Installing Vapor Recovery Units On Storage Tanks

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Lessons Learnedfrom Natural Gas STAR PartnersInstalling Vapor Recovery Units onStorage TanksExecutive SummaryThere are about 500,000 crude oil storage tanks in theUnited States. These tanks are used to hold oil for briefperiods of time in order to stabilize flow betweenproduction wells and pipeline or trucking transportationsites. In addition, the condensate liquids contained inproduced gas that are captured by a mist eliminator filter/coalescer ahead of the first compressor station intransmission pipelines are often directed to a storage tankas well. During storage, light hydrocarbons dissolved inthe crude oil or condensate—including methane and othervolatile organic compounds (VOC), natural gas liquids(NGLs), hazardous air pollutants (HAP), and some inertgases—vaporize or "flash out" and collect in the spacebetween the liquid and the fixed roof of the tank. As theliquid level in the tank fluctuates, these vapors are oftenvented to the atmosphere.One way to prevent emissions of these light hydrocarbonvapors and yield significant economic savings is to installvapor recovery units (VRUs) on storage tanks. VRUs arerelatively simple systems that can capture about 95percent of the Btu-rich vapors for sale or for use onsite asfuel. Currently, between 7,000 and 9,000 VRUs areinstalled in the oil production sector, with an average offour tanks connected to each VRU.Natural Gas STAR partners have generated significantsavings from recovering and marketing these vapors whileat the same time substantially reducing methane and HAPemissions. Partners have found that when the volume ofvapors is sufficient, installing a VRU on one or multiplestorage tanks can save up to 606,800 per year andpayback in as little as two months. This Lessons Learnedstudy describes how partners can identify when and whereVRUs should be installed to realize these economic andenvironmental benefits.Technology BackgroundUnderground crude oil contains many lighterhydrocarbons in solution. When the oil is brought to thesurface and processed, many of the dissolved lighterhydrocarbons (as well as water) are removed through aseries of high-pressure and low-pressure separators. Thecrude oil is then injected into a storage tank to await saleand transportation off site; the remaining hydrocarbons inthe oil are emitted as vapors into the tank. The sameprinciples apply for condensate, which accumulates as aresult of the conditions within the pipelines and isremoved ahead of the first compressor station. Therecovered condensate, which contains dissolved lighthydrocarbons, is routed to a storage tank where thedissolved light hydrocarbons are emitted as vapors. Thesevapors are either vented, flared, or recovered by vaporrecovery units (VRUs). Losses of the remaining lighterhydrocarbons are categorized in three ways: Flash losses occur when the separator or heatertreater, operating at approximately 35 pounds persquare inch (psi), dumps oil into the storage tanks,which are at atmospheric pressure. Working losses refer to the vapor released from theEconomic and Environmental BenefitsMethod for ReducingNatural Gas LossesVolume ofNatural GasSavings(Mcf/yr)Installing VaporRecovery Units (VRUs)on Oil ProductionStorage Tanks4,900—96,0001Value of Natural Gas Savings( /yr) 1 3 perMcf 5 perMcf 7 perMcf 13,965— 273,600 23,275— 456,000 32,585— 638,400ImplementationCost ( )OtherCosts( ) 35,738— 103,959 7,367— 16,839Payback (Months) 3 perMcf 5 perMcf 7 perMcf6 — 374 — 233 — 16Assumes 95% of the annual volume of gas lost can be recovered using a VRU.1

Installing Vapor Recovery Units on Storage Tanks(Cont’d)changing fluid levels and agitation of tank contentsassociated with the circulation of fresh oil throughthe storage tanks. Standing losses occur with daily and seasonaltemperature changes.The volume of gas vapor coming off a storage tank dependson many factors. Lighter crude oils (API gravity 36 ) flashmore hydrocarbon vapors than heavier crudes (APIgravity 36 ). In storage tanks where the oil is frequentlycycled and the overall throughput is high, more “workingvapors” will be released than in tanks with low throughputand where the oil is held for longer periods and allowed to“weather.” Finally, the operating temperature andpressure of oil in the vessel dumping into the tank willaffect the volume of flashed gases coming out of the oil.The makeup of these vapors varies, but the largestcomponent is methane (between 40 and 60 percent). Othercomponents include more complex hydrocarbon compoundssuch as propane, butane, and ethane; natural inert gasessuch as nitrogen and carbon dioxide; and HAP likebenzene, toluene, ethyl-benzene, and xylene (collectivelythese four HAP are referred to as BTEX).VRUs can recover over 95 percent of the hydrocarbonemissions that accumulate in storage tanks. Becauserecovered vapors contain natural gas liquids (even aftercondensates have been captured by the suction scrubber),they have a Btu content that is higher than that ofpipeline quality natural gas (between 950 and 1,100 Btuper standard cubic foot [scf]). Depending on the volume ofNGLs in the vapors, the Btu content can reach as high as2,000 Btu per scf. Therefore, on a volumetric basis, therecovered vapors can be more valuable than methanealone.Exhibit 1 illustrates a VRU installed on a single crude oilstorage tank (multiple tank installations are alsocommon). Hydrocarbon vapors are drawn out of thestorage (stock) tank under low-pressure, typically betweenfour ounces and two psi, and are first piped to a separator(suction scrubber) to collect any liquids that condense out.The liquids are usually recycled back to the storage tank.From the separator, the vapors flow through a compressorthat provides the low-pressure suction for the VRU system.(To prevent the creation of a vacuum in the top of a tankwhen oil is withdrawn and the oil level drops, VRUs areequipped with a control pilot to shut down the compressorand permit the back flow of vapors into the tank.) Thevapors are then metered and removed from the VRUsystem for pipeline sale or onsite fuel supply.Exhibit 1: Standard Stock Tank Vapor Recovery System2

