DEMONSTRATION OF A LOW COST 2-TOWER MICRO SCALE

N2 REJECTION SYSTEM TO UPGRADE LOW-BTU GAS FROM STRIPPER WELLS

a JOINT PROJECT by

THE KANSAS GEOLOGICAL SURVEY

(KUCR, University of Kansas)

&

AMERICAN ENERGIES CORPORATION

(Wichita, Kansas)

Low BTU Natural Gas – Resource BaseLow BTU Natural Gas – Resource Base

Pipeline specifications – > 950 BTU/cu ftPipeline specifications – > 950 BTU/cu ft Less than 950 BTU/cu ft – considered as low-BTULess than 950 BTU/cu ft – considered as low-BTU

U.S. natural gas reserves – 204 Tcf (EIA, 2006)U.S. natural gas reserves – 204 Tcf (EIA, 2006) Sub quality (low BTU) Gas & ReservesSub quality (low BTU) Gas & Reserves

> 2% CO> 2% CO22, or > 4% N, or > 4% N22 or inert gases or inert gases 17.5 Tcf – Mid-Continent (Hugman, 1990)17.5 Tcf – Mid-Continent (Hugman, 1990) 9 Tcf – Rocky Mountain Region (Hugman, 1990)9 Tcf – Rocky Mountain Region (Hugman, 1990) 33% of 1253 gas analyses in KS are low-BTU (Newell, 2007)33% of 1253 gas analyses in KS are low-BTU (Newell, 2007)

Low BTU due to presence of NLow BTU due to presence of N22 32 Tcf nationwide (17% of reserves) (Lokhandwala, 2006)32 Tcf nationwide (17% of reserves) (Lokhandwala, 2006)

Significant portion located in small or modest size fieldsSignificant portion located in small or modest size fields Great majority in Mid-Continent (Jenden, 1988)Great majority in Mid-Continent (Jenden, 1988)

Low-BTU Gas Reserves in KSLow-BTU Gas Reserves in KS

750-849< 750 850-949BTU/scf

Problem StatementProblem Statement

Available NAvailable N22 rejection technologies rejection technologies Cryogenic – Large feed volumes (> 5 mmcfd) and expensiveCryogenic – Large feed volumes (> 5 mmcfd) and expensive Conventional (3 or 4 Tower) PSA/TSA – 0.5 to 20 mmcfdConventional (3 or 4 Tower) PSA/TSA – 0.5 to 20 mmcfd Expensive to design and build – patented components/processesExpensive to design and build – patented components/processes

NN22 rejection technologies under development rejection technologies under development Lean Oil Absorption & Membrane SeparationLean Oil Absorption & Membrane Separation

Most of the nation’s gas production – large fieldsMost of the nation’s gas production – large fields Low BTU gas processed at centralized facilities – cryogenic/PSALow BTU gas processed at centralized facilities – cryogenic/PSA

To meet long-term demand of natural gas in the USTo meet long-term demand of natural gas in the US Small, isolated, low-BTU reserves have to be mobilizedSmall, isolated, low-BTU reserves have to be mobilized

Currently SI or behind pipe – lacking micro-scale separation plantsCurrently SI or behind pipe – lacking micro-scale separation plants

REQUIRE LOW COST MICRO NREQUIRE LOW COST MICRO N22 REJECTION PLANT REJECTION PLANT ECONOMIC at LOW VOLUME, LOW PRESSUREECONOMIC at LOW VOLUME, LOW PRESSURE

Project ObjectivesProject Objectives

GoalsGoals Design, build, optimize – 2-Tower Micro-Scale NDesign, build, optimize – 2-Tower Micro-Scale N22 rejection plant rejection plant

Using Pressure Swing Adsorption (PSA)Using Pressure Swing Adsorption (PSA) Patent free – off-shelf, non-proprietary componentsPatent free – off-shelf, non-proprietary components

Conventional plants – use proprietary components and processesConventional plants – use proprietary components and processes Economic at low feed volumes - < 200 mcfd (shallow/small fields)Economic at low feed volumes - < 200 mcfd (shallow/small fields)

