Positive NPV and attractive rate of return on investment: (re) Introduction to the ProSep proprietary product line

By Greg Hallahan, Ryan McPherson, Mahesh Konduru

(ProSep) Throughout history, pioneers and inventors, after spending countless hours developing an innovative product, have faced resistance in developing and communicating the benefits of their products to a diverse audience. The result, usually, is a delay in bringing the product to market, slow adoption by clients, or in some unfortunate instances, “death” of the product. Products in all industries have suffered from this resistance and continue to do so today.

As we enter into the second quarter of 2016, oil producers and oilfield service companies are under tremendous pressure to integrate efficient practices and to return to profitability.  Products that are capable of introducing immediate efficiencies, while achieving an attractive rate of return and positive net present value, can assist these companies in returning to profitability now, while providing lasting gains when market forces and volatility subside.

ProSep has, in its 11 year history, provided best in class products to the Oil and Gas Upstream segment with specific focus on process separation solutions. Process separation solutions refers to the upstream business where the fluids, in gas and liquid phase, produced from the well need to be “cleaned up” before transported in pipelines, trucks, stored or re-used.

Technologies for separating liquids (oil and water) and gas (natural gas) have existed for decades with different degrees of innovation added over time. The Oil and Gas industry is notorious for slow adoption of new technology, where risk-aversion with significant amount of capital investment and profits at stake is common, especially concerning technology switches. Additionally, convincing multiple parties within the decision making group, from operators and engineering managers to procurement managers and executives, to switch to a new technology is difficult when each member of the group has a different role and responsibility to the company. This often makes it hard to gain consensus to switch technologies from conventional to the new and innovative.

ProSep has solved this technology switch difficulty with its proven proprietary product line of mixers and produced water treatment. ProSep provides a rigorous techno-economic analysis that articulates concisely the Net Present Value (NPV) and Internal Rate of Return (IRR) for its mixers and produced water products to every client. This analysis will allow clients to vary assumptions specific to their application, allowing NPV and IRR calculations over a range that meets the client’s requirements.

ProSep’s proprietary products include:

ProMix

This mechanical mixing device replaces injection quills and static mixers, in order to reduce demulsifier chemical usage by 20-50%. In oil separation applications in the upstream segment, ProMix can generate greater than 50% IRR and significantly positive NPV, often with a return on investment in less than a year. Major clients in the North Sea, Middle East, and Latin America has purchased and deployed ProMix products. ProMix can be effectively deployed in the downstream segment as well where clients are currently spending significant amounts of capital on chemical usage.

A ProMix was recently proposed to an operator in the Middle East region with the following specifications and metrics:

Oil Flow Rate (BOPD) 750,000
Reduction in Demulsifier Injected due to ProMix 25%
Water Cut (%) 36%
ProMix Indicative Price ($) 1,000,000
Annual Savings of Demulsifier ($) 960,000
NPV 10 years (12% Discount rate) $4.1 Million
IRR 72%
Increase in Earnings ($) $9.6 Million

ProSalt

The removal and reduction of salt from oil is not only a statutory mandate, but also required for transportation and refining. In most oil and gas separation processes, lowering salt content requires a significant amount of a precious resource: fresh water. Depending on the geography of the site, the value of fresh water can vary from expensive to priceless. Pipeline operators and refiners also place value on crude with low salt content. ProSalt lowers fresh water usage ranging from a 20% to 60% reduction as compared to conventional mixing systems, and often saves customers millions of gallons per year in fresh water injection for desalting vessels. The IRR on a ProSalt ranges from 15-30% on water and energy savings alone with a materially positive NPV depending on the specific application.

ProSalt was awarded the Offshore Technology Conference (OTC) “2009 Spotlight on New Technology Award” recognizing innovative technologies significantly impacting offshore exploration and production. ProSep has successfully deployed numerous ProSalt units with Statoil, Saudi Aramco, and PEMEX.

ProDry

Processing of natural gas at the production or collection site involves removal of water (dehydration). The presence of vapor phase water in natural gas restricts the amount that can be processed and transported. In addition, capital expenditure is required in the form of tri-ethylene-glycol (TEG) systems to remove water from natural gas. ProDry is ideal for debottlenecking retrofit applications allowing for 15-25% of additional natural gas to be processed and sold, depending on specific conditions; ProDry also reduces the capital expenditure needed to upgrade existing TEG systems to meet additional production capacity. An IRR of 25% with significantly positive NPV can be achieved with the deployment of a ProDry mixer.

ProBlend

ProBlend was developed to combine two crude process streams of differing density/viscosity to meet a required density (API) or viscosity. Based on ProSep’s proprietary mixer technology ProMix, ProBlend provides even pre-distribution of heavy or high viscosity oil into light or low viscosity oil. This blend of crudes is further mixed in ProSep’s modulating mixer design, creating a homogenous blend that is significantly easier to transport than heavy, viscous crude, and simpler to treat in dehydrating and desalting applications. In South America and Canada transportation of heavy crude is expensive. In Venezuela’s Oronoco region and Colombia’s Llanos basin, naptha is sometimes injected to facilitate the transportation of the heavier crude through pipeline. Deploying a ProBlend in these instances would lower transportation cost or naptha (chemical) usage by 10-40% thus driving a positive NPV and high IRR to operators. ProSep has successfully deployed ProBlend units with PEMEX.

Osorb

ProSep’s proprietary media Osorb has unique capabilities, including the abilities to be regenerated and selectively remove water soluble organics. Because of these capabilities, Osorb has availed itself to a multitude of specialized applications, including removal of BTEX from produced water treatment and oil removal from EOR water streams. Osorb has shown the capability to provide IRR of 35% and positive NPV for a specific application in the Gulf of Mexico. In addition, a 750 BPD unit is currently in operation in the Middle East.

This article was published in the World Oil “Thriving In The Downturn” Newsletter, dated April 19, 2016.

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