Eni Corporate University

Scuola Enrico Mattei

Master MEDEA 2002/03

Techno-economic assessment of the

needs for improved technology for
sour oil and gas management.
ALLIEVI

TUTORS

Anuar Abdugaliev
Donato Azzarone
Gonzalo Cabrera
Chiara Cerruti
Jos De Fonseca
Morenikeji Kobiti
Massimiliano Marin
Daniela Matos
Alessia Poggio
Anatoliy Zikanov

Thomas Lockhart

Scuola Mattei 2002-2003

Introduction ...................................................................................................................................................................... 3
[Link]......................................................................................................................................................................... 4
2. Consolidated technologies for sour gas processing .................................................................................................... 5
2.1 TECHNICAL ASPECTS Of GAS REMOVAL AND SULFUR RECOVERY FROM NATURAL GAS. ...................... 5
2.2 Natural Gas Desulfurization..................................................................................................................................... 6
2.3 Overview of the technological sequence for the desulfurization process ................................................................. 7
3. Cost analysis.................................................................................................................................................................. 9
3.1 Cost structure ........................................................................................................................................................... 9
3.2 Structure of costs- A more analytic approach ........................................................................................................ 14
3.1 The program excel H2S costs ............................................................................................................................. 18
3.3.1 Determining optimal the size of a the plant ..................................................................................................... 18
3.3.2 The analysis of desulphuring cost.................................................................................................................... 20
3.3.3 An Investment analysis .................................................................................................................................... 20
3.4 Application to hypothetical fields ........................................................................................................................... 22
3.4.1 Small on-shore italian field.............................................................................................................................. 22
3.4.2 Caspian region fields ....................................................................................................................................... 23
3.5 the sulphur storage issue ....................................................................................................................................... 26
[Link] Alternatives.............................................................................................................................................. 28
4.1 Acid gas Injection ................................................................................................................................................... 28
4.2 Xergy Processing. ................................................................................................................................................... 30
4.3 Hydrogen production.............................................................................................................................................. 31
4.4 Electricity generation from sour gas ...................................................................................................................... 33
Conclusion ....................................................................................................................................................................... 36
Aknowledgments............................................................................................................................................................. 36
Appendix a ...................................................................................................................................................................... 37
Appendix a ...................................................................................................................................................................... 37
Conversion units ............................................................................................................................................................. 37
References........................................................................................................................................................................ 38

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INTRODUCTION
For Eni and other major operators, the development of major new hydrocarbon
resources in the Middle East and the Caspian region represents a key element in
their business strategy for the next few decades. A recurring characteristic of the
oil and gas resources in this region is the presence of high concentrations of
hydrogen sulphide, H2S, which can reach as much as 20 mol % or higher in the
(associated) gas.
High concentrations of H2S and high total volumes to be processed can add
greatly to the cost of these assets, as well as increasing the need for strict safety
and environmental practices. Not surprisingly, much effort is underway in Eni
and elsewhere, to develop new processes that can reduce the economic impact of
H2S and sulphur management.
The objective of this study was to develop and apply a methodology for estimating
the need for and the potential impact of new technology on the development of
highly sour oil and gas resources.
This objective has been reached by first developing an economic simulation tool
which guides the identification of the preferred H2S processing scheme (Claus or
Lo-Cat) for a given resource and by estimating the cost of this process.

By

considering the absolute value of the H2S processing costs and by comparing
these costs to the value of the hydrocarbon resources to be produced, it is shown
that for certain field characteristics (not only those of the Caspian region, but also
the on-shore field of Miglianico), H2S processing costs are indeed significant.
This provides a very strong incentive to identify major improvements over the
consolidated technologies.

Several alternative processes (some still at the

research stage) which aim to cut the cost of H2S processing or extract energy or
chemical value from this by-product are considered in the light of the economic
needs identified for the highly sour field developments.

Scuola Mattei 2002-2003

[Link]
The first part of the paper describes the technical and economical aspects of the
traditional technologies, Amine/Claus/SCOT and Lo-Cat, for H2S processing.
Next, a simulation tool for estimating the costs of H2S processing has been
developed from an SRI report [1] by disaggregating the costs.

The model

implemented allows for the calculation of both investment and operating costs
pertaining to the use of these technologies.
Application of this tool to assets in Italy and the Caspian region has allowed an
evaluation of the economical weight of H2S management on the asset value to be
made, assuming the use of the best consolidated technologies for H2S
management.
Finally, innovative and emerging technologies for H2S processing are examined in
the light of the demonstrated need for alternative, lower-cost routes for H2S
processing in highly sour oil and gas resources.

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2. CONSOLIDATED TECHNOLOGIES FOR

SOUR GAS PROCESSING
2.1 TECHNICAL ASPECTS Of GAS REMOVAL AND SULFUR
RECOVERY FROM NATURAL GAS.
Natural gas desulphurisation and sulphur (S) recovery processes consist of three
segments:
Acid gas absorption

S recovery

Tailgas treatment

The first step in the process chain consists in the removal of acid gases from
process streams by absorption. Commonly used solvents are of three types:
physical, chemical, and blends. After absorption, release of the acid gases from
the solvent may be achieved through pressure reduction, thermal stripping, or a
combination of both. The regenerated solvent is recycled to the absorber, while
the released acid gases flow forward to the S recovery unit.
Usually the H2S is converted to sulphur through the Claus process. The chemical
principle of the process is to stechiometrically burn one-third of H2S with air to
SO2 in a thermal reaction furnace. The converted SO2 reacts with the remaining
two-thirds of H2S to form elemental S. The S conversion reactions begin initially
in the thermal furnace and then continue in two or three catalytic stages over an
aluminum catalyst.
For low H2S contents, as well as low total S recovery capacities, the conventional
thermal stage is not appropriate. As such, for trace amounts to 2.0 mol%, and
total S recovery capacity not exceeding 20 t/d, the process employed is LO-CAT.
Unlike the Claus process, which involves thermal and catalytic reactions, LO-CAT
is a direct H2S oxidation in an iron chelate solution.
For cases in which the H2S content of the reactor off-gas is higher than that
permitted by regulations, there arises the need for a further reduction of the H2S
content with a tailgas treating process. As a result, the increasing need to reduce
the H2S content has led to the development of many new technologies, including
the following: Clintox, SCOT, Hydrosulfreen, Beaven.
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Scuola Mattei 2002-2003

