own
Notes
pressure.
___________________
Process Platform: Process Platforms are the biggest platforms in
an offshore complex, which is equivalent to a GGS onshore. ___________________
Production Platform: Production platform contains certain ___________________

minimum processing facility like separation and stabilization of ___________________
crude oil.
___________________
Propylene: It is made by cracking petrochemical feedstock like
___________________
propane, butane or naphtha.
___________________
PVC: Polyvinyl chloride is the plastic commonly known as PVC. It
finds wide applications in PVC pipes for transportation of water. ___________________
___________________
Reservoir: A large formation of rocks of bearing hydrocarbons
___________________
SCADA: It stands for Supervisory Control and Data Acquisition.
It is a central monitoring system, which monitors the entire
pipeline parameters over several hundred kilometres by telemetry
and tele-control.
Separator: is essentially a vessel having some internals to
facilitate separation.
Smoke Point: It is the length of flame in a standard laboratory
test, which produces smoke.
Specific Gravity of a Gas is defined as the weight of a given
volume of the gas compared to the weight of the same amount of
air at the same temperature and pressure, where air weight is
taken as reference (= 1).
Synfuel: It is essentially natural gas converted to light oil by

Upstream: Includes Oilfield Processing and Transportation of oil
and gas
Utilities Platform: For large facilities the utilities like power

generation, instrument air system etc. are installed in a separate
platform called Utilities platforms.
Utility: It is the state of being useful, profit-able, or beneficial.
Well Fluid: It a mixture of crude oil, natural gas and saline water
along with small amounts of sand and sludge.

Understanding Oil Gas Business

Transféré par

Informations du document

Titre original

Copyright

Formats disponibles

Partager ce document

Partager ou intégrer le document

Options de partage

Avez-vous trouvé ce document utile ?

Ce contenu est-il inapproprié ?

Droits d'auteur :

Formats disponibles

Understanding Oil Gas Business

Transféré par

Droits d'auteur :

Formats disponibles

UNIT 20: Case Study

MBA (Oil & Gas Management)

Understanding Oil &

Dr Satya Sheet Prof I M Mishra Mr M K Goel

SLM Development Team

Mr Kapil Mehra Mr A N Sinha

Course Name: Understanding Oil & Gas Business

Version: July 2013

© MPower Applied Learning Enterprise

Unit 1 Basic Concepts ................................................................................................................ 3

Unit 6 The Exploration of Oil .................................................................................................. 61

Unit 11 Gas Processing ............................................................................................................ 117

Unit 16 Distillation in Refineries ............................................................................................ 175

Unit 17 Petrochemical Industry .............................................................................................. 197

Unit 22 Health, Safety and Environment............................................................................... 267

Unit 23 IT Applications in Hydrocarbon Industry ................................................................. 293

Unit 24 Economics and Technology Trends............................................................................ 317

Unit 25 Case Study .................................................................................................................. 337

Glossary ............................................................................................................................................ 341

z Composition of Crude Oil

z Some Important Concepts on Crude Oil

z Products from Crude Oil

\ Concept of petroleum, its constituents and their significance ___________________

Oil industry is perhaps the most exciting industry in the history of

Oil business has been responsible for prosperity, war, intrigues

Let us understand the importance of oil and gas industry by

And it is not really as expensive as it sounds.

be a small molecule with combination of one or a few carbon atoms ___________________

Table 1.1: Light and Heavy Hydrocarbon Molecules

Name Formula Phase

___________________ Reservoir, Well and Well Fluid

Figure 1.1: Hydrocarbon Formation

formation water or produced water. ___________________

z Other components like sulfur compounds, carbon dioxide,

z Normally, well fluid comes out on its own pressure, which

Check Your Progress

Crude Oil and Natural Gas

Check Your Progress

Units Specifically Used in Oil and Gas Industry

of exploitation of hydrocarbon resources by the companies of 9

z Crude-oil volume is usually measured in barrels. ___________________

z One barrel holds 42 gallons (159 liters). ___________________

z Weight or mass of crude in India is in metric tons (tonne). ___________________

the crude oil. ___________________

z Million Barrels of Oil Equivalent (MBOE) means amount of ___________________

z Oil production capacity or refinery capacity are often

z Some typical conversion figures used in the oil industry are

Table 1.2: Commonly Used Measurement

___________________ Carbon and hydrogen molecules can join together to shape

Lesson End Activity

Questions for Discussion 11

Further Readings ___________________

Crude Oil and Natural Gas

\ Products from Crude Oil ___________________

Various Forms of Natural Gas

Check Your Progress

Elementary Concepts on Hydrocarbons

Bonding of hydrogen atoms to carbon atoms. ___________________

Figure 2.1: Hydrocarbon Structure

The phase (solid, liquid or gas) of the hydrocarbon depends on the

CH4 (METHANE) : GAS

C6H6 (BENZENE) : LIQUID

C20H42 (WAX) : SOLID