Put Out The Flare and Squeeze More Value from Marginal Production Fields

The operator of a historic field in Texas, a major integrated oil company, approached EcoVapor for help in recovering and selling associated gas. The field began producing in the 1920s, but over time formation pressure has dropped significantly and remains low after nearly 100 years of production. The wells have been placed on a vacuum for enhanced recovery.

The produced liquid and gas streams are processed at a centralized separation facility, but the associated gas is flared because the vacuum recovery process introduces oxygen into the production stream at levels exceeding pipeline specifications.

The Problem – Flaring Off Valuable Natural Gas

The operator faced two problems. First, they were losing revenue by flaring off valuable natural gas rich in BTU content at a time when maximizing free cash flow is a priority. Second, the company has an ambitious environmental performance goals, including eliminating routine flaring by 2030 and significantly reducing the methane intensity of its operations.

The technical challenge was to remove oxygen from gas streams at pressures less than 10 PSIG and minimize pressure drop throughout the process without prohibitively increasing costs to ensure a positive economic return.

The Solution

EcoVapor engineers designed a ZerO2 unit specifically for this “reduced volume” application. The unit is a scaled-down version of our larger models and uses the same proven technology as the E300 and E1200.  It was fitted with a full port actuated ball valve and a modified heat exchanger to minimize pressure losses.

The unit was delivered and installed in early September 2021. Commissioning began in the morning and later that same day, after confirming acceptable residual oxygen levels in the treated gas stream, the midstream operator approved sending the gas to sales.

Results

After several weeks of trouble-free operation, the operator reported the following performance data:

	Before	After
Average daily gas sales volume	– 0 –	45,000 SCF
Realized gas price	N/A	$7.40 per MSCF
Net Revenue Interest	87.5%	87.5%
Gas revenue per month	$0	$8,750
Monthly power cost	$0	$1,500
Net revenue per month	$0	$7,250

 

Fast payout and strong profits. Upfront costs were approximately $8,000 for piping and installation. After factoring in all costs, including EcoVapor’s standard ZerO2 lease rate, installation costs were recovered in approximately six weeks, making for a fast payout and generating an estimated profit margin of 58% month after month.

 

Durable economics. The PV10 value of the solution was estimated at over $50,000 for a return of more than five times the installation costs, using a 12-month forecast period, assuming level gas production volumes and commodity prices. A sensitivity analysis revealed the project would break even within 12 months at Henry Hub gas prices as low as $2.00 per MSCF, providing for very durable economics.

 

Environmental performance gains. Capturing and selling the gas turned off the flare, reducing both VOC and nitrous oxide emissions by an estimated 46 tons per year and removing 2,718 metric tons of CO₂ equivalent from the atmosphere, as compared to flaring it with an assumed 95% VOC combustion efficiency[1]. The solution is helping the operator achieve its ESG mandates.

The cumulative result is that the operator was able to improve environmental performance and meet ESG mandates without sacrificing economic performance. This is the first installation in the field, other sites are under consideration.

Key Points

Increasing gas capture, eliminating routine flaring and reducing emissions are all possible even in legacy fields with low production rates, very low reservoir pressure, and marginal economics. Effective solutions, however, must meet these criteria:

• Generate sufficient incremental profits to overcome even small increases in operating costs.
• Deliver high reliability to keep maintenance and repair costs low.
• Efficient, fast and safe installation for minimizing downtime.
• Right-sized for effective performance at an affordable cost.

Fit into existing operational processes to avoid disruptions and adding to workloads.

[1] Emission calculations were developed and provided by Ruby Canyon Environmental Inc., Grand Junction, Colorado.