December 5, 2008
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Home / Issue Archive / 2007 / November #11 / Metaprocess Promotes Conversion of Associated Gas into Methanol

№ 11 (November 2007)

Metaprocess Promotes Conversion of Associated Gas into Methanol

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Gas to liquids (GTL) technology is a alternative to gas flaring that saves the environment while it converts associated petroleum gas (APG) into useful products that producers can sell domestically without needing access to pipelines. Not surprisingly, Kirill Lyats, General Director of Metaprocess, a company which produces methanol from associated gas using GTL technologies, attracted his share of attention at the recent APG conference in Moscow (see page 46). Lyats presented a paper on his company's technology and later talked with Oil&Gas Eurasia in an exclusive interview . Here is what Lyats had to say: 

Oil&Gas Eurasia: Kirill Georgievich, could you tell us about the GTL-technologies that formed the basis for the methanol production mini-units?
Kirill Lyats: Industrial methanol production is connected with hydrocarbon synthesis technologies developed in the 1920s by the German chemists Fischer and Tropsch in Kaiser Wilhelm Institut. In those times the problem was that the conditions of the Versailles treaty put an embargo on motor fuel supplies for the German army. There was no oil in Germany but the Ruhr river basin had huge coal reserves. The task was to get petrol and diesel fuel from the coal, and these two chemists invented a special coal gasification method, producing synthesis gas from coal. This was the first stage. The second stage was to produce motor fuels from the synthesis gas. These fuels were used by the fascist Germany for its tanks, motorbikes, automobiles, etc. As we all know, war is the driver of progress, and were it not for the embargo and the Versailles treaty, maybe the technologies of Fischer-Tropsch synthesis would never appear.   

OGE: Why did you decide to take on this subject?
Lyats: I have been working with oil and gas equipment for 10 years at the Omsk Metallurgical Plant (OMP) where I headed the Department of Oil and Gas Equipment. In those times they began to research the issues of oil and gas processing. At a certain moment the specialists of the State Institute of Nitrogen Industry (GIAPA) suggested the idea of chemical gas processing. But we didn’t manage to implement the projects due to the restructuring of OMP. So, that was when we founded “Metaprocess”: our idea was to try to implement chemical gas processing technology. In November our company will be three years old.

OGE: Have the methanol production units ever been manufactured before?
Lyats: When we were beginning the work, it seemed unreasonable to manufacture the units. The economy ofscale plays a significant role: it’s always better to construct a big plant to produce millions of tons of products than an enterprise to produce only a few dozens of thousands of tons. Thus, before we proved their high efficiency, it had been impossible to construct small plants. Besides, you can economize on not having to supply methanol to remote territories. Small gas chemistry can develop in Russia because, unlike in other gas producing countries (except Canada), hydrates, that is ice plugs, are formed in the wells in Russia and these ice plugs hinder gas seepage. In most cases Russian technologies use methanol to thin the plug. The effect is similar to that of defroster when washing the windscreens: methanol is hygroscopic and absorbs water in any state (steam, water, ice) making it part of the mixed fluid. Our gasmen, respectively, consume enormous quantities of methanol. Methanol is imported: all the Russian methanol plants are located in the Ural and in Central European part of Russia and also very far, in Tomsk. In case a field is not easily accessible, with no roads, even if only on a small stretch, there is always a technological risk of production go-off when there is no more methanol left. These peculiarities characterized the conditions where our first client, NOVATEK company, found itself, when they turned to us to implement the idea of developing minor gas chemistry.
 
OGE: Could you be more precise about these peculiarities?
Lyats: The Yurkharovskoye gas condensate field, located beyond the Arctic Circle, belongs to this company. There’s a complicated access road leading to the field and this road is a winter road only. During navigation methanol can be supplied by Ob river and Taz bay and between the navigation and winter period it’s possible on helicopter only. So, the price of methanol thus increases five- or tenfold. There are many fields of this type in Russia but NOVATEK was the first company to try to change the situation. As a private company NOVATEK is sensitive to innovative ideas and tries to implement them. The first methanol production plant that we designed and constructed proved that it was worth all our efforts. It’s a really good solution that allows a broader view of the principles of forming complex gas preparation created by gas companies. Besides, if to take a closer look at the situation, you can highlight additional advantages, among them VAT economy. Another advantage for independent companies that have a limited gas supply to the main pipeline in the framework of their agreement with Gazprom is a possibility to direct larger gas volumes for methanol production. The companies get a possibility to increase gas production by the volume that they can direct for producing gas and chemical products. This step towards minor gas chemistry is, we are sure, also a decisive step towards major gas chemistry at the facilities with big resources of associated gas, including the facilities belonging to independent gas and oil producing companies, with the purpose of getting real gas products.

OGE: What consumers did the first project of the company target? 
Lyats: We made the first contract with Rosneft in 2004. Its fields were examined for the possibilities of processing the associated gas into synthetic oil.

