Understanding Oil and Gas Business

MDSO-801D
Course Design
Advisory Council
Chairman
Mr. Sharad Mehra
Members
Dr. S J Chopra Dr. Deependra Kumar Jha Dr. Veena Dutta
Chancellor Vice Chancellor Registrar
Dr. Kamal Bansal Ms. Deepa Verma Mr. Ashok Sahu

Dean-Academics Sr. Director-IA Head Online Business
SLM Development Team
Dr. Raju Ganesh Sunder Dr. Rajesh Gupta

Professor & Head-Academic Unit Sr. Associate Professor
Mr. Tarun Batra Mr. Rahul Sharma Mr. Shantanu Trivedi

Asst. Director-Product Development Lecturer Lecturer
Author
Dr. Raju Ganesh Sunder, Mr. Rahul Sharma
Course Code: MDSO-801D

Course Name: Understanding Oil and Gas Business
Version: July 2019
Contents
Block I
Unit 1 Basic Concepts .............................................................................................................03
Unit 2 Crude Oil and Natural Gas Concepts ........................................................................15
Unit 3 The Macro-system ........................................................................................................35
Unit 4 The Indian Perspective .................................................................................................49
Unit 5 Case Study .....................................................................................................................67
Block II
Unit 6 The Exploration of Oil .................................................................................................75
Unit 7 Production Methods .....................................................................................................91
Unit 8 Onshore Oilfield Processing .......................................................................................109
Unit 9 Offshore Oilfield Processing ......................................................................................125
Unit 10 Case Study

....................................................................................................................139
Block III
Unit 11 Gas Processing

......................................................................................................................145
Unit 12 Liquefied Natural Gas (LNG) ....................................................................................161
Unit 13 Petroleum Refining ....................................................................................................175
Unit 14 Refinery Requirements ..............................................................................................189
Unit 15 Case Study ...................................................................................................................205
Block IV
Unit 16 Distillation in Refineries ...........................................................................................211
Unit 17 Petrochemical Industry ............................................................................................225
Unit 18 Production of Petrochemicals ....................................................................................241
Unit 19 Transportation of Oil, Gas and Products: Pipelines .................................................263
Unit 20 Case Study...................................................................................................................279

Block V
Unit 21 Transportation of Oil, Gas and Products: Other Modes .........................................285
Unit 22 Health, Safety and Environment ..............................................................................303
Unit 23 IT Applications in Hydrocarbon Industry .................................................................323
Unit 24 Economics and Technology Trends ............................................................................341
Unit 25 Case Study...................................................................................................................357

Block I
2
Unit 1
Notes
Basic Concepts
Objectives
After completing this unit, students will be aware of the following topics:
 Concept of Petroleum, its Constituents and their Significance
 Common Concepts, Definitions and Terminologies used with Respect
to Oil and Gas
 Units Specifically used in Oil and Gas Industry
Introduction
Oil industry is perhaps the most exciting industry in the history
of civilisation. Although the history of oil traces back to seepages
of oil as early as 3000 BC, the real thrill of it started with the oil
boom in the USA. When Rockefeller was asked to tell very briefly
how people get rich, he replied, ‘Some people find oil, some don’t’.
It’s amazing how much oil and gas has penetrated into our lives
today. The toothbrush we use to start the day, the suit we wear,
the fuel we use in our cars to drive to office, the car interiors, back
home with cozy furniture, tapestry and mattress of the bed we
sleep on; all are petrochemicals i.e. chemicals from petroleum.
Oil business has been responsible for prosperity, war, intrigues and
adventure. Search of oil and gas leads us to some of the most exotic
forests, deserts and ocean. Perhaps some of the most beautiful
man-made sights in the world are offshore platform in deep ocean,
array of offshore rigs in a remote desert or jungle or an illuminated
petrochemical complex at night.
Let us understand the importance of oil and gas industry by looking

at its share in the energy supply to the world. More than 60% of
the energy needed in the world is provided by oil and gas. And it
is not really as expensive as it sounds. To understand oil and gas
business, one needs to understand a whole spectrum of activities
from oil well to petrochemicals. It is also important to understand
the trend and future of the industry in terms of technology,
economics and pricing of energy resources. Energy price is very
important for the economy of any country. As stated earlier, oil
and gas provide over sixty percent of the energy requirement of
Unit 1: Basic Concepts
3
the world. Oil had been the dominant component of the mix. Oil
Notes
prices have been controlled from time to time to a high level by the
Petroleum Exporting Countries (OPEC). It is cleaner, cheaper and
new discoveries and reserves of gas field are coming up in many
parts of the world including India. Very often the question comes
up how long the hydrocarbon resources (oil and gas) will last. Many
predict oil and gas will start depleting in another 20 to 30 years.
But the world is keeping on adding new hydrocarbon finds and

developing technology to recover more hydrocarbons from existing
oil and gas fields. Also, major R&D work is going on to find how
to exploit huge reserves of ‘Methane Hydrates’ i.e. an unstable
compound of water and methane, lying untapped deep below the
ocean in many parts of the world including coastal areas of India.
It is a fact that although the oil and gas industry will continue
to dominate for several decades from now, at some point of time
other forms of energy will take over. Oil and gas industry generate
wealth and a part of the wealth is being put into R&D to innovate
for the future. We shall cover the topic in a later section on future
trends. Let us not call the industry just oil and gas industry; it is
energy industry.
What is Petroleum?
Petroleum is a word derived from the Latin words Petra (rock)
and Oleum (oil). It essentially comprises of naturally occurring
hydrocarbons i.e. compounds made of carbon and hydrogen atoms.
These hydrocarbons are trapped below the surface of the earth, in
porous rocks, in the form of oil and gas.
From where did the hydrocarbons come? There are various theories.
The most accepted theory is the organic theory.
Hydrocarbons came from remains of the bodies of pre-historic land-

based animals, marine organisms (plankton) and vegetation, which
were washed away and buried below the earth during upheavals on
the earth’s surface millions of years ago. In the course of time the
buried organic matters decomposed and the carbon and hydrogen
present in these reacted under heat and pressure to form various
compounds, generally hydrocarbons.
The hydrocarbons got trapped in the porous rocks and were covered
by hard sedimentary rocks that formed over it. They acted as ‘cap’
or seal to prevent hydrocarbons from escaping.
Understanding Oil and Gas Business
4
As explained later, carbon and hydrogen atoms can join together
Notes
to form molecules of various sizes and structures. Hydrocarbons
could be a small molecule with combination of one or a few carbon
atoms with hydrogen (e.g. Methane; CH4, Ethane; C2H6) or it could
be very large molecule by combination of dozens of carbons and
hydrogen atoms (e.g. Wax - C20H42) or even thousands of carbons
and hydrogen atoms (e.g. Polythene).
Petroleum is essentially composed of hydrocarbons with some other

impurities. The words ‘petroleum’, ‘oil and gas’ and ‘hydrocarbon’
are all used synonymously in the oil and gas industry. Hydrocarbons
in petroleum could be in gaseous, liquid or solid form depending on
the type and size of hydrocarbon molecule:
• It can be in gaseous form as natural gas, which can be associated

with oil in an oil field or found free of oil in a gas field.
• It can be in liquid form as crude oil (dark and viscous), or

condensate (clear and volatile like motor gasoline).
• The solid and semi-solid forms of petroleum are called asphalt

and tar.
Petroleum as a general term is used for all three mentioned above.
Table 1: Light and Heavy Hydrocarbon Molecules

Name Formula Phase
Methane CH4 Gas
Hexane C6H14 Liquid
Octane C8H18 Liquid
Wax C20H42 Solid
Check your Progress
State whether the following statements are true or false:
1. Hydrocarbons in petroleum could be in gaseous, liquid or

solid form depending on the type and size of hydrocarbon
molecule.
2. Petroleum is a word derived from the Latin words Petra

and Oleum.
Unit 1: Petrochemicals: An Overview
5
Reservoir, Well and Well Fluid Notes
Through the burial and decomposition of organic material, huge
number of hydrocarbons are formed below the earth’s surface.
Movements and convulsions below the earth’s surface resulted in
different types of geological formations, where the hydrocarbons
are trapped. In these formations, the hydrocarbons are contained
by porous rocks known as source rock, covered with strata of hard
sedimentary rocks known as cap rock which settled over them.
When huge quantity of recoverable hydrocarbon is trapped in rock

formations below the earth, it is called Reservoir. Figure 1 depicts
a typical formation of a reservoir. The surface on earth above the
reservoir is called oilfield or gas field or condensate field depending
on what it produces.
Figure 1: Hydrocarbon Formation
It must be noted that the reservoir in an oil field is not like a pool
of liquid or a container filled with gas. It is oil or gas trapped in
pores of porous sedimentary rocks, covered by impervious cap rock.
To produce oil from the reservoir, wells are drilled through the
surface of the earth. A well is then perforated at right location from
where the oil or gas enters the well pipe and rushes out because of
high pressure.
What is Well Fluid?

The fluid that comes out of the well in an oilfield or gas field is
called well fluid. Well fluid is a mixture of crude oil, natural gas
and saline water along with small amounts of sand and sludge.
The water is called formation water or produced water.
6
If the crude oil had been just made of hydrocarbons, processing to
Notes
get the final products would have been easy and at low cost. But
a number of undesirable components come out with the well fluid,
which increases the processing blocks and processing cost.
Other components like sulfur compounds, carbon dioxide, nitrogen,

traces of metals are also present. Their removal constitutes part
of processing. Proportion of oil, water and gas may vary widely
from one field to other. It changes substantially with time during
production. Normally, well fluid comes out on its own pressure,
which depletes with time. Artificial methods of recovery are used
in later stages of production.
Check your Progress
1. The fluid that comes out of the well in an oilfield or gas

field is called ____________________
2. When huge quantity of recoverable hydrocarbon is

trapped in rock formations below the earth, it is called
____________________
Crude Oil and Natural Gas

The first processing step in an oilfield is separation between crude
oil, natural gas and produced water.
What is Crude Oil?

Crude oil is a mixture of about 500 organic chemicals, predominantly
hydrocarbons (molecules made of carbon and hydrogen). It is
recovered from underground reservoirs, normally 1000 – 5000
meters down the earth. Crude oil can be of wide variety and
characteristics. It could be very fluid, very viscous or semisolid.
The colour could be black, dark brown, amber or light brown. It is
also called Petroleum.
What is Natural Gas?

Natural gas is a mixture of the lightest hydrocarbons like methane,
ethane, propane and butane. It also contains water to its saturation
limit. It may also contain hydrogen sulphide (H2S), carbon dioxide
(CO2), nitrogen (N2) and occasionally small amounts of helium (He).
When natural gas comes out of the well along with crude oil, it is
called associated gas. Associated gas is produced along with crude
Unit 1: Basic Concepts
7
in a field which is essentially an oil producing field. When the well
Notes
produces mainly gas with very little liquids, it is called free gas.
Free gas production can be shut when we do not want it. When acid
gases like CO2 and H2S are present in substantial quantity, the gas
is called sour gas. Otherwise it is called sweet gas.
Check your Progress
1. ______________ is also called Petroleum.
2. When natural gas comes out of the well along with crude
oil, it is called ________________
Units Specifically Used in Oil and Gas Industry

Oil industry uses certain specific units for production rates and
volumes which will be bused frequently in our text. Due to past
history of oil and gas industry which is predominantly the history
of exploitation of hydrocarbon resources by the companies of
American origin, the American units are more often used in the
industry rather than Metric Units. Here are some important units
commonly used with which one must get familiar:
• Crude-oil volume is usually measured in barrels.
• One barrel holds 42 gallons (159 litre).
• Weight or mass of crude in India is in metric tons (tonne).
• A barrel of average crude oil weighs 0.150 ton, as a thumb rule.

It must be remembered that it depends on the density of the
crude oil.
• Million Barrels of Oil Equivalent (MBOE) means amount of

gas or any other fuel whose calorific value or heating value is
equivalent of one million barrels of crude oil.
• Oil production capacity or refinery capacity are often expressed

in Barrels per Day (BPD) or Barrels per Standard Day (BPSD).
Roughly 20,000 BPSD is equivalent to 1 Million Tons per year
of crude, taking an average density of crude. [Note: It depends
on density of crude oil.]
Some conversion figures used in the oil industry are given in

Table 2.
Understanding Petrochemical Business
8
Table 2: Commonly Used Measurement Units in Petroleum Industry
Notes
Check your Progress
1. Crude oil volume is usually measured in _____________
2. Weight or mass of crude in India is in metric _________
Summary
Petroleum is a saying determined from the Latin statements Petra
(rock) and Oleum (oil). It basically includes commonly happening
hydrocarbons i.e. fuses made of carbon and hydrogen particles. The
aforementioned hydrocarbons are trapped beneath the surface of
the earth, in permeable shakes, in the manifestation of oil and gas.
Carbon and hydrogen molecules can join together to shape particles

of different sizes and structures. Hydrocarbons could be a modest
atom with consolidation of one or a couple of carbon particles with
hydrogen (e.g. Methane CH4, Ethane -C2H6). On the other hand, it
could be extremely huge atom by fusion of portions of carbon and
hydrogen iotas (e.g. Wax - C20H42) or even many carbon and hydrogen
particles (e.g. Polythene). Petroleum is made out of hydrocarbons
with some different pollution. The statements 'petroleum', 'oil and
gas' and 'hydrocarbon' are all utilised synonymously as a part of
the oil and gas industry.
Questions for Discussion

1. Write a short note on Crude oil.
Unit 1: Petrochemicals: An Overview
9
2. Explain the formation of Petroleum.
Notes
3. Define Natural Gas. State its various forms.
4. What are the units most commonly used in the Oil and Gas
industry?
10
Unit 2
Notes
Crude Oil and Natural Gas

Concepts
Objectives
 Hydrocarbons
 Composition of Crude Oil
 Products from Crude Oil
Introduction
Crude oil is a dark oil consisting mainly of hydrocarbons. It is a
mixture of about 500 organic chemicals, mostly hydrocarbons,
which are molecules made of carbon and hydrogen. It is recovered
from underground reservoirs very deep in the Earth’s crust. Crude
oil can be very fluid, very viscous or semisolid and the colour could
be black, dark brown, amber or light brown. Crude oil is also
popularly known as Petroleum.
Natural gas is a fossil fuel in the gaseous state; used for cooking
and heating homes and is a mixture of hydrocarbons. It also
contains water, hydrogen sulphide, carbon dioxide, nitrogen and
also small amounts of helium. The hydrocarbons in Natural gas
can be methane, ethane, propane and butane.
Various Forms of Natural Gas

There often exists a lack of understanding regarding the various
terminologies or nomenclature used in the industry in describing
components or forms of natural gas. The most commonly used ones
are NGL, LPG, LNG and CNG. Let us understand what are these
and how do they differ from natural gas.
NGL: During production or transportation of gas, the heavy

components such as pentane or hexane, condense due to natural
cooling and separate out as liquids. This is called NGL (Natural
Gas Liquids). As the name suggests, this is not really a gaseous
component, but volatile liquid.
Unit 2: Crude Oil and Natural Gas Concepts
11
LPG: The propane/butane component of the natural gas is liquefied
Notes
under moderate pressures and is supplied as cooking gas fuel. This
is called LPG (Liquefied Petroleum Gas).
LNG: Natural gas in bulk is liquefied under very low (cryogenic)

temperature for transportation in large quantities by marine
tankers. This is bulk of the natural gas in liquefied form and is
re-vaporized after receiving it at its destination from tankers, to
be used as natural gas. The objective of converting the gas to LNG
is transportation in large quantities or export by marine tankers.
This is called LNG (Liquefied Natural Gas).
CNG: Natural gas is compressed to high pressures for use as

automotive fuel or for transportation in small quantities. This is
natural gas in highly compressed form but not liquefied. It is called
CNG (Compressed Natural Gas).
Check your Progress
1. ___________________ is formed when natural gas is

compressed to high pressures for use as automotive fuel
or for transportation in small quantities.
2. ____________________ is Natural gas in bulk is liquefied

under very low temperature for transportation in large
quantities by marine tankers.
Elementary Concepts on Hydrocarbons

Now that we know crude oil is made of around 500 components,
mainly hydrocarbons and natural gas is mainly light hydrocarbons,
it becomes important to understand a little basic about hydrocarbon
molecules.
The whole petroleum and petrochemical industry revolves around:
• Starting with the hydrocarbon molecules as produced naturally

from the well.
• Rebuilding them into valuable products by various types of

processing.
What is Hydrocarbon?
Hydrocarbons are compounds made of carbon and hydrogen. The
hydrocarbon molecules are formed by:
12
• Bonding of hydrogen atoms to carbon atoms.
Notes
• Bonding of a number of carbon atoms to form chain or cycle or
a combination of chain and cycle.
• The number of carbon atoms bonded together can be a few or

many, in various combinations, creating numerous chemicals.
• The bonding of carbon atoms could be in the form of a straight

chain, branched chain or cyclic manner.
Typical hydrocarbon structures are depicted in Figure 1.
Figure 1: Hydrocarbon Structure
The phase (solid, liquid or gas) of the hydrocarbon depends on the

number of carbon atoms joined together in a chain, for example,
CH4 (Methane): Gas C6H6
Benzene: Liquid C20H42
Wax: Solid
Crude oil is made of a mixture of more than 500 components,

mainly Hydrocarbons, which are the desired components. Crude
oil contains from light components as dissolved gases (LPG), light
liquids (Petrol, diesel) to heavy stock like wax, tar and resins. The
more carbon atoms a hydrocarbon molecule has, the ‘heavier’ it
is the higher is its molecular weight and the higher is its boiling
point.
Check your Progress
1. Hydrocarbons are compounds made of _______________
2. The bonding of carbon atoms could be in the form of a

straight chain, _______________ or cyclic manner.
13
Composition of Crude Oil Notes
Crude oil is predominantly made of hydrocarbons. It is composed of
three main hydrocarbon groups:
• Paraffins
• Naphthenes
• Aromatics
It also contains unstable hydrocarbons called olefin. Paraffins are

straight chain compounds, chemically stable. Lighter ones (CH4,
C2H6) are gas. Heavier molecules are liquid (oil) or solid (wax).
Naphthenes consist of carbon rings, with/without side chains.
Saturated with hydrogen, naphthenes are also chemically stable.
Lighter naphthenes are liquids and heavier ones could be solid.
Aromatics are compounds having a ring of six carbon atoms with

alternating double and single bonds and six hydrogen atoms. They
are relatively unstable. Olefins are double bonded hydrocarbon
chains, normally produced during high temperature processing of
petroleum. Olefins are unstable and polymerise easily i.e. a large
number of olefins can combine together easily to form large gummy
or plastic molecules.
Figure 2: Types of hydrocarbons

14
Check your Progress
Notes
1. ________ are straight chain compounds, chemically stable.
2. _________________ are double bonded hydrocarbon chains,

normally produced during high temperature processing of
petroleum.
Some Important Concepts on Crude Oil