Installing Vapor Recovery Units on Storage Tanks(Cont’d)Economic and Environmental BenefitsVRUs can provide significant environmental and economicbenefits for oil and gas producers. The gases flashed fromcrude oil or condensate and captured by VRUs can be soldat a profit or used in facility operations. These recoveredvapors can be: Piped to natural gas gathering pipelines for sale at apremium as high Btu natural gas. Used as a fuel for onsite operations. Piped to a stripper unit to separate NGLs andmethane when the volume and price for NGLs areattractive.VRUs also capture HAPs and can reduce operatoremissions below actionable levels specified in Title V of theClean Air Act. By capturing methane, VRUs also reducethe emissions of a potent greenhouse gas.Decision ProcessCompanies using fixed roof storage tanks can assess theeconomics of VRUs by following five easy steps.Step 1: Identify possible locations for VRUinstallation.Virtually any tank battery is a potential site for a VRU.The keys to successful VRU projects are a steady sourceand adequate quantity of crude oil or condensate vaporsalong with an economic outlet for the collected product.The potential volume of vapors will depend on the makeupof the oil or condensate and the rate of flow through thetanks. Pipeline connection costs for routing vapors off sitemust be considered in selecting sites for VRU installation.meters, however, might not be suitable for measuring totalvolumes over time due to the low pressures at tanks.Calculating total vapor emissions from oil tanks can becomplicated because many factors affect the amount of gasthat will be released from a crude oil tank, including:1. Operating pressure and temperature of the separatordumping the oil to the tank and the pressure in thetank;2. Oil composition and API gravity;3. Tank operating characteristics (e.g., sales flow rates,size of tank); and4. Ambient temperatures.There are two approaches to estimating the quantity ofvapor emissions from crude oil tanks. Both use the gas-oilratio (GOR) at a given pressure and temperature and areexpressed in standard cubic feet per barrel of oil (scf perbbl).This process is applicable to all compressor designs. Theless common overhung compressors have a single seal, andswitching from wet to dry seals would yield half thesavings of doing the same for a beam type compressor.The first approach analyzes API gravity and separatorpressure to determine GOR (Exhibit 2). These curves wereconstructed using empirical flash data from laboratorystudies and field measurements. As illustrated, this graphcan be used to approximate total potential vapor emissionsfrom a barrel of oil. For example, given a certain oil APIExhibit 2: Estimated Volume of Storage TankVaporsStep 2: Quantify the volume of vapor emissions.Emissions can either be measured or estimated. An orificewell tester and recording manometer (pressure gauge) canbe used to measure maximum emissions rates since it isthe maximum rate that is used to size a VRU. OrificeFive Steps for Assessing VRU Economics:1. Identify possible locations for VRU installation;2. Quantify the volume of vapor emissions;3. Determine the value of the recovered emissions;4. Determine the cost of a VRU project; and5. Evaluate VRU project economics.3

