FinalReportUSEPAAgreementXA 83397101
FinalReportUSEPAAgreementXA 83397101
Project
Prepared by
Contents
1 Introduction ........................................................................................................................ 6
1.1 Background ................................................................................................................. 6
1.2 Project Objectives ....................................................................................................... 6
1.3 Project Outcomes ........................................................................................................ 7
2 Description of Ancon Oil Field .......................................................................................... 8
3 Legal and Environmental Framework .............................................................................. 10
3.1 Political Constitution of the Republic ....................................................................... 10
3.2 Hydrocarbon regulations ........................................................................................... 11
3.3 Environmental Law ................................................................................................... 12
3.3.1 Institutional Framework .................................................................................... 14
4 Oil and Gas Situation in Ecuador ..................................................................................... 15
4.1 Oil Exploitation in Ecuador....................................................................................... 15
4.2 The International Market Natural Gas ...................................................................... 16
4.3 Production of Associated Gas and Fugitive Natural Gas Emissions in Ecuador ...... 16
5 Oil Well Identification Process......................................................................................... 17
5.1 Description of the Area ............................................................................................. 17
5.2 Wells Characteristics and Production ....................................................................... 17
6 Equipment Selection and Testing ..................................................................................... 19
6.1 Equipment Selection ................................................................................................. 19
6.1.1 Hi Flow Sampler ................................................................................................. 19
6.1.2 Remote Methane Leak Detector Intrinsically Safe Model................................. 20
6.2 Testing Procedure ...................................................................................................... 20
6.2.1 Selection of the Testing Sample......................................................................... 21
6.2.2 Testing Activities ................................................................................................ 21
7 Testing Results ................................................................................................................. 22
7.1 Results ....................................................................................................................... 22
7.2 Conclusions ............................................................................................................... 24
8 Training ............................................................................................................................ 26
8.1 Training on the use of Hi-Flow Sampler ................................................................... 26
8.2 Training on the Use of the FLIR Camera .................................................................. 27
8.3 Training and Dissemination of the Project ................................................................ 28
The study includes an analysis of the technological options for gas recovery and use as well
as the barriers, legal, technical or otherwise, which need to be overcome for the recovery and
use of associated gas coming from a part of the field. It also includes a training workshop in
methane recovery and use in the oil and gas sector for stakeholders. The results and
experience gained with the project could be later extrapolated to the whole industry in the
country through dissemination activities.
The Ancon oil field is located in the southwest of Ecuador, approximately 145 Km west of
Guayaquil, in the Province of Santa Elena. Petroleum production began in the early 1920s.
Ancon is a marginal field with a current total of 1400 oil producing wells with an average
production of 1 barrel/day of oil per well.
The Ancon field is divided by areas: Perito, La Fuente, Certeza, Emporio, Santo Toms, San
Joaqun, La fe, Tablazo, Cacique, Central, Ancn, Seca, Hecotea and Concepcin. The areas
called Navarra and Asturias, to the west of the field, are gas producing fields. The concession
area includes the fields of San Raymundo, Santa Paula, Cautivo, Carmela, and El Tambo.
The total area of the field is around 1200 km2.
As stated in the concession contract, ESPOL uses part of the revenues from the extraction of
the Oil Camp for university extension and social projects for local communities in the region
of Santa Elena and also to support local Municipalities in the area. The project is fully in line
with the spirit of the Concession contract: research, technology acquisition and technology
transfer for the benefit to the surrounding community and the country at large.
The goal of the project partnership is to improve the likelihood of success of methane
recovery and use projects from the oil and gas industry in Ecuador, by reducing barriers to
such project development through a pilot study, capacity building, and systematization of
lessons learned from the project, and dissemination activities.
1
The concession contract with ESPOL was terminated by the government in Dec 2010, but the reversion is still
in the process of being completed. The government decided to retain PACIFPETROL as operator but without
the participation of ESPOL. This situation caused difficulties that led to delays in the completion of the
activities of the present project.
(1) To conduct an inventory and measurements to determine the quantity and quality of
the gas being currently vented at the Ancon oilfield,
(2) To develop a GIS based decision support system to assist in the selection of recovery
and use options,
(3) To identify schemes to maximize gas recovery,
(4) To identify legal barriers for the implementation of gas capture and use in Ecuador.
(5) To complete a pre-feasibility analysis for the use of the recovered methane, and
(6) Conduct training in Ecuador.
The present report summarizes the main results obtained during the project. As the main
outcome this final report explores the pre-feasibility of economically collecting the gas and
converting it into an energy product, as well as serving as a template for projects in Ecuador.
For this, a GIS based system has been developed to assist in the selection of recovery and use
options; and the legal barriers for the implementation of gas capture and use in Ecuador were
identified. Potential greenhouse gas emission reductions have been quantified and carbon
finance has been also explored.
Training activities were conducted as part of the project and one final training workshop was
delivered in Guayaquil, the main ESPOL campus, and the related activities are briefly
presented in this report. As part of the dissemination activities for the project, an extended
abstract has been submitted for participation to the 11th Latin American and Caribbean
Consortium of Engineering Institutions LACCEI- Conference to be held in Cancun in
August 2013.
Stratigraphy
In the Tertiary sequence crossed in the Peninsula presents various reservoirs, the most
important being the Atlanta Sandstones, equivalent in the subsoil to the Ancons Azcar
formation. In the following Cretaceous sequence, in order of importance based on their
production, the sand levels are: the formations Passage Beds, Clay Pebble Beds (CPB), and
Socorro.
Reservoirs Characteristics
The evolution of the gas-oil ratio over the life of the wells drilled in Atlanta suggests a
production mechanism by expansion of dissolved gas. Although there is no sure estimate of
the gas that is being produced, it is mentioned in the Ancon Espol Operational reports that
gas-oil ratio rapidly increased by putting the wells into production, stabilizing at a high GOR
in mature development areas (1350 ft3/bbl), to decline in old wells or depleted areas.