For our study, in which we take into consideration natural gas and oil reservoirs,
we have chosen the desulfurization processes that best known and commercially
well established for the removal of sulphur from natural gas.
Natural Gas Desulfurization by the Process Chain of Sulfinol absorption, Claus
Sulfur Recovery, and SCOT Tailgas Treatment
The Claus process converts concentrated H2S derived from solvent absorption to
elemental S by a combination of thermal and catalytic oxidation stages. In the
absorption process, the solvent used is sulphinol, which consists of three
components: water, sulfolane, which is a physical solvent, and a tertiary amine,
which is a chemical solvent (di-isopropanolamine or methyldiethanolamine).
Typically, a Claus unit is separated into a thermal reaction followed by a catalytic
reaction. In other words, a reaction furnace is followed by a thermal reactor
which in turn is followed by three catalytic beds. The catalytic reaction involved
in the Claus process requires two moles of H2S to react with one mole of SO2. As
such, only one-third of the H2S stream is burned in the reaction furnace, leaving
two-thirds to react with the SO2 in the thermal reactor.
The reactions that characterize the process are the following:
H2S + 3/2 O2 -> SO2 + H2O

burns one-third of the H2S to SO2

2H2S + SO2 -> 3/2 S2 + 2H2O

Claus conversion of H2S and SO2

In treating the tailgas, the treatment process used is the SCOT tailgas treating
system. The entrained S in the tailgas is converted to H2S by catalytic
hydrogenation over a Co-Mo or Ni-Mo catalyst. The other gases, SO2, COS, and
CS2 are also hydrolyzed to H2S. Following moisture reduction, H2S in the
converter gas is absorbed in an MDEA solution and then recycled to the
upstream Claus reactors for S recovery.

2.2 NATURAL GAS DESULFURIZATION

This technology is used for desulphuring high-pressure natural gas containing
low concentrations of H2S and moderate amounts of CO2. Initially, H2S and CO2
in a natural gas stream are absorbed from the gas by an aqueous solution of
diethanolamine (DEA), producing a marketable natural gas that is acid gas-free
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and that meets pipeline specifications. Subsequently, the acid gases are thermally
stripped from the DEA solution. The stripped lean solution is recycled to the
absorber, while the acid gases are treated with LO-CAT II, a liquid phase, direct
oxidation process. This procedure separates CO2 and other inert gases from H2S,
the latter is then subjected to a catalytical oxidation that involves using a mixture
of iron chelates as the redox vehicle that convert it to elemental S.

2.3 OVERVIEW OF THE TECHNOLOGICAL SEQUENCE FOR THE

DESULFURIZATION PROCESS
Regarding the Claus process, the data taken as reference are:
Sour gas type

Natural gas

Sour gas feed rate, million Nm3/d

1,5

Sour gas H2S content, mol%

22,5

S capacity base cases, t/d

431

Sour natural gas

( 1.5 million Nm3/d)

CH4, CO2
H2S(22,5mol%)

SO2, H2O,
CO2, N2

Sweet Gas
CH4

Air O2/N2

Acid Gas Removal

Sulfur Recovery
(Sulfinol Process) Acid Gas (Claus Process)
H 2S
CO2

H2S, SO2
Recycle

Tail Gas Clean-up

( SCOT)

Incineration

S
Sulfur Degassing
S ( 431 t/d)
Fig. 1- Claus process

As for the LO-CAT, the data include:

Sour gas type

Natural gas

Sour gas feed rate, million Nm3/d

1,5

Sour gas H2S content, mol%

0,5
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S capacity base cases, t/d

10
FIG.2-LO-CAT PROCESS

Sour Natural
Gas
(1.5 million
Nm3/d)

CH4, CO2,
H2S (0.5mol%)

Sweet Gas
CH4

Acid Gas Removal

(DEA)
Acid Gas

Sulfur Recovery
(LOCAT)

H2S, CO2

S
(10t/d)

Sulfur Disposal

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3. COST ANALYSIS
3.1 COST STRUCTURE
This section analyzes capital and production costs for desulphuring acid gas
streams using either the Lo-Cat II or Claus process. The analysis is based on
data published from SRI Consulting [1]. The first step of the analysis is the
definition of the plant capacity to be considered (for a description of the choice
between Lo-Cat or Claus process, see the technical section). For the data shown
in this section, the plant is assumed to be located on the U.S. gulf coast. In the
table below, three cases are presented for each of the two technologies; in the
case of using Lo-Cat II desulfurization technology, the base capacity of the plant
considered is 8 million lb/yr (3500 t/yr) of elemental Sulfur, resulting from a gas
flow rate of 53 million scfd with a H2S content of 0.5 vol%, while the half of base
case has a capacity of 4 million lb/yr, and the twice of base case has a capacity of
15 million lb/yr. These examples will show how the amount of flow entering the
process affects desulfurization costs.
The first two rows reported in the table indicate the estimated battery limits
investment (BLI) and the estimated total fixed capital (TFC), respectively. These
data are fundamental for the determination of the other desulfurization costs. The
evaluation of these two data is as follow: the estimated FOB equipment cost for
the base case of Lo-Cat II technology is about $ 0.93 million; adding the costs for
direct and indirect installations, plus 10% for unscheduled equipment (e.g.,
mobile equipment, test instruments, portable tools), the estimated battery limits
investment amounts to about $ 5.3 million, including 25% contingency.
The off-site investment include water treatment systems, a steam boiler, and a
general services facilities equal to 20% of the sum of the BLI and the utilities and
storage investment, plus another 2.6% for wastewater treatment. The resulting
total off-site investment is about $ 3 million, including a 25% contingency.
Adding the battery limits and off-sites investment together, the estimated total
fixed capital (TFC) investment is about $ 8.3 million for the base case. The
investment for the half of base and twice of base plants are extrapolated from the
costs of the base capacity plant. The total fixed capital extrapolated from the base