Installing Vapor Recovery Units on Storage Tanks(Cont’d)gravity (e.g., 38 ) and vessel dumping pressure (e.g., 40psi), the total volume of vapors can be estimated per barrelof oil (e.g., 43 scf per bbl). Once the emissions rate perbarrel is estimated, the total quantity of emissions fromthe tank can be determined by multiplying the per barrelestimate by the total amount of oil cycled through thetank. To continue the example above, assuming an averagethroughput of 1,000 barrels per day (bbl per day), totalemissions would be estimated at 43 Mcfd (Exhibit 3).Exhibit 3: Quantity (Q) of Hydrocarbon VaporEmissionsGiven:API Gravity 38 Separator Pressure 40 psiOil Cycled 1,000 bbl/dayVapor Emissions rate 43 scf/bbl (from Exhibit 2)Q 43 scf/bbl x 1,000 bbls/day 43 McfdThe shortcoming of this approach is that it does notgenerate information about the composition of the vaporsemitted. In particular, it cannot distinguish between VOCand HAP, which can be significant for air qualitymonitoring, as well as determining the value of theemitted vapors.The second approach is to use the software package E&PTank version 2.0. This is the modified version of theprevious software; the American Petroleum Institute (API)introduced several changes in this model which made itmore user-friendly. Partners in the Natural Gas STARProgram have recommended E&P Tank as the bestavailable tool for estimating tank battery emissions.Developed by API and the Gas Research Institute (now theGas Technology Institute), this software estimatesemissions from all three sources—flashing, working, andstanding—using thermodynamic flash calculations forflash losses and a fixed roof tank simulation model forworking and standing losses. An operator must haveseveral pieces of information before using E&P Tank,including:1. Separator pressure and temperature.2. Separator oil composition.3. Reference pressure.4. Reid vapor pressure of sales oil.5. Sales oil production rate.6. API gravity of sales oil.E&P Tank also allows operators to input more detailedinformation about operating conditions, which helps refineemissions estimates. With additional data about tank size,shape, internal temperatures, and ambient temperatures,the software can produce more precise estimates. Thisflexibility in model design allows users to employ themodel to match available information. Since separator oilcomposition is a key input in the model, E&P Tankincludes a detailed sampling and analysis protocol forseparator oil. Future versions of the software are beingdeveloped to estimate emissions losses from productionwater tanks as well.Step 3: Determine the value of the recoveredemissions.The value of the vapors recovered from VRUs and realizedby producers depends on how they are used:1. Using the recovered vapors onsite as fuel yields a valueequivalent to the purchased fuel that is displaced–typically natural gas.2. Piping the vapors (NGL—enriched methane) to anatural gas gathering pipeline yield a price thatreflects the higher Btu content per Mcf of vapor.3. Piping the vapors to a processing plant that will stripthe NGLs from the gas stream and resell the NGLsand methane separately should also capture the fullBtu content value of the vapors. Exhibit 4 illustrates amethod of calculating the value of the recovered vaporsusing an average price of 7.00 per Mcf (for pipelinequality natural gas at 1,000 Btu per scf). Where theExhibit 4: Value of Recovered VaporsR QxPR The gross revenueQ The rate of vapor recovery (Mcf/day)P The price of natural gasCalculate:Q 41 Mcfd (95% of 43 from Exhibit 3)P 7.00/McfR 41 Mcfd x 7/Mcf 287/day 8,800/month 105,600/year4

Installing Vapor Recovery Units on Storage Tanks(Cont’d)Methane Content of Natural GasNelson Price IndexesIn order to account for inflation in equipment andoperating & maintenance costs, Nelson-FarrarQuarterly Cost Indexes (available in the first issue ofeach quarter in the Oil and Gas Journal) are used toupdate costs in the Lessons Learned documents.The average methane content of natural gas varies by natural gasindustry sector. The Natural Gas STAR Program assumes thefollowing methane content of natural gas when estimatingmethane savings for Partner Reported Opportunities.Production79 %Processing87 %Transmission and Distribution94 %The “Refinery Operation Index” is used to reviseoperating costs while the “Machinery: Oilfield ItemizedRefining Cost Index” is used to update equipmentcosts.Btu content of the vapors is higher, the price per Mcfwould be higher.To use these indexes in the future, simply look up themost current Nelson-Farrar index number, divide bythe February 2006 Nelson-Farrar index number, and,finally multiply by the appropriate costs in the LessonsLearned.Step 4: Determining the cost of a VRU project.The major cost elements of VRUs are the initial capitalequipment and installation costs and operating costs.VRU systems are made by several manufacturers.Equipment costs are determined largely by the volumehandling capacity of the unit; the sales line pressure; thenumber of tanks in the battery; the size and type ofcompressor; and the degree of automation. The maincomponents of VRUs are the suction scrubber, thecompressor, and the automated control unit. Gasmeasurement is an add-on expense for most units. Pricesfor typical VRUs and related costs are shown in Exhibit 5.Partners who have installed VRUs and VRUmanufacturers report that installation costs can add asmuch as 50 to 100 percent to the initial unit cost.Installation costs can vary greatly depending on location(remote sites will likely result in higher installation costs)and the number of tanks (larger VRU systems will berequired for multiple tanks). Expenses for shipping, sitepreparation, VRU housing construction (for cold weatherprotection), and supplemental equipment (for remote,unmanned operations) must also be factored in whenestimating installation costs.When sizing a VRU, the industry rule-of-thumb is todouble the average daily volume to estimate the maximumemissions rate. Thus, in order to handle 43 Mcfd of vapor(Exhibit 3), a unit capable of handling at least 86 Mcfdshould be selected.Operations and maintenance (O&M) expenses vary withthe location of the VRU (sites in extreme climatesexperience more wear), electricity costs, and the type of oilExhibit 5: Vapor Recovery Unit Sizes and CostsDesign Capacity1 (Mcfd)Compressor Horsepower2Capital Costs3 ( )Installation Costs3O&M Costs ( 31,72810,10320030—5042,52921, 6,839123Assumes design capacity is double average vapor recovery rate.Assumes compressor discharge to a 100 psi or less sales line or fuel gas system.Cost information provided by Natural Gas STAR partners and VRU manufacturers.5