The average temperature at the reservoirs is 50C (120 F) with an estimated gradient of
2.4 C per 100 meters (corrected).
The applicable legislation to the hydrocarbon sector in Ecuador has four components, which
can be grouped as follows:
Article 7 of the Constitution stipulates that the exploitation of non-renewable resources can
only be conducted after consultation with the communities living in areas near the resource
site. The results of the consultation, however, are not binding and when the community does
not approve a particular project, the President of the country may still give approval to the
project, if it is considered in the best interest of the country.
Article 261 states that the State is not just owner of the resources but also has control and
management of hydrocarbons. In case of disputes between the contractor and the State, the
parties have the right to resolve the conflict in court or by means of an agreed upon
competent body.
Article 274 allows the decentralized autonomous governments (DAG) to also get involved in
the regulation of companies with projects of industrialization or exploitation of non-
renewable natural resources, including the exploitation of natural gas fields, in their territorial
jurisdictions.
Articles 315 and 316 indicate that the first degree competence for the exploitation of non-
renewable natural resources belongs to the state. As it is shown below in the amended
Hydrocarbons Law, private enterprises can only in rare occasions have access to the
exploitation of hydrocarbon deposits.
Under Article 23 (Replaced by Article 9 of Act 44, RO 326, Nov. 29, 1993, and amended by
Article 18 of the unnumbered Decree Law, RO 244-S, July 27, 2010), the obstacle is that
being a novel market, the natural gas market does not have national development plan or
expansion plans as a substitute for liquefied petroleum gas (LPG), so that state policies
should be focused on establishing the final retail cost and the respective regulatory
framework for commercialization. At this level it is left at the risk of the operator obtaining
resources for the development and expansion of distribution and marketing plans of the gas
without the respective support and promotion of the state laws. At the time of writing this
report, prices have been set for the natural gas coming from the Amistad Field, for domestic,
commercial and industrial use. (Executive Decree 1458, reforming article 11 of the Executive
Decree 929, RO 575, Nov 14, 2011, March 13, 2013)
The Hydrocarbon Law still in effect, sets the standards for the exploration and exploitation of
crude oil and natural gas. However, it does not take into account the associated natural gas
from the exploitation of crude oil deposits. In the Ministerial Agreement (MA) 389, which is
This last article was amended by Ministerial Agreement 017, published in Official Gazette
(RO) 288 of 2004, as neither the Hydrocarbon Law nor the Ministerial Agreement (MA) 389
(originally) considers the potential sources of natural gas, such as associated gas from oil
production or dry natural gas fields, and fields of natural gas and condensate.
MA 389, Article 14 provides guidelines for proceeding to operate a natural gas field after the
exploration period.
For the case of plugging and abandoning wells in Article 24 from the same Regulation there
are parameters for this task. This is very important because it specifies the obligation of the
contractor to mend operational or economic problems from a well, be it oil or gas.
In the second transitional provision of the Regulation of Hydrocarbon Operations (RHO), the
State requires contractors to have measurements and treatment of the associated natural gas
from the exploitation of oil fields.
In general then, the RHO specifies certain aspects that are unclear with the Hydrocarbons
Law, specifically regarding the exploitation of natural gas associated with oil and gas
deposits, surplus gas and condensate. Also, the State through this regulation requires
contractors to extract the rich components (high value gases such as propane and butane) of
associated gas and sell it to the state oil company Petroecuador or to burn it in exceptional
cases prior the payment of a compensatory fee.
In summary, the State owns all hydrocarbon deposits. The State reserves for itself the right
for the exploitation of hydrocarbons alone or associated with domestic and foreign companies
with proven experience. PETROECUADOR is responsible for the production, processing and
transportation of oil, alone or in partnership with other companies, and that serves the
interests of the State. The regulator and supervisor of the exploration, production,
transportation and marketing of hydrocarbons is the National Board of Hydrocarbons (under
Article 11 of the HL), which is under the Ministry of Non-Renewable Natural Resources.
Article 86 of the current Constitution of the Republic, mandates that the State promotes the
right of the population to live in a healthy environment. Also, Article 89, paragraph 1, states
that the State shall promote the use of environmentally clean technologies and clean energy
alternatives.
Environment Regulation establishes the rules in the exploration, production, processing and
transportation of hydrocarbons. In Article 30, subparagraphs a and b provide the tools to
monitor the emissions in hydrocarbon operations and oil storage tanks, respectively.
The Environmental Management Law sets out the principles and guidelines of environmental
policy, determines obligations, responsibilities, levels of participation from the public and
private sectors in the environmental management and indicates the permissible limits,
controls and sanctions in this matter (Article 1). Article 20 sets the obligation to obtain the
corresponding environmental license in advance to start any activity that could endanger the
environment.
The Hydrocarbons Law regulates the exploration and production, refining, transportation,
storage and marketing of hydrocarbons in Ecuador. In Article 31, Literal t) indicates that
"PETROECUADOR and contractors or partners in exploration and exploitation of
hydrocarbons, in refining, marketing and transportation, are required, as they are concerned,
to conduct petroleum operations in accordance with the laws and regulations to protect the
environment and security of the country and in relation to the international practice of
preservation of ichthyologic wealth and agricultural industry.
The Health Law seeks to regulate the actions that can affect the universal right to health given
in the Constitution of the Republic and the law. In its Article 95 states that "the national
health authority in coordination with the Ministry of Environment, establish the basic
standards for the preservation of the environment in areas related to human health, which are
mandatory for all individuals, public, private and community. "
In Articles 9, 14, 25, 46, 50, this regulation establishes that PETROECUADOR, its affiliates
and contractors shall submit Environmental Impact Assessments (EIA) for the different
phases of the project, including geophysical prospecting, drilling exploratory and advanced
storage - transport - industrialization and commercialization, and construction of civil works.