OGE: In what other projects did you participate?
Lyats: Metaprocess has built a turnkey plant of associated gas desulphurization in Chechnya. I mean a simple but correct way of utilizing the resource: Grozneftegas, a Rosneft department, uses jumbo burners with gas high in hydrogen sulfide and therefore not suitable for mass consumption because it will lead to intoxications. But, at the same time, this gas can be used for gasification of neighbouring settlements and cities, so Rosneft decided to clean the gas and supply it to the population. For this purpose we designed and constructed a plant and finished the construction in June.
OGE: Could you be more precise as to the project of constructing the associated gas utilization units that the Khanty-Mansiysk Autonomous District (KhMAD) was so active to support?
Lyats: The idea of this project appeared a long time ago. Since 2004 we have been working with KhMAD administration that, as a member of the Global council for decreasing gas flaring, plays an active global role in the sphere of processing associated petroleum gas. After fruitless attempts of convincing the oil companies KhMAD administration decided to subsidize the construction of units for synthetic oil production on the basis of associated petroleum gas. The program was divided into several stages. The first stage is to choose a site. Metaprocess won the bid and currently the site is being chosen from the variants offered by TNK-BP, Gazprom Neft and LUKOIL. We will choose the site before the end of the year and next year we’ll begin to construct the pilot units.
OGE: There is an impression that the companies are reluctant to obtain the plant!
Lyats: No, they do want to get it. The main reason is that they’re willing to keep their reputation in the region of their main production and also to test the new technology. But, as a matter of fact, this technology is not simple and it’s probably the most complex and “whimsy” among all the gas and chemical technologies. Moreover, only few projects that were introduced all over the world were implemented in the industry. Of course, these results have an impact on the attitude of oil companies and, most likely, when the environmental charges are minimal, it’s easier to burn the gas.
 
OGE: If you were aware of the unsuccessful foreign experience, why did it not stop you?
Lyats: Because we were confident in our abilities. Today only large companies with enormous overhead costs would be able to produce such units that are, in this case, not paying. Metaprocess is a small company with virtually no overhead costs. Today we try to do our best to meet the demands of the client and try to make the most of the equipment and of the project to make it practical, that is easily applicable in difficult conditions. Recently Metaprocess produced, at its own expense, our own pilot unit for synthetic oil production that we plan to launch before December.

OGE: How do you estimate the market capacity?
Lyats: Concerning the small units for methanol production, I estimate the maximum overall market demand as 20 units for the next 10 years. The units will be mainly needed at gas fields, such as the Bovanenkovskoe, Kharasaveyskoye field, etc, where methanol can be used for technological needs.
The demand for synthetic oil production units on the basis of processing associated petroleum gas can be much bigger. From the viewpoint of a realistic approach to associated petroleum gas utilization, in case the situation changes and the companies start to order the units the demand can reach 200 units for the main marginal fields with considerably big volumes of associated gas.

OGE: Can the market capacity increase, taking into account the planned development of fields in Eastern Siberia?
Lyats: We’re having active negotiations with Surgutneftegas concerning the Talakan field that is located precisely in Eastern Siberia, in Yakutia. They’re already thinking of the ways to adapt our technologies for direct conversion of associated gas into synthetic oil. In general we think that the best approach is to regard this issue on the stage of setting up the facilities and infrastructure of the fields and to adapt the unit to the general infrastructure that will be constructed. It is a cheaper way.

OGE: Could you be more precise as to the price of the methanol production unit?
Lyats: It depends on the available field infrastructure. NOVATEK had both water and electricity, that’s why the construction of a unit with an output of 12,500 t per year cost approximately $15 mln.

OGE: The NOVATEK unit is meant for operation in permafrost conditions. What are, in this respect, the technological peculiarities of mini-GTL?
Lyats: The first peculiarity is the foundation: the construction is based on piles. Secondly, the equipment located out of the facilities is designed for operation in permafrost conditions, up to –60 С and consists almost fully of a frost-resistant stainless steel high in nickel that highly affects the price of the unit. If the units were constructed in Central Russia, the equipment and, respectively, the construction works would cost about 20% less.

OGE: Did the launch of the unit and its practical operation reveal any necessity of improving it?
Lyats: There were many problems. We began the launch in February, when the temperature was –46 С. All the pressure gages and indicators got frozen before the launch and it was impossible to control the temperature mode in the reforming furnace. Because of that we burned the catalytic pipes (the most expensive part of the pipes) during the launch and spent two months repairing them. During the re-launch the American compressor failed in the most unexpected manner: the shaft was broken. After we changed it the new shaft broke in two days. The problem was so serious that Metaprocess decided to make a full model of the compressor´s work. We found the fault: the manufactured shaft was meant for a completely different fastener and the shaft was assembled incorrectly. After that the manufacturer made another shaft taking our calculations into account.

OGE: Which equipment manufacturers have the best reputation?
Lyats: Our cooperation with the equipment suppliers was generally successful. I would like to note that all the equipment in the facility was replenished by UralTechnoStroy (Bashkortostan). In case we had any problems the company representatives immediately came, analyzed everything, took the units away on airplanes at their own expense, repaired them, took them back here and installed them.
We’re very much satisfied with our cooperation concerning the reforming furnace with the Russian company Aliter-Aksi (St. Petersburg). They were the first to manufacture reforming furnaces in Russia. Aliter-Aksi (St. Petersburg) manufactures furnaces for different industry branches, including oil processing, and they manufactured an excellent reforming furnace according to our project.
The scientific engineering centre INKOMSYSTEM (Tatarstan) has written a very good and fully automated unit control algorithm.

OGE: Do the Metaprocess representatives still appear at the NOVATEK field?
Lyats: Only if it concerns designing plants with an output capacity of 50,000 t. Concerning those with an output of 12,000 t we only have to solve some operating issues. NOVATEK increases its production and starting from 2009 they’ll need more methanol. The unit that has been in operation for the last three months only satisfies current needs in methanol and the new unit will cover the future volumes. At the moment we finish the design works and start kitting and construction of the second unit.

OGE: What, in your opinion, should be changed in the legislative regulations of associated gas utilization?
Lyats: Firstly, we could do it Norwegian way and impose a tax on associated gas consumption that would compensate the market price of the lost product. 
Secondly, it’s necessary to stimulate the investments in oil companies. The oil companies must not be forced to deal with associated gas; they should be provided a right to give it to other companies on the basis of agreements with a fixed price. It will attract the investors who can produce a good product from this gas.

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