By Peter Mueller, CEO, EcoVapor

I had an insightful conversation over coffee with a friend of mine a few weeks ago and although I won’t mention his name to protect the innocent, he is an executive with decades of experience in the oil and gas business. At any rate, after exchanging pleasantries and small talk about oil prices and the newest challenges our businesses face, he made a provocative statement. “Peter, flaring is the result of poor planning.”

Peter Mueller
Peter Mueller, CEO, EcoVapor Recovery Systems

That’s a bold thing to say, but if you take a moment to consider his point, it’s accurate. If natural gas pipelines and processing plants of sufficient capacity were built and operating in advance of, or on pace with development drilling, there wouldn’t be much reason to flare gas because it would have a productive place to go.

Along with the wasteful aspects of flaring, the emissions from flaring are getting noticed. Given last week’s announcement by the Colorado Department of Health & Environment that the air quality along the Front Range region of Colorado is not meeting Federal standards for Volatile Organic Compounds (VOCs) and Nitrogen Oxides (NOx), government regulators are motivated to reduce the practice of flaring. Although E&P companies in Colorado can be justifiably proud of making significant progress to reduce emissions, they will be well-served by taking an even more proactive approach. This same issue is happening near San Antonio, TX due to emissions from development of the Eagle Ford shale.

One flaring “solution”

Even with sufficient pipeline access, operators incinerate as much as 15% of natural gas produced at well sites. This flared gas is the gas that evolves from oil sitting in storage tanks at atmospheric pressure, no longer held in solution by formation pressures, similar to how CO2 evolves out of champagne when you pop the cork. It defies economic and operational sense to burn off high-profit tank vapor gas. Tank vapor gas is very high in BTU content, containing significant amounts of natural gas liquids, which typically sell for much more than methane on an energy equivalent basis. Burning tank vapors at new well sites is like taking a match to thousand-dollar bills!

Over the past several years, it has become clear that tank flash gas often contains oxygen, which gas gatherers and interstate pipelines have placed increasing tighter limits on due to its corrosive effect on their steel pipelines and processing plants. So, unless this rich gas can be removed from the oil before it enters the tanks or the oxygen is removed from the gas, the entire tank flash gas stream is usually incinerated on site. That’s wasteful and generates unnecessary emissions. Thinking back, if I as a young engineer would have proposed to purchase a piece of equipment that would then burn 2800 Btu/SCF gas with no economic return, I can imagine I would be doing something else for a living today.

For example, let’s assume for the moment that a new multi-well production pad is generating 300 MCFD of tank flash gas. Its high energy content makes it worth more per unit volume. At today’s prices, that volume of rich tank vapor gas would be worth approximately $64,000 per month. On an energy equivalent basis, that amounts to about 4,200 barrels of oil per month, not a trivial amount. Burning it is the economic equivalent of spilling over 1,000 barrels on the ground every month, also not a trivial amount, and none of us would allow that to happen. Furthermore, that is only for one production pad. Multiply that single site estimate by hundreds of well sites that will be placed into production this year and the lost economic value quickly adds up to a significant sum.

Lost profits, and in some cases royalties, are the most tangible consequences of flaring tank vapor gas, but there are also environmental aspects. Even though the industry has made significant progress in reducing venting and flaring, regulators are having to take a closer look.

The law of unintended consequences

Flaring (or “combusting”) reduces some emissions but it unfortunately increases others. Flaring significantly reduces site emissions of Volatile Organic Compounds, or VOCs. That’s a good thing. However, it also generates nitrogen oxides, or NOx, as a by-product of combustion, and that’s not good as it contributes to the development of ground level ozone. In summary, burning off flash gas reduces VOCs, but also contributes to ozone pollution.

Creating a new sense of urgency to reduce VOC and NOx emissions is the recent announcement by EPA and the Colorado Air Pollution Control Division. On June 22, the Air Division of the Colorado Department of Public Health & Environment announced that the EPA designated the Denver-Metro-North-Front-Range (DMNFR) nine-county region as not attaining the 2015 National Ambient Air Quality Standard of 70 parts per billion (ppb) average over an eight-hour period. That is a long way of saying there is too much ozone in the air along the Front Range.