Scuola Mattei 2002-2003

case of the Lo-Cat II technology (8 million lb/yr of sulfur) are respectively $ 6.2
million and $ 12 million.
The scaling exponents to be used for determining the TFC are strongly influenced
by the plant capacity; for the Lo-Cat II plant they are 0.52 and 0.42 for the twice
of base and the half of base plant, respectively.
The table proceeds with the row showing the variable costs for materials and
utilities. It is important to underline that for the Lo-Cat II plant, more than 98%
of the material cost is attributable to chemical costs in the direct oxidation
section; on the other hand, the Lo-Cat II section accounts for only 10% of the
utilities costs, whereas the DEA adsorption-stripping section accounts for 90%.
Following with the cost analysis, the next component is the labor cost, which is
mainly constituted from the sum of three factors: operating labor, maintenance
labor, and control lab labor. The first of them needs to be treated with particular
caution, because it represents the cost of the labor force and is therefore a
variable strongly dependent upon the geographic zone where we are operating. In
the example we show in the table, the plant is located on the U.S. part of the Gulf
of Mexico, where the labor cost is assumed to be $ 29.85 per hour (1997).
Obviously, a plant located in another area of the world would mean a different
impact of this cost on the overall expenses.
Maintenance Labour is calculated as a yearly percentage of BLI, and the
explanation seems to be obvious, in fact as the equipment settled increases, the
maintenance labour that should be done on it, increases proportionally.
Generally this percentage is within the range of 1% 4% of BLI. Control Labour
is referred to the control activities executed in laboratory during the process and
they are determined as a percentage of the operating labour (it is usually about
20%).
Adding up these three terms together we obtain a value of 5.77 cent/Lb for the
base case.
Adding to the Labour cost the maintenance materials expenses, which are a
function of BLI, and the operating supply costs, which depends on the manpower
in the field , we arrive at the Total Direct Costs, which in our case amounts to
20.95 cent/Lb.

To the operating expenses considered so far we have to add

general and administrative ones, grouped under the name Plant Overhead;
these costs are generally linked to employee costs and therefore they are
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expressed as a percentage of Labour Cost.

The range of variation that this

percentage may undertake is very wide (50% 150%) and depends on the
specificity of the project we decide to examine. Normally, if precise sheets) of
expenses are not available, we can consider a mean value of 80%.
The following cost, Taxes and Insurance, should not be confused with taxes on
revenues eventually reached, but it is above all determined by insurance
expenses on the equipment settled and it is expressed as a percentage of TFC
(2%).
Summing up the terms listed so far we are now at the point to be able to define
the Plant Cash Costs, which amount to 27.73 cent/Lb (base-case).
Considering for the plant an economic life of 10 years and a depreciation plan
with fixed quota, we now have to take into account the term depreciation, equal
to 10% of TFC, that should be added up to Plant Cash Cost: in this way Plant
Gate Costs are obtained (38.58 cent/Lb). Obviously this value is strictly linked to
the depreciation plan chosen.
Generally the costs of G&A, sales and research are considered out of the gate and
they assume a forfeit value of 1% of the final cost in the year considered.
In determining the final cost linked to the desulphurisation process it is usual to
consider a recovering level of invested capital, defined as ROI before taxes, and
expressed as a percentage of TFC. Nevertheless this is only one of the possible
approaches in defining a recovery of the invested capital in the determination of
the final cost, and perhaps it is the most usual methodology in the Anglo-Saxon
system. In Europe the way usually followed is more cautious than the previous
one; it suggests determining the recovering quota as in the following formula:
R=

C (1 + i ) e.l . * i
(1 + i ) e.l . 1

where:
e.l. is the economic life of the plant (in our example it is 10 years);
C is the initial investment;
i represents the expected rate of return, which is determined by three factors:
- the risk-free rate of interest;
- an adequate premium for the risk managed in executing such a project;
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- a margin sufficient to assure the recovery of the payment of taxes.

In general, with this last methodology we obtain lower capital recovery, and
consequently a lower final cost, with respect to the one in the table below, that
amounts to 66.37 cent/Lb.
We have preferred to reclassify the costs examined above in terms of Capex and
Opex costs as the scheme below:
reclassify the costs examined above in terms of Capex and Opex costs as the
scheme below:

Taxes and Insurance

CAPEX

Depreciation

they represent the part of TFC that must be associated to the

final cost in one year of exercise

ROI before taxes

Variable costs
Labour costs
OPEX

Maintenance Materials
Operating Supply
Plant Overhead

G&A, sales and research

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Tab.1-Production costs. From [1].

production costs [c/lb]

Capacity [Mlb/y]
BLI [M$]
TFC[M$]

7,65
5,30
8,30
un. capex [Link]
13,73

Variable Costs
Operating Labor
Maintanance Labor (%/Y of BLI)
Control Labor (% of Op Labor)

3,42
1,66
0,68
5,77
1,11

2,40
20

Labor Costs
MaintananceMaterials (%/Y of 1,6
BLI)
Operatin Supply (% of Open 10
Labor)

0,34

Total Direct Costs

20,95
4,61
2,17
27,73

Plant OverHead (% of Lab Costs) 80

Taxes_Insurance (%/Y of TFC)
2
Plant Cash Costs
Depreciation (%/Y of TFC)

10

10,85

Plant Gate Costs

38,58
0,67
39,25

G&A, Sales Research

Net Production Costs
ROI before Taxes (%/Y of TFC)

25

27,12

Product Value
unitary capex [c/lb]
unitary opex [c/lb]
Product Value

66,37
40,14
26,23

66,37

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3.2 STRUCTURE OF COSTS- A MORE ANALYTIC APPROACH

Based on the SRI data [1], we have developed an analytical model to estimate all
the costs for both technologies.
Indicating with q [tS/d] the daily S production, the desulphurisation

CAPEX

(investments) depends on q as:

capex (q ) = K c q
The coefficient Kc depends on the country and the change with US $; the
depends only on technology chosen.