Carbon Numbers
The hydrocarbons are often referred in terms of number of carbon
atoms rather than whole formula.
Example:
C1 = Methane
C4 = Mixture of Butane and hydrocarbons with 4 carbon atoms
C7 = Mixture of all hydrocarbons with 7 carbon atoms.
For further clarity let us put down some of the paraffin hydrocarbons
the symbol (-) indicating carbon to carbon bonds:
Methane CH4CH4
Ethane C2H6CH3 - CH3
Propane C3 H8CH3 CH2 CH3
Butane C4 H10CH3 - CH2-CH2-CH3
(normal butane or n-butane)
Butane structure can also be branched chain type as given below:
CH3-CH-CH3
|
CH3
(Isobutane or i-butane)
Both the structures of butane have same number of carbon atoms

and same number of hydrogen atoms i.e. C4H10. The only difference
is how the carbon atoms are bonded with each other. This makes
them different chemical entities but with very similar and close
physical properties like boiling point and vapour pressure. The
branched chain hydrocarbons of same carbon numbers, same
15
number of hydrogen atoms and same chemical formula are called
Notes
isomers.
Now let us look at Pentane.
Pentane C5H12 CH3 - CH2 - CH2 - CH2 - CH3

(n-pentane)
Pentane can have quite a few isomers:
CH3-CH- H2-CH3 CH3 - CH - CH3

| | |
CH3 CH2 CH3
Thus, one can have more and more isomers as the number of carbon
atoms in the chain increases.
In addition to the numerous isomers, there are other types

of hydrocarbons like olefins (double bonded or triple bonded
hydrocarbons). C5 and higher hydrocarbons can have cyclic structures
(naphthenes and aromatics) and there could be molecules with
combination of cyclic and straight chain hydrocarbons.
For example, C6 hydrocarbon can be compounds of:
• Normal paraffinic chain structure (e.g. normal hexane)
• Isomers (isohexanes)
• Olefinic structures or structures with double bond (hexanes)
• Cyclic structure (benzene)
Thus, just saying C6 means a number of hydrocarbons with six

carbon atoms put together in various forms.
That explains:
• How innumerable varieties of hydrocarbon molecules are

possible.
• How with same number of carbon atoms, say C8, numerous

hydrocarbon compounds are possible.
Higher the number of carbon atoms, more numerous is the possible

hydrocarbon compounds.
Classification of Crude Oil

Various crude oils are often referred by their API Gravity. API
Gravity is expressed as (141.5/ Sp. Gravity - 131.5). As specific
16
gravity is in the denominator, API Gravity is higher for lighter
Notes
crude and lower for heavier crude.
A comparative idea of this gravity unit can be obtained by

comparison with water:
Water : 10 API
Typical API Gravity figures for crude oil are:
Mumbai High Crude : 40 API - Light Crude
Arabian Crude : 34 API - Medium Crude
Venezuelan Crude : 15 API - Heavy Crude
There could be sub-categorisation as Medium Heavy or Light

Medium.
Another common classification is based on Characterisation Factor,

which depends on API Gravity and Boiling Point.
The crude oils are also classified in terms of chemical nature, for
example:
• Paraffinic base
• Asphaltic base
• Intermediate base
• Naphthenic base
Crude oils for which the residue after distillation contains paraffin
wax is called paraffinic. If the residue contains asphalt, it is called
asphaltic base and so on.
Refinery processing scheme and product yields depend on type of

crude in terms of chemical nature and gravity. It also indicates the
type of product it can yield.
As typical example:
• Paraffinic base crude does not yield good bitumen (road tar)
and is not good for lubricating oil manufacture. But it is good
for diesel
• Light crude contains more of gasoline
• Medium crude is good for diesel production

17
• Heavy crude may give better bitumen
Notes
• Naphthenic crudes are good for lubricating oil
Cut or Fraction
Crude Oil and its products are mixtures of several components.
Each component has a boiling point. It is interesting to examine
what would be the boiling point of mixture of several liquids.
Thus, mixtures do not have a single boiling point; it has a boiling

range from the initial boiling point to the final boiling point.
Liquid mixtures are identified with their boiling range. Crude oil
being a mixture, has a boiling range. Each product like gasoline or
kerosene is also a mixture and has a boiling range.
Cuts, Fractions and Carbon Numbers

Crude oil is a mixture of over 500 components. It has a boiling
range of around 40-600°C. Each product from Crude oil is also
mixture of several components (hydrocarbons). The hydrocarbons
range from C1 to C65 in terms of carbon numbers.
Product of a particular boiling range taken out of crude is defined

as cut or fractions. The products are identified as cuts from crude
of certain boiling ranges and carbon numbers.
Table 1: Petroleum Product Cuts and Carbon Numbers

Product / Cut Boiling Range Carbon Number
Natural Gas <20°C C1 - C4
Gasoline 40 - 200°C C5 - C10
Kerosene 180 – 250°C C10 - C15
Diesel (Gas Oil) 240 – 350°C C14 - C20
Jet Fuel (ATF) 170 - 240°C C10 - C15
Lube Oil 350 - 450°C C20 - C30
Bitumen/Tar 450°C+ C30 ++
Petroleum Products
Crude oil (Oil) and natural gas (Gas) mixed along with water, comes
out of the well as well fluid. Crude oil and natural gas together can
be broadly referred as petroleum. Petroleum is just a raw material.
Let us see what products we get from oil and gas that comes out
from well head.
Well Head to Energy and Petrochemicals

There are two distinct uses of well head oil and natural gas- as fuel
18
and as high value products. Primary use of the petroleum products
Notes
in the early days of its exploration has been as fuel. But later
with the development of petrochemical area (plastics, fibres, etc.),
emphasis has shifted to greater valorisation of the raw material.
Let us look at the table below to understand this.
Table 2: Petroleum as Fuel and as Value Products

Fuel and Products Calorific Value (Kcal/Kg) Price USDollars/Ton
Coal 6,500 80
Crude Oil 10,400 150
Fuel Oil 10,000 120
Motor Gasoline 11,000 180
Polythene Not fuel 500
Polystyrene Not fuel 550
The high calorific value of the petroleum products, its low cost in
the past and its suitability for use as relatively clean fuel created
incentive to consume as fuel. But in the current economic scenario,
valorisation to higher value products has become integral part of
oil and gas industry. It is important to note that besides producing
fuel and automotive products like gasoline or diesel, both crude oil
and natural gas provide feed stock for petrochemicals. Feed stocks
are component of crude oil and natural gas that are converted
into high value petrochemical products like polythene, polyester,
synthetic rubber and synthetic fibre, etc. It is apparent from the
table above that there is substantial valorisation once the oil or gas
is converted to petrochemicals. The macro-system from well head
to Petrochemicals has been dealt in detail in the next section. For
an initial understanding of the petroleum products let us have a
look at the simple block diagram given in Figure 3.
Figure 3: Petroleum Utilisation Blocks
The various blocks in overall system are:
• Well fluid is processed at the oilfield first. Oil and gas are
19
separated, made transportable and dispatched to the Refinery
Notes
and Gas Processing Facility, respectively.
• Refinery produces products like petrol, diesel oil, lubricating

oil etc. It also produces feed stock (Naphtha) for petrochemical
(plastic, fibre, etc.) manufacture.
• Gas Processing Facility purifies the gas from undesirable

components and separates feedstock for petrochemical
production.
• Petrochemical feed stocks from Gas Processing or Refinery or

both are sent to a Petrochemical Complex for production of
petrochemical.
• The balance gas is used as fuel for power generation or as

industrial fuel.
Each individual block in the above diagram could be a separate

company. And each of these blocks could be located far away from
each other in the same or different countries. This makes the oil
and gas industry a real global industry.
Some important terms often used in oil and gas industry with
respect to the block diagram:
• Offshore: Oil or gas field situated in the sea/ocean.
• Onshore: Land based oil or gas field.
• Upstream: The blocks covering reservoir, production,

processing and transportation of oil and gas is referred as
upstream blocks.
• Downstream: Gas Processing, Refinery and Petrochemical

Facilities are referred as downstream blocks.
Products from Natural Gas

The natural gas is made mainly of the four lightest hydrocarbons
i.e. C1 (Methane), C2 (Ethane), C3 (Propane) and C4 (Butane). As
gas separates out of the crude oil, it pulls out a little bit of heavier
hydrocarbons like C5, C6, etc.
Table 3 shows the typical composition of gas and use of various

components towards high value product.
20
Table 3: Gas Composition and Utilisation
Notes
Component Composition Utilisation
Volume %
Methane(C1) 50-96 Fuel,Petrochemical feedstock,
powergeneration
Ethane (C2) 2-15 Petrochemical feedstock
Propane (C3) 1-12 Petrochemicalfeedstock, LPG
Butane (C4) 0.5-3 Petrochemicalfeedstock, LPG
Heavies (C5+) 0.1-1 Refinery blendingstock,
(NGL) petrochemicalfeedstock
Hydrogen Sulfide 0-15 Toxic, corrosive and undesirable
(H2S) component
Carbon Dioxide 0-30 No fuel value, corrosive,
(CO 2) undesirable component
Nitrogen 0-30 No fuel value, corrosive,
undesirable component
Water Saturated Undesirable component
Total 100
The points to note here are:
• There is a wide range of gas composition, varying from field to

field and well to well.
• Only consistent trend is the reducing pattern of the hydrocarbon

constituents from the lightest to the heavier ones
• e.g. methane followed by ethane and heavier hydrocarbons.
• Utilisation of gas as fuel is the easiest but lowest in the value

chain.
• Utilisation of gas to make petrochemicals is the highest in the

value chain.
Hence very often the components of the gas are separated by gas
processing to be used for manufacture of petrochemicals. While
Table 4 gives a range for gas composition; typical gas composition
is given in Table 3.
Table 4: Typical Gas Composition
Component Methane rich Associated gas Sour gas Gas with

(Volume%) Sweet Gas (mildly sour) high N2
Methane (C1) 94.5 76.5 71.5 62.5
Ethane (C2) 2.8 12.2 10.2 4.2
Propane (C3) 1.0 6.5 5.7 2.5
Butane (C4) 0.2 1.8 1.0 0.5
Contd...
21
Heavies (C5+) Traces 1.0 0.5 0.1
Notes
Hydrogen Sulfide Nil Nil 3.5 Nil
Carbon Dioxide 1.5 2.0 7.6 5.4
Nitrogen Nil 300 ppm Nil 24.8
Water Saturated Saturated Saturated Saturated
Total 100.0 100.0 100.0 100.0
Each of these gases will have different processing techniques and

problems in the Gas Processing Plant. These will be dealt with
later. But let us look at the obvious:
• The methane rich gas will have very little feedstock for
petrochemicals.
• The associated gas is rich in petrochemical feedstock and LPG.
• The sour gas will need treatment to remove highly toxic and
corrosive Hydrogen Sulfide.
• The nitrogen rich gas will have low calorific value.
Check your Progress
1. _______________________ Facility purifies the gas from

undesirable components and separates feedstock for
petrochemical production.
2. The ______________ rich gas will have low calorific value.
Products from Crude Oil

The five hundred odd components mostly hydrocarbon ranging
from C1 to C65 gives wider range of products. Each of the products
by itself is a composite of numerous hydrocarbons. The crude oil is
processed in the refinery to separate the base stock (raw products)
by distillation into cuts. Then the various product base stocks are
processed and treated to meet specifications.
22
Table 5: Products from Crude Oil Refining
Notes
The important petroleum products produced in bulk in a refinery

are presented in Table 5. Each of the products has to meet certain
performance specifications. Only one typical specification is stated
in the table for a preliminary understanding of its significance
with respect to the usage. It must be remembered that besides
performance specifications, there are strict specifications to meet
environment and emission norms. These are related to polluting
components like sulfur, aromatics, etc.
Petrochemical Products/Petrochemicals
What are petrochemicals? Petrochemicals are usually plastic
products and chemicals that are derived from petroleum and
natural gas and are made on a large scale (approximately >10,000
tons per annum upwards). As indicated in the earlier sections,
certain components from gas processing plants and refinery are
used as feedstock for manufacture of petrochemicals (e.g. ethane,
propane, naphtha).
Petroleum products from refinery and natural gas, supply over

50% of the feedstock for the entire chemical industry and more
than 50% of organic chemicals.
As you can see in the next table, petrochemical products have

permeated into every facet of our lives. A vast majority of them are
polymers, whose molecules are tailored by reaction process to suit
specific characteristics or properties.
23
Table 6: Petrochemicals
Notes
Check your Progress
1. ________________ are usually plastic products and

chemicals that are derived from petroleum and natural
gas and are made on a large scale.
2. The important petroleum products are produced in bulk

in a _______________
Summary
Raw petroleum might be of wide mixed bag and aspects. It could
be exceptionally liquid, extremely thick or semisolid. The colour
could be dark, dim tan, golden or light tan. It is additionally called
Petroleum. Natural gas is a naturally occurring hydrocarbon gas
mixture consisting primarily of methane, but commonly including
varying amounts of other hydrocarbons, carbon dioxide, nitrogen
and hydrogen sulfide. Natural gas is an energy source often used
for heating, cooking and electricity generation.Hydrocarbons
are fuses made of carbon and hydrogen. Unrefined petroleum is
overwhelmingly made of hydrocarbons. It is made out of three
primary hydrocarbon bunches; Paraffins, Naphthenes and
Aromatics.

1. Give a brief outline of the different forms of Natural gas.
2. What are Hydrocarbons? Explain.
3. Write a short note on the Composition of Crude oil.
4. What are the various products from Crude oil? State them.
24
Unit 3
Notes
The Macro-system
Objectives
 Oil and Gas Chain from Oil - well down to the Petrochemical Industry
 Overview of Business Environment in each Block of the Chain
 Overview of the Major Players in the Chain
Introduction
Use of petroleum dates back to 3000 BC. But it was sourced from
natural oil seepages that occurred on the earth’s surface. Asphalt
from natural oil seeps is known to have been used around 3000 BC
in Mesopotamia. They used it for construction of roads. Egyptian
mummies were known to be wrapped in asphalt-soaked clothing.
Application of asphalt was also made for the construction of
pyramids. The oil producing countries are divided into two groups
those who are members of Organisation of Petroleum Exporting
Countries (OPEC) and those who are not.
In India, the oilfield in Digboi was discovered during the later part
of nineteenth century. Till 1970, oilfields in Assam and Gujarat
were the major producers. In the seventies, Mumbai High was
developed into a major producer.
From Wellhead to Petrochemicals

A block diagram representation of the entire industry is given in
Figure 1.
The first step in the block is oilfield processing. The well fluid is
processed in or in the vicinity of the oilfield. The processing steps
here are:
• Separation of crude oil, natural gas and water which comes as

mixture in the form of well fluid.
• Oil and gas are treated to meet specifications for transportation

and any customer specification. Oil is normally treated to
remove water and then it is pumped and metered before
Unit 3: The Macro-system
25
putting it through pipeline.
Notes
• Similarly, gas is dehydrated, compressed and metered before
putting it through pipeline. Separated water (called produced
water) is treated to meet environment specifications for
discharging it.
• Sometimes the produced water is re-injected into the reservoir.

In such case it is treated to meet reservoir quality specifications.
Separated gas is sent by pipeline to the gas processing plant, which

may be located away from the field. Transportation of oil and gas,
which are raw material, is done by pipeline, marine tankers or rail/
road tankers. Transportation by itself is a huge business sector. The
gas is first treated to remove impurities like sulfur. Then cryogenic
(low temperature) processing is carried out to liquefy and separate
by distillation, the components like ethane, propane and LPG. The
separated components are utilised to make higher value products:
• Methane, which is bulk of the gas, is a good raw material for

manufacture of urea fertiliser, chemicals like methanol or can
be used as fuel to generate power.
• Ethane and propane are sent to the petrochemical plants as

feedstock to crack them into ethylene/propylene, which are
polymerized into plastics (polythene, polypropylene).
• LPG (propane and butane mix) is bottled in cylinders and sent

for domestic consumption.
• The heavier hydrocarbons (C5+), which are present in the gas

condenses as Natural Gas Liquids (NGL). NGL is sent to the
refinery to be processed as blending stock for gasoline or it is
sent to a petrochemical complex as feedstock.
• If the gas is to be transported to another country by marine

tankers, it is liquefied as LNG.
The oil from the oilfield processing block is pumped (or taken
by tanker) to the refinery. Oil refining is a composite of several
processing steps. The first step is separation of raw products by
distillation. There are subsequent process steps to meet certain
specification of the products. Then there are processing to meet
environment related specifications. Also, there is processing to
crack the heavy part of the crude into lighter products like gasoline,
kerosene and diesel. The finished products that we get from the
refinery are summarised in Figure 1.
26
Each of the blocks of gas processing and processing of oil in the
Notes
refinery generates feedstock for Petrochemical Complex.
Figure 1: The Oil and Gas Chain
Naphtha is the main feedstock for petrochemical manufacture

generated in the refinery. Even the kerosene and gas oil (raw diesel
cut) can be used as feedstock. Methane, ethane, propane, butane
and the NGL component of the gas can be used as feedstock.
Most of the petrochemical processes are conversion of the molecules

of feedstock by:
• Cracking the feedstock, i.e. breaking bigger molecules into

smaller molecules. In Petrochemical Processes cracking of
feedstock like ethane, propane or naphtha is done to generate
smaller olefin molecules like ethylene or propylene.
• Polymerisation of the olefins i.e. joining together of the olefin

molecules several thousand-fold producing large molecules
which are called polymers. Olefins tend to polymerize
easily making resinous or plastic material like polythene or
polypropylene.
Very often a non-hydrocarbon or inorganic component can be

brought into the reaction process to generate other petrochemical
products. For example, nitrogen becomes an essential raw material
besides methane as feedstock, for synthesis of urea fertiliser.
Similarly, for making Polyvinyl Chloride (PVC), vinyl chloride
is first formed by reaction of chlorine with ethylene. With any of
the feedstock mentioned, numerous petrochemical products are
made. Starting with ethane as feedstock, configuration of a typical
petrochemical complex is shown in Figure 2. Ethylene is made by
cracking ethane. Vinyl chloride is made by reaction of ethane with
chlorine. Plastic end products like Polythene and PVC are made by
27
polymerisation of ethylene and vinyl chloride.
Notes
Figure 2: Petrochemical Building Blocks
Part of the ethylene undergoes processing with benzene (originating

from naphtha as feedstock) and produces polystyrene as end
product.
Figure 3 shows a typical petrochemical complex.
Figure 3: View of a Petrochemical Complex
Upstream and Downstream

These two terms are very frequently used in the petroleum
industry. Let us look in to the broad category of processing blocks
we described:
• Oilfield Processing
• Transportation of oil and gas
• Gas Processing
• Refinery
• Petrochemicals
• Power Plants and other gas based industries
Of course, another large industry not mentioned earlier is the

storage, transportation and logistics of numerous products that
28
come out of processing of oil and gas.
Notes
The first two businesses i.e. oilfield processing and transportation
activities are known as Upstream. The others are referred as
Downstream. Now we shall touch upon brief history of development
of oil and gas industry. Then the Indian oil and gas industry with
reference to the macro-system, upstream and downstream will be
described.
Check your Progress
1. Oilfield processing and transportation activities are

known as ________________
2. For making PVC, __________________ is first formed by

reaction of chlorine with ethylene.
History of Oil and Gas Industry

The use of petroleum dates back to more than 3000 BC. But it
was sourced from natural oil seepages that occurred on the earth’s
surface.
Oil and Gas from Seepages and Brine Wells

Asphalt from natural oil seeps is known to have been used around
3000 BC in Mesopotamia. They used it for construction of roads.
Egyptian mummies were known to be wrapped in asphalt-soaked
clothing. Application of asphalt was also made for the construction
of pyramids.
Natural gas seeps were known in the Baku region of Azerbaijan,