Installing Vapor Recovery Units on Storage Tanks(Cont’d)produced. For instance, paraffin based oils can clog theVRUs and require more maintenance.Step 5: Evaluate VRU Project Economics.Installing a VRU can be very profitable, depending on thevalue of the recovered vapors in the local market. Exhibit 6calculates the simple payback and Internal Rate of Return(IRR) for VRU sizes and costs listed in Exhibit 5. Using anestimate of the value of recovered vapors of 7.00 per Mcf,the potential returns are attractive, particularly for thelarger units.When assessing VRU economics, gas price may influencethe decision making process; therefore, it is important tore-examine the economics of installing vapor recoveryunits as natural gas prices change. Exhibit 7 shows aneconomic analysis of installing a 100 Mcfd vapor recoveryunit at different gas prices.Lessons LearnedThe use of VRUs can profitably reduce methane emissionsfrom crude oil storage tanks. Partners offer the followinglessons learned: E&P software can be an effective tool for estimatingthe amount and composition of vapors from crude oiltanks. Vapor recovery can provide generous returns due tothe relatively low cost of the technology and in thecases where there are market outlets for the highBTU vapors. VRUs should be installed whenever they areeconomic, taking into consideration all of thebenefits—environmental and economic. Because of the very low pressure differential betweenExhibit 6: Financial Analysis for VRU ProjectDesign Capacity(Mcfd)Installation &Capital Costs1 ( )O&M ( /Year)Value of Gas2( /Yr)Payback3 (months)Internal Rate ofReturn4 10500103,95916,839606,81035671Unit cost plus estimated installation cost of 75% of unit cost. Actual costs might be greater depending on expenses for shipping, site preparation, supplemen tal equipment, etc.295% of total gas recovered at 7 per Mcf x 1/2 design capacity x 365 days3Based on 10 percent discount rate.4Calculated for 5 years.Exhibit 7: Gas Price Impact on Economic Analysis 3/Mcf 5/Mcf 7/Mcf 8/Mcf 10/Mcf 52,011 86,686 121,360 138,697 173,371169665Internal Rate of Return(IRR)70%136%200%231%294%NPV (i 10%) 93,947 213,440 332,934 392,681 512,174Value of Gas SavedPaybackPeriod (Months)6

Installing Vapor Recovery Units on Storage Tanks(Cont’d)the storage tank and the compressor, large diameterpipe is recommended to provide less resistance to thegas flow. A VRU should be sized to handle the maximumvolume of vapors expected from the storage tanks (arule-of-thumb is double the average daily volume). Rotary vane compressors are recommended for VRUsto move the low volume of gas to low pressures. It is very important to choose reliable, sensitivecontrol systems, because the automated gas flowvalves must be opened and closed on very lowpressure differences. Include methane emissions reductions from installingVRUs in annual reports submitted as part of theNatural Gas STAR program.One Partner’s ExperienceChevron USA Production Company installed eight vaporrecovery units in 1996 at crude oil stock tanks. As aresult, Chevron has realized an estimated reduction inmethane emissions of 21,900 Mcf per year from eachunit. At today’s gas price of 7 per Mcf, this correspondsto approximately 153,300 in savings per unit, or 1,226,400 for all eight units. The capital andinstallation costs were estimated to be 240,000 ( 30,000per unit) in 1996 or the equivalent of 324,000 ( 40,500per unit) in 2006 dollars. This particular project wouldhave realized a payback in just over 3 months in 2006.Griswold, John A., Power Services, Inc. and Ted C. Ambl

tank; 2. Oil composition and API gravity; 3. Tank operating characteristics (e.g., sales flow rates, size of tank); and 4. Ambient temperatures. There are two approaches to estimating the quantity of vapor emissions from crude oil tanks. Both use the gas-oil ratio (GOR) at a given pressure and temperature and are expressed in standard cubic feet per barrel of oil (scf per bbl). This process is .

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