Estimate well deliverability and decline – to size the plantEstimate well deliverability and decline – to size the plant Small field size affects production declineSmall field size affects production decline User friendly techniques & commonly available software/freewareUser friendly techniques & commonly available software/freeware

Analyses – Wireline logs, 4-point test, and production declineAnalyses – Wireline logs, 4-point test, and production decline Disseminate LESSONS LEARNED to stripper well communityDisseminate LESSONS LEARNED to stripper well community

Technology Transfer Workshops & PublicationsTechnology Transfer Workshops & Publications Maps showing distribution of NMaps showing distribution of N22 rich low-BTU reserves in KS rich low-BTU reserves in KS

2-Tower Micro-scale N2-Tower Micro-scale N22 Rejection Plant Rejection Plant

Diam. 4 ft, Ht. 8 ft

Feed: 150 mcfd

Composition: 70% CH4, 25% N2, 3% HHC, 2% inert

Sales Stream: ~ 100 mcfd, <4% N2,~ 975 BTU/cu ft

Vent: ~ 5% CH4

Adsorbent – Activated Carbon made from coconut husks

Palletized Activated CarbonPalletized Activated Carbon

Made from coconut husksMade from coconut husks Large surface areaLarge surface area

300 to 4000 m300 to 4000 m22/g/g Pore size diameter – 10 to Pore size diameter – 10 to

25 Angstroms25 Angstroms

Adsorbs larger moleculesAdsorbs larger molecules CHCH44, H, H22S, COS, CO22, H, H22OO

Vents smaller moleculesVents smaller molecules NN22, , HeHe, O, O22, H, H22, CO, CO

Regenerate adsorbed CHRegenerate adsorbed CH44

Under vacuumUnder vacuum

Activated Carbon from coconut Husk

Proposed Technology vs. Conventional Proposed Technology vs. Conventional

Conventional Commercial PSA Plants – patented parts/processesConventional Commercial PSA Plants – patented parts/processes 3 to 4 Towers – requires professional design (1/33 to 4 Towers – requires professional design (1/3rdrd cost mark-up) cost mark-up) Patented adsorption bedsPatented adsorption beds Patented purge cycles – reduces pressure shock on bedsPatented purge cycles – reduces pressure shock on beds Surge towers – uniform composition of sales gasSurge towers – uniform composition of sales gas Economic feed volumes – 500 mcfd to 20 mmcfdEconomic feed volumes – 500 mcfd to 20 mmcfd

Proposed Micro-scale Plant – non proprietary parts/processesProposed Micro-scale Plant – non proprietary parts/processes 2 Towers – Easy to design and build (<10 moving parts)2 Towers – Easy to design and build (<10 moving parts) Use readily available palletized activated carbon for adsorptionUse readily available palletized activated carbon for adsorption Carry out pressure equalization by pause using vent gasCarry out pressure equalization by pause using vent gas Discharge gas accumulator – uniform composition of sales gasDischarge gas accumulator – uniform composition of sales gas Economic feed volumes – 40 to 200 mcfd (<100 psi)Economic feed volumes – 40 to 200 mcfd (<100 psi)

Enhances bed life and reduces dust emission (compressor fowl up)Enhances bed life and reduces dust emission (compressor fowl up) Additional DifferencesAdditional Differences

Micro plant – Modular & Scalable, Operate in remote locations Micro plant – Modular & Scalable, Operate in remote locations

Conventional PSA Plants – 3 & 4 TowersConventional PSA Plants – 3 & 4 Towers

Surge Chambers

Each tower in different cycle:

1. Adsorption

2. Desorption

3. Pressure up slowly

4. Slowly going to vacuum

Cycle Time Optimization – Micro Plant Cycle Time Optimization – Micro Plant

Basic PSA PrincipleBasic PSA Principle – TIME TESTED (IT WORKS)– TIME TESTED (IT WORKS) PSA used many different applicationsPSA used many different applications CHCH44 can be adsorbed in a bed of activated carbon can be adsorbed in a bed of activated carbon

Critical QuestionCritical Question – How to optimize a micro-scale plant ? – How to optimize a micro-scale plant ? Main GoalMain Goal – Shortest cycle time for max CH – Shortest cycle time for max CH44 recovery recovery