Iran, India and other countries. Some of them caught fire and
burnt for thousands of years. Use of petroleum as medicine was
made in China.
The first effort for production of petroleum by digging wells were

reported in China in the year 600 BC. Crude oil is reported to have
been produced during digging of brine wells.
Those days the technique for search of oil was limited to looking
for oil or gas seeps and trying to locate an adequate source nearby.
The search for oil and gas today is much more complicated.
Industrial Revolution and the Search for Oil

During the eighteenth century, the industrial revolution created
29
the demand of lighting, fuel and lubricating oils for the machineries.
Notes
This intensified the search for oil (exploration) and it resulted in
the development of the technology for oil exploration.
In the middle of the nineteenth century oil from coal (named

kerosene) was being used to satisfy the demand of lighting oils
lamps. Whale oil and coal oil were also used for lubrication of the
machines. Kerosene from the petroleum produced from natural
seepage started shortly afterwards. During the period 1850 to
1870, drilling of wells to produce oil started the oil boom in the
USA. Those days often oil was found at depths of 30 to 100 meters.
Today the depth of oil wells are a few thousand meters to several
kilometre. Development of the exploration and drilling technology
moved faster with the companies getting cash rich with the oil
boom. Some of the largest and financially strong oil companies
emerged in the USA. The landmark events in the history of oil and
gas industry are:
In 1870, John D. Rockefeller founded the Standard Oil Company,

which soon gained a near monopoly on oil production and became
one of the largest companies in the world. Till 1900, fuel oil, kerosene
and lubricating oils were the main products from petroleum. Then
came the advent of cars and the demand for gasoline. During the
early part of the twentieth century, gasoline-fueled cars became
popular; locomotive and ship engines were converted from coal to
oil; and the airplanes using aviation gasoline started flying. The
demand for gasoline went up and with the advent of electric power,
the demand for kerosene for lighting went down, bringing change
in refinery technology. Search and production of oil became more
technology oriented since early twentieth century. Rotary drills
were used to dig wells for oil. The first offshore wells were drilled
in California in 1896. In 1948 the first platform was used to drill
an offshore well in Louisiana.
In the first half of the twentieth century, the discovery of large

oilfields spread to the other parts of the world. New fields were
discovered in erstwhile USSR, the Middle East and other locations.
USSR became a major producer of oil under state ownership of the
various oil reservoirs. With the participation in major discoveries
and ownership worldwide, some of the pioneering American
companies like Standard Oil, Texaco and Mobil became giants.
In India, the oilfield in Digboi was discovered during the later part of
nineteenth century. Till 1970, oilfields in Assam and Gujarat were
30
the major producers. In the seventies, Mumbai High was developed
Notes
into a major producer. The Middle East came into the picture in the
1930s. In 1932, the first crude oil discovery in Bahrain was made
by Standard Oil. In 1936, Standard Oil of California joined with
other American majors to form Arabian American Oil Company
(ARAMCO). ARAMCO made a major oil discovery in Saudi Arabia
in 1938. North Sea oil field were discovered and developed during
the late sixties and seventies. During the eighties and nineties,
some of the Latin American countries (Mexico, Venezuela) made
major oil field discoveries and development. During the nineties,
Asia Pacific countries like China and Indonesia became major
producers.
Oil Scenario Worldwide

The regions having the largest proven oil reserves today are given
in Figure 4 below.
Figure 4: Region-wise Hydrocarbon Reserves
It is important to know that India’s proven reserves are meagre

compared to the size and potential of the country. The oil producing
countries are divided into two groups those who are members of
Organisation of Petroleum Exporting Countries (OPEC) and those
who are not. The figure below consists of oil producing countries.
The oil of the world will run out in a few years. Every country is
trying to discover more reserves of oil. It is known that how far
this struggle will succeed. It is the need of the hour that we cut
short the need of oil. Anyhow we should try to maximise the oil
production. Following are the list of top ten oil producing countries
31
in which we discuss their production, import and export of the oil.
Notes
Figure 5: Top 10 Oil Producing Countries in the World
1. Russia: The single largest oil producing country in the world

is Russia, with a production of 10,124,000 barrels per day. It
shares 12% oil of the world. It has about 60 billion barrels of
proven oil reserves or 5% of the world oil reserves.
2. Saudi Arabia: Saudi Arabia is the second largest oil producers.

It produces oil less than the Russia. The production of Saudi
Arabia is 10,121 million barrels oil per day. It has one-fifth of the
world’s proven oil reserves. It is the world’s largest oil exporter.
3. United States: It is the third largest oil producing country

and produce large amount of oil in the world. It produces
9.6-million-barrel oil per day. It shares about 11% oil of the
world. It has 21-billion-barrel proven oil reserves.
4. China: It produces about 4.27 million oil barrels per day. It

supplies 5% of the world. It has about 20.3 billion barrels of
proven oil reserves. It is the fifth biggest supplier of oil to the
US. Iran supplies 11% of China oil imports.
5. Iran: Iran plays a major role in the world oil market because its
quality is very good. It produces about 4,172,000 bbl and 4.25
million barrels of oil per day. It supplies 4.95% oil to the world.
6. Canada: It is the major industry in the economy of North

America. Its production is 3,289,000 barrels per day. It supplies
about 3.90% oil of the world. It is the single largest source of oil
imports into the United States.
7. Mexico: It supplies three leading foreign countries to the United

32
States, along with Canada and Saudi Arabia. Its production is
Notes
3,001,000 oil of the world. It shares about 3.56% oil to the world.
8. United Arab Emirates: It produces about 2,798,000 oil of the

world and exports 3.32% oil of the world. Their oil reserves are
ranked as the sixth largest country in the world and possess
one of the most developed economies in west Asia.
9. Brazil: It produces 2,572,000-barrel oil the world. It shares

about 3.05% oil to the world. It has 8.5 billion of proved oil
reserves. In Brazil, Tupi oil field is a large oil field.
10. Kuwait: It produces less than Brazil. The production of oil of

Kuwait is 2,494,000. It exports 2.96% oil to the world. It has
104-billion-barrel proven oil reserves. Kuwait’s oil reserves are
the fourth largest in the world. It is on seventh no. in export.
Some important features of OPEC and non-OPEC countries are:
• Proven crude reserves are concentrated in OPEC countries.

Out of the world’s 1.0 trillion barrels of proven reserves, 80% is
held by OPEC.
• 80 to 90% of the oil produced by them are exported.
• There is very little internal consumption indicating the

economy to be oil export dependent.
• OPEC countries have very high spare capacity for production.

Non-OPEC countries hold approximately a combined 500,000
barrels per day (bbl/d) of spare oil production capacity, while
OPEC spare production capacity is estimated to be as high as
8 million bbl/d.
• The petroleum resources of OPEC countries are mostly owned

by the State whereas in non-OPEC countries the ownership is
generally in private hands.
• Greater OPEC production as a proportion of world production

will be seen in the future.
With this kind of profile of OPEC countries, it is apparent that they

are in a position to control the oil prices in the world, whenever
they are united.
There are a few important points to note in the global production and
consumption pattern. There is not a single OPEC country in the top
ten oil-consuming countries. This indicates that in terms of industrial
33
development other than oil production, the OPEC countries are
Notes
lagging behind. The only developing countries in the top ten oil
consumers are China, Brazil and India. This indicates a growth of
industry and infrastructure driven by oil and gas as sources of energy.
Major Oil Companies

Major oil companies are very large transnational corporations.
They rank among the largest corporations in the world. There have
been a number of mergers recently to meet the crisis created by
slowing down of the economy since the late nineties. As per survey
done by Fortune magazine, five oil companies feature among the
top fifteen companies in the world in terms of revenues. There
has been a spate of mergers between major oil companies in the
recent times. As apparent from the figure 3.6, some of the largest
companies are result of merger of major oil companies of the world.
The merger of Exxon and Mobil and that of BP, Amoco and Arco
happened during the last few years. Some more mergers are in
the offing. The result has been detrimental to the consumers. USA
has seen a rise in gasoline prices as a result of the mergers which
has lessened competition. The cartel created by OPEC which is
keeping oil prices around 103 to 109 Dollars per barrel and the
recent mergers of oil majors has created a situation detrimental to
the growth of oil importing countries.
Figure 6: World’s Largest Oil and Gas Companies

34
Check your Progress
Notes
1. ____________________ oil companies feature among the
top fifteen companies in the world in terms of revenues.
2. In terms of industrial development other than oil

production, the ______________ countries are lagging
behind.
Summary
In this unit, we learnt about the Oil production and Exploration
in India. This unit talks about the Evolution of oil exploration in
the country and how it has come of age. The major Public sector
gas companies and their role in the Indian scenario have also
been highlighted. The major pipeline systems, especially the one
starting from Hazira have been talked about.
Other than this, the Demand supply gap or imbalance in oil and
gas demand and production has been highlighted. Also, a major
dream by the government, the Hydrocarbon Vision 2025 has been
written about. Finally, the future of the Oil and Gas Industry in
India has been presented.

1. Draw a block diagram showing the flow of gas and its
components from a gas field offshore to further processing and
generation of ethylene-based petrochemicals.
2. Name three of the largest oil companies in the world.
3. Give an outline of the Oil and Gas industry worldwide.
4. Explain the Oil and Gas chain with the help of an illustration.
Unit 4 35
Notes
The Indian Perspective
Objectives
 Overview of Oil and Gas Business Environment in India
 The Indian Perspective-upstream and Downstream
 Major Players in the Petrochemical Sector
Introduction
Oil exploration and production industry in India dates back to the
late nineteenth century. The first commercial oilfield was struck
at Digboi in North-Eastern India in the year 1890. Till the 1970s,
petroleum production was mainly from oilfields in the North-
Eastern region and Gujarat. In this unit we will study about the
Indian Oil and Gas scenario.
The Indian Perspective – Upstream

The government owned companies known as Public Sector Units
(PSU) earlier dominated the upstream oil and gas industry. The
two companies - Oil and Natural Gas Corporation Ltd (ONGC) and
Oil India Ltd (OIL) were the main players. They were responsible
for exploration and production. Bombay High (now known as
Mumbai High) was discovered in the 1970s and was one of the
largest finds in the world at that point of time (albeit not enough
for a large country like India). The government felt the need for
liberalising participation of foreign companies for exploration
and production. In 1991 various offshore blocks were offered
for licensing. The government policy now allows joint as well as
private sectors to participate in this sector. The government has
leased a number of blocks of potential fields to both Indian and
multinational companies.
As a result of these measures the number of players in the

upstream industry has gone up substantially. Reliance Petroleum
became owner of a few major oilfields in the Mumbai High region.
A number of Indian and overseas private operators explored and
produced oil from newly developed fields in Krishna Godavari
36
and Kaveri basin. ONGC is still the biggest player upstream due
Notes
to historical reasons. The proven oil and gas resources are still
meagre for India’s size and requirement.
Oil and Gas Field

Figure 1 shows the producing and proven oil and gas reservoirs in
India.
The locations of the various reservoirs are only indicative. They do

not show the map and size of the fields. Some of the major gas and
oil pipelines are also shown in Figure 1.
Let us understand the oil and gas infrastructure of India by looking

into a few of the systems with the macro-system block diagram in
mind.
Figure 1: Location of Producing and Proven Reservoirs
Mumbai High is the largest oil and gas producer in India. It is

located offshore about 200 Km. away from the coast off Mumbai.
As seen in the map an oil pipeline and a gas pipeline are laid below
the sea reaching landfall point at a place called Uran south of
Mumbai. Up to this point, it can be called the upstream and is
owned by ONGC. The oil is distributed to the refineries (BPCL)
near Mumbai. LPG is extracted out of gas at Uran. Also, ethane
and propane are extracted out of gas in the gas processing facility
located at Uran. The balance gas goes to nearby power plant and
Unit 4: The Indian Perspective
37
fertiliser plants at Thal (Maharashtra). The ethane and propane
Notes
extracted from gas at Uran goes to petrochemical complex at
Nagothane (Maharashtra).
Another major pipeline originating from Mumbai High area is

a gas pipeline laid below the sea up to landfall point at a place
called Hazira. Bulk of the gas comes from a gas field offshore near
Mumbai High called South Bassein Field. This gas is sour gas
(Hydrogen sulphide bearing). A major gas processing complex is
located at Hazira where sweetening (removal of sulfur from gas)
and recovery of LPG are carried out. Hazira is the originating
point of India’s longest gas pipeline network called HBJ Pipeline
(Hazira Bijapur Jagdishpur pipeline). HBJ Pipeline is a network
of over 2000 Km. of pipeline extending from Hazira to northern
part of India. It provides feedstock to numerous fertiliser plants,
power plants and petrochemical plants on its route. In addition, the
balance gas provides fuel to the industries. From Hazira onwards
ownership of the pipeline and gas distribution facilities changes
from ONGC to Gas Authority of India Ltd. (GAIL).
Figure 1 also shows a few major oil pipelines. From the North-
Eastern oil fields of India, the first major cross-country pipeline was
laid starting from Nahorkatiya in Assam to Barauni and Haldia.
This pipeline feeds oil to all major refineries in the North-Eastern
and eastern India including Barauni refinery and Haldia refinery.
Major Player Upstream

The major players of upstream are given in Table 1.
Table 1: Major Players Upstream

No. Company Exploration and Other activities
Production Areas
1 Oil and Natural Bombay High, South Oil and Gas
Gas Corpn. Bassein, Heera and other Pipeline
western offshore Oilfields,
KG basin, Assam, Gujarat,
Rajasthan
2 Reliance India Neelam, Panna, Krishna Downstream

Ltd. Godavari Basin refineries and
petrochemicals,
Pipeline
3 Oil India ltd. Assam, Rajasthan
4 Cairn Energy Cauvery Basin
India
Contd...
38
5 Essar Oil Ratna Oilfield Downstream

Notes
Development Refinery
6 Gas Authority of Oil Exploration, Gas Petrochemicals
India Pipeline
7 Hindustan Oil KG Basin (PY3), Cambay
Exploration Co. Basin
8 Videocon KG Basin (Ravva Offshore)
Petroleum
9 Niko Resources Cambay Basin
The domestic oil demand and supply are presented in Table 1. It

can be seen that we are grossly insufficient in our hydrocarbon
resources and dependent on imports of oil and gas Natural Gas.
Figure 2: World Oil Supply and Demand
The demand of gas has been projected by various estimates

depending on assumed user pattern at figures between 150 to 200
million SCMD. Major consumption of Natural Gas in India will be in
the Power and Fertiliser sectors. Natural Gas consumption in other
industries, such as petrochemicals, town gas, or as Compressed
Natural Gas (CNG) in the automobile sector, is also considered in the
projections. This leaves a wide gap in the supply demand balance for
Natural Gas in the country. The India Hydrocarbon Vision 2025 has
projected that the demand for Natural Gas will go up to a level of
390 million standard cubic meters per day by 2025. In the long-term
policy statement, the Government of India has visualized Hydrate
reserves and coal bed methane, as potential indigenous resources.
Earlier plan was to meet the future gas requirements by import of
LNG. Recent hydrocarbon discoveries of Reliance and ONGC are
expected to bridge the gap to a certain extent.
Future Perspective
The per capita energy consumption in India is very low at the level
39
of 226 kg of oil equivalent compared to 7759 kg oil equivalent in the
Notes
USA. With a low base, the energy supply in India has been growing @
6% annually compared to an average of 1.5% worldwide. It is projected
that the growth rate of Indian economy may go up to 7-8% in the near
future. This will further increase the energy requirement for the future.
The future energy needs has to be planned keeping hydrocarbon, coal,
hydroelectric power, nuclear energy and unconventional sources of
energy into consideration. The hydrocarbon resources are expected to
be enhanced in the following manners.
• Increased search of hydrocarbon resources in India by the

policy of liberalisation and leasing out prospective hydrocarbon
basins.
• Prospecting for hydrocarbons overseas by Indian companies (e.g.

ONGC investing in Vietnam and other prospective regions).
• Import and distribution of LNG. Petronet, a public sector LNG

distribution company was set up for this activity.
• Linking hydrocarbon resources from countries like Bangladesh,

Iran by cross country pipeline to India.
• Exploitation of hydrate resources in coastal sea bed.
• Exploitation of coal bed methane reserves.
A comprehensive energy study and planning with above resources and

other resources like coal, hydroelectric, nuclear and non-conventional
energy is needed for long term planning of energy needs.
Check your Progress
1. A major gas processing complex is located at

___________________ where sweetening and recovery of
LPG are carried out.
2. The first major cross-country pipeline laid in North-

Eastern oil fields of India, was from ______________in
Assam to Barauni and Haldia.
The Indian Perspective – Downstream

The refinery industry also dates back to over one hundred years.
India’s first refinery was built at Digboi in 1901 by British
Petroleum. In the late ’50s and early ’60s multinational oil
40
companies such as Shell, Caltex and Esso invested in refineries
Notes
in India. Indian Refineries Ltd., the first state owned (public
sector) refinery was built in Guwahati in the early sixties. Later
it became Indian Oil Corporation. India nationalised the refining
and product marketing sector in 1976. Regulatory regime was
introduced on production, distribution and pricing of crude oil and
petroleum products. State owned companies such as Indian Oil
Corporation, Bharat Petroleum and Hindustan Petroleum were
the largest companies in the refinery sector. The Administered
Pricing Mechanism implemented in the seventies subsidised
prices for products like kerosene and LPG. Charging higher prices
for other products like gasoline and aviation fuel generated part
of the subsidy. Diesel prices were kept neutral. The Administered
Pricing Mechanism was based on fixed 12% post-tax return on net
worth deployed for refining, distribution and marketing.
The Refining Industry

India has one of the largest and fastest expanding Petroleum
Refinery Industry in Asia with over 110 Million tons per year
installed capacity. The petroleum products’ demand was around
225 Million tons per year in the year 2011-2012. The stress will
be on revamp, expansion and de-bottlenecking as well as new
refineries. With the deregulation of the oil economy initiated in the
early nineties, a number of private players emerged. The Reliance
refinery at Jamnagar became the biggest refinery in India and
one of the biggest in the world. Other players like Mangalore
Refineries and Petrochemicals Ltd emerged in the private sector.
Privatisation of some of the public sector refineries are also on the
cards but presently held up in the legalities.
Figure 3: Refinery Locations

41
In the early nineties, India started the process of de-regulation and
Notes
liberalisation of the economy to make the economy market driven.
This already has created impact and structural changes in the
hydrocarbon sector. In 1997, the Government of India firmed up a
plan for deregulations of the oil industry with respect to all aspects
of pricing, imports and exports of crude and petroleum products.
Generally, deregulation has been achieved as per the plan. The
private sector can now carry out refining as well as marketing of a
limited number of petroleum products e.g. LPG, naphtha, aviation
fuel, fuel oil etc., which have been taken out of Administrative
Pricing Mechanism. Divestment of some of the State-owned
companies also has taken place.
Emergence of the Reliance Group has been a major development

in the private sector of oil industry. Today Reliance has the largest
refinery and the largest petrochemical complex in India, which are
also among the largest in the world.
The Petrochemical Industry

In the Petrochemical sector also, the initial big players were the
multinational companies in the private sector. National Organic
Chemical Industries Ltd. (NOCIL) and Union Carbide plant at
Mumbai were the first two major petrochemical plants in India.
The Indian Petrochemical Corporation Ltd. (IPCL) at Vadodara
was the first major petrochemical complex set up under state
ownership in the mid ‘70s. This was followed by another major
petrochemical complex at Nagothane in Maharashtra under IPCL.
India has also a large and growing Petrochemical industry with

one of the largest integrated petrochemical complexes in the
world and several other petrochemical complexes. India has the
second largest fertiliser production capacity in the world. There is
abundance of small and medium size petrochemical and chemical
plants badly needing improvements through revamp for increasing
their efficiencies. Many of them are old and revamp of the plants
pose a challenging opportunity.
In the Petrochemical Sector, the major players are:
• Reliance Industries Ltd (RIL)
• National Organic Chemical Industries Ltd (NOCIL)
• Indian Petrochemical Corporation Ltd. (IPCL) now acquired

by Reliance
42
• Haldia Petrochemicals Ltd. (HPL)
Notes
• Gas Authority India Ltd. (GAIL)
Except GAIL, which is government owned company (PSU), the

rest are private holdings listed in the stock exchange. HPL is held
jointly by government and private entities.
Transportation Infrastructure
India has major ports for handling of oil and products (export and
import) at Jamnagar, Mumbai, Mangalore, Cochin, Chennai, Vizag
and Haldia. Inland transportation of crude from the production
sites or ports is primarily undertaken via pipelines.
Transportation of refined products is carried out through multiple

options – pipelines, the rail system, road tankers and coastal
shipping using marine tankers. A very broad and approximate
distribution of load on various modes of transportation of petroleum
products is:
• Pipelines: 42%
• Marine transportation: 10%
• Rail transportation: 38%
• Road transportation: 10%
Thus, railways carry almost as much load as pipelines as far as

product transportation is concerned. With greater investments
coming in pipeline, in future the balance will be in favour of
pipeline.
Pipelines
A few of the major pipeline systems in the country is shown in the
next block. A vast network of oil, gas, LPG and petroleum product
pipelines exist all over the country.
Rail System
About 40 Million tons of petroleum products are moved from
refineries to storage terminals or depots in other various cities and
towns by the railway network.
43
Check your Progress
Notes
State whether the following statements are true or false:
1. The Reliance refinery at Jamnagar is the biggest refinery

in India.
2. India nationalized the refining and product marketing

sector in 1967.
Summary
In this unit, the total macro-system from oil well to petrochemicals
was explained in the form of block diagram. Flow of various
components of gas and oil in to the manufacturing blocks of refinery
and petrochemicals leading to final products was highlighted.
Indications were given how at each step of processing the oil and
gas get valorised in to higher priced products.
Having explained the macro-system, a brief history of oil and gas

industry was presented. Major players in the world and specifically
in India were identified. Hydrocarbon infrastructure in India was
presented with maps. The high growth potential of oil and gas
business and future opportunities were highlighted.