Article 82 of the Organic Law of Citizen Participation states that "any decision or
government approval that may affect the environment must be consulted with the community.
The consulting entity will be the State. "
In Annex 3.1 there is a summary of the Ecuadorian laws concerning environmental protection
activities and hydrocarbon operations in Ecuador.
Besides environmental competences, there are other competences that are derived from the
location of the project, as well as the functional areas to which the project belongs, in this
case hydrocarbons.
Public agencies with jurisdiction or functional responsibilities are those to which a law or
executive action has assigned administrative control or regulation relating to a socio-
economic activity or specific utility.
2
Within private companies can be noted that in 2004 the ones that operated in Ecuador were: AECE, AGIP,
BURLINGTON, CANADA LARGE, CGC, CNPC, EDC, CITY, ESPOL-Pacifpetrol, WEST (now
Petroamazonas), Perenco (today held by Petroamazonas), Petrobras, Repsol YPF and Tripetrol. From 2006 to
2008, several oil blocks operating private companies have been reverted to the State. In 2008 all oil contracts
were renegotiated by order of the Ecuadorian Government. Source: Country Environmental Analysis.October
2008, IDB.
The crude oil is transported through two pipelines, the SOTE and OCP, of 500 km length
each, from Lago Agrio to Balao. The SOTE is operated by PETROECUADOR while the
OCP are operated by private oil companies. On their journey, the two lines cross three of the
four regions of Ecuador.
3
4.2 The International Market Natural Gas
In recent years the natural gas market worldwide has been characterized by greater use of this
natural resource as fuel for electric power plants, as a result of the ecological and economic
benefits it offers over other fuels. Natural gas has become a "commodity" as a result of
technological progress and affordable costs of Liquefied Natural Gas (LNG). According to
British Petroleum (2007), in 2006 the world economy grew by 5.4% versus the previous year,
and the consumption of energy (oil, coal, natural gas, hydropower, nuclear energy) increased
2.4% over 2005. In 2006, global consumption of natural gas was 275.826 million cubic feet
per day (MMCFD) or 284 377 billion BTU per day (1 cubic foot of natural gas = 1.031 Btu =
0.028317 meters cubic of natural gas = 0.259671 calories), 2.5% higher than in 2005 and
27.2% higher consumption than a decade ago. Interestingly, the regions of highest
consumption of natural gas in the world are in Europe-Eurasia, North America and Asia
Pacific, which together account for 82.6% of global demand. It is worth mentioning that in
2007, United States (U.S.) consumed about 23 trillion (1 trillion = 1,000,000,000,000) cubic
feet of natural gas.
4.3 Production of Associated Gas and Fugitive Natural Gas Emissions in Ecuador
In Ecuador, the oil industry is the largest user of associated gas generated in its operations,
with diverse applications as: power generation, improved recovery and thermal heaters. In the
Amazon is located the highest concentration of oil blocks, and there is also in this region
where the main users of associated natural gas are situated.
Updated statistics on the use, flaring and venting of natural gas in the country are not
available. However, data are provided by the former Ministry of Energy and Mines in 2006,
where it was estimated that in Ecuador the production of associated natural gas is 127 163
MCFD, of which 64480 MCFD is used and 62683 MCFD is burned.
According to that report, the Gustavo Galindo Velasco ESPOL, commonly known as Ancon
field, produced 656.84 MCFD, which were completely consumed on site.
3
Evaluation of Natural Gas Options in the Energy Industry, PhD Thesis. Victor Manuel Garcia de la Vega.
Instituto Tecnolgico y de Estudios Superiores de Monterrey (ITESM), Mexico City. Mexico. July 2009.
The Ancon oil field can be divided in four sectors: the first includes the stations Seca Cental,
Cacique, Emporio and Certeza; at North are Prosperidad, Navarra and Matilde; Santa Paula,
San Raymundo, Las Conchas, Petropolis are located in Salinas; and the main station in La
Libertad is Cautiverio. The abovementioned stations were primarily considered when
selecting the monitoring sample, as is described in the next section.
The geologic formations in each of these zones are very similar. The formations Socorro and
Atlanta are present in these areas but at different depths.
From these zones it is known that in Transnavarra and Santa Paula there is natural gas,
nevertheless it has not been determined which is richer in methane. Santa Paula is a zone
more studied, where is estimated that there is 93% - 97% of methane. In other zones this
value is much lower.
Because of the many geologic failures present in this region, there is no continuity in the
geologic formations, which does not allow knowing beforehand the flow unit. Indeed, it is
possible that there is a flow unit per failure, each with different petro-physical characteristics
(porosity, water saturation, permeability). Thus, the amount of gas and the methane
concentration vary in each flow unit.
Another aspect to consider in a well is that its production varies not only spatially but also
with time. For instance, a region that is currently rich in methane (as Santa Paula) could
reduce its production rate in some years, whereas the opposite could occur in a zone with
currently no significant emissions (as the south region of the Ancon oil field).
All the wells are vertical, with depths ranging between 3500 to 45000 ft, in formations
Atlanta and Socorro. In other formations, the depth of the well varies between 800 and 900 ft.
In addition, there are a significant number of wells that are not separated from each other,
because at the time they were drilled, there was no such requirement. Because of that, and the
This project also includes measurements of fugitive gas from oil storage tanks. In these tanks
is stored the oil extracted from wells with mechanic pumping system. In addition of oil, these
tanks also contain gas and water from the extraction; and, a natural separation takes place,
where the gas is accumulated at the top of the tank, and is then vented to the atmosphere.