Kc 3,1
0,47

CAPEX LO-CAT
14,00
12,00

M$

10,00
8,00

Capex LO-CAT

6,00

data from SRI

4,00
2,00
24,50

22,00

19,50

17,00

14,50

12,00

9,50

7,00

5,00

2,50

0,00

0,00

q [tS/d]

Fig 3.(a) Capex of Lo-Cat. (b) Capex of Claus

CAPEX CLAUS

Kc 0,98
0,58

60,00
50,00

CAPEX CLAUS

30,00

data from SRI

20,00
10,00
930,00

850,00

790,00

710,00

630,00

550,00

470,00

390,00

310,00

230,00

0,00
150,00

M$

40,00

q [tS/d]

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The production cost is divided in a unitary capex and a unitary opex (see previous
chapter). We indicate the unitary capex as cx; this is an annual percentage of
capex total; it depends on following economic data:
r = return on Investments, ROI
d=depreciation
t=taxes
Therefore to have the unitary capex (cx) expressed in [$/Kg]:

cx =

K c capex ( q ) ( r + t + d )

365
q

with

K c (r + t + d )
365 1000

cx [$ / Kg ] = q 1
The opex cost expressed in [$/y] show a q dependence as:

Opex (q ) = K 0 q
The unitary opex (ox) expressed in [$/Kg] are a similar dependence on q:

K 0 q
ox ( q ) =
= q 1
q * 365 * 1000
The important difference between the two classes of cost is that in the unitary
capex there are the specifications of economics.

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Fig 4.(a) Unitary Opex of Lo-Cat. (b) Opex of Claus

Opex-LO-CAT
2,500

$/Kg

2,000
1,500

model

1,000

SRI-data

0,500
24,50

22,50

20,50

18,50

16,50

14,50

12,50

10,50

8,50

6,50

5,00

3,00

1,00

0,000

ox [$/Kg]

q [tS/d]

LO-CAT technology OPEX-CLAUS

1

0,080
q [tS/d]

4,75

9,49

19

0,060

[H2]

0.5%

0.5%

model
0.5%

0,020
Vin1 [Nm3]

0,75 106

1,5 106

3 106

0,000

0,42

0,29

0,22

0,040

15
0,
0
23 0
0,
0
31 0
0,
0
39 0
0,
0
47 0
0,
0
55 0
0,
0
63 0
0,
0
71 0
0,
0
79 0
0,
0
85 0
0,
0
93 0
0,
00

z [$/1000scf]

data SRI

q [tS/d]

The unitary cost z [$/Kg] will be given by the sum of unitary capex and opex and
shows a dependence with q-1. Because of is less than 1 for both the
technologies, the impact of desulphuring is particularly onerous for small scale
operations.
A summary of data from SRI report is showed in following tables. In Table 2.a
there are the parameters for both the technologies. In Table 2.b and 2.c there are
the costs calculated for 3 cases for each technology.

1 1Nm3=35,31 scf

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Table 2.a

Lo-CAT

CLAUS

q [tS/d] range

0-25

150-930

0,47

0,58

KC

3,91

0,98

KO

1,91

0,58

Table 2.b

LO-CAT technology

q [tS/d]

4,75

9,49

19

[H2]

0.5%

0.5%

0.5%

Vin2 [Nm3]

0,75 106

1,5 106

3 106

z [$/1000scf]

0,42

0,29

0,22

Table 2.c

CLAUS technology

q [tS/d]

205

409

817

[H2]

22.5%

22.5%

22.5%

Vin1 [Nm3]

0,7 106

1,42 106

2,83 106

z [$/1000scf]

1,32

1,00

0,8

1Nm3=35,31 scf
17

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3.1 THE PROGRAM EXCEL H2S COSTS

3.3.1DETERMINING OPTIMAL THE SIZE OF A THE PLANT
The Excel program H2S_cost has been developed to provide an estimate of the
desulphurisation cost (z) for a gas or gas/oil field. We suppose the technology
choice is only between the LO-CAT process or CLAUS technology. Other technical
alternatives will be discussed in the next chapter.
To estimate z it necessary to know:
physical data from field
economics
technology parameters
The physical data from field are:
The production rate PR [bbl/d]
Gas to Oil Ratio (GOR) [m3/m3]
H2S molar concentration [H2S]
From them is possible to work out the volume feed of natural gas going in the
plant, that is indicated as Vin [Nm3/d].
In a oil field it can express as:

Vin = PR GOR 0,159[m3 / bbl ]

For a gas field Vin is directly the production rate of natural gas expressed as
[Nm3/d] or as [boe/d]. From Vin and the molar concentration of H2S in the gas
([H2S]) the daily S production (q [t/d]) will be given as:

q = Vin [ H 2 S ]
The calculus of coefficient (~1,2 10-5 ) is described in Appendix B.
The value of q allow to chose the technology and, therefore, the parameters:

Kc

Ko

Only the coefficient depends exclusively on technology; the other parameters

refer to the costs in USA $ of 1995. Therefore it is necessary to update the value
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of the coefficient with a scale factor (sf) that considers the change, the inflation
and the country of installed plant.
In addition to the scale factor, there are other economics parameters whose mean
has been explained in previous chapter. Definitely the input parameters are:

(r)eturn on ROI

(d)epreciation

(t)axes of plant

(s)cale (f)actor

that with the technology choice is necessary to estimate the desulphurisation cost
(expressed in different measure units).
If q exceeds the maximum capacity of a plant, more plant have to be built and
this number is indicated as n. Definitely the final formula to calculate the total
unitary cost z is :
1

K (r + t + d ) K 0 365 q
z [$ / Kg ] = fs n c
+

365
1000
1000

A Excel worksheet has been implemented to work out the unitary cost (expressed
in different measure units) from the economical and physical data. The form of
this software is shown in Fig.5

FIG 5- A VIEW OF EXCELL WORKSHEET TO WORK OUT THE DESULPHURING COST

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3.3.2 THE ANALYSIS OF DESULPHURING COST

Another approach is studying the desulphuring cost in function of physical
variables. For instance, it is possible, fixed the volume of gas, investigate the
dependence of z on percentage of H2S. In this example fixed Vin=1 Mnm3 the cost
per 1000 Nm3 is shown if fig.6:
25

z [$/1000Nm3]

20

15

10

4,

4,

4,

4
2,

0
2,

3,

6
1,

2
1,

3,

8
0,

4
0,

2,

0
0,

H2S %
Fig.6 Cost z versus H2S concentration

3.3.3 AN INVESTMENT ANALYSIS

Let pz be the value of S in the market expressed in [$/Kg]. A simple investment
analysis show that the net present value of the discounted cash-flows has the
form of:
T