1. On the map of India, plot a diagram on showing the locations
of various Producing and Proven Reservoirs. Also highlight the
major petrochemical ports in the country.
2. Name the major petrochemical industry player in India.
3. In a blank map of India, mark the location of major oilfields

and major refineries.
4. Name three of the upstream oil companies in India.
5. Name four major refining companies in India with approximate

refining capacity owned by them.
44
Unit 5
Notes
Case Study
The Changing Environment within the Gas Industry
Gas is the carefully controlled source of nearly half of the country’s

energy needs. And most of that gas is transported safely and reliably
by a British company - Transco. All day, every day, sophisticated
computer-based telemetry watches, records and reports as the gas
goes through meters, compressors, valves and governors on its way
to more than 20 million homes, factories and businesses. Millions of
cubic metres of gas every day are pushed through the system at a
steady 10-15 miles an hour.
Transco is the gas transportation arm of BG plc. The top management

team comprises a managing director, chief operating officer, finance
director, corporate affairs director and strategy and business
development director. The business is divided into a number of groups,
or directorates - licence to operate, legal, human resources, corporate
projects, regulation and reform of gas trading arrangements. Transco
is highly information-rich. Its cutting-edge computer systems
and technological knowhow run the gas transportation network
and underpin the competitive market in domestic, industrial and
commercial gas supply. This case study focuses on changes to the gas
industry in recent years.
Few organisations exist within a market that changes almost by

the hour. Transco is able to cope with changes in demand - and this
is largely because its forecasting of gas demand is accurate. It is a
complicated process, taking account of all aspects of the weather and
the hourly gas demands of consumers. Demand forecasts are made
four times a day, but more may be made if the weather forecast or
demand changes significantly.
Few organisations exist within a market that changes almost by

the hour. Transco is able to cope with changes in demand - and this
is largely because its forecasting of gas demand is accurate. It is a
complicated process, taking account of all aspects of the weather and
the hourly gas demands of consumers. Demand forecasts are made
four times a day, but more may be made if the weather forecast or
demand changes significantly.
Safety and security of supply have top priority. Transco monitors

the system to maintain a physical balance, making sure that gas is
Contd...
Unit 5: Case Study
45
available at the right place at the right time. Thousands of computer
simulations are run each year to ensure optimum operation of Notes
the network under all operating conditions, including planned
maintenance and special operations. It’s not only ensuring security
of supply that’s a crucial element of Transco’s business. Making sure
that all its operations are carried out safely is vital, too. As part
of Transco’s commitment to safety, it operates the national 24-hour
freephone gas emergency service. Anyone who smells gas; no matter
who their gas supplier is - can contact the freephone service on 0800
111 999*. Calls to the helpline are dealt with by trained operators
at one of three national centres at Hinckley, Killingworth and
Gloucester. Operators can give safety advice and, if the situation
warrants it, dispatch an engineer to make safe any escaping gas. An
engineer has to attend within one hour if the leak is uncontrolled,
two hours if controlled. It is estimated that in 1999, the service will
receive around five million calls and of these, approximately half
will be of an emergency nature.
Source
The gas starts its journey deep beneath the North Sea and is
pumped ashore on the mainland of Great Britain at one of the
seven terminals - St Fergus (Scotland), Bacton (Norfolk), Barrow
(Cumbria), Easington (Yorkshire), Theddlethorpe (Lincolnshire),
Burton Point (North Wales) and Teesside. From the terminals, it
enters the National Transmission System and eventually arrives at
the customer’s meter. The Bacton-Zeebrugge interconnector links
Great Britain with Europe, so during periods when the gas flows
into the country rather than out, it is in theory possible that a gas
consumer in Scotland could burn gas which started its journey in the
Urals. Two other interconnectors supply gas from the mainland to
Northern Ireland and the Irish Republic.
Nationalisation to Regulation
In the past the gas industry was owned by Government, within the
public sector. In 1986, gas became the first energy source in Great
Britain to be regulated, three weeks after the then British Gas was
privatised, with the issue of shares on the London Stock Exchange
taking it into the private sector. Even though gas is in the private
sector, it is still heavily regulated. Transco is the country’s near-
monopoly gas transporter and the largest of around ten public gas
transporters licensed by the regulator, OFGEM (the Office of Gas
and Electricity Markets) to move gas around the country. Transco’s
pipeline business, because it is a monopoly, is regulated by OFGEM
whose staff ensure that Transco works within the requirements of
the Gas Acts and its licence conditions.
Contd...
46
Pricing and Competition

Notes
Transco’s revenues are earned within a price control linked to the
rate of inflation and modified by an efficiency factor decided by the
regulator who controls Transco’s revenues. The formula - RPI- X - was
introduced in the mid-80s. That type of control and the regulation
of profits in general was seen as a temporary means of ‘holding the
fort’ until competition arrived. Developments in the price controls in
both the gas and electricity supply industries - both now regulated
by a common regulator - are being looked at. Full competition in gas
supply arrived in 1998, when every domestic consumer was given
the opportunity to select a supplier of their choice. There is also
competition in the field of gas connections and gas meter reading.
OFGEM is proposing that metering will have its own price control,
similar to that imposed on Transco.
From a Nationalised Industry to Public Gas Transporter
1965: In the same year that The Beatles received their MBEs,
the nationalised Gas Council rebuilt and modernised the UK’s
gas industry. The energy map of Britain was drastically redrawn
with the discovery in the North Sea of high-quality gas reserves
that would provide supplies for the foreseeable future. Coal and oil
gasification plants become virtually obsolete.
1967-1977: In the decade that Neil Armstrong landed on the moon,

the Gas Council carried out one of the biggest civil and commercial
engineering programmes ever undertaken. A ten- year, £1 billion
programme converted every gas appliance in the UK to use natural
gas and retired existing plants. By the end of the decade, gas usage
had tripled.
1971-72: Money went metric and the UK gas industry was transformed
from a local manufacturer of gas with a distribution network to a full-
scale energy company with operations that extended from exploration
to marketing. In 1972, a new Gas Act restructured the Gas Council
and regional gas boards into the nationwide British Gas Corporation.
1979: Margaret Thatcher’s first government was elected and, in a

programme to be copied around the world, it prepared to privatise
national corporations.
1986: The British Gas Corporation was privatised as British Gas

plc, with 17 million customers, 4.5 million shareholders, over 89,000
employees and had annual cost operating profits of £688 million. It
was granted a 25-year monopoly to supply gas to customers using
under 25,000 therms a year and was subject to strict pricing controls
by the regulator, the Office of Gas Regulation (Ofgas).
Contd...
Unit 5: Case Study
47
1988: Competition began to be felt. The South Morecambe gas field,
British Gas’s first major independent find, was brought into operation. Notes
It was one of the largest gas fields on the UK Continental Shelf.
The Monopolies and Mergers Commission (MMC) recommended
the publication of contract price schedules, allowing competitors to
undercut British Gas in the 25,000-plus therms a year business user
market.
1989: Ofgas issued direction for the use of common carriage rights,
using the British Gas network.
1991: Government proposed a reduction of the monopoly threshold

to 2,500 therms a year. British Gas was required to separate its
transportation and supply businesses and agreed to create the
conditions to allow competitors to supply 60 percent of the market
by 1995.
1993: Boris Yeltsin stopped an attempted coup in Russia. The MMC

recommended divestment of British Gas’s gas trading business. It
proposed a totally competitive gas market by 2000- 2002. British
Gas announced a major restructuring into five business divisions
to be completed by March 1994. The Government demanded that
competition in the domestic market be phased in from 1996-1998,
well ahead of the original timetable.
1994: The Channel Tunnel was completed and Transco formally

separated as a stand-alone business within BG plc.
1996: Mad cow disease (BSE) and competition in domestic gas

supply in the southwest hit the headlines. The Network Code, which
governs relationships between gas suppliers, shippers and Transco
was published and came into force.
1997: In the UK’s largest demerger, the marketing, sales and retail
activities of British Gas separated to become Centrica plc. BG plc
was formed and focused on the operation of the gas pipeline (through
Transco) and storage systems, gas and oil exploration, international
gas transportation, distribution and power generation and energy
research and technology.
1998: The domestic gas market became fully competitive. Transco

spent over 500 man-years to design and build the computer systems
that enable the world’s largest competitive market to function.
Controlled all the Way to the Door
Transco’s national control centre at Hinckley, Leicestershire,

monitors and controls the flow of gas through the network, operating
compressor stations and flow control valves to ensure the optimum
Contd...
48
supply of gas to Transco’s local distribution zones, power stations

Notes
and other large gas users.
Every minute of every day, 44,000 telemetered items, such as

pressures and flow rates, are scanned. The centre uses the demand
forecasts produced by the areas, together with nominations from
power stations and other large users, to determine the country’s total
gas requirements. The centre also monitors the amount of gas which
shippers plan to put into the system and takes steps, including the
buying and selling of gas, to ensure that supply and demand remain
in balance throughout the day.
Four area control centres – at Killingworth, Hinckley, Dorking and

Gloucester - operate the local gas transportation system in their
area. Gas from the National Transmission System has to be reduced
in pressure several times before it reaches the consumer’s meter. To
achieve this, each area control centre monitors and controls up to 600
major pressure reduction stations, as well as local storage installations,
which smooth out the variation in demand throughout the day.
A Matter of Branding
The gas industry has undergone enormous change in recent years.

The monopoly of the former British Gas has been broken. Instead
of being restricted to one supplier, all gas consumers can choose
from a number of companies from whom to buy their gas. With so
much change, there is understandably some confusion in the public
mind as to who does what within the industry. Some people find it
hard to move on from the idea of ‘the gas board’. Transco is keen for
its various audiences to have a clear understanding of the role it
plays in helping deliver gas across the country. With that in mind,
it launched a £3.75 million nationwide advertising campaign using
television, radio and the press.
The theme, ‘Transco, an essential British company, piping gas for

you’, continues to be used in company advertising, along with a series
of ‘We do, we don’t’ adverts which seek to emphasise that Transco
pipes gas and runs the gas emergency service - but doesn’t sell gas,
fit cookers, send gas bills or mend boilers. Regular surveys, carried
out to track public awareness of Transco as a brand, demonstrate a
steady rise.
Question
Critically analyse the case.
Source: http://businesscasestudies.co.uk/transco/the-changing-environment-within-the-
gas-industry/a- matter-of-branding.html#ixzz2Qj0YNSIv
Block II
50
Unit 6
Notes
The Exploration of Oil
Objectives
 How Hydrocarbons (Oil and Gas) were Formed and Trapped below the
Surface of the Earth
 How Hydrocarbons are Explored, Located and Assessed for Commercial
Viability
 Overview of Primary Production Methods and Enhanced Oil Recovery
Methods.
Introduction
It is important to have an elementary understanding on how
hydrocarbon is formed and trapped in the rocks below the earth.
It was explained earlier that according to the widely accepted
‘organic theory’, oil and gas were originated from huge masses of
organisms, animals and vegetation that got buried under the earth
and were covered by sedimentary rocks. Layers of rock formed over
it and the formation and trapping of the hydrocarbons took place in
the following stages over millions of years.
Formation of Oil Traps

The following explains the formation of oil traps:
Formation of Hydrocarbons: The hydrocarbon formation took

place by decomposition in various layers of rock called source
rock. The decomposition took place under high pressure and
temperatures between 50°C and 170°C at depths between 1500
meters and 6000 meters. At lower temperatures (normally at lower
depths) heavier oil was formed and higher temperatures lighter oil
was formed.
Migration of Hydrocarbons: Due to lighter gravity of hydrocarbon

formed compared to water which is always present below earth’s
surface and due to high pressures below the earth, oil and gas
migrated slowly through the gaps in subsurface rocks with high
permeability. During the migration, the oil and gas got into
densely packed sedimentary rocks of very high porosity known as
Unit 6: The Exploration of Oil
51
reservoir rocks. Sandstone and limestone are common reservoir
Notes
rocks. Figure 1 shows typical indicative sketch of permeable rocks
and Figure 2 shows an indicative sketch of porous reservoir rocks.
Figure 1: Migration of Hydrocarbons through Rocks having Permeability
Figure 2: Porous Reservoir Rocks
Formation of Traps: Migration of the oil and gas stopped at traps

which were formed due to various reasons like sedimentation and
convulsions that took place on earth’s strata. A typical trap is
covered with non-permeable hard rock called cap rock.
Traps are formed by deformation of the rocks, deposition of rocks or

52
by creation of faults due to movement of rock strata. The common
Notes types of structural traps are anticlines and domes or a fault. Figure
3 shows some typical traps.
Figure 3: Traps
In the trap, the gas being the lightest rises to the top. The oil
settles below the gas and the water, which is heaviest, settles at the
bottom. Due to high pressure, a lot of gas remains dissolved in the
oil. A large formation of rocks of this nature bearing hydrocarbons
is called reservoir. The earth surface above a reservoir from which
commercial exploitation takes place, is called oil, gas or condensate
field depending on what it produces. The term hydrocarbon reserves
refer to the estimated amount of oil, gas or condensate that is
expected to be produced in the future from wells in known fields.
The search for hydrocarbons is called prospecting or exploration of
oil or hydrocarbons.
Check your Progress
1. The hydrocarbon formation took place by decomposition

in various layers of rock called ______________
2. During the migration, the oil and gas got into densely
packed sedimentary rocks of very high porosity known as
______________________
53
Exploration for Oil and Gas
Notes
As stated in the previous section, early oilfields were discovered
through locating seepages. It is said that the first oil field in India,
at Digboi was identified after oil was seen on the mud carried with
footsteps of elephants in the jungles of Assam. With such easily
locatable and shallow oilfields having been exhausted and the
demand for energy having gone up by leaps and bounds, the search
for oil is a different ball game today. It is very technology-oriented,
yet uncertainties and risks are still heavy.
A commonly used terminology in oil companies, Exploration &

Production (E&P), comprises of search, discovery and production
of oil and gas by undertaking the following activities:
• Licensing and agreement from the governments concerned.
• Geological surveys including aerial photography, satellite

images to examine nature of rocks and soil strata and
interpretation of such data.
• Geophysical surveys such as seismic surveys.
• Interpretation of data and geological modelling.
• Identifying hydrocarbon resources and their location based on

the interpreted data.
• Economic evaluation of the located reserves.
• Exploratory drilling to establish commercially viability.
• Preparation of field development plan.
• Commercially exploiting them by setting up necessary drilling

and production infrastructure.
The range of activities outlined take several years of teamwork

between Geologists, Geophysicists, Reservoir Engineers, Chemical
Engineers, Petroleum Economists and other disciplines. Here we
shall cover the exploration part.
Licensing and Agreement

The first step in exploration of oil obviously is entering into contract,
lease agreement or obtaining licenses from the governments.
Normally the government of the country carries out a lot of surveys
to define a ‘block’ for exploration and invites bids. The selected
bidder then enters into agreement with the government. There are
54
two types of arrangements:
Notes
• Licenses to the exploring company to explore and produce oil
and gas with license fees, royalties (per unit production) and
taxes payable to the state.
• Production sharing contracts, in which the state or a state

owned company, is made a partner in the venture. Normally
the initial exploration costs are borne by the licensee. Revenues
earned on production are first set-off against the costs incurred
by the licensee and the balance amount is shared in an agreed
percentage.
Once the agreement is reached, the exploration starts.
Geological and Geophysical Surveys