The Air Division noted “Although ozone levels have improved over the years, air quality in the DMNFR has not improved quickly enough. It will take a collective effort from the Air Division and Colorado’s citizens and businesses to attain both the 2008 and 2015 ozone air quality standards, and the Air Division encourages you all to do your part to reduce ozone forming emissions (NOx and VOC).”

Oil and gas operators in Colorado should take note that although our industry has made significant progress in reducing emissions and VOCs along the Front Range, government will be asking, or even forcing, that more be done. The bottom line is that operators, especially those in the DJ Basin, should expect more stringent air quality regulations in the near future and start planning for it yesterday.

There is a solution

The good news is that there is a solution and it won’t cost you a dime, in fact operators can make money by implementing it. Forward-thinking executives recognize that it is only a matter of time before regulators at the state and federal levels take aim at further restricting the incineration of tank flash gas, especially in light of the Colorado Air Division’s recent announcement. Here is the “clean” little secret, operators can generate profits and meet future regulations before government acts.

EcoVapor has designed and built systems that remove free oxygen from natural gas, including tank vapor gas. We’ve been doing it for eight years now and are getting pretty good at, even if I say so myself.

Once the oxygen is removed, this rich, valuable gas stream can be sold to enhance profits. And, flaring only has to occur in the case of the rare emergency. Now that publicly-traded E&P companies are facing mounting pressure from their institutional shareholders to generate returns on capital instead of growing production at any cost, monetizing tank vapor gas to increase profits and boost returns seems like a no-brainer. Never mind the growing pressure from environmental activists.

Removing oxygen from tank vapor gas just makes sense, and dollars too. As I think about my friend’s comment, I don’t believe that the many industry players will be able to fully plan resource development in such a way that flaring is naturally eliminated. But I am confident that operators can do something right now to remove oxygen from flash gas and sell it. As more operators adopt this innovative approach, their management teams, investors, working interest owners and State Treasurers will recover more money and we will all breathe a bit easier.

Proven technology

Although a growing number of operators are adopting oxygen removal solutions, old habits die hard. It is human nature to resist change. Adopting new technology usually has few leaders and a lot of fast followers. There’s an old adage in the oil business – “no one ever got fired for using Halliburton,” meaning that if you use tried-and-true processes and established service companies, otherwise known as the status quo, then your job is secure. If you try something new and different, the perception is that you are taking a chance. We greatly appreciate our customers who have taken that chance with us, but in reality, the risk was zero because they are using a tried-and-true process!

EcoVapor has adapted a process similar to that used to by the automotive industry to reduce vehicle emissions to the oil and gas industry. Our patented technology is based on the same process employed by a standard piece of equipment used on almost every vehicle driven in America since 1972 – the catalytic converter. A vehicle’s catalytic converter converts unburned fuel using oxygen, whereas EcoVapor uses hydrocarbons to convert oxygen. Both processes convert the oxygen and hydrocarbons into CO2 and water vapor – VOC and NOx problem solved. No one ever gets in their car and worries about its catalytic converter functioning. That’s the same level of reliability and confidence we’re shooting for at EcoVapor with the recent launch of our ZerO2 systems.

EcoVapor ZerO2

The EcoVapor ZerO2 is a stand-alone, skid-mounted oxygen removal unit that is designed to be paired with a third-party vapor recovery unit (VRU). The VRU pulls gas directly off the oil storage tanks and pushes it to our ZerO2 unit where the oxygen is converted using a proven chemical reaction process. The oxygen-free natural gas is then blended with gas coming off the separators and flowed onto the sales meter. A ZerO2 E300 unit can process 300 MCFD, has a small 4’ by 4’ footprint, has just an inlet and outlet gas connection, and an electrical connection for 480V three-phase power. It has no moving parts and makes no emissions. The resulting CO2 and water vapor exit our unit along with the oxygen-free hydrocarbon stream. New technologies like horizontal drilling and multi-stage fracturing have made oil and gas a sunrise industry again. New drill bits allow for the entire well to be drilled without a single bit trip, new technologies allow for precise frac stage placement and information technology advancements have increased operator efficiency and business process efficiency. EcoVapor’s patented technology is just the latest innovation allowing operators to increase operational efficiency, profitability and generate stronger returns on investment, all the while making more stringent regulations and control unnecessary.

Kyle Lesniak
Executive Vice President


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