NPV = capex(q ) +
t =1

(p

zt

zt qt

(1 + i )

In this case the plant is considered simply as a plant that produced a product (S)
that can be sold in the sulphur market. If the NPV value would be positive, the
desulphurisation process will be a self-sustaining investment. Roughly speaking
we can compare the average cost of the desulphurisation process [0.1 $/Kg] with
a typical recent value for S, ie., less than 30 $/t. It is clear that this is not a self20

Scuola Mattei 2002-2003

sustaining investment. The problems related to sulphur market will be treated in

section 3.
Where the sulphur finds no outlet on the market (a situation found in several
areas of the world), the cost of desulphurisation will be charged entirely to the gas
value, or to the oil value if there is no market for the associated gas. Supposing
where capexfield , c (the cost of extracted gas) are related to the gas field.
In this case z is expressed in [$/1000 Nm3].

[ pt (c + z (q)) Vin
(1 + i ) t
t =1
T

NPV = capex field capex(q) +

If the cost is charged on all the hydrocarbon production, we have:

T p ( c + z ( q ) ) Q
t
boet
NPV = capex field capex(q ) +
t
t =1
(1 + i )

where z is expressed in [$/boe].

For this analysis in necessary to know the expectations on prices, the costs, the
capex and the profile of production that is not easy to have.
Therefore a sensitivity approach has been used to estimate the convenience of
developing field. A worksheet NPV-sensitivity allows this kind of procedure
(fig.7)

FIG.7- A WORKSHEET THAT ALLOWS THE SENSITIVITY ANALYSIS ON OIL/GAS FIELD

21

Scuola Mattei 2002-2003

3.4 APPLICATION TO HYPOTHETICAL FIELDS

We start applying the model before described to some field with different
characteristics.

3.4.1 SMALL ON-SHORE ITALIAN FIELD

The data of this field give an annual sulphur production of q=7,6 tS/d. The peak
of production will be in 2012: 8000 bbl/d of oil and 0,15 MNm3 of gas. This
corresponds to a total hydrocarbon production3 of 8960 boe/d.
This suggests the choice of the Lo-Cat technology and, therefore, allows using the
procedure to work out the capex and the opex of the desulphurisation plant. The
value of return on ROI used is 15% and the factor of scale (fs) has been kept at
the same value of sf=1.
The value of gas in this area is estimated in 2,5 [$/1000 scf] ( 88,31 $/1000Nm3)
[2]. This is a conservative estimation of gas value that could be worth more but it
is enough to provide a qualitative estimation of the impact of desulphurisation on
total costs.
Table 3 summarizes this results:
Table 3

Field Data
PR

[boe/d]

8960

Vin [Mnm3d]

0,15

[H2S]

4%

[tS/d]

7,6

Capex field [M$]

164

Opex field [M$/y]

14

Desulphuring costs

Capex [M$]

6,2

Opex [M$/y]

0,56

For Italian gas 1 Nm3=6,3x10-3 boe

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Scuola Mattei 2002-2003

Gas

Value

88

[$/1000Nm3]
z [$/Kg]

0,8

z [$/1000Nm3]

40,86

z [$/boe]

0,68

Our analysis show the high cost of desulphurisation on total cost of production (5
$/boe) may reach more than 10%.
For this field the capex and opex are supposed to know and therefore is possible
to make a sensitivity analysis on boe price that make non economic the
development of field. Using the Excel worksheet NPV-sensitivity is possible
estimating the price in 10-11 $/boe. In fig.8 the application of Excel worksheet is
shown.
Fig.8 Sensitivity Analysis for Miglianico field

3.4.2 CASPIAN REGION FIELDS

Evaluating H2S processing costs is of particular interest for the Caspian region,
given the characteristically high H2S levels, and the strategic value of the this
region and middle east for Eni and other major oil companies.

We begin by

analyzing the field of Karachaganak; a description of which is found in [8].

23

Scuola Mattei 2002-2003

The costs of Kazakhstan have been calculated both

with a factor scale fc=1.

although it does not seem plausible because of in this remote region all the cost
are higher than those in USA.
The value of r

used is 15%. The field data used [9] refer to a production of

200000 boe/d, a production level for the years until 2004. In fact the production
rate for this field will have the peak of 500000 boe/d in 2010.
The daily production of 200000 boe/d is split into:
120000 bop/d of liquids
12,8 MSm3/d (equivalent to 80000 boe/d)
Only one-half of the gas extracted is sold to the market, the rest is re-injected into
the reservoir. With this volume of gas and [H2S]=3,5% we can calculate the daily
S output of 284 t/d which suggests using the Claus technology.
The value of gas in this area has been estimated for the sake of this exercise to be
in 0,5 $/1000 scf [2]. The cost of desulphurisation is charged both on oil and gas
sold (that is the half of the total gas extracted) to finally have the z expressed in
[$/boe]
Tab.4 summarizes the data from the Karachaganak oil-gas field
Table 4. Karachaganak

Field Data
PR

total

160000

sold[boe/d]
Vin gas [Mnm3d]

6,4

[CO2]

5,5%

[H2S]

3,5%

q [tS/d]

284,5

Capex field [M$]

----

Opex field [M$/y]

----

Desulphuring costs
fc

Capex [M$]

26

Opex [M$/y]

5,61

24

Scuola Mattei 2002-2003

Gas

Value

18

[$/1000Nm3]
z [$/Kg]

0,12

z [$/1000Nm3]

10,81

z [$/boe]

0,43

In Tab.5 there are the data from Kashagan oil-gas field. In this analysis we
suppose a production of 100 kbbld with a concentration of [H2S]=16%. The
physical fields data give a S output of 1605 tS/d; this means using 2 Claus
Plants of 803 tS/d capacity. Therefore the total capex and opex will be the sum of
2 opex and capex of a 803 tS/d plant. The parameters of cost are supposed to be
the same as for Karachaganak. In this case the gas extracted is supposed not to
be sold to the market. Therefore the cost of desulphurisation is attributed entirely
to the price of the crude oil. In fact even if the gas were flared, it would still have
to be desulphurized to respect environmental laws.
Therefore in Kashagan there is a conjunction of two difficult situations: a very
high percentage of H2S and the absence of a market for the large volumes of
associated gas.
Table 5 summarizes the data:
Table 5- Kashagan