Leakage pressures are very low (1 2 psi), thus to use this gas in nearby communities, it
must be compressed before reaching the points of use.
The following figure shows some of the abandoned wells located in Ancon.
(1) (2)
(3) (4)
Fig. 5.1. Wells ANC0986 (1), ANC0988 (2), ANC0265 (3), NCDD01 (4) at the Ancon oil
field
There is no simple answer to which technology/method is the best for gas leak detection and
measure. Each technology has certain capabilities and limitations and thus the suitability of a
given method largely depends on the application in which it is to be used. Therefore, to
choose the correct method, one must properly define application requirements.
For portable natural gas leak detection, flame ionization (FID) and catalytic combustion (CC)
detection methods have served the oil and gas industry over the last twenty (20) years.
Pellistor sensors in the catalytic combustion method and flame ionization detectors in the
flame ionization method operate with gas concentrations on the ppm scale as well as on the
%LEL scale. The thermal conductivity method is typically employed to measure high
concentrations of gases in the % volume range. Technologies such as solid state (or semi-
conductor) and infrared (IR) cover the full gas concentration range of ppm, %LEL and %
volume gas concentrations. However, both, solid state as well as infrared methods suffer from
major limitations for gas detection such as high cross-responses to the other gases found
within the composition of natural gas (over-reading up to 60%) and, in some cases, cannot be
used to detect gases in all concentration ranges.
Remote sensing technologies have been developed, and successfully used in detecting
pollutants. These technologies include: Thermal imaging and Tunable Diode Laser
Absorption Spectroscopy (TDLAS).
Leak Rate = Flow Rate (Leak CH4 Level Background CH4 Level)
To ensure that the instrument is capturing all the gas that is escaping, testing is performed at
two flow rates. The first measurement is taken at the highest possible flow rate, followed by a
second measurement at a flow rate that is approximately 75% of the first. If the two
calculated leak rates are the same, then it can be assumed that all gas has been captured
during the test.
4
Heath Consultants Incorporated, May 2010.
The measured flow rate and the measured methane levels (both leak and background levels)
are used to calculate the leak rate of the component being tested, with all measured and
calculated values being displayed on the hand-held control unit.
i. Wells
ii. Storage tanks
Pump house
Santa Paula Station
Compressor Station 67
Compressor Station Tigre
Dehydration and Natural Gas Extraction Plant
The abovementioned units were recently refurbished (late 2008), therefore there are no
leaking, which was verified on field, having no pressure variation in the lines and in each of
the component subunits.
5
Heath Consultants Incorporated, May 2010.
Considering the above, 100 wells were selected from the zones listed in the previous section,
in particular near to the Santa Paula station. This production station has a two-phase separator
system and a compressor, where the associated gas from active wells is conducted. The gas is
then directed to a natural gasoline station in Ancon, through an 8 km gas pipeline. Santa
Paula station is located at 2 km from the community of San Raymundo. In addition 30
storage tanks were included in the monitoring. The weighted sample would allow knowing
the emissions of all 90 tanks.
The wells are classified in groups, in accordance to the linear distances between them (see
Section 11.1.1 and 11.1.2 of this report).
7.2 Conclusions
The training conducted in Ancon oil field with Bacharach and RMLD equipment applied to
the determination of methane gas, established favourable conditions for their use in wells
(active, suspended from production and abandoned), flow lines, storage tanks, compressor
stations, production stations and other facilities.
The determination of methane gas with the Bacharach and RMLD equipment showed sound
results; even with variations of meteorological conditions (wind speed and relative humidity).
It was determined that the volume of fugitive gas from the wells sampled equals 27,065 SCF
per day , and 11,750 SCF per day of gas is leaking from the storage tanks.
From the total, 6 wells registered cero methane emissions. On the other hand, the maximum
daily emission of methane registered was 648 SCF.
16
14
12
10
Number of Wells
8
6
4
2
0
The following chart shows the daily methane emission by group of wells. Groups 3, 7 and 10
presented the highest values (3000 4000 ft3/day).
9000
8000
Methane emision rate (ft3/day)
7000
6000
5000
4000
3000
2000
1000
0
1 2 3 4 5 6 7 8 9 10 N/G
Groups
Fig. 7.2. Daily Rate of Emission of Methane into the Atmosphere from Monitored Wells
Training on the use of Hi-Flow Sampler, consisted of the technical explanation of each of the
components, and equipment operation.
ESPOL Team and Ancon-ESPOL project engineers attended the training session. The staff
was instructed on the use of important accessories, the main connections of equipment,
checking the calibration, equipment operation, and interface management of the data logger.
Before actual field work, team members were subjected to induction for activities around oil
wells. Instructions included verification of anti- explosion characteristics of the equipment to
be used, avoidance of the use of spark generating equipment, including vehicles not fitted
with spark and flame deterrents in their exhaust systems, use of explosion meters, among
others related subjects.
As a field work, measurements of gas leaks were taken on oil wells Ancon 386 and Ancon
21. Ancon 21 is a well with a mechanical pumping extraction system. Measures were taken
on the oil well head, and on the engine exhaust.
The equipment is a radiometric infrared camera, portable with FPA (Focal Plane Array). It
could be noted that the camera is capable of scanning large areas from ground works in real
time and take high resolution images of gas leaks.
The GF320 model has the advantage of having a spectral filter optimized for detecting gas
leaks and vapors. The thermal sensitivity of the camera is less than 35 mK with temporal
adaptive filter if enabled.
6
This training was made possible by HIVIMAR Cia Ltda, the local representative of FLIR products. The project
recognizes the help of Ing. Jaime Echeverria, alumnus of ESPOL and owner of the company, for allowing the
participation of the project personnel in the training as part of the training to refinery personnel included in the
sale of the camera to Petroecuador.