Geologists try to develop a model or a map where hydrocarbon
might occur, based on geological principles. The map is based on a
wide variety of geological information. They try to locate anticlines
and domes by mapping rock layers coming out of earth’s surface.
They use very conventional tools like hand-held compass, telescope
etc. to determine the orientation of the rock layers. With these
instruments’ geologists generate drawings and maps of the position
and size of the rock protrusions. Other tools used by Geologists
are aerial photographs and satellite pictures of the earth’s surface.
When exploratory wells are drilled, geologists examine the rock
samples and other well data to make subsurface maps of the
reservoir rocks. Matching up rock layers between wells allows
geologists to draw cross sections in order to find petroleum traps.
Geophysicists measure the properties and patterns of sub-surface

rock strata by three types of surveys. These are explained below:
• Magnetic Survey: To determine the strength of the Earth’s

magnetic field at a specific location.
• Gravity Survey: To determine the strength of the Earth’s

gravity at a location.
• Seismic Survey: To draw subsurface maps using sound waves.
In seismic survey explosive charges are detonated in holes drilled

by truck mounted rigs at specific points in the survey area. This
rig is called Thumper Truck. The energy waves are picked up by
geophones laid out on the surface and recorded on magnetic tape
by seismographs, the same instruments that are used to measure
55
the earthquakes.
Notes
By knowing the velocity at which energy travels through rocks of
different types and by measuring the time it takes for the energy
to be reflected to the surface, seismologists are able to construct
approximate relief maps of deeply buried rock layers. Computers are
used to enhance the subsurface picture formed from sound waves.
Figure 4 depicts a seismic survey being done with a Thumping
Truck and a Recording Truck. The geo-phonic data is processed by
computers into seismic lines. The seismic lines are two-dimensional
displays that resemble cross-sections of the rock strata.
The seismic data helps to develop the geometry and size of the ‘trap’
formation, where hydrocarbon exists under the trap and decide
whether an exploratory well is to be drilled. Two-dimensional lines
(2-D) are created as seismic data by laying the geophones in single
line. Three dimensional seismic lines can be created by collecting
geo-phonic data as an intersecting grid of seismic lines. 3-D seismic
data can help to create 3-D geometric model of the reservoir.
Figure 4: Seismic Survey
Drilling
After geological and geophysical studies are carried out, the
possibility of presence of hydrocarbon deposits worth further
exploration is established. Once an exploration target is defined a
drilling contractor is hired to drill exploratory wells.
56
Exploratory well: An exploratory well is required to confirm the
Notes
existence of oil or gas in a basin identified through geological and
geophysical surveys. The first exploratory well drilled in a field
is called wildcat. The first successful well showing hydrocarbon
presence during wildcat is called discovery well. Points to note are:
• It may or may not produce oil and is abandoned if it does not

produce oil. The well is called dry hole.
• A lot of information is generated by logging some of the

properties of the well and analyzing the fluids and rocks
that come out during drilling. This data helps in defining the
geological history and the properties of the reservoir.
The information interpreted from the well logs is used for decision
making on whether the well is to be used for production or is to be
abandoned for being not viable economically. The information is
also used to update the geological models. Drilling is a continuous
effort in a field even after discovery and production of hydrocarbons.
Drilling of additional well after discovery to define the size of the
reservoir is called delineation. Development wells are drilled into a
known reservoir to increase production. Oil wells are being drilled
all over the world in diverse geographical areas. Very often they
are in remote areas like deserts, forests or oceans (offshore). On
land (onshore) the well site must be cleared and access roads are
constructed.
A typical drilling rig onshore is shown in Figure 5.
Figure 5: Drilling Rig

57
Drilling the Well
Notes
Drilling rigs of special design are used to drill wells for exploration.
The basic system involves a rotary mechanism, a circulation
mechanism and a hoisting/lowering mechanism as shown in the
Figure 5. The rotary system includes diesel-based power and a
rotating wheel assembly that causes the drill pipe to turn thus
activating the drill in the hole. The hoist is also powered by a diesel
engine and is used to raise and lower the drill stem to change the bit.
The circulation system includes a pump to force a mixture of water

and mud down the inside of the drill stem to:
• keep the drill bit cool
• bring fragments of broken rock to the surface
• keep the drill bit lubricated
• to prevent any accidental ‘blow-out’ meaning sudden eruption

of oil and gas through the well pipe.
As the mast is raised, the equipment is placed in position, it is

called ‘Rigging Up’. As the drilling the well is begun, it is known as
‘Spudding In’. Drilling is 24 hours a day operation. Shallow wells
on land may be drilled very quickly, e.g. 500 meters in 3 to 4 days.
Deep wells (3000-4000 meters) offshore can take several weeks
depending on depth of sea, weather etc.
Each time the drilling bit is changed, the entire length of pipe in
the hole must be brought up, disconnected and stacked. This is
called ‘Making a Trip’. The mud circulates down the inside of the
drill pipe through the bit and up the outside of the pipe. Blow-out
Preventers (B.O.P.) are located at the surface. These are valves
which automatically close if a sudden increase in pressure occurs.
A blow out can cause explosion and fire with severe loss of life.
Getting the fire out and controlling the well is a major problem.
Horizontal Drilling
Horizontal drilling is an important technology which makes oil
production more economic. Wells are usually drilled vertically or
slanted from a platform. Modern drilling technology can produce a
90 degree turn in a short distance. This is due to methods and tools
that control the drill bit, flexible pipe and innovative engineering
design. A horizontal well is first drilled vertically to a target then
angled to a path parallel to the formation to penetrate the reservoir.
58
This improves recovery and economics.
Notes
Offshore Drilling
Offshore or marine rig is positioned by tugs. The type of rig selected
depends on depth of the sea. The different types of offshore rigs are
shown in Figure 6.
The various types of offshore drilling rigs are:
1. Jack-Up Rig is floated to its well location. At the location huge

‘legs’ are cranked down to reach the sea floor. Then the hull is
raised above sea level. It normally stands on four legs resting
on the sea bed. Its use is limited to water depths of up to a few
hundred meters.
2. A Drill Ship is like any other ship but has a mast located
centrally and is therefore a very mobile drilling rig.
3. Submersible Rigs have hulls on which it floats while being

towed to the site. On location the hulls are flooded and the hulls
come to rest on the bottom. Used for shallow water drilling
only.
4. Semi-Submersible Rigs are similar to submersible rigs but

when the hulls are flooded, they do not sink to the bottom.
Once a reservoir is found to be commercially viable, a development

well program is carried out from a platform anchored to the sea
bed. The rigs must not be confused with offshore platforms, which
are normally permanently piled in the sea bed.
Figure 6: Jack-up and Semi-submersible Rigs

59
Field Development Plan
Notes
If the results of an exploratory drill indicate the possibility of
commercially viable oil or gas find then a field development plan
is created and an economic viability report based on the plan is
prepared. The field development plan is a project report containing:
• Projected production profile based on reservoir simulation
• Pressure, temperature and well production data
• Recovery techniques
• Optimal recovery rate over a period of time
• Life of the field
• Enhanced Oil Recovery methods needed in future
• Number and type of wells proposed and drilling technique
• Field layout with location of wells and other facilities
• Facilities required for production and processing at oilfield
• Transportation and distribution infrastructure
• Environmental impact
• De-commissioning costs
• Logistics support required at the oil or gas field
• Total investment, production cost, maintenance cost and cost

of material and logistics for production
An economic evaluation is made, based on contractual terms and

taking into account the risks involved. The viability of the project
is worked out by discounting the estimated cash flows at suitable
discount rates.
De-Commissioning of Wells
In most of the countries, it is mandatory to decommission the
wells and bring back the land to its original state after the field is
abandoned.
Exploration and Production Costs

The costs incurred for production of oil and gas comprise of the
following:
60
• Exploration Costs
Notes
• Development Costs
• Operating Costs
Exploration costs include the cost of seismic surveys and

exploratory drilling and varies between US$1 per bbl in prolific
oilfields to more than US$12 per bbl, where the environment is
difficult and production per well is low. The finding costs have
reduced significantly over a period of time to US$4-6 per bbl on
average. This is due to the technological evolutions like:
• Developments of 3-D seismic surveys, which give more precise

location of wells
• Development of horizontal drilling
• Development of FPSO
• Development of sub-sea production system
Development and operating costs include the cost of production,

maintenance, processing, transportation, infrastructure, etc. It
varies from US$1 per bbl in Middle East to as high as US$20 per
bbl in certain locations.
On an average, the cost of oil exploration, development and

operation comes around US$10-12 per bbl.
Oil Industry is a Risk Business

The cost of exploration for hydrocarbon resources is very high. In
spite of technological developments in establishing oil finds, the
uncertainties involved in finding commercial quantities of oil and
gas is large. Several millions of dollars are often spent without
discovering a viable field. The successful ventures have to generate
sufficient profits for the unsuccessful ones to keep the business
going.
The risks exist because:
• In spite of high level of technology involved, methods are not

precise.
• Methods are indirect and they do not indicate the presence of

petroleum itself. They only indicate geological situations with
probability of oil find.
61
• We can not see what is happening below the earth. We conclude
Notes
only by interpretation of the data. Variables are numerous and
the interpretation may go wrong.
• Thus, many dry holes are drilled.
Oil companies balance the risk with rewards.
Oil Production – A Challenging Task

Once the exploration and assessment stage is over and the reservoir
is found suitable for commercial exploitation, decision is taken for
commercial exploitation. The method of production depends on:
• Location of the field
• Field life
• Size of the field
• Quality of oil and gas
• Production profile over the field life (for oil, gas and water)
• Pressure/Temperature profile over the field life
• Use of artificial methods of production
• Customer specification of oil and gas, market location and

method of transportation.
Location of the Field

Most hydrocarbon deposits today are found in remote areas. For
example, they are found more often in the deserts or dense forests
(onshore) or below the ocean (offshore). Earlier the hydrocarbon
finds and production offshore was limited to shallow or moderate
depth locations (a few meters to a few hundred meters). With
today’s exploration and production technology, we have shifted to
deeper seas (thousand meters water depth).
Field Life
It could be from a few years to a few decades. Fields with low
production profile and short life are referred as marginal fields.
Area over which a field exists (measured over the earth’s surface)
could be as small as 50 to 100 square Km to a few thousand square
Km.
62
Quality of Oil and Gas

Notes
Oil could be light, medium, heavy or it could be even condensate. It
could be sour (high sulfur bearing) or sweet. The gas could be high
calorific value (methane rich), low calorific value (carbon dioxide or
nitrogen bearing), sweet or sour. Ratio of gas to oil known as Gas
Oil Ratio (GOR) can vary widely from field to field and over the
field life.
Production Profile
Normally the oil production starts at a low level, it increases
to a peak level called plateau level and then tapers off. The gas
and water production also changes with field life depending on
characteristics of the reservoir. Typical production profile of an
oilfield is given in Figure 7.
Figure 7: Production Profile
Check your Progress
1. An _________________ well is required to confirm the

existence of oil or gas in a basin identified through
geological and geophysical surveys.
2. _____________ rigs are similar to submersible rigs but

when the hulls are flooded, they do not sink to the bottom.
Summary
In this unit, at first the formation of hydrocarbon bearing structures
was described. A description of hydrocarbon reservoir comprising
of porous rocks containing the hydrocarbon in its pores and covered
by a non-permeable cap rock was given.
63
This was followed by description of the methods of oil exploration,
Notes
identification of probable hydrocarbon bearing structures and
drilling of exploratory wells. The risks and costs involved in search
for oil was highlighted.

1. Describe how oil is formed and how it migrated and got trapped
in certain locations below the surface of the earth.
2. Outline the major steps an oil company has to go through

starting from the decision to explore for oil in certain area to
the decision to start production of oil.
3. List down all the factors that can affect economics of production
from an oil field.
4. Explain the different types of drilling.

64
Unit 7
Notes
Production Methods
Objectives
 Overview of Production Methods
 Various Primary Production Methods
 Overview of Enhanced Oil Recovery Methods
Introduction
There are primary, secondary and tertiary methods of recovery of
hydrocarbons are used for maximum extraction of hydrocarbons
from the reservoir. A team of reservoir engineers, geologists and
geophysicists base the choice of EOR method and its design/operating
parameters on a thorough simulation and study of the reservoir.
Production – An Overview of Methods

In the beginning of field life, unless the pressures are very low, the
well fluid comes out of the wells on its own pressure. This kind of
production of oil on its own pressure is called Primary Production.
A primary production facility comprises of:
• Manifold on top of the well, called Christmas Tree.
• Equipment and systems for separation of oil, gas and water.
• Equipment and systems to make the oil and gas as free of

water as specified by the customer (dehydration of oil and gas).
• Equipment and systems for measurement and transportation

of oil and gas to the customer.
• Equipment and systems to treat water for disposal.
During primary production, 25-30 percent of the oil in the reservoir

can be recovered by the natural reservoir drive. Other techniques
are used to recover some of the remaining oil. Secondary and
Tertiary methods of recovery of hydrocarbons are used for maximum
extraction of hydrocarbons from the reservoir. These methods are
summarised in Table 1. These are also known as Enhanced Oil
Unit 7: Production Methods
65
Recovery (EOR) methods. Sometimes the pressures of the reservoir
Notes
are low at the early stages of production. In such cases artificial
methods are used even during primary production. A very popular
method used for low-pressure shallow wells is Sucker Rod Pumps
to pump out the oil (Figure 1). These pumps having huge size of
their drive system, which moves up and down, make a magnificent
sight in the oilfield, where often an array of such pumps can be
seen. The plunger goes deep down the well moving up and down
pumping out the oil.
Figure 1: Sucker Rod Pump
Water Injection
Water is first treated to meet reservoir specification for particulate
content, dissolved solids content, oxygen content etc. Then it
is injected around the periphery of the producing well as shown
(Figure 2).
Figure 2: Water Injection

66
Use of water injection can boost the recovery by another 15-20%
Notes
of the original oil in the reservoir, raising the recovery level to 40-
45%. Water Injection is sometimes considered primary production
method and falls under the category of artificial lift, meaning
lifting the oil out of the well by artificial means rather than its
own pressure. The essential equipments in water injection system
are filters, deoxygenating tower and chemical injection system.
Enhanced Oil Recovery (EOR) methods are tried after the water
injection. It can further increase the recovery by another 15-20%
leading to recovery of around 60% of the oil in the reservoir.
Table 1: Secondary and Tertiary Methods of Production
Steam Injection
Steam is injected down injection wells to heat the heavy oil to reduce
its viscosity and make it more fluid. The steam also produces drive
to push the oil toward producing wells.
Unit 7: Production Methods
67
Notes
Figure 3: Steam Injection
Main equipment are water treatment plant (for boiler quality

water) and boiler. Rugged types of boilers are used to produce
high-pressure steam (above reservoir pressure).
In-situ Combustion
This method of EOR is used for very viscous crude oils. It is also
used as primary production method where crude oil is too viscous
to flow up through the well on its own.
In-situ combustion has been effectively used in North Gujarat

Oilfield in India to produce very viscous crude oil, which is almost
like semi-solid in the ambient temperature.
In this process (Figure 4), air and water are injected into the oil
reservoir in alternate cycles. At first air is injected around the outer
layer of the reservoir and the oil is ignited as a result of presence of
oxygen (air). The heat generated raises the temperature of oil thus
reducing the viscosity.
But due to combustion, there is loss of some amount of crude oil.

Once the desired temperature level in the reservoir is reached, air
injection is stopped.
Figure 4: In-situ Combustion

68
The flame in the reservoir is quenched with injection of water.
Notes Water injection is stopped once the flame is quenched. As the
temperature falls, injection of air and ignition of the oil is done
again. This cycle goes on repeating according to the time cycle
decided by reservoir engineers.
Gas Injection and Gas Lift

It is important to note the difference between the two methods of
recovery of hydrocarbons. Gas Lift is injection of gas in the well
tubing to make the density of oil column in the well lighter. As a
result the hydraulic head of the fluid in the well becomes less and
oil flows out more easily. But Gas Injection involves injection of the
gas directly to the reservoir to provide drive to push out oil. Both
processes involve compression of the gas coming out in the field
to high enough pressure to be put back either to the well or to the
reservoir. These are some of the typical EOR processes. A team of
reservoir engineers, geologists and geophysicists base the choice of
EOR method and its design/operating parameters on a thorough
simulation and study of the reservoir.
Check your Progress
1. _______________ is injection of gas in the well tubing to

make the density of oil column in the well lighter.
2. ______________ involves injection of the gas directly to the

reservoir to provide drive to push out oil.
Summary
In this unit, an overview was given on various primary and
secondary methods of oil and gas production. This included Water
injection, Steam injection, In-situ Combustion and Gas Injection
and Gas Lift.

1. Give brief description with sketch for Water Injection Process.
2. Give a brief description with sketch for In-situ combustion

process.
3. What is the difference between gas injection and gas lift

processes?
69
Unit 8 Notes
Onshore Oilfield Processing
Objectives
 Crude Oil
 Crude Oil Quality and Refining Economics
 Fundamentals of Refinery Processing
 Classifying Refineries by Configuration and Complexity
Introduction
Wellhead fluids must be processed before anything else. So, oil
and gas production involve a number of surface unit operations
between the wellhead and point of custody transfer. Collectively
these operations are called oilfield processing. This unit talks
about Oilfields processing and its various facets.
Typical Field Configuration for Production

A hydrocarbon producing field can be a few hundred to a few
thousand square kilometre in area. Several wells need to be drilled
in the area for optimal production.
Figure 1: A Hydrocarbon Producing Field
In a land-based field (onshore), the wells could be in short distances

(less than a Km) spread over the whole area. The well fluid from the
wells is collected into Group Gathering Stations (GGS), where the
70
oil, gas and water are separated and processed. A typical onshore
Notes
field configuration is shown. As shown, the well fluid is collected
from the wells by flow lines into a GGS. There could be more than
one GGS in an oilfield depending on the area of the field, number
of wells and development plan of the field.
After processing in the GGS, oil is stored in tank farms and sent
to the consumer (refinery) through pipeline or tankers. The gas
is compressed and sent by pipeline to the consumer (power plant
or industry) or sent to a gas processing plant to produce LPG and
separation of petrochemical feedstock.
Certain other terminologies on gathering and processing/storage of

hydrocarbons in the field are commonly used such as:
• Gas Collection Station (GCS - applicable for a gas field)
• Central Tank Farm (meaning oil storage facilities at the

oilfield)
• Oil Collection Station (OCS)
In an offshore field, the terminologies as well as the configuration

differ from an onshore field.
• The wells are normally drilled by Drill Ships of various types

and well head may be installed in small fixed platforms called
Well Platform.
• Well fluid from different well platforms is gathered by sub-

sea flow lines into a Production platform or Central Process
Platform.
The necessary oilfield processing is done at the Central Process

Platform. There are other categories of platforms as well as floating
production facilities (FPSO). With exploration and production
going deeper into the sea (2000 metre or more), subsea production
technology has developed with well and production facilities under
water, installed on the sea bed. The configuration of offshore field
is discussed later in this section.
71
Table 1: Oil and Gas as Produced and as Desired
Notes
Why Processing at Oilfield?