Field Data
PR [boe/d]

100000

GOR [Nm3/bbl]

79,3

Vin [Mnm3d]

7,9

[H2S]

16%

q [tS/d]

1605

Capex field [M$]

----------

Opex field [M$/y]

------------

Desulphuring costs
Number plants

2 x 803 [tS/d]

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Scuola Mattei 2002-2003

Capex [M$]

56,1

Opex [M$]

20,48

Gas

18

Value[$/1000Nm3]
z [$/Kg]

0,07

z [$/1000Nm3]

14,2

z [$/boe]

1,12

3.5 THE SULPHUR STORAGE ISSUE

For all three cases examined, application of the consolidated technologies for H2S
processing (in one case, Lo Cat, in the other cases, Claus) lead to high total costs.
Because the Lo-Cat process for the removal of low quantities of S (scavengers)
have relative high cost, the cost of removing S can be a high percentage on the
total cost of production (small Italian field).
Application of the Claus process for the removal of large quantities of S leads to
low unitary cost per Kg of sulphur removed. However, the large volumes of H2S
to be handled and the limited market for the large volumes of produced gas for
the two Caspian region fields studied lead to a very significant contribution of H2S
processing costs to total cost of extraction. For Karachagank, this is 0.41$/boe
and for Kashagan 1,12 [$/boe]. A rough estimation for Kashagan field when the
production will be around 1 Million of bbl/d give a daily cost of more 1 M$/d.
Another consideration for the Caspian fields regards the distance of the sulphur
produced from the market, and the present world-wide over-supply of sulphur on
the market.

For these reasons, not only must the Caspian region sulphur be

considered as a cost but it is likely that the sulphur produced will be destined for
long-term storage.
In this case there are a lot of open questions.
The problem is producing a huge amount of solid S the cannot be sold: the
market of S has an excess of supply and the S price is dropped to zero value [5].

26

Scuola Mattei 2002-2003

Storing the S produced seems to be the only feasible solution but this has a cost.
Producing 1600 t of solid S per day, hoe before described in our example, means
reaching an annual production of 0,58 million of tons that have to be stored. The
cost of storing sulphur as a solid block is estimated in 13$/tS, for an annual cost
of sulphur storage of 7,6 M$. Other costs are related to monitoring and
maintenance of the large sulphur blocks in order to avoid environmental damage.
It has been reported that the annual cost for avoiding acid runnoff from old and
unstable sulphur blocks has reached 3 $ t/y in some cases [5]. This would
correspond, for the above annual production, to an additional 1,7 M$ per year. It
easy to understand the importance of this issue for the H2S rich gas of
Kazakhstan fields.
In table 6 are reported the costs before described and the cost per year due to
different contribution in Kashagan field with a production rate of 1M boe/d:

Cost for Kashagan [M$]

Z [$/boe]
Storage

cost

1.124

408

13

76

17

[$/tS]
Other costs [$t/y]
total

501

With this estimation become easy to understand the importance of economical

impact that the H2S removal issue will have on developing fields in this area.
The problem related to the sulphur storage in Kazakhstan Tengiz field is well
discussed in [6].
In next section some alternatives technologies to storage will be discussed.

prudent estimation calculating the cost with fs=1

27

Scuola Mattei 2002-2003

[Link] ALTERNATIVES
The economical impact of S storage before analyzed make necessary studying
other approach to avoid the storage. The technological alternatives that will be
discussed in this chapter are based on following ideas:
avoiding Claus and Lo-Cat improving the acid gas re-injection
using H2S as a source of value (energy, H2)

4.1 ACID GAS INJECTION

The acid gas from the amine regeneration column, is at low pressure,
typically 5 to 7 psig. The acid gas is made largely of H2S and CO2, but it also
contains small amounts of light hydrocarbons and nitrogen. Because of the
nature of the stripping process, the acid gas is saturated with water at these
conditions. In order to get it through the pipeline and into the injection, the acid
gas has to be compressed to a sufficient pressure. The compression takes place in
a multi-stage compressor with interstage cooling until 49C. At this temperature,
an aqueous phase is likely to form and is removed using interstage knock-out
scrubbers. Next the acid gas is transported to an injection well in a pipeline.
Based on safety considerations, the pipeline is generally kept as short as possible.
Finally, the fluid is injected usually into a suitable underground formation. The
formation is selected based on geological criteria such as the size of the disposal
reservoir, and the containment of the injected acid gas.
In an acid gas injection scheme, pressures can range from near atmospheric up
to 30 Mpa or more; the upper limit dictated by the selected reservoir. The
temperature can range from about 30C up to as much as 200C; again the upper
limit is being the reservoir conditions.
Acid gas injection is essentially a zero-emission process because during normal
operation all of the H2S from the produced gas is re-injected. This solution
requires adequate technologies since there are several important physical
properties and phase equilibria to be considered in the design of an acid gas
injection scheme.
These include, but are not limited to:

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Scuola Mattei 2002-2003

non aqueous phase behaviour

water content of the acid gas and the possible formation of an aqueous
liquid.
hydrate formation
the density and viscosity of the acid gas
Perhaps the most significant problem with the calculation for the acid gas
injection is that much of the process occurs at conditions that are near the
critical point of the mixture.
Typically the range of temperature is 0.75<Tr<1.25, where Tr is the reduced
temperature, the ratio of the temperature to the critical temperature. The vicinity
of the critical point is a region where it is difficult to accurately calculate the
physical properties. Not only do the property estimation tend to be poor, but in
addiction, the properties are strong functions of the temperature end the
pressure. In this region, small changes in pressure or temperature can have a
dramatic effect on the physical properties.
Acid gas injection in suitable formations is a technology so far only applied to low
capacity reservoirs. It is not yet possible to use this method to stock the
quantities involved in order to significantly tackle the issue of sulphur generation.
The main obstacles to overcome are:
the technological gaps on compression plants.
the availability and selection of suitable formations to stock such
quantities.
the security risks arising from the presence of tonnes of high-pressure
liquid hydrogen sulphide on the plants.
In Tab. 7 and Tab. 8 we compare the data of a typical small size LO-CAT recovery
plant with a Gas Injecton Plant for the same data field.