An extended abstract was submitted for consideration of the organizers of the 11th Latin
American and Caribbean Consortium of Engineering Institutions LACCEI- Conference to
be held in Cancun in August 2013.
Additionally, it was developed a geographic base design in which the smallest unit of
information is the oil well. And it was generated as the minimum information unit for the
project the so called unit cell, corresponding to a geographic area of 1 x 1 km, that is used to
summarize or consolidate the information obtained through a geographic object polygon type.
The layers that form the geographical database USEPA-ESPOL are summarized in the
following chart.
The layer gridepa1000 (G-1) was generated by creating polygons of 1 km2, in order to
develop cross spaces to consolidate data, generating relevant information.
The database information of the field consolidated by production (well) for the period June-
96/Aug-09, was subsequently grouped through a geographic enquiry and permanently
attached to the object EPA_MASTER (O-1).
Using layer G-1 through a spatial query was updated the layer O-1, including the code of the
unit cell in which is located the well.
The layer structure O-1 and G-1 are summarized below. And in Annex 9 are described in
detail the components of the layers.
The information collected in the field (test group) is included throughout the system graphic
layers Pozos muestreados por EPA-ESPOL (M-1) and Tanques muestreados por EPA-
ESPOL. The relevant information from the aforementioned tables was entered to a data
handler software (ACCESS) and hence, using the import tool it was incorporated as an
alphanumeric object in Mapinfo, where using the geographic layers O-1 it was geocoded.
Using the geographic database as described above, 10 maps were developed, which are listed
in the following chart and included in Annex 9 of this report.
The geographic area that is proposed for this project includes settlement known as San
Raymundo, in city La Libertad.
The population growth in the city of La Libertad is attributable, on the one hand, the natural
increase (difference between births and deaths) and, on the other hand, the growth occasioned
To explain the rapid growth of the city of La Libertad, it must be understood the spatial links
established with other jurisdictions in the country, especially on the coastal region and the
city of Guayaquil, among other geographical areas; and, the structure of those links. In other
words, to discover in what way human, commercial, financial relationships have generated
and continue to generate the spatial reality of the city of La Libertad.
San Raymundo is located in Zone 21 on Census Tracts 2, 3, 5 and 6 (see Figure 10.3).
Other demographic aspects, for instance the distribution of population by age, level of
education, productive activities and basic services in homes, are described in detail in Annex
10 of this report.
In the area of San Raymundo there are 51 economic establishments for 2012 (see Annex 10),
additionally there were identified 18 establishments that once operated and currently do not
work. For 2010 the National Institute of Statistics and Census listed 58 sites, therefore on
average there are 32 people per economic establishment in the area of San Raymundo.
It should be noted that a minority of establishments do not work regularly and the amount of
activity varies throughout the year. Moreover, the number of establishments can be increased
between the months of December to April coinciding with holidays on the Coastal region.
Other establishments have poor conditions (see Figure 10.4).
In addition, the majority of the respondents would be willing to receive technical explanation
on the use of alternative energy technologies.
The population of La Libertad is increasing not only in number, but also is demanding higher
quality of life levels, and is pushing for greater use of natural resources. This increases
pollution problems and requires urgent efforts to decrease the impact on nature and social
environment.
The proposed use of fugitive methane gas from wells of Ancon field is justified from the
social standpoint, proving suitable for the community in the project area.
The proposal is in line with the Strategy "Provision of basic services according to population
growth" from the National Development Plan, which includes in Objective 1 "sponsor equity,
social cohesion and territorial integration", and points out in Policy 1.6 "Ensuring universal
access to quality public services social, cultural and recreational programs."
Since the pressures of the fugitive methane are very low, the capture and collection process
presented in this case must be carried out interconnecting between 8 to 10 wells with pipes of
various diameters starting with 2.5 or 3 inches in diameter on the wellheads and gradually
coupled with larger diameter pipes which end with diameters of 10 to 12 inches (main pipe).
The cost of the two compressors is estimated at around US $ 240,000. The cost of the two
tankers and their respective storage system is approximately US $ 160,000.
The approximate length of the pipe is 35 km. The cost of the gas pipeline and the compressor
interconnecting branches is around US $ 100,000 per kilometer, giving a total value of
US $ 1.9 million approximately.
After that methane gas has been purified, it will be passed to a storage tank (compressed gas
tank) for distribution to the commune San Raymundo.
11.1.2 Case B
As the case presented before, the capture and collection of the fugitive methane from the
wells, will be carried out through interconnected pipelines Since the pressures of fugitive
emissions are very low, the process of capturing and gathering, presented in this case, it must
be carried out by interconnecting between 8 or 10 wells with pipes of various diameters
starting with 2.5 or 3 inches in diameter from the wellheads and gradually coupled with larger
diameter pipes ending in compressors with diameters of 10 to 12 inches (main pipe). The pipe
would be coupled to a compressor to pump the gas to the treatment plant, in this case a
greater amount of pipe would be used, but the operating cost will decrease in relation to the
case of collection with portable equipment.
To proceed to the gas collection from the abandoned wells by this process, groups of 8 to 10
wells will have to be interconnected (approximately 100 wells). The number of groups
depends on the distance between each other.
The fugitive gas collected by the compressors would be transported to the treatment plant.
The cost of the two compressors is around $ 240,000, and the approximate cost of this
treatment plant is equal to the deemed cost in case A.
The approximate length of piping to connect the wells to the treatment plant is 70 km. The
cost of the gas pipeline and the interconnecting branches leading to the compressor is around
US $ 100,000/km, giving a value of approximately US $ 3.9 million.
As in case A, after methane gas has been purified in the treatment plant, the gas will be
passed to a storage tank (tank of compressed gas) for distribution to the San Raymundo
commune.
Note: Because some wells that have been monitored are widely separated from groups 1 to
10, the pipe connection costs would be very high to collect the low flows of gas that emit
these wells, so these links would be impractical.