Selectively vary input parameters:Selectively vary input parameters: Inflow ratesInflow rates Cycle timeCycle time Adsorbent qualityAdsorbent quality

Measure effect onMeasure effect on CHCH44 recovery and breakthrough recovery and breakthrough Bed economics – degradation, compaction, & heavingBed economics – degradation, compaction, & heaving Operation costsOperation costs

Elmdale Field, Chase County, KSElmdale Field, Chase County, KSOther N2 Rejection Plants in KS

-Cryogenic plant (McCoy Pet)

-Feed volume – 5 mmscfd

-Hodgeman & Ness County

Other Features – Micro PlantOther Features – Micro Plant

ScalabilityScalability Small, shallow, low BTU fields – production declineSmall, shallow, low BTU fields – production decline Designed to handle varying feed - 40 mcfd to 200 mcfdDesigned to handle varying feed - 40 mcfd to 200 mcfd

Skid mounted units – attach/detach units to process high/low feedSkid mounted units – attach/detach units to process high/low feed

Operating EconomicsOperating Economics Initial investment ~ $100,000 (Conventional PSA 3 to 4 times)Initial investment ~ $100,000 (Conventional PSA 3 to 4 times) At $5/mcf, monthly income $4,500 to $11,250 (40 to 150 mcfd) At $5/mcf, monthly income $4,500 to $11,250 (40 to 150 mcfd)

Building Material – Carbon steelBuilding Material – Carbon steel Instruments & control panel – low cost cast iron (rated 125 psi)Instruments & control panel – low cost cast iron (rated 125 psi) Widespread availability & easy replacementWidespread availability & easy replacement

PatentsPatents – Proposed process and components not covered – Proposed process and components not covered Previous SWC fundingPrevious SWC funding – None to our knowledge – None to our knowledge

Anticipated Results – Micro PlantAnticipated Results – Micro Plant Significant Production ImprovementSignificant Production Improvement

U.S NU.S N22 rich low-BTU reserves – 32 Tcf (17%) (Lokhandwala, 2006) rich low-BTU reserves – 32 Tcf (17%) (Lokhandwala, 2006) Much of this “sub quality” gas – trapped in small, isolated fieldsMuch of this “sub quality” gas – trapped in small, isolated fields

Proposed Micro Plant – Mobilize NProposed Micro Plant – Mobilize N22 rich low-BTU gas rich low-BTU gas Could add 1 Tcf to U.S. reservesCould add 1 Tcf to U.S. reserves (Lokhandwala, 2006) (Lokhandwala, 2006) Within resource reach of stripper well operatorsWithin resource reach of stripper well operators

Reduction in Operating CostsReduction in Operating Costs Optimized, plant runs unattended 95% of time – 2 operator Optimized, plant runs unattended 95% of time – 2 operator

visits/dvisits/d Monthly maintenance – compressor and bed levelMonthly maintenance – compressor and bed level Less than 10 moving parts (outside engine & compressor)Less than 10 moving parts (outside engine & compressor)

Minimal Environmental ImpactMinimal Environmental Impact Does not require electric power - compressor runs on feed gasDoes not require electric power - compressor runs on feed gas Compressor engine – Powers batteries to run unitCompressor engine – Powers batteries to run unit Solar panels – Power flare in vent gas lineSolar panels – Power flare in vent gas line Vent gas has no VOCs, heavy HC, HVent gas has no VOCs, heavy HC, H22S, COS, CO22, and H, and H22O O Small footprint - ~ 400 sq ftSmall footprint - ~ 400 sq ft

Anticipated Results – Micro Plant Anticipated Results – Micro Plant (contd)(contd)

Commercialization ViabilityCommercialization Viability Our micro plant – Simple, patent-free, off-shelf componentsOur micro plant – Simple, patent-free, off-shelf components

Within resource reach of stripper well operatorsWithin resource reach of stripper well operators Build, design, operate on their own or with minimal outside helpBuild, design, operate on their own or with minimal outside help No waiting period – for wide scale applicationNo waiting period – for wide scale application