Vin [Mnm3d]

0,5

[H2S]

0,44%

q [tS/y]

2,8
Tab. 7

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Scuola Mattei 2002-2003

Tab. 8

Capex [M$]

Capex [M$]

2,25

Opex [M$/y]

1,13

Opex [M$/y]

0,3

z [$/Kg]]

2,44

z [$/Kg]]

0,3

The technology of re-injection show a lower cost of desulphuring. The use of this
technology could be competitive the gas extracted.

4.2 XERGY PROCESSING.

A new H2S removal technology has been developed by Xergy processing for
removing a S in a range of 50 Kg/d to 20 t/d. It is the range where the usual
desulphurisation system is quite expensive [3].
Is possible compare capex and opex of this technology with LO-CAT. The data of
field are showed in Tab 9.a. For this production of S (q=1,8 tS/d) we can compare
the cost for Lo-CAT from [3], the cost of Lo-CAT from our model and the cost of
Xergy method. The results are shown in Tab 9.b and its clear the convenience of
this new technology ( and the precision of our model whose results are similar to
costs reported in [3]).
Tab 9.a

Vin [Mnm3d]

0,28

[H2S]

0,5%

q [tS/y]

1,8

Tab 9.b

LO-CAT from [3]

LO-CAT Our model

Xergy method

Capex [M$]

2,6

2,7

Unitary Opex [$/Kg]

0,37-0,72

0,36

0,062-0,085

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Scuola Mattei 2002-2003

Some discussion of other technologies that have been developed to treat high
pressure sour gas are in [4]

4.3 HYDROGEN PRODUCTION

Because of the high cost of removing S for small-scale process, there is interest in
identifying alternative S recovery approaches. One of these is the production of
hydrogen (H2) from H2S, for which many experimental processes have been
devised. The H2 is a value in the petrolchemistry

and will be more and more

important in the future hydrogen economy.

The different processes are quite diverse, and many of them are very interesting.
A summary of the processes follows.
In the early 1980s, the I.V. Kurchatov Institute in Moscow began experiments to
convert H2S to hydrogen using microwave radiation. Within a short time they had
installed a large-scale pilot plant at a gas plant at Orenburg, Russia. Follow-up
work took place in North America at Argonne National Laboratory and in a joint
Canadian study (Alberta Energy/Shell Canada/Atomic Energy of Canada).
Several laboratories are working on electrolysis of H2S, either as a gas or as
liquefied H2S or as an aqueous solution. Major projects have been conducted at
Georgia Tech, CANMET, Texas A&M and elsewhere.
Some novel processes use electrical discharges. Again there are several variants.
Thus "hot" electric arcs or the cooler discharges from ozonizers can be used.
Other processes that are being looked at use thermal decomposition -- basically
strong heating. Alberta Sulphur Research Ltd. is piloting a thermal process in
which heat from a Claus reaction furnace is used as the source of energy. The
economics of thermal processes have been studied at the University of Calgary.
Ingenious and elaborate thermal cycles have been investigated. In most of these,
at least one step does not give good yields, and economic separation of the
products is an issue.
An oxidation-reduction cycle using anthraquinone derivatives is being pursued by
Marathon Oil. It is quite advanced and is heading for the pilot stage.

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Scuola Mattei 2002-2003

There are processes that use light energy. Some of these use the sun's thermal
energy, while others use photochemical principles. Research in the latter is
focused on finding better photo catalysts and on ways to obtain sulfur in a
salable form.
Considering the intensity of research in this field, a commercial H2S splitting
process could emerge soon. Such a process could be practiced anywhere there is
a source of H2S. However, transporting hydrogen is costly. Hydrogen should
preferably be consumed at the site. Therefore the most suitable locations would
be refineries or heavy oil upgraders, including the Alberta oil sands.
According to Cox (1998), using an efficient H2/H2S separation system, the
thermal decomposition of H2S is able to produce hydrogen at a cost approaching
that of the conventional SMR process. The analysis of Cox et al. showed that the
most economic route for hydrogen production by direct decomposition of H2S is
one in which CH4 is burned to supply the decomposition heat and unconverted
H2S is recycled until extinction. This scheme would produce H2 at a cost of about
$4.50/106 BTU (corrected to 1998 US dollars). This figure compares favorably
with $4.75/106 BTU (corrected to 1998 US dollars) for a Claus plant to treat the
same amount of H2S plus a conventional SMR plant to generate an equivalent
amount of H2 gas. In principal, this process can be integrated with a nonpolluting heat source (for example, solar) to eliminate emission of greenhouse
gases from the combustion furnace. Alternatively, part of the hydrogen gas
produced in the process can be rerouted and burned in the furnace as fuel
without any emission of greenhouse gases.
Fig.8

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Scuola Mattei 2002-2003

4.4 ELECTRICITY GENERATION FROM SOUR GAS

Peter Clark, professor of Chemistry at the university of Calgary and director of
research at Alberta Sulphur Research Ltd. (ASR), has recently launched an
innovative idea by declaring that sulphur can be consider as a source for
electricity production. He even goes so far as to say that by using sulphur energy,
it would be possible to supply 25% of the electricity required in the entire
Canadian province of Alberta.
Dr. Clark has recently revealed the results of his research; he shows that sulphur
can be used as a source of fuel to produce enough energy in the form of water
vapour to feed turbines that would produce electricity. What Dr. Clark is
proposing, and what has already been proven in the laboratory, is that the
reservoirs of sour gas can be used more profitably. As usual, after removal of the
methane, H2S and CO2 are brought into a pressurized chamber where they are
burned. The products stemming from this combustion are sulphur dioxide (SO2),
water vapour and the remainder of the CO2. The energy released from this
reaction in the form of water vapour is considerable, and can be used to drive
turbines to produce electricity: by way of comparison, coal combustion (the
primary source of electricity in Alberta) produces 8000 BTU/pound, whereas
hydrogen sulphide combustion produces 6000 BTU/pound. Moreover, the
resulting CO2 and SO2 will be redirected to the sour gas reservoir, where sulphur
dioxide reacts within the reservoir with H2S to yield liquid sulphur.
This means that a highly polluting substance such as SO2, is recovered in the
form of sulphur, and the CO2 is never released into the atmosphere but rather
kept in internal circulation. In addition, the liquid sulphur thus formed can also
be passed into a combustion chamber to form SO2 while releasing energy of 4500
BTU/pound. Once the H2S reserves are exhausted, the underground reservoir will
contain only liquid sulphur, to which the surplus of sulphur from tar sands
petroleum refineries can be added for safer storage. This sulphur reserve will
represent very little risk for the environment compared with the outside storage;
in addition, this buried sulphur can be available for future generations.
AN INTERESTING ASPECT OF THIS PROCESS IS THAT IS GENERATES
CONSIDERABLE ENERGY WITHOUT CO-PRODUCTION OF CO2, THUS IT IS OF