To cover the gas flow that the commune would require, the gas emitted from wells that are
not connected to the current treatment station could be used, these are: SPA0052, SPA0207,
SPA0250, SPA0256, VAL0006, whose total flow is 8333 ft3/day. This added to the flow of
gas emitted from abandoned wells SPA0077, SPA0082, SPA0088, SPA0203, SPA0221,
SPA0225, SPA0246 that totals 1714 ft3/day, located in the north, a gas flow of about 10,000
ft3/day would be collected, and a total of 27,000 ft3/day would be reached.
Table 1 has been created by taking information from the results of fieldwork regarding the
abandoned wells (geographical location, production, etc.). The linear distance between wells
were calculated by the GPS coordinates taken, i.e., latitude and longitude.
In Table 1 there are only 76 wells since this production is enough to meet the estimated gas
consumption in the district concerned.
The natural gas supply system proposed comprises a fuel storage tank and pipe networks. The
supply system also includes control devices, control valves and flow control gauges for
recording mass consumption in each house. The proposal includes the storage of the natural
gas at a station near San Raymundo.
The use of natural gas (NG) by 600 families of San Raymundo would displace the
consumption of 900 tanks of 15 kg of liquefied petroleum gas (LPG) per month, assuming
that a family of 4-5 members uses 1.5 tanks of LPG per month. To estimate the quantity of
natural gas that is needed a series of calculations were carried out, considering that the energy
must be replaced by the same amount, must have equivalence between the LPG and NG. The
following table summarizes the consumption requirements of natural gas for domestic use in
San Raymundo. Annex 11 contains a detailed description of the calculations and
assumptions.
The consumption of natural gas (NG) estimated for the 600 families of San Raymundo does
not consider other types of businesses, such as bakeries, pastry shops, operating in the study
area.
11.2.2 System for the Utilization of Fugitive Natural Gas: Storage and Distribution
(Case B)
To estimate the capacity of the storage system for the NG, two conditions were evaluated: the
storage of liquefied natural gas (LNG) and the storage of compressed natural gas (CNG), as
A storage tank of compressed natural gas very similar to the capacity required for this project
is presented below.
11.2.2.1 Considerations
The natural gas distribution network for domestic use should be done through underground
pipelines from the regasification or pressurized tank station to the consumer (home or
restaurant). The maximum operating pressures permitted are 150 kPa and 5.0 kPa for primary
and secondary networks, respectively.
The supply pressure of the natural gas (NG) at the outlet of the storage tank should be on the
order of 5 bar. The inlet pressure of NG at the point of use must be 1.96 kPa. When the
system is in operation, continuous monitoring of pressure transients at points of use is
suggested; these variations are above 15% and below 25% of the nominal pressure.
At the point of use the gas network should have a consumption meter, a pressure control
valve, and at least three stopcocks; and, for added security the main pipeline will be installed
at a depth of 0.5 m approximately, covered with a thick concrete structure. In addition, at the
points of use must have a shutoff valve between the main pipe and the control box; this valve
can be opened only with a special stopcock to prevent tampering in case of fuel flow shutoff
for non-payment to the supplier company.
As an example, the following figure shows the consumption meters for natural gas in the
commune of Bajo Alto of Tendales parish, at the city of El Guabo.
The two-stage adjustment reduces the initial pressure of 4 bar up to 1380 mbar or 345 mbar,
depending on the case, and then up to 23 mbar. The first regulatory site is placed outside of
the housing and the second is placed at the entrance of the monitoring center. With multiple
monitoring centers, are required as many second stage regulators.
The three-stage adjustment reduces the first from 4 bar up to 345 mbar and 1380 mbar, in the
second to 138 mbar and in the third to 23 mbar. Regulators 1 and 2 are on the outside of the
house and at the entrance of the monitoring center, and regulator 3 can be located within each
dwelling.
To isolate the rings connected to the arterial line, valves made of polyethylene are used,
which bind to the process pipe by thermal fusion or electro-fusion. Each segment of the
system of arterial lines, in turn, must have valves that are located generally below the node
where the sections are interconnected to stop the gas flow when needed.
The sizing of the installation was calculated considering that the natural gas will be used as a
domestic fuel.
The natural gas distribution network was calculated considering that at each supply point the
inlet pressure of the NG should be 2.6 kPa. It has been foreseen momentary pressure
fluctuations at the points of use. These variations are usually above 15% and below 25% of
the nominal pressure. Gas appliances that are specified by the manufacturer to operate at
different gas nominal pressures cannot be supplied by the same regulator of last stage.
The pipe has been sized in order to ensure the required flow to supply the facility, taking into
account the maximum allowable pressure drop.
The formulas used to calculate the diameter and the pressure drop are the quadratic Renouard
equations, since in this section the NG supply pressure is above 100 mbar. In Annex 11 is
described in detail the calculations.
The maximum pressure drop is 15 kPa in primary networks. The minimum pressure at the
point of use is from 2.6 kPa.
The minimum nominal diameter admitted to the internal distribution network is 15 mm.
The natural gas distribution system is composed of a steel matrix line fed to a maximum
gauge pressure of 20 bar. This interconnects the network equipped with a pressure regulating
station, in which the gas is reduced and controlled to a maximum gauge pressure of 4 bar.
From the arterial lines are derived the rings and polyethylene pipes, from which connections
are taken to supply the households. No point of a ring must have a pressure less than 1.4 bar.
Table 11.4 presents the costs of equipment, instruments, fittings and connections of the fuel
supply system.