Technology Transfer Workshops – upon completionTechnology Transfer Workshops – upon completion Easy to use techniques to determine well deliverability & declineEasy to use techniques to determine well deliverability & decline Step-by-step guide to scale & design a micro-plant – non-patentedStep-by-step guide to scale & design a micro-plant – non-patented Best practices regarding optimizing plant performanceBest practices regarding optimizing plant performance Plant maintenance protocolsPlant maintenance protocols

Application of 2-Tower Micro-Scale NApplication of 2-Tower Micro-Scale N22 Rejection Plant Rejection Plant Small, isolated NSmall, isolated N22 rich low BTU fields/stripper wells in US rich low BTU fields/stripper wells in US

Low feed volumes < 200 mcfd Low feed volumes < 200 mcfd If vent gas > 10% He – compress @ 3000 psi for He plantsIf vent gas > 10% He – compress @ 3000 psi for He plants

At current rates – value added by-productAt current rates – value added by-product

at BPU

Pennsylvanian(Missourian)

Pennsylvanian(Virgilian)

Permian

160:180:1

40:1

20:110:15:1

2.5:1

"sub-quality"

"low-BTU"

0.1

1

10

0.010.1 1 10 100

He %

NITROGEN AND HELIUM %CENTRAL KANSAS GASES

N2 %

N2:Heratio

"pipeline quality"

How does our proposed project complement SWC’s goals?How does our proposed project complement SWC’s goals?

SWC seeks to identify new technologies SWC seeks to identify new technologies Significant production increase - domestic O&G stripper well/fieldSignificant production increase - domestic O&G stripper well/field Significantly reduce operator costsSignificantly reduce operator costs Improve environmental issuesImprove environmental issues Have broad applicability to large regions of the USHave broad applicability to large regions of the US

Successful demonstration of our proposed projectSuccessful demonstration of our proposed project Mobilize an entire class of unproduced gas Mobilize an entire class of unproduced gas ~ 1Tcf N~ 1Tcf N22-rich low-BTU -rich low-BTU Unattended operation (95%), <10 moving parts, inexpensive Unattended operation (95%), <10 moving parts, inexpensive

sparesspares No emissions of CHNo emissions of CH44, H, H22S, COS, CO22, HHC, & VOCs , HHC, & VOCs $100,000 investment, attractive returns, technology transfer$100,000 investment, attractive returns, technology transfer

OUR GOALSOUR GOALS – Field Demonstration & Tech Transfer – Field Demonstration & Tech Transfer Demonstrate how stripper gas operators can build and operate a Demonstrate how stripper gas operators can build and operate a

low-cost Nlow-cost N22 rejection plant using non-patented components rejection plant using non-patented components ACTIVATED-C BASED ADSORPTION WORKS – ACTIVATED-C BASED ADSORPTION WORKS – NEED TO NEED TO

OPTIMIZE AT MICRO SCALESOPTIMIZE AT MICRO SCALES

Benefits to AEC & Stripper Well OperatorsBenefits to AEC & Stripper Well Operators

AEC primarily owns and operates stripper wells in KSAEC primarily owns and operates stripper wells in KS Benefits to AECBenefits to AEC

Produce known low-BTU reserves behind pipe – Elmdale fieldProduce known low-BTU reserves behind pipe – Elmdale field Phase II – bring online low volume, low BTU wells – SI presentlyPhase II – bring online low volume, low BTU wells – SI presently

Neighboring high BTU fields have depletedNeighboring high BTU fields have depleted

Proposed Proposed 2-Tower Micro Scale Plant2-Tower Micro Scale Plant Within resource reach of stripper well operators such as AECWithin resource reach of stripper well operators such as AEC

Technology and FinancialTechnology and Financial However, need to develop a learning curveHowever, need to develop a learning curve

No micro scale NNo micro scale N22 rejection plant is currently operating in KS rejection plant is currently operating in KS Learn how to design, scale, build, operate, and optimize a micro plantLearn how to design, scale, build, operate, and optimize a micro plant

Request SWC support to try new patent-free technologyRequest SWC support to try new patent-free technology Technology transfer workshops upon completion Technology transfer workshops upon completion

Convey transfer lessons learnt to stripper well community Convey transfer lessons learnt to stripper well community