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Scuola Mattei 2002-2003

ADDITIONAL

INTEREST

IN

AN

ERA

OF

INCREASED

CONTROL

OVER

GREENHOUSE GAS EMISSIONS.

Although there are still important technological issues to cope with, the process
may not be very far from implementation: once the mixture of H2S/CO2 gases has
been burned to produce steam, the sulphur and carbon dioxides (mixed with
water vapour, and nitrogen and excess oxygen coming from the air used for the
combustion) are brought to a condenser and then to a stripper, where they are
separated from the condensed water. Well-known graphite lined vessels can be
employed for this step. After this, the SO2 is divided from the rest of the gases by
means of an absorber, and after the step of SO2 solvent regeneration it is
compressed and then injected
Down into the reservoir, at a pressure of about 3.000 12.000 psi and a
temperature greater than 90 C (depending on the reservoir conditions), the
following reaction takes place, which realized a reduction in volume and pressure:
2 H 2 S + SO 2 2 H 2 O + 3/8 S8
At this stage, the sulphur produced by the reaction will be subjected to a gravity
drainage and it migrates toward the bottom of the reservoir. It could be
questioned if the liquid sulphur can represent a risk to the productivity of the
field, because the reservoir can become plugged with sulphur; Clark and
colleagues reply that the produced sulphur cannot fill the pore structure of the
reservoir, due to the density increase of the product; moreover, 100 years of
experience available on movement of gas through liquid sulphur enable the
researchers to exclude this hypothesis.
Another interesting feature of this technology is the possibility of using it also to
produce energy from the combustion of solid sulphur which yields SO2 and heat
(used once again to generate water vapour); in this way, sulphur coming from
stockpiles or from new field production can be burned and than reinjected,
avoiding the great environmental problems of storing solid sulphur. The process
of burning solid sulphur is interesting also because it does not produce water
vapour in the reaction chamber, simplifying the design and the number of steps
of the plant.

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Scuola Mattei 2002-2003

In conclusion, as well as supplying a considerable amount of energy and

electrical potential, this new chemical technology is very ecological for it prevents
the emission of polluting gases such as SO2 and CO2. A number of additional
chemical engineers and others are joining Clarks team, and with the help of an
industrial partnership, they are beginning the erection of a test plant to be used
as a prototype for a first commercial plant in 2004.

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Scuola Mattei 2002-2003

CONCLUSION
Development of Kazakhstan field as Karachaganak and above all, Kashagan is a
challenge because of the very high percentage of H2S concentration and very high
reservoir pressure.
The high expected production rate of this field will give enormous quantities of S
that will have be removed from gas. The traditional technologies, as Claus process
seem to be too expensive relating to the problem of storing the solid sulphur. The
economical and environmental impacts could be affected the profitability of the
whole project.
Other technologies, the H2S re-injection above all, will be able to guarantee the
economic development of the fields where the problem of H2S is economically
relevant.

AKNOWLEDGMENTS
We would like to express our gratitude for the assistance

rendered by the

following persons Mr. Novelli, Mr. Chiaramonte and Mr. Lockhart.

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Scuola Mattei 2002-2003

APPENDIX A
The moles extracted are function of environmental pressure e temperature:

p0Vin
[1]
RT0
The concentration can be expressed as:
nng + nH 2 S =

nH 2 S
nH 2 S + nng

= [H2S ]

[2]

Substituting [2] in [1] we obtain:

nH 2 S =

p0
Vin [ H 2 S ] [3]
RT0

The mass of gas is:

mH 2 S = nH 2 S PM H 2 S [4]
The recovery factor of desulphuring plant is expressed as:

q
mH 2 S

Therefore the daily production of S can be expressed in function of volume of gas

extracted and the molar concentration of H2S:

q = PM H2S

p0
Vin [ H 2 S ] = Vin [ H 2 S ]
RT0

CONVERSION UNITS
1000 Nm3

6,2 boe

1 t of S= 714 Nm3
1 MBTU =293 KWh=27,2 Nm3 natural gas

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Scuola Mattei 2002-2003

REFERENCES
[1]

J.J. Ma et al - Acid Gas Treatment and Sulfur Recovey SRI consulting

Nov.1997
[2]

[Link], [Link]

- Il peso dello zolfo nella produzione del gas

naturale Tpoint 2/2001

[3]

[Link] et al - New H2S Removal technologies for 0.1 to 10 t/d S

available at address
[4]

[Link] et al Comparison of Technologies for removing Sulphur from

High-Pressure Natural Gas with Sulphur Throughputs between 0.1 and 30 Long
Tons/Day
[5] Enitecnologie Report H2S A growing economic challenge
[6]C. Leeuw TengizChevroil tackles its Caspian Business news November 6,
2002
[7] National Chemistry Week Internet Address
[8] [Link]-Producing with H2S in West Kazakhstan- Enitecnologie Report
H2S A growing economic challenge
[9] [Link]-H2S & ENI Caspian Region Development:- Enitecnologie Report
H2S A growing economic challenge
[10] Ali T-Raissi Technoeconomic Analysis of Area II Hydrogen Production-Part
1- Proceedings on the 2001 DOE Hydrogen Program Review

38