Indeed, with respect to the estimations ESPOL has made on the quantity and quality of
methane gas leaks in some wells in the field, it was found that of the 2800 wells that
approximately exist in the Ancon field, about 1300 correspond to abandoned or suspended
units, which are open to the atmosphere. Needless to discuss the need and desirability of
closing these wells to prevent the leakage of gas that, although in small quantities
individually, represent a large volume of gas as a whole, produced and expelled to the
atmosphere despite the wells being unproductive or abandoned.
The problem is that the gas expelled into the atmosphere is a source of pollution and puts in
danger the health of the population of the area, which is a depressed socioeconomic
community. Also there are global environmental benefits from preventing the emission of
greenhouse gases.
Additionally, and in accordance with the policy of the Ecuadorian government to achieve
good living status for the different population groups, the gas from these wells, rather than
escaping to the atmosphere, could be collected and retrieved with a certain investment in
collection sites where they can serve nearby towns using it as domestic gas for the
communities. To this end, the project focused the analysis on the community San Raymundo,
behind Santa Paula oil and gas collection and distribution station, road to La Libertad, as a
pilot for the purpose. This proposal is made based on the social and economic conditions of
the San Raymundo community and due to its proximity to the field.
Based on the above background and the results found in this study, ESPOL through its
Faculty of Mechanical and Production Sciences Engineering could promote a project to
recover the gas from the wells and collect it for distribution to households in the pilot
commune of San Raymundo to be used as domestic gas. If this proves non-viable the wells
could be sealed to prevent contamination, this being an alternative course of action, also
explored here.
For any course of action taken it is mandatory to estimate the necessary investments for any
of the options and to estimate their feasibility.
If the decision is made for gas distribution to households - Option 1- (Case A), this project
has been thought for 600 families, with 4-5 persons per family. For this project to be
operational, it is necessary first to extend a pipeline network among the different wells which
would discharge to special trucks in a number of 2 and from here to a treatment plant for
methane. After this, 2 compressors and 1 gas storage tank would be needed before final
distribution to households. Each truck would have a collector tank and compressor. This
alternative does not require the laying of a very long pipeline network and would have an
approximate investment of US$ 5327,945 (see annex 12.1 for details).
An alternative way -Option 2- (Case B) dispenses with the use of trucks but requires the
interconnection among all wells, requiring a longer pipeline network which discharges to a
main line that goes to a set of fugitive gas compressors and from here to the aforementioned
treatment plant. This alternative would have an approximate investment of US$ 8427,945
(see annex 12.2 for details).
If the decision is made to plug the wells -Option 3- (Case C), the construction of 1200
assemblies would cost approximately $ 1200,000.
This cost includes installation. It is necessary to have an exact location of the wells.
It should be noted that the wells in the oilfield have a variety of casing diameters. It is thus
necessary to gather information about the number of unproductive wells for each diameter, as
a result, costs could have variation.
A summary of the investments needed for each alternative is shown in the following chart,
expressed in US dollars. A description of the plug assembly that would be used is presented
in the Annex 12.7.
Option Cost
1. Piped gas distribution to homes. Production collected by trucks. 5087,945
2. Piped gas distribution to homes. Production collected by main
8427,945
pipeline.
3. Construction of mechanical plugs and sealing of 1200 unproductive
1200,000
wells.
Investments in fixed assets and the value of necessary permits from de Ministry of Energy or
from PETROECUADOR are approximate, expected to be in any case lower than envisaged.
The working capital is given by the cost of personnel including a manager, secretary, driver-
messenger, and a field engineer. The amount given should also cover the starting needs of
supplies, parts, insurance and others that would be financed by the company proceeds.
The gas consumption per family is about 22.5 kg per month if they used normal 15 kg LPG
gas tanks (1.5 tank/month). This will render a total consumption per year of 162,000 kg
(10,800 tanks) for the 600 families considered.
There is a recent presidential decree (March 2013 Decree No. 1458) establishing prices of
piped gas for domestic use in US$0.50 per million BTUs consumed.
Considering the calorific power and density of natural gas to be 10000 kcal/m3 and 0.6 k/m3,
it can be determined that a million BTUs consumption corresponds approximately to one 15
kg tank (1BTU=0.252 kcal).
This means that in a year the project income for piped gas distribution would reach at the
most $10,800 x 0.5 = US$ 5,400.
This shows that the government interest for the projects envisioned is social only, as
expressed in paragraph 12.1
It should be noted that LPG for domestic consumption is heavily subsidized. In 2011, the
government imported 835,603 metric tons of LPG at a cost of USD $ 770,747,326.40. This
means that it bought a kilo of gas at $ 0.92, the same that, if multiplied by 15 kilos, which is
the content of a cylinder of cooking gas, the cost to the country was USD 13.8, to which must
be added the cost of bulk storage rates, filling in cylinders, transportation, maintenance and
replacement of cylinders and marketed charged by traders (Duragas, REPSOL-YPF, AGIP,
Congas, etc.) to the State for the provision of these services (Ref. http://www.
informatecuador.com/inicio/index.php?option=com_content&view=article&id=1464:ecuador
-sigue-el-problema-del-gas-domestico&catid=6:opinion&Itemid=18). The estimated real total
cost per 15 kilo tank could easily reach US$14.
If the consumption of the families in our study is the equivalent of 10,800 tanks, the
government savings for not using subsidized gas for them would be 14 2 = $12 per tank
which amounts to US$129,600 per year.
These Emission Reduction Certificates can be purchased from the primary market (purchased
from original party that makes the reduction) or secondary market (resold from a
marketplace). In the present case the analysis is made using the secondary market in the
USA,
At present time prices for are under $5, say $4 per ton CO2eq per year at the Chicago Climate
Exchange. Considering that the present project aims to reduce emission of methane and other
Now, based on the analysis of fugitive gas from 100 wells it was determined that these wells
expel to the atmosphere approximately 27,000 ft3/day. The sequestered or abated gas in
options 1 and 2 would then amount to 110,799 m3/year (1 ft3=0.028317 m3). For this total it
has been considered a 40% certainty index.