Oil and gas as produced in the field is not transportable and does
not meet customer specification. Before transportation to the buyer
by pipeline or tanker, crude oil and natural gas must be separated
and treated to meet certain customer specifications. Table 1 gives
an idea of the quality of oil and gas as it comes out from the oil well
and as desired by the customer.
Processing of the well fluid and oil, gas and water is needed before
we can bring them to the desired specification for sending to a
customer. Thus, some amount of processing at the oilfield itself
is required, whether offshore or onshore, however remote the
location may be. The configuration of an oil field is presented in
Figure 2 in block diagram format outlining the gathering scheme
and minimum processing at the gathering station.
The block diagram configuration of Group Gathering system

(Figure 2) is to be seen in conjunction with oilfield configuration
shown in Figure 1. Flow lines carrying well fluid from the wells
are all taken to a GGS. A Header or a manifold collects all the well
fluid. As indicated in Figure 2 the main processing blocks are:
• Separation of oil, gas and water
• Treatment of water before it can be discharged safely meeting

environment requirements
• Dehydration of oil and gas to remove water
• Metering and pumping of oil
• Metering and compression of gas

72
Notes
Figure 2: Oilfield Facilities Configuration
Check your Progress
1. In a _________________ based field, the wells could be in

short distances spread over the whole area.
2. The necessary oilfield processing is done at the

___________________ Platform.
Description of Oilfield Processing

Well fluid is a mixture of oil, gas and water, coming out of well
under high pressure. First, we need to separate them. This is
done in an equipment called Separator, which is essentially a
vessel having some internals to facilitate separation. A schematic
diagram of separation and some details of Separator equipment is
shown in Figure 3.
Figure 3: Separation of Oil, Gas and Water
The separators are of many configuration and types such as

horizontal, vertical, spherical, cyclonic type etc. Their selection
and sizing part of engineering skill is not covered here. Oil (in the
well fluid), which is at high pressure with dissolved gases, need
to be brought to stable atmospheric pressure for storage. This is
called Stabilisation of oil. Instead of bringing down the pressure
abruptly, it is stepped down slowly through a series of separators
(Figure 4). The simple configuration shows High Pressure (HP),
Unit 8: Onshore Oilfield Processing
73
Low Pressure (LP) and Atmospheric Pressure separation.
Notes
Figure 4: Crude Stabilisation
Further removal of water from crude oil is required before we

transport the oil to refinery. This process is called crude oil
dehydration. This is often carried out in an equipment known as
Heater-Treater where heating the crude oil and coalescing the
water particles by electrostatic force helps in bringing down the
water content (See Figure 7).
Figure 5 shows the processes mentioned above in the form of a

simple flow diagram.
The water that is produced is either discharged or re-injected to the

well. We need to treat effluent water to meet certain specifications
before discharging or re-injecting. This process is called Water
Treatment. A description of a typical facility for treating water is
given later. Like crude oil, the natural gas that is produced also
needs to be dried of water before it is put to the pipeline. This
is to save the pipeline from corrosion. This process is called Gas
Dehydration. A description of a typical facility for dehydration of
gas is given in later part of this section.
After processing as described above both oil and gas need to

be metered and transported to the customer which could be a
refinery or a gas processing plant owner. Often the customer could
be several hundred kilometre away and transportation could be
through long distance cross country pipeline or by tanker. To meet
transportation requirement, compressors are installed to meet
pressure requirements in the pipeline and large oil pumps are
used to pump the oil into the pipeline or a tanker. Often for greater
efficiency of gas dehydration at higher pressures, compressors are
placed ahead of the gas dehydration facility.
Two more important items that form essential part of oilfield

processing are:
74
Custody Transfer Meter: Most often the producer of the gas and
Notes
oil and the customer are different companies or different profit
centres under the same company. Accurate metering of oil and gas
are required before they are dispatched to the customer.
Pig Launcher: An equipment known as Pig, which is spherical

or cylindrical objects of diameter close to the pipeline diameter, is
pushed into the pipeline at certain intervals by the Pig Launcher.
The objective is to clean and monitor inner surface of the pipeline.
Figure 5: Flow Diagram of Oilfield Process System
Minimum Processing Requirement in Oilfield
Oilfields being often in remote areas, only the minimum processing

which is required for transporting and marketing the oil and gas
is carried out in the oilfields. The minimum processing facilities
necessary to be installed in an oilfield are:
• Separation of oil, gas and water
• Separation of sand and sludge
• Stabilisation of crude oil
• Dehydration of crude oil
• Dehydration of gas
• Treatment of water
• Pumping and metering of oil
• Compression and metering of gas
In addition, a number of utilities and other facilities are needed

like:
• Flare System
• Chemical Injection System

75
• Control System
Notes
• Utilities like power generation
Certain other facilities also may need to be installed in the field.

These are:
• Gas Sweetening: If hydrogen sulfide or carbon dioxide content

in the gas is high enough to cause severe corrosion during
processing and transportation.
• Storage of Oil: It is based on logistics of operation.
• Secondary and Tertiary Recovery: Requirement of Enhanced

Oil Recovery comes up as the field ages.
Description of Oilfield Processing Equipment

Let us now give a look at all the equipment mentioned in Figure
5 with a little more detail. For easier installation at remote
oilfields, these are normally combined with necessary piping,
instrumentation and control system. The whole equipment system
with the ancillaries is mounted on easily transportable skid. These
are known as Skid Mounted Oilfield Process Systems.
Separators
These are pressure vessels whose function is to separate oil, gas
and water. A simple sketch of a separator was presented earlier.
The operating pressure of the separators could be very high (say 50
to 60 atmospheres) or lower depending on the reservoir pressure.
Besides the simple design of separator shown, there could be wide
variety of designs, some of them of proprietary make:
• Horizontal separator
• Vertical separator
• Cyclone type separator
A skid mounted separation system is shown in Figure 6.
Stabilisation system for crude oil is a series of separators in

sequence (normally 3 to 4) where pressure of the well fluid is
brought down in each stage.
76
Notes
Figure 6: Skid Mounted Separators
Dehydration of Crude Oil
The water in oil can be present in two forms:
• Free water: It is in droplet form and separates easily.
• Emulsion water: It is in emulsion form, often very tight.
Most of the free water comes out of the crude oil in the separators. But
the emulsion water remains dispersed in the crude. There can be as
high as 30 to 40% emulsion water in some crude oils after the separator.
Special equipment called Electrostatic Treater or Heater Treater is
used to dehydrate the crude oil to a level of below 0.5% water content.
While Electrostatic Treater treats the crude by coalescing the water
particles in emulsion by creating an electro static field, the Heater
Treater also heats the crude oil in the same equipment reducing the
viscosity of crude oil and facilitating dropping down of water particles.
A sketch of Heater-Treater is shown in Figure 7. It has two chambers.

First crude oil enters the heating chamber where it is heated by a
fire tube which is fired with oil or gas burners. Some water droplets
settle down in this chamber itself. Then the crude passes through
the treater section where an electrostatic field is created by a high
voltage transformer. Here the electrically charged emulsion water
particles coalesce, settle down at the bottom and drained.
Figure 7: Heater Treater

77
Dehydration of Gas
Notes
There are a number of processes for dehydration of gas as described
later. These could be Dry Bed Adsorbent process, where moisture
is adsorbed on the porous surface of the drying medium, which
are solid particles. For example, beads of Silica Gel or Molecular
Sieves are used as drying medium. Some of these processes are
used to dry the gas to ‘bone dry’ level.
The other type of processes are based on absorption of the moisture

from the gas by scrubbing (washing) the gas with a liquid drying
agent, which is a good absorbent of moisture. These units are
easier to operate but not suitable for getting the gas totally dry
(bone dry). In oilfield, absorption type of process is more commonly
used. Water is removed from the gas by contacting the wet gas
with an absorbent liquid which absorbs the water (Figure 8).
Glycols are used as absorbent. Tri-ethylene glycol (TEG) and
ethylene glycol (EG) are the two most commonly used glycols
in natural gas dehydration. TEG is used in about 95% of glycol
dehydrators. Dehydration with TEG is most widely used in oil/gas
field processing.
Dehydration of gas takes place in a column (Absorber Column)

with trays or packing inside to facilitate contact between glycol
absorbent and the wet gas. The gas fed at the bottom part of
the column goes up and the dry glycol (lean glycol) fed at upper
part of the column comes down the column absorbing water out
of the gas. Absorbent containing water absorbed from gas (rich
glycol) is regenerated by heating and stripping out the water in
the regeneration section of the unit. The regenerated absorbent is
circulated back.
Figure 8: Gas Dehydration Unit Using Glycol

78
Such systems are widely used in offshore and onshore fields for
Notes
dehydration of gas. Gas dehydration unit is also skid-mounted
with piping and ancillary equipment for easy installation in the
field.
Produced Water Treatment

A simple schematic diagram of produced water treatment is given
in Figure 9. Produced water is separated from various separators
and oil treaters in the oilfield. It has to meet specifications for
discharge of water as per environment regulations. It contains oil
and sand/silt which need to be removed. The water is taken to an
oil skimmer first. Oil from the skimmer is transferred to a slop
oil tank, from where it is pumped to the suction of Main Oil Line
Pump (refer Figure 8.5). Water passes through Cyclone to separate
solid material like sludge. Fine emulsion of oil in water is still
left in the produced water. Normally desired specification before
discharge of the water is oil concentration of less than 20 ppm.
This is achieved by an equipment called Induced Gas Floatation
Unit. Low pressure gas is bubbled through a sparger in a floatation
cell to separate the emulsion and coalesce the particles. Oil layer
comes out from the top.
Figure 9: Produced Water Treatment
Water is taken to a settling tank where the quality is monitored

before discharging the water. In offshore platforms water is sent
to an equipment called Caisson. It resembles a cylindrical well
dipped into the sea. This allows for an additional guard before the
water goes into the sea. The last traces of water that separate out
at the Caisson are pumped to the slop tank.
Flare System
Flare system is an important facility in any plant processing oil
79
or gas. It is essentially a tall stack made of steel pipe along with a
Notes
flare tip (burner) at top and ancillary equipment. It burns out any
hydrocarbon released during processing due to overpressure in any
of the equipment. Normally, the plant facilities have safety release
valves which release the contents of an equipment if the pressure
rises beyond a safe operating limit. The flare system prevents such
flammable hydrocarbon releases to get into the plant area and
surroundings by burning out such releases. It is also used to burn out
any excess gas produced. This situation can occur when a customer
downstream suddenly stops taking the gas due to any operating
problem in his plant. It may take some time for the oilfield operator
to cut down the gas production. During this period the gas is diverted
to flare, to avoid any kind of accident. Also, in a field producing crude
oil, the associated gas produced may be more than the gas demand in
the market. Then the excess gas will need to be flared.
Elevating the flare can prevent potentially dangerous conditions

of high radiation at the operating area of the plant. The height
and distance of the flare stack from the plant area is fixed to limit
heat radiation within acceptable limits. Further, the products
of combustion can be dispersed above working areas. This helps
to reduce the effects of noise, heat, smoke, objectionable odours
and limits ground level concentration of pollutants from flare.
In the onshore production facility, a tall flare stack (structurally
supported) is provided 50 to 100 meters away from the plant area
as shown in Figure 10.
In offshore production facility, flare is provided in two possible

configurations:
• An inclined structure directed away from the platform supports

the flare at one edge of the platform. This is called flare boom.
• A separate flare tripod structure, away from the platform
Figure 10: Onshore Flare Stack Chemical Injection System

80
Oilfield facilities require a variety of chemicals to be injected to the
Notes oil and gas streams in small dozes (20-100 ppm):
• Corrosion inhibitors to control corrosion in the equipment

and piping.
• Defoamers are used to control foam. Some oils have tendency

to foam as the gas bubbles through and separates out in the
gas oil separators. This creates inefficiency in the separation
system.
• Demulsifier chemicals are used to break emulsions of water

in oil or oil in water.
• Bactericide is used to prevent growth of bacteria, fungi and

sea weeds inside pipeline and equipment.
• Oxygen scavenger is used for the same purpose.
• Flow improver is used for viscous crude oil to improve

transportation efficiency.
Production Configuration for Gas Field

The configuration of a gas field could be different. Here again there
will be gathering or collection of gas from various wells to Gas
Gathering Station (GGS) or Gas Collection Station (GCS) as the
nomenclature may be according to the operating company’s norms.
Normally gas is associated with some amount of condensate in the
reservoir. The processing done at the GGS (Figure 11) are:
• The well fluid is gathered from the wells by flow lines into a
manifold at GGS.
• Condensate (or NGL) is separated in Separator equipment.
• Condensate is stabilised, stored and then dispatched to the

customer.
• Gas is dehydrated, compressed and metered before being sent

for gas processing.
The gas processing complex could be several hundred kilometre

away from the gas field. The processing facilities at the gas
processing plant have been described in detail later. The major
units in the gas processing complex are:
• Gas Sweetening if there is hydrogen sulfide in the gas.

Gas sweetening is normally accompanied with conversion of
Unit 8: Petroleum Refining
81
hydrogen sulfide to sulfur.
Notes
• Dehydration of gas - this is needed because sweetening
process makes the gas wet with moisture again. Sweetening
agents are normally in solution with water.
• Fractionation of chilled and condensed gas to recover LPG

and petrochemical feedstock (ethane and propane).
• Conversion of the gas to LNG if needed for transportation

purposes.
Figure 11: Gathering and Processing of Gas
Check your Progress
1. A _______________ is essentially a tall stack made of steel

pipe along with a flare tip at top and ancillary equipment.
2. _____________________ chemicals are used to break

emulsions of water in oil or oil in water.
Summary
Certain amount of processing needs to be done at the oilfield before
the oil and gas are transported to refineries or gas processing plants.
This unit described what are the processing done, schematics and
equipment for such processing.
Typical configuration of an oil field with wells, gathering of well

fluid and processing stations were described for both onshore and
offshore fields.
82
Notes
1. Explain the typical field configuration for production of
hydrocarbons with the help of a diagram.
2. Why does an oilfield need to be processed?
3. What is the production configuration for a gas field?
4. How does a flare system work?

Unit 9 83
Notes
Offshore Oilfield Processing
Objectives
 Overview of Various Types of Offshore Production Facilities like
Platforms, FPSO
 Logistics Involved in Production of Oil and Gas
 Configuration and Design of Offshore Facilities
Introduction
The oilfield facilities are installed in the oilfield whether it is an
onshore or offshore field. So, far we had focused on the configuration
of onshore facilities. We explained how oil and gas are gathered in
Group Gathering Stations and processed. In this unit, we will talk
about offshore oilfields.
Offshore Production Facility

The processing requirements and schemes in offshore field are
very similar to onshore processing system. But in certain areas,
the configuration and design of offshore facilities differ a lot:
• Field configuration and terminologies used in offshore

facilities are to a certain extent different. For example, at
onshore one can drill a number of wells spread all around the
field. But offshore drilling is expensive. So, a number of wells
are drilled from a single drilling platform and a number of
drilling platforms (also called well platform) are spread around
the field. Gathering and processing are done at Production
Platform or Central Process Platform.
• Construction technology and operating philosophy in

offshore facility are also different. Due to cost of space created
at offshore platform and its isolation from infrastructure, the
layout (tight and compact) and safety considerations in design
of the facilities are different.
Both exploration and installation of production/processing facilities

are more expensive offshore.
84
Notes
Offshore Facilities Description
Offshore installations could be fixed platform or floating facility
(FPSO). Floating productions systems are getting more prevalent
due to cost factors under certain conditions. FPSO (Floating
Production, Storage and Offloading), generally a large tanker
or vessel with production and storage facility, has found wide
application today where putting up a platform is uneconomic. A
descriptive picture of an offshore platform is given in Figure 1.
Figure 1: Offshore Platforms
A number of fixed platforms, or floating facilities, subsea

installations or a combination of them can make an offshore
production complex. Platforms are named according to the type
of processing or function it is meant for. The types of platform
normally encountered at offshore are:
Drilling and Well Platform: Normally more than one well is

drilled from the well platform. Quite often 4 to 8 wells are drilled
from a single platform. All the well heads are manifolded into a
single pipe which goes down to the sea bed and leads to a Production
Platform or Process Platform.
Production Platform: Production platform contains certain

minimum processing facility like separation and stabilisation of
crude oil.
Process Platform: Process platforms have the complete process

facilities described earlier. They are the biggest platforms in an
offshore complex, which is equivalent to a GGS onshore. They are
also referred as Central Process Platform.
Utilities Platform: For large facilities the utilities like power

generation, instrument air system, etc. are installed in a separate
platform.
Unit 9: Offshore Oilfield Processing
85
Living Quarters Platform: The production and maintenance
Notes
personnel for an offshore facility stay for long periods of shifts
(in terms of weeks) in an offshore platform. For safety, the living
quarters for personnel are made in a separate platform.
Flare Tripod: If the flare has a large gas flaring capacity, it is

installed away from a platform to minimise heat radiation to the
operating area of the platforms. It is installed in a tripod structure
piled into the sea. Some times flare is put in the platform itself as
an inclined flare boom directed away from the platform.
Several other platforms are installed with the requirement of

Enhanced Oil Recovery as the reservoir pressure depletes. These
could be Water Injection Platforms, Gas Injection Platforms and so
on. Offshore platforms can be rigid structures that extend all the
way from above the water surface and piled to the seabed. They
can be supported on single leg (Monopod), three legs (Tripod), four
legs, eight legs or multiple legs. In a common type of platform, the
legs are piled into the sea bed. The platforms can be supported by
steel or concrete structure. For a bigger surface area at the top of
the platform, more number of legs are provided. Some designs of
the platforms are not fixed into the sea bed. They float near the
water surface.
Table 1: Types of Platform
Building platforms in sea is very expensive and the well production

rate has to be much higher than onshore field for economic
justification. For example, an onshore field can be justified with per
well production rate of even a few hundred bbl/day. But in offshore
field it has to be in thousands of bbl/day for economic exploitation.
A well platform in Mumbai high costs anything between US$20
Million to 50 Million. A process platform costs around few hundreds
of Million Dollars. In contrast a GGS onshore (albeit with much
lower production) will cost around five Million Dollars only.
Configurations of a Major Offshore Field

Production at offshore requires a fixed or floating facility or a
86
subsea production system and means for transportation of oil and
Notes
gas to the consumer at shore. The transportation of oil could be by
offloading it to an oil tanker or by pipeline. But for gas, pipeline is
normally the only option. Another option that has developed now
is floating LNG Plants to liquefy and transport the gas directly by
tanker from offshore. The configuration of an offshore facility could
be developed based on any of above or a combination depending
on the location, water depth and production profile. Study and
decision of the optimum economic configuration is one of the prime
skills in developing an offshore production facility. Figure 2 shows
a simple configuration of a small offshore production complex. This
is a concept based on fixed platforms. It is similar to the concept of
development of Mumbai High Field.
In the first phase (Phase-1), when the potential of the field can not
be predicted accurately, a few well platforms and a small production
platform can be installed just to separate the oil and flare the gas.
A storage tanker anchored next to it to store the oil produced. It
offloads the oil to another shuttle tanker. Once the potential of
the field is established, the Phase-2 starts. More well platforms
and Central Process Platforms are installed for gathering and
processing the well fluid. Oil and gas pipelines are laid to the shore
to transport them and the tanker becomes a standby option. Once
the pressure of the reservoir drops, to boost production, a number
of water injection platforms are installed and water injection well
platforms are put around the periphery of the field. Later more
platforms can crop up due to the changing production profile and
EOR requirements.
Figure 2: Offshore Field Configuration

87
FPSO
Notes
Floating Production and Storage Offloading (FPSO) is one of the
most popular systems for offshore production. The first floating
system started production in North Sea in 1975. Its design has been
adopted to wide variety of production situations and environment.
FPSOs are operating today all over the world. It can operate down
to 2000 meters of water depth.
FPSOs have been effectively used in large producing fields, deep

sea and marginal fields. Its economic advantage comes because:
• It avoids need for large and costly fixed installation and

infrastructure. This is particularly advantageous in deep sea,
say at 1000 meters depth.
• It can be modified easily for different production conditions by

bringing it to the yard.
• It has the flexibility to move from one field to another, unlike

fixed platforms. It can be used for production from a number of
marginal fields with short field life.
Figure 3: FPSO
Normally large supertankers are converted to FPSO. The bare

surface at the top of the tankers provides space for process
equipment system and infrastructure. The storage capacity of the
tanker is used to store oil. The oil is offloaded to a shuttle tanker
from time to time. The gas can be connected to gas pipeline, sent to
another floating unit with gas processing facility or flared.
88
A typical configuration of an FPSO producing oil in deep sea is given
Notes
in Figure 3. The FPSO anchors in the selected location where, one
or more subsea wells are already drilled and vaulved at the bottom
of the sea. The well is connected to the production facilities on the
deck of the FPSO by flexible well piping called umbilical. The wells
are controlled by remote control from the FPSO through control
cables going down below the sea to the wells.
Offshore Platform Construction Technology

