Strategic Studies

Since inception, Barnes & Click has been providing client management with economic and technical evaluations of strategic options. When major capital spending initiatives are under review, clients have sought independent, external opinion to confirm or revise their internal analysis of the options. The engineering and operating background of B&C consultants uniquely equips them to evaluate a facility and discern where new investment will yield the greatest gains.

Technical Feasibility Study
An example of this kind of work was the study of a major gas processing plant that would be receiving new gas volumes from a series of fields to be developed over the next three years. Incremental volumes would push gas loads to 120% of nameplate capacity. The client had three basic questions. First, what would happen to liquid recoveries as gas volumes approached projected levels? Second, where could they de-bottleneck the existing plant to gain the greatest increases in inlet capacity and recovery efficiencies? Third, if the new gas volumes will overwhelm the existing plant, what is the most economic avenue to gain the required gas capacity while maintaining or increasing liquid recoveries?

To achieve this degree of specificity, B&C developed a computer simulation of the existing plant built on carefully compiled operating data. Actual plant data were needed to calibrate the model so it would yield reliable results for "extrapolated operations" on higher gas volumes. The model was used as a tool to determine process loads on individual pieces of equipment and to quantify the capacity change resulting from any particular de-bottlenecking step. Employing this methodology, B&C consultants were able to identify six modifications to greatly improve plant performance in terms of both gas volumes and liquid recoveries.

Economic Feasibility Study
A feasibility study for a major new facility grew directly from the conclusions reached in the de-bottlenecking study above. It was clear from that study that even with the identified improvements, expanding the existing plant to the degree required by the new gas volumes would severely depress liquid recoveries and would require large capital expenditures. A new process train was clearly indicated, and that led to the next question: Would it be best to install a parallel train and integrate it with the existing plant, or to replace the existing plant with a new cryogenic plant large enough for all the gas?

The study developed four options based on various combinations of refrigeration and recompression horsepower that delivered a range of capacities for new inlet gas. A parallel train could be sized between 100 and 165 MMCFD and full replacement plant would be 300 MMCFD. To determine the differences in economic results, B&C created an economic model capable of testing the interplay of various inlet gas scenarios against corresponding liquid output volumes. This analysis promptly zeroed in on 120 MMCFD as the optimum size of a parallel train with the lowest operating costs and maximum output per capital dollar.

It was a much tougher call between this size parallel plant and the full replacement option. Full replacement increased capital cost by 83% but delivered 67% more after-tax cash flow. The DCF rate of return was well above the client’s hurdle rate, but the 120 MMCFD parallel plant yielded an even higher ROI. In the final analysis, the client’s business judgment is the only arbiter in deciding whether to take the additional capital risk. The intangible factor here, beyond conventional ROI analysis, is the gatherer’s need to offer the most attractive processing option to maintain his dominant purchasing position in the region.

Refinery/Petrochemical Integration Studies
Petroleum refineries and petrochemical plants have historically been constructed adjacent to, or even intertwined with, each other because of the myriad synergies and natural exchanges between them. In the most obvious example, steam crackers producing ethylene also make hydrogen, which must go to fuel if no alternative commercial outlet exists. At the same time, refineries consume hydrogen, often in quantities exceeding their captive production, to remove sulfur and to saturate olefins and aromatics in some products. Thus a low-value byproduct from one facility can be a high-value feedstock for the other.

However, the recent trend in the industry has been to dis-integrate refinery/petrochemical complexes as one or the other component is sold or spun off. In our observations, of the few complexes that have remained under common ownership, even fewer still capture the full potential of the underlying synergies.

Barnes & Click has assembled a world-class team to assist clients in recapturing lost benefits through re-integration of refining and nearby petrochemical assets. You can read more about the team and the potential profit opportunities in Barnes & Click Solutions, May 2006 issue.