The amount of gas recovered in metric tons, for a normal density of natural gas 0.6 kg/m3
turns to be 66,479 kg or 66.4 MT per year. It is possible then to validate and register to the
proper instances this abated emission from the 100 wells considered in Ancon oilfields in
order to get the issuance of the respective Emissions reduction certificates ($80/MT) which
will generate revenue for $5,312 per year.
In the same line of reasoning, for 1200 gas emitting unproductive wells (option 3), and
assuming their behaviour similar to the 100 wells analysed, the total quantity of abated gas
would reach 321,600 ft3/day or 797 MT/year. In emission reductions value, this is equivalent
to $63,760 per year
Actually the structures of the cash flows are very simple: an initial investment given above
for each option considered and equal annual revenues given also above for each option. It is
assumed extra investments of $ 500,000 (options 1 and 2) and $ 100,000 (option 3) will be
necessary by the middle of the useful life of the project. The salvage investment value at the
end of the project has been taken as $ 300,000; $ 450,000 and $ 100,000 for options 1, 2 and
3 respectively.
Operational flows are thus obtained, comprising the core project operation.
In all three options considered, the relevant indicators are shown for comparison.
As can be seen option 3 is the most desirable. Even though the financial internal rate of return
reaches only a 3.2%, the investment can be recovered in 20.4 years with a low NPV which is
however much better than the negative values rendered by options 1 and 2. It requires a much
lower initial investment and does not need the creation of an administration unit.
The benefit-cost ratio or net worth index is the relation between revenues Y generated by the
project, and expenses G necessary for its operation taken both at their present value using a
deflator index r, expressed by:
n
Yt
(1 + r )
t =0
t
BC =
n
Gt
(1 + r )
t =0
t
As a relation between income and expenditure, the ratio will be greater than 1 when benefits
are greater than the expenses (revenues> expenses) and therefore the project is acceptable.
Otherwise, the project is inconvenient or represents losses.
The benefit-cost ratio shown for option 3 says that the project gets $ 1.02 for each dollar
invested in the conditions given for the project. In options 1 and 2 the returns are not
satisfactory.
Despite this, options 1 or 2 should not be abandoned and could be undertaken as pilot
projects with social interest for community benefit.
[2] Measurements were taken at well heads, and even though they may not have fulfilled
all the requirements of a more rigorous approach, they do point out the presence of
fugitive methane gas from the abandoned and/ or open well heads and some other
related infrastructure. The measurements do give a quantitative idea of the volumes of
fugitive gas involved.
[3] From the measurements of about 100 well heads which were considered, a daily flow
of fugitive methane amounting to about 27000 (twenty seven thousand) cubic feet per
day. This will suffice to supply fuel for domestic cooking needs for about 600
families from neighbouring towns. Cost analysis does not necessarily support this
alternative in a straightforward consideration.
[4] A project like the present helps increase consciousness of the presence of fugitive
methane. The amount of technical personnel from the various institutions
participating during the technical visits and during measurement operations showed
that they wanted to get involved in the various aspects of fugitive methane evaluation
and measurement.
[5] A method for the selection of representative well heads was implemented in this
project. At this point, the synergy with another on-going project of Oil and Gas
(Ancon- ESPOL project) which was under partial control of the technical counterpart
of this project, ESPOL, during part of the duration, was instrumental. It would have
been no easy task if such an existing project had not been in existence especially at
the start of the present project. Conditions changes during the execution of the project,
and this complicated the field work and brought about unexpected delays.
[6] The productive use of the fugitive gas and means to implement its utilization is not
easy task. Some possibilities have been presented in the report, and they are
interesting, in particular because it could help reduce the leakage of methane into the
atmosphere on the one side, while on the other is put to use for some energy needs of
neighbouring communities. Costs, on the other hand, tend to be somewhat
disproportionately high, and this possess a challenge to the application. Nevertheless,
the alternative of just capping the open well heads of abandoned wells appears to be a
viable one.
[7] A project like this requires the more or less continuous participation, at various levels,
of a myriad of technical personnel. The various components in technical,
environmental, chemical, measurements, equipment, gas and oil engineering, design,
sociological, and other aspects, makes it mandatory that this wealth of human
resources be kept in periodic call to assist with the ever changing project demands and
[8] A sustained effort had to be carried out prior to the field visit and field work. The
particular and changing situation of the Ancon Field, which was changing controlling
hands during the execution of the present project. These situations introduced undue
delays within the project and generated somewhat disheartening moments.
Nevertheless, recognizing that there was a fluid change in regulations and situations
in the oil scenario in Ecuador, the project personnel had to divert their efforts towards
some of the other activities and to look for alternative locations to keep carrying the
project forward. An example of this was the field visit to a local sanitary landfill,
where fugitive methane measurements were taken.
13.2 Recommendations
[1] Based on the analysis above, the recommended option to be executed as a first
priority is the plugging of approximately 1200 opened-to-air abandoned or suspended
oil wells in the Ancon oilfield (option 3). The reasons for this are, among others, the
following:
It is technically feasible.
The costs are reasonable.
The returns on investment and capital, IRR and NPV are acceptable.
A source of pollution will be eliminated.
Represents a source of skilled labour since plugs are national made.
Prevents the accumulation of greenhouse-effect gases in the atmosphere.
Does not require an administration unit.
[2] It is also recommended, as a second priority, the financing of a pilot project for the
distribution of piped gas in one of the communities in the area (option 1). Given the
need to improve the living conditions of the inhabitants of the area and a growing
population's claim for access to a better standard of living and the utilization, in their
province, of the natural resources it generates, the government could seek the
financing of such a project also.
[3] Although this solution is not financially appropriate, it should also be done
considering its high social interest to the community.