Offshore construction is a challenging task, quite different from
construction of an onshore plant. Let us look into the construction
of a typical four-legged platform. Legs can be of tubular structure
of large diameter. A construction barge carries pieces of the leg to
the selected location in deep sea for installation. The pieces are
welded together, lowered till it reaches sea bed. Then piles are
hammered through it into the sea bed to fix the legs on the sea bed.
Fabrication of rest of the platform is done meanwhile in a shore-

based construction yard. A rectangular three dimensional piece of
steel structure called jacket is fabricated to hold together the four
legs. The finished structure is then skidded on to the transportation
barge, taken to the location and placed on top of the legs to hold them
together. Also the platform decks are fabricated in the yard, brought
by the barge to the location and placed on top of the jacket. Process
equipment along with piping and ancillaries are also fabricated in
different shops on shore as modular skid mounted units. They can
be placed on the decks beforehand at the yard itself or brought by
barge to the location and placed by crane on top of the decks.
Figure 4: Construction Barge Anchored Along Side Platform under Construction

89
There are several interesting techniques of installation of such
Notes
facilities. There is a lot of sub-sea construction work including
welding under water is involved. An offshore facility requires the
services of trained divers for construction as well as maintenance
work below the sea. Concrete platforms are constructed in a
different way. Construction is carried out in a dry dock near the
sea. The concrete structure (hollow) is built vertically upwards. At
a certain point, the dock is flooded and the structure is floated.
Further construction takes place while it is floating. It is then
towed to the location and filled with sea water so that it can sink
down to its final position on the seabed. Such structures can weigh
hundreds of thousand tons.
Figure 5: Offshore Construction
Check your Progress
1. _______________ platforms are also referred as Central

Process Platform.
2. ________________ platforms can be rigid structures that

extend all the way from above the water surface and piled
to the seabed.
Offshore Field Operation and Logistics

With several platforms in a remote offshore field, the operating
philosophy and logistics support requirement is quite complex
compared to any plant onshore.
Operating Philosophy
Special features of operating philosophy in offshore platform are:
Safety: Being far away in a remote area, operating safety and

emergency planning for containment of disaster and evacuation
90
of personnel are important features in design and operation of an
Notes
offshore platform. This involves:
• Special safety instrumentation for safe shutdown of production

facilities in case of emergency situation, redundancy of
• equipment and instrumentation wherever needed for safety

reasons.
• Special seaworthy Escape Capsules for operating personnel in

case of emergency.
• Safety training of the operators for working in marine

environment and regular practice drills.
Remote Control and Monitoring: In a large offshore complex,

the process platforms may be fully manned but the well platforms
are generally unmanned and remote operated. Several wells and
other facilities need to be monitored from control room in the Central
Process Platform. Also, there is need for coordination between
offshore facilities, pipeline operation and onshore facilities like gas
processing plant or crude storage terminal at shore. This is done by
telemetering and telecontrol system known as Supervisory Control
and Data Acquisition (SCADA). This involves remote transmission of
operating data and computer-based data acquisition and monitoring
system by communication with optical fibre cables, microwave or
satellite. Such systems will be covered in detail in the section on ‘IT
Applications in Oil and Gas Industry’.
Shift Schedule: Onshore plants normally have three shifts

of operators, changing every eight hours a day. In offshore the
logistics problem for such rotation will be enormous if people have
to be taken every eight hours to remote areas far away from town
and brought back. The shift pattern in offshore vary from seven
days to fifteen days in one shift. That means the operators have to
live in the offshore platform for shift period of seven to fifteen days
depending on the shift cycle decided by the management. After
the period, operators for the next shift are flown by helicopter and
the operators of the earlier shift return. That is why the platforms
need to have safe and well-equipped living quarters.
Logistics
Logistics management is very important for successful operation
of offshore production facility. Logistics support requirements are
personnel related, maintenance related and equipment related.
91
Logistics relate to: Notes

• Movement of operators and maintenance personnel
• Movement of divers for sub-sea maintenance and operation
• Catering, medical and other services for the personnel
• Supply of maintenance equipment and spare parts as and

when needed
• Carrying out work-over operations on the wells in the well

platforms
To provide for these, the production companies maintain

an offshore supply base at shore and arrange contractors to
operate fleet of supply boats and helicopters.
Check your Progress
1. ____________________ relates to Movement of operators

and maintenance personnel.
2. _________________ involves remote transmission of

operating data and computer-based data acquisition and
monitoring system by communication with optical fibre
cables, microwave or satellite.
Summary
This unit described what are the processing done, schematics and
equipment for such processing. Typical configuration of an oil field
with wells, gathering of well fluid and processing stations were
described for offshore fields. How the concept of an oilfield at offshore
changes and develops with time was described from real life example.

1. An offshore field produces sour gas and a large amount of
condensate. Draw a block diagram showing different process
systems that need to be installed in the platform.
2. Make a list of various types of offshore production installations

with brief description of the same.
3. Write a short note on Supervisory Control and Data Acquisition

(SCADA).
92
Unit 10
Notes
Case Study
Southeast Asia Offshore Oil Drilling Problem
Our client, Petro-Oil, is a mid-sized oil and gas exploration and

production company with major areas of exploration located in South
America, Gulf of Mexico, Western Africa, China, Eastern Europe and
several other countries.
The Board of Petro-Oil has just set an ambitious goal to be completed

in the next five years: To be the largest oil and gas producer in Asia
by the end of 2017. A quick market research inquiry shows three
major competitor companies (Table 1) that are larger than our client.
To support their new aspirations, our client just purchased Ceylon-II,
a large deepwater oilfield offshore in the South China Sea.
Table 1: Benchmark Results (million barrels of oil equivalent)
Proven Reserves Annual Production

Competitor A: PetroChina 15,000 1,500
Competitor B: Petronas 8,000 800
Competitor C: Pertamina 7,500 750
Client: Current Producing 6,000 450
Assets
Client: Ceylon-II (newly 6,000 0
acquired deepwater asset)
Petro-Oil’s management team has hired your company to do a diagnostic

of the company’s current portfolio, operations and organisation to help
them understand what they need to do to achieve this goal.
Key Points and Assumptions
• Production is generally correlated with reserves.
• Assume the reserves of each of the assets are exactly at the same
rate of depletion.
• Assume that all competitors continue to seek additional reserves

in the Pacific region.
• The current existing production rates in the area are significantly

higher than the client’s production rate.
Analysis
The current extraction rate of Competitors A, B and C are much
Contd...
Unit 10: Case Study
93
higher than our client and hold, at a minimum, 10% extraction rate.
The client’s current production rate needs to increase and the new Notes
asset has to meet the current standard of 10% extraction rate.
Further exploration in the area to gain new assets for additional

production is key for growth and to increase the extraction rate.
Even with these two current assets, the client’s current reserves are
still less than the region’s the largest producer.
Questions
1. Develop a strategy for the same.
2. What initial recommendations would you give to the client?
3. What further analysis would you recommend to the client?
Source: http://chenected.aiche.org/tools-techniques/management-case-study-southeast-
asia-offshore-oil- drilling-problem/
Block III
Unit 11 95
Notes
Gas Processing
Objectives
 Properties and the Characteristics of Natural Gas
 Objectives for Processing the Gas and Configuration of a Gas
Processing Complex
 Processing Schemes for Various Gas Processing Units
Introduction
Natural Gas processing is a complex industrial process designed
to clean raw natural gas by separating impurities and various
non-methane hydrocarbons and fluids to produce what is known
as pipeline quality dry natural gas. Natural Gas processing
begins at the well head. The composition of the raw natural gas
extracted from producing wells depends on the type, depth and
location of the underground deposit and the geology of the area.
Oil and natural gas are often found together in the same reservoir.
The natural gas produced from oil wells is generally classified as
associated-dissolved, meaning that the natural gas is associated
with or dissolved in crude oil. Natural gas production absent any
association with crude oil is classified as ‘non-associated’.
Characteristics of Natural Gas

The following are the characteristics of Natural gas:
Physical Properties
Natural Gas is gaseous at any temperature over –161°C (258°F).
Since that is a very cold temperature, we normally consider
natural gas as a gas. Natural gas boils at atmospheric pressure
and a temperature of –161°C, exactly like water turns into a
vapour (steam) at +1000C. Natural gas is handled in a wide range
of operating conditions – as a liquid below –161°C (LNG) and also
as compressed gas at 200 Bar (3,000 psi) for automobile (CNG).
In its pure state, natural gas is odourless, colourless and tasteless.

For safety reasons, however, an odorant called Mercaptan is added,
so that any leak can be easily detected because of the typical smell.
96
Concept of Volume and Weight

Notes
• The volume of natural gas is measured in cubic meters (M3) or
cubic feet (cu.ft. or cft).
• Its flow in M3/hr or cu.ft./hr or cfh at operating condition.
• The production figures are normally given in Standard Cubic

Meters per Day (SCMD) or Standard Cubic Feet per Day
(SCFD).
• Since the quantity of gas per unit volume is highly sensitive to

pressure and temperature of the gas, the volumetric capacity
is always referred to a standard reference temperature and
pressure. In metric unit 1 SCMD means 1 cubic meter of gas
at a standard condition of 0°C and 1 atmosphere pressure.
Similarly, 1 SCFD means 1 cubic foot of gas at 60°F and 1
atmosphere pressure.
• One SCMD equals 37.8 SCFD.
• One cubic meter (SM3) of natural gas weighs roughly 0.8 Kg.
Comparatively one M3 of oil weighs about 800 Kg.
• Because of large volume the gas occupies, its transportation is

more expensive than oil for equivalent weight.
• For transportation across the seas, Natural gas is condensed

to LNG and put into marine tankers. This reduces the volume
more than 600 times.
• That means 600 cubic meters (M3) of gas (which is roughly 480
Kg) is made into 1 cubic meter of LNG.
The Composition of Natural Gas

The composition of natural gas varies widely from one field to
the other. The main constituents of natural gas are the lightest
hydrocarbons i.e. Methane, ethane, propane, butane and traces of
heavier components like pentane. However, methane is generally
the largest component. Methane is normally between 85% to 95% of
the total volume. Other components like nitrogen, carbon dioxide,
oxygen, hydrogen sulfide and traces of other gases can be present.
Hydrogen sulfide (H2S) and carbon dioxide (CO2) are often present
in the gas. CO2 is corrosive to the pipeline and equipment in
presence of water. H2S is both corrosive and very toxic (hazardous
to health).
Unit 11: Gas Processing
97
Important Physical Properties of Natural Gas
Notes
Calorific value of a hydrocarbon is measure of heat released by
burning unit volume or weight of the hydrocarbon. Heavier the gas,
lower is the calorific value per unit weight of the gas and higher
the calorific value per unit volume of the gas. Specific gravity of a
gas is defined as the weight of a given volume of the gas compared
to the weight of the same amount of air at the same temperature
and pressure, where air weight is taken as reference (= 1).
• Specific gravity of air = 1.00
• Specific gravity of methane = 0.55
• Specific gravity of natural gas = typically 0.60
• Specific gravity of propane = 1.56
• Specific gravity of butane = 2.00
This means that natural gas being lighter than air will rise if
escaping, thus dissipating from the site of a leak. This important
characteristic makes natural gas safer than most fuels. Natural gas
does not contain any toxic component; therefore, there is no health
hazard in handling of the fuel. Heavy concentrations, however, can
cause drowsiness and eventual suffocation.
Chemical Properties
The air-to-fuel ratio (AFR) indicates the amount of air relative to
the amount of fuel used in combustion. The minimum amount of air
relative to fuel for complete combustion is called the stoichiometric
ratio. The stoichiometric ratio for natural gas (and most gaseous
fuels) is normally indicated by volume. The air to natural gas
(stoichiometric) ratio by volume for complete combustion is 9.5:1
to 10:1. This ratio is approximate only because of the variations in
fuel composition. The Lower Explosive Limit (LEL) and the Upper
Explosive Limit (UEL) determine the range of flammability. For
natural gas, the LEL is 4%, while the UEL is 14%. It means that
a natural gas mixture ignites within a range of 25:1 to 7:1 air-to-
fuel ratio by volume. By comparison, a propane mixture ignites
within a range 2% LEL to 10% UEL. It means a gas leaner or
richer outside the explosive limits is not explosive.
Natural gas has a very high-octane number, approximately 130.

By comparison, propane is approximately 105 and gasoline 92 to
94 at best. This means that a higher compression ratio engine can
98
be used with natural gas than gasoline. Indeed, many racing cars
Notes
use the high octane rating of natural gas to give them more power.
Processing and Utilisation

At the oil/gas fields, a number of processing steps are put in place
before the gas is sent to the consumer. These include:
• separation to remove liquids (oil or condensate) and water
• dehydration to minimise moisture
• compression to meet destination pressure and
• if necessary, Sweetening to remove Hydrogen sulfide and

Carbon dioxide
The transportation of natural gas is normally done by long

distance cross-country pipeline. When the cost of laying a pipeline
is prohibitive or it is not practicable due to technical, socio-political
or any other reason, gas is liquefied as LNG and transported over
the high seas by LNG tankers. The further processing of gas for its
utilisation and valorisation is described in this section.
Check your Progress
1. Natural gas is gaseous at any temperature over ______ °C.
2. The volume of natural gas is measured in ______________

or cubic feet.
Overview of Gas Processing

In this section, we will get a basic overview of Gas processing.
Why Gas Processing

The purpose of gas processing operation is three-fold:
• Removal of impurities like moisture, hydrogen sulfide, carbon

dioxide etc. to make it suitable for transportation and consumer
acceptability.
• Liquefaction and recovery of hydrocarbon components

like ethane, propane, LPG, generally by low temperature
refrigeration or cryogenic processes. These go as feedstock for
petrochemical manufacture.
• Liquefaction of the entire gas to LNG under cryogenic

99
temperatures (–160°C) for transportation purposes.
Notes
A gas processing plant may be built to meet one or more of the
above objectives. Now let us get an overview of the gas processing
facilities in terms of block diagrams.
Removal of Impurities
The main impurities present in the gas are moisture, carbon
dioxide, hydrogen sulfide, nitrogen, mercury.
Some of these need to be removed totally (to a few ppm level), while
some need to be brought down in concentration.
Gas Dehydration: The gas needs to be dehydrated because:
• Moisture causes corrosion in the pipeline particularly when

carbon dioxide or hydrogen sulfides are present. Also, any
condensation reduces pipeline efficiency.
• Natural gas forms hydrates during low temperature gas

processing operations. As explained earlier, hydrates tend to
choke or block the equipment.
Gas Sweetening: Removal of carbon dioxide and hydrogen sulfide

from gas is called gas sweetening. Gas bearing hydrogen sulfide is
called acid gas.
Why carbon dioxide needs to be removed:
• Carbon dioxide corrodes pipeline and equipment
• It forms ice during cryogenic processing
Why hydrogen sulfide needs to be removed:
• It is very toxic
• It is highly corrosive
Mercury removal: In some of the gas fields, the gases carry

mercury. Removal of mercury is necessary as it damages the steel
equipment in gas processing.
Recovery of Hydrocarbons
The objective is to recover hydrocarbons like ethane, propane,
butane by condensing them at very low temperatures and then
purifying by fractionation. The word ‘cryogenic’ is used for low
temperature processing.
100
The operating conditions for recovery of the hydrocarbons in gas
Notes
are:
• Recovery of NGL : +5 to 10°C at high pressure
• Recovery of LPG : -35 to -45°C at 12 Kg/cm2
• Recovery of Ethane : -65 to -75°C at 30 to 40 Kg/cm2.
Liquefaction of Gas
For liquefaction of gas for transportation purpose (LNG),
temperature below –160°C is required at atmospheric pressure.
During liquefaction normally LPG and ethane are recovered when
temperature levels mentioned above are reached. The remaining
bulk of the gas, mainly methane, is transported as LNG. As
mentioned later, LNG by itself is a large and complex industry.
There could be processing at lower temperatures for helium
recovery or nitrogen rejection for gases containing high amount of
nitrogen. Essentially to recover any component, the gas needs to
be chilled to a temperature at which the component will condense.
The flow diagram and brief description of the processes are given
later. An overall block diagram of the processing steps in a gas
processing plant is given in Figure 1.
Gas received from pipeline often comes along with ‘slugs’ of liquid
(NGL). This is trapped in ‘Slug catcher’. The liquids are separated
in the slug catcher. The gas is first sweetened to remove H2S (if it
is a sour gas). Some amount of carbon dioxide also gets removed
along with H2S. Normally H2S is not allowed to be discharged into
the atmosphere. It is converted to sulfur in a sulfur recovery plant.
Sulfur comes out as a by-product. Gas is then compressed to the
desired pressure and dehydrated to bone dry (below 1 ppm water)
state for cryogenic processing. Presence of moisture in the gas
can create hydrate formation. If cryogenic processing is not done,
dehydration requirement is still there, but less severe. Cryogenic
processing of the gas is then carried out for separation of the
hydrocarbons into:
• LPG for use as domestic fuel
• NGL for sale to refinery or petrochemical plant
• Ethane/propane mix as feedstock for petrochemical plant
• Methane is used to generate power or make fertilisers and

other chemicals.
101
There are two possible ways the methane rich gas after recovery of
Notes
heavy hydrocarbons is transported to the user:
• Through pipeline
• Converting the gas to LNG and exporting by marine tankers
Figure 1: Gas Processing
If LNG is to be made, a deeper cryogenic process will be needed

to bring the temperature of the gas to –160°C. LNG is normally
exported after recovering the LPG out of the gas. Part or whole of
the gas can be sent by pipeline to the consumers if transportation by
pipeline is feasible. Before sending to the pipeline, the gas is chilled
to the lowest temperature it will face in its route to the destination.
This helps to drop out and separate the NGL or condensate which
would otherwise drop off in the pipeline as liquids, reducing
pipeline efficiency and capacity to transport the gas. This process of
chilling the gas to moderately low temperatures to prevent further
condensation in the pipeline is called Dew Point Depression or Dew
Point Control. Literally, it means processing to prevent formation
of hydrocarbon dews in the pipeline due to cooling. Condensates
from various units of gas processing plant (C5+ components) are
passed through separators to drop the pressure and stabilise it.
Condensate is sold to a refinery or a petrochemical feedstock. The
refineries distill it as blending stock for gasoline and kerosene.
Condensate could be a good feedstock for the petrochemical plant
also for
• cracking to olefins and
• polymerisation of the olefins to plastics.
Thus, gas processing plant essentially prepares the feedstock for

102
further processing at refinery and petrochemical plants.
Notes
Check your Progress
1. The word __________________ is used for low temperature

processing.
2. The process of chilling the gas to moderately low

temperatures to prevent further condensation in the
pipeline is called ______________________
Process Description
This section talks about the process of Gas processing:
Gas Dehydration
There are two types of gas dehydration processes:
Adsorption Processes: These are solid bed processes using reagents

like Molecular Sieve or Alumina as adsorbents.
Absorption Processes: These use liquid absorbents which absorb

the moisture from the gas.
Normally, Absorption Process using liquid absorbents is used in the

oilfield dehydration of natural gas. In the oil/gas field gas is saturated
with water vapour. To prevent corrosion in the pipeline caused by
moisture in presence of other contaminants like carbon dioxide, the
gas needs to be dried to a level of moisture content of 7 lbs/Million
Standard Cubic Feet (about 120 ppm). This is suitably achieved
by Absorption Process using Glycols as the reagent for absorbing
moisture from gas. Normally Tri-Ethylene Glycol (TEG) is used as
the reagent. A flow diagram of the process is given in Figure 2.
Figure 2: Gas Dehydration Using TEG (Glycol Dehydration)

Wet natural gas is introduced in the Absorber (also called 103

Contactor) at the bottom and goes up through contactor plates in
Notes
the column. It contacts lean glycol solution fed at the top of the
column and travelling down the column. The moisture from the
gas is absorbed by the glycol and the dry gas leaves the absorber
for further processing. The rich glycol (glycol with absorbed water)
is drawn from the bottom. The rich glycol (glycol plus water) is then
regenerated in a stripping column at near atmospheric pressure
using heat to boil off the moisture at around 200°C.
The absorption column operates at high pressure (at pressure of the

gas) in the range of 30ata to 70ata while the stripper is operated
at near about atmospheric pressure. There is a heat exchange
between rich glycol and hot regenerated lean glycol which reduces
the energy requirement in the stripper and cools the lean glycol
before it is recirculated to the absorber. The dry bed processes
are not normally used in offshore or onshore oilfield due to more
complexity of operation and solid handling requirement.
Dry bed processes using molecular sieve granules as drying agent

is used to make the gas bone dry (below 1 ppm moisture) before
processing at low temperatures. Molecular sieves are zeolite
granules manufactured under controlled conditions to create
microscopic pores at its surface. These pores have affinity for water
molecules and moisture gets into the surface of the molecular sieve
at its pores. This process is called adsorption.
Complete drying of the gas is necessary because at low sub-zero

temperatures, under the pressure of gas, the slightest presence of
moisture in the gas can create hydrate formation. Hydrates are
snow like compounds of hydrocarbons and water (e.g. methane
hydrate) which choke the equipment and piping during low
temperature processing of gas. Once that happens, the hydrates
have to be disintegrated by injecting small dozes of methanol into
the equipment.
Normally two dryers containing beds of molecular sieve are used.

One of the dryers is used for drying and the other is meanwhile
regenerated by removing absorbed water from the molecular sieve
bed by heating Figure 3. The dryers are alternately switched
over from drying mode to regeneration mode. For regeneration,
normally dry natural gas heated in a fired heater is passed through
the bed of the dryer. Dry bed processes are more difficult to operate
compared to the Glycol Dehydration process.
104
Notes
Figure 3: Dry Bed Gas Dehydration
Normally in oilfields offshore and onshore, where specification

of gas for transportation by pipeline is not as stringent, Glycol
Dehydration units are used.
Gas Sweetening
Hydrogen sulfide, carbon dioxide and mercaptans can be removed
from natural gas by several processes. The various processes for
sweetening used are:
• Amine as absorbents (shown here) utilizing mono ethanolamine

(MEA), diethanolamine (DEA), DGA.
• MDEA (methyl diethanolamine) and MDEA based proprietary

amines (for all three – effectiveness varies for Mercaptans) as
absorbents.
• Molecular Sieves (removes H2S and mercaptans only)
• Batch processes such as Iron Sponge, Sulfa Check and
• Sweet (for H2S removal)
• Physical solvents such as Sulfinol and Ifpexol
• Membrane process to remove H2S
The choice of sweetening process depends a number of factors such

as:
• Hydrogen sulfide and carbon dioxide content
• Specification of treated gas
• Temperature and pressure of gas

105
• Volume of gas
• Requirement of converting the hydrogen sulfide to sulfur Notes
Gas sweetening using an amine solution is among the most widely

used method. Figure 4 represents a simple amine treating facility.
Sour gas is introduced in the absorber at the bottom and goes up
through contactor plates in the column. It contacts lean amine
solution (amine solution of high concentration, free of H2S and
CO2) fed at the top of the column and traveling down the column.
The acid gas components, H2S and CO2, are absorbed by the
amine solution and the sweet gas leaves the absorber for further
processing. The rich amine (amine with dissolved hydrogen sulfide
and carbon dioxide) is drawn from the bottom.
The absorption column operates at high pressure (at pressure of the

gas) in the range of 30ata to 70ata while the stripper is operated at
closer to atmospheric pressure. The temperature at the absorption
column is close to the ambient temperature (30-40°C).
Figure 4: Amine Sweetening Process
The rich amine is sent to a flash tank to drop the pressure and
absorbed hydrocarbons exit as the flash-tank vapour. The rich
amine flows through the lean/rich amine heat exchanger increasing
the temperature to above 100°C.
Fine particles, resulting from wear and tear of the piping and other
equipment, collect in the amine solution, which ultimately lead to
blocking and foam generation in the column. So, there is an amine
filtration step before the regeneration in the stripping column.
The rich amine (amine with dissolved hydrogen sulfide and carbon
dioxide) is separated (regenerated) in a later step using steam in
the stripping column. From the top of the regeneration column
mainly hydrogen sulfide and carbon dioxide mixture with a little
106
quantity of hydrocarbons absorbed by the amine come out.
Notes
The hot rich amine is stripped at low pressure removing the
absorbed acid gases, dissolved hydrocarbons and some water.
Considerable amount of energy is required to strip the amine.
Heat is supplied by a firetube type reboiler. The temperature at
the bottom of the stripping column can be over 200°C.
The stripped or lean amine is sent back through the lean/rich

exchanger decreasing its temperature. A pump boosts the pressure
such that it is greater than the absorber column. Finally, a heat
exchanger cools the lean solution before entering the absorber. The
lean amine entering the absorber is usually 40 to 45°C.
Liquefaction and Recovery of Hydrocarbon

The objective is to recover hydrocarbons like ethane, propane,
butane by condensing them at very low temperatures and then
separating by fractionation. As indicated earlier, the temperature
to which gas need to be chilled depends on what we are trying to
recover. LPG can be recovered by chilling to –15 to –35°C. To make
the gas to LNG, chilling is required below –160°C. Condensation of
part of the gases takes place at these temperatures. Fractionation
of the condensed liquid is carried out to separate the components.
To chill the gas, refrigeration is required. There are three types of

processes:
(i) Processes using refrigeration supplied by external refrigeration

systems to chill the gas. Normally some component of natural
gas itself like ethane or propane is used as refrigerant using
conventional compression refrigeration equipment.
(ii) Processes using expansion of the gas itself to attain cooling.

Gas chills when its pressure is dropped just as it gets heated
when it is compressed. Turbo-expander process is used to
expand the gas while doing the work of driving a turbine like
equipment called turbo-expander. Thus, it attains cooling by
losing its internal energy by expansion as well by driving the
turbo-expander machine.
(iii)
Processes using a combination of external and internal
refrigeration.
A simple conceptual diagram of an external refrigeration process

for LPG Recovery is depicted in Figure 5. The important steps in
the process are:
107
• Natural gas coming from the source at high pressure is first
Notes
dried in molecular sieve dryers.
• It is then chilled by exchanging heat with the chilled gas

coming out after LPG Recovery.
• The gas is further chilled to around –35°C using external

propane refrigeration package.
• At each of the two stages of chilling there are separators to

collect the condensed liquids from the gas. At –35°C, almost
all C4 and C5+, most of C3 and some amount of C2 and C1
components condense.
• This liquid need to be fractionated to take the light ends (C1

and C2) out to meet the LPG specifications. LPG and C5 (NGL)
are also separated by the fractionation system. Generally, this
is done in a series of two fractionating columns.
Figure 5: External Refrigeration Process for LPG Recovery
When C2 also need to be condensed and separated, lower temperatures

(–50 to –60°C) are needed and more than two fractionation steps
may become necessary. The lower temperatures are obtained by
expanding the gas to lower pressures and by using external ethylene
as refrigerant. Lower temperatures can be achieved by using external
ethylene refrigeration cycle or by Turbo-expander process shown in
Figure 6. The diagram actually shows a combination of external
refrigeration and turbo-expander. The energy given to the turbo-
expander is used to re-compress the outgoing gas. But due to the
efficiency factor of turbo-expander process, it can be recompressed
to a pressure much lower than its original pressure.
108
Notes
Figure 6: Turbo-expander Process for LPG Recovery
By an appropriate combination of external refrigeration and turbo-

expander process, very low temperatures can be factors like:
• Pressure of the gas
• Temperature to which the gas needs to be chilled and

components to be recovered
• Pressure requirement of the outgoing gas by the customer.
Check your Progress
1. ______________________ are solid bed processes using

reagents like Molecular Sieve or Alumina as adsorbents.
2. ___________________ use liquid absorbents which absorb

the moisture from the gas.
Summary
In this unit we learnt about the Physical properties and
characteristics of Natural gas. We also learnt about its Chemical
properties and its composition. The entire process of Gas Processing
is also explained.

1. What is Natural Gas? State its physical and chemical
properties.
2. What is the purpose of gas processing?
3. What is gas sweetening? Explain.

109
Unit 12 Notes
Liquefied Natural Gas (LNG)
Objectives
 LNG Cycle
 LNG business
 Indian scenario on LNG
Introduction
Natural Gas is a highly desirable energy source: it burns cleanly,
with little pollution, it is often inexpensive to produce and can
be transported easily through pipeline like any other petroleum
product. The demand for natural gas is growing at a fast pace as a
source of energy and petrochemicals.
The LNG Cycle

LNG, or liquefied natural gas, consists mostly of methane and is
cooled to approximately 256 degrees Fahrenheit so that it can be
transported from countries that have more natural gas than they
need to countries that use more natural gas than they produce.
In its liquefied state, natural gas takes up 1/600th of the space,
making it much easier to ship and store when pipeline transport
is not feasible. As world energy consumption increases, experts
anticipate that the LNG trade will grow in importance.
At present, however, the technology does not exist to build long

distance pipelines through the depths of the ocean. So moving
natural gas between continents requires an alternative approach.
Conversion of natural gas to Liquefied Natural Gas (LNG) is a

proven commercial technology for transporting large volumes
of natural gas across oceans by marine tankers. The utility of
liquefying Natural Gas is the substantial volume reduction
gained by liquefaction (1:620). This volume reduction makes the
transportation and storage of the gas much more convenient.
Typical composition and characteristics of LNG is presented in

Table 1.
110
Table 1: LNG Characteristics
Notes
LNG Composition (Typical Mol %)
N2 → 01.0 %
Methane → 85.1 96.7 % (Lean)
Ethane → 1.9 8.6 % (Rich)
Propane → 0.68 4.1 %
i- Butane, nButane → Traces
Mol. Wt. → 16.8 19.3 (Rich)
Gross Heating Value → 10.450 Kcal/NM3
S. G. → 0.455
• Methane in Natural Gas does not liquefy under pressure. To

make LNG Natural Gas must be liquefied through refrigeration.
• Becomes liquid at -160 deg C at atmospheric pressure.
• Volume reduces by 620 times when liquefied.
• Spilled LNG will crack a steel plate like boiling water hitting
frozen glass.
The LNG industry is economic when liquefaction and the

transportation of LNG are done in very large volumes (say above
5 Million SCMD and above). This involves a number of major
investment and contractual activities including:
• Liquefaction by the producer of the gas
• Storage facilities at producer end
• Loading in tankers and Transportation
• Receiving/unloading terminal and storage at buyers end
• Re-vaporisation of LNG to gas and
• Distribution to the consumers with a cross country pipeline

network.
This is depicted in Figure 1 and is known in the industry as the

LNG Cycle. This was developed for conceptualizing one of the
LNG projects planned with the LNG Receiving terminal planned
in the eastern coast of India. This would involve buying of LNG
from one of the South East Asian countries or Australia Fertilizer
plant and power plant, which are large consumers of gas was
proposed to be installed near the receiving terminal. The balance
gas was proposed to be transported by pipeline with a northern
Unit 12: Liquefied Natural Gas (LNG)
111
grid of pipeline and a southern grid to various parts of India. The
magnitude of investment in such a project is very large. Notes
Figure 1: The LNG Cycle
The facilities at the producer end of the cycle is called LNG upstream
and the buyer end is called LNG downstream. LNG upstream
comprises of gas treatment and liquefaction steps as explained
earlier in this section along with LNG loading facility for loading in
marine tankers. This is shown schematically in Figure 2.
The down stream section comprises of unloading from tankers,

storage, pumping, re-vaporisation and transportation by pipeline.
This is shown schematically in Figure 3.
Figure 2: LNG Upstream
Figure 3: LNG Downstream

112
Storage of Liquefied Gases
Notes
Storage and handling of gases is dealt with in later sections. But it
is important to know at this stage that there are two ways liquefied
gases are stored;
• Pressurised storage where gas is in liquid phase under pressure

at ambient temperatures.
• Cryogenic or low temperature storage (generally at atmospheric

pressure).
LPG is often stored in pressurised containers although it is also

stored under cryogenic conditions. Figure 4 shows two types of
pressurised LPG storages – sphere and bullet. LNG is always
stored under cryogenic conditions (below –160°C) at atmospheric
pressures. At such temperatures, steel becomes brittle like glass.
The storages are made of special nickel steel as normal steel
becomes brittle at that low temperature.
They are heavily insulated to minimise heat leakage from the

atmosphere into the tank. They are often double walled with
concrete outer shells utilised as additional resistance to tank
damage and as containment in the unlikely event of tank leakage.
This type of tank with containment of leakage is the most costly
and has most often been used for the storage of LNG. Some leakage
of heat does take place from the surrounding atmosphere into the
storage tanks. There is some amount of liquid vaporisation and
boil-off. The vapours are compressed, condensed by refrigeration
and put back into the tank.
The tankers carrying LNG also have spherical domed storage

tanks along with refrigeration system for boil-off vapours. LNG
tanks could be on ground or mounded under earth. Figure 5 depicts
an LNG receiving terminal with an LNG tanker, jetty and LNG
storage facility. The LNG tankers can have a carrying capacity
from 20,000 cubic metres to 135,000 cubic metres. A large LNG
storage tank can be holding around 100,000 cubic meters of LNG.
For this capacity, the tank would be about 70 meters in diameter.
Japan is the world’s largest importer of LNG and imports 94% of
its gas as LNG.
113
Notes
Figure 4: LPG Storage
Figure 5: LNG Receiving Terminal
LNG Project Economics

Basic gas price at source for LNG facilities are relatively
cheap, based on large and easily produced reserves. Processing
(Liquefaction) and transportation equipment is capital intensive
and highly specialised, requiring large investment for each new
facility. For each million cubic feet of gas delivered to end use, less
than 30 percent of the cost is associated with the raw material
price (gas price at source). The balance is the cost associated with
processing and transportation.
Liquefaction is a very energy-intensive process. Typically, about

8 to 9 percent of the natural gas delivered as raw material at an
LNG plant, is used as plant fuel for liquefaction. The number of
tankers required is a function of the distance between the export
terminal and the import terminal and the number of days it takes
114
to move between the source of gas and destination. The unit cost of
Notes
marine transport is primarily a function of the capital cost of the
tanker, distance, the financing terms and acceptable rate of return
for the tanker owners.
Complexity of an LNG Project

The complexity of an LNG project is due to:
• Sheer size of the project. Liquefaction, transportation and re-

vaporisation of LNG can be economic at a very large capacity,
at least 5 to 10 Million SCMD. This requires investment on
billions of Dollars.
• Large number of ‘operations blocks’ or projects of diverse

technologies need to be developed simultaneously, integrated
and planned together. For example Liquefaction plant, Loading
facilities, Unloading facilities and re-vaporisation facility along
with large consumers have to come up simultaneously.
• Numerous locations covering countries and states.
• Numerous agencies, consumers involved.
• Market Development for the LNG by the buyer.
• Strong technology base and support required.
• Numerous contract negotiations.
• Long-term Contract between LNG supplier and buyer.
♦ Long-term Contract between LNG buyer and transporter.
♦ Long-term Contracts between LNG buyer and LNG users

like Power Plant, Fertilizer Plant, etc.
Because of enormous effort required on planning and development

of the project and numerous contracting involved, the gestation
period of an LNG based grass-roots project is normally quite long
(4 to 6 years).
Due to the immense costs of each link in an LNG cycle, such

projects can be undertaken only by large organisations with great
financial capacity and project management skills. A successful
project requires cooperation and selling of the idea to:
• The government of the country having gas source
• The company that owns the natural gas

115
• The government in the consuming country
Notes
• Consuming organisations
• Financiers
Check your Progress
1. LPG is often stored in __________________ containers.
2. The utility of liquefying Natural Gas is the substantial

____________________ gained by liquefaction.
The Indian Scenario

If we consider the Indian scene with respect to LNG, we can see:
Recovery of LPG and Petrochemical Feedstock

Gas processing facilities in India started with the commissioning
of ONGC’s Uran gas processing facilities. This was based on gas
from Mumbai High as feedstock, Uran at Maharashtra being the
first onshore terminal. Later Uran was expanded to more than
double the capacity and ethane along with propane was recovered
from the gas to provide feedstock for a petrochemical complex
(Maharashtra Gas Cracker Complex at Nagothane). Later with a
bigger gas processing terminal at Hazira, ONGC became a major
producer of LPG. Currently ONGC is producing over 1.2 million
tons per year of LPG. ONGC produces close to 1 million tonnes
of LPG at its Uran and Hazira terminals. Another major player
emerged once Gas Authority of India Ltd (GAIL) was formed to
transport and distribute the gas. Currently GAIL has extensive
network of gas pipeline gas processing complexes to produce
LPG and one to produce propane as feedstock for a petrochemical
complex. It also own a petrochemical complex based on feedstock it
generates from its own gas.
LNG Facility
There is a large gap between demand and supply of gas in India.
In the nineties ambitious plans were drawn out by the government
as well as private sector Indian and Multinational companies to
import LNG and build LNG terminals in India. The government
facilitated formation of Petronet LNG Ltd. in the public sector to
lead the drive to import LNG and boost gas supply in the country.
Most of the plans have not materialised.
116
As stated earlier, the success of LNG projects depends on a number
Notes
of factors: reliable and continuous supply of LNG in large volumes,
constant technological support, reliable long-term market demand
and ability to finance. Many of the companies who intended to
enter into the LNG business, has got into such detailed planning.
As a result, most of the LNG projects planned have failed to take
off. The first LNG terminal in India was built by Enron for its
Dabhol power plant. The next LNG projects that are likely to see
the light of the day are the projects of Petronet LNG and Shell.
Petronet LNG project at Dahej is ahead of another LNG project
being implemented by Shell at Hazira.
Dahej LNG import terminal was also completed and Five million
tonne gas (20 million metric standard cubic metres) are supplied
to users along HBJ Pipeline. The large discovery of gas in 2002
off Andhra Coast by Reliance and ONGC’s discovery at Vasai and
near Surat are expected to give further boost to the gas supply
and gas processing industry. It should be noted that India being
LNG importing country, the LNG facilities planned fall under the
category of LNG upstream. For the import of LNG, the long-term
tie-ups are with producers in the Middle East.
Check your Progress
1. _________________________ was formed to transport and

distribute Natural gas.
2. The first LNG terminal in India was built by Enron for its
______________________ power plant.
Summary
Basic properties and characteristics of natural gas was described
in the beginning. This was followed by highlighting the need
or objectives of processing natural gas – namely – removal of
impurities and separation of the components of gas. Various
processes used in gas purification was described with simple flow
diagram. The importance of gas dehydration and gas sweetening
was highlighted.
Liquefaction of the gas to LNG and separation of various components

of gas were described with simple flow diagrams. Various methods
of getting low temperatures for condensation of gas was described.
117
Questions for Discussion Notes
1. What are the objectives of gas processing? Name the various

gas treatment or purification processes.
2. Write down a brief description of gas dehydration process with

simple flow diagram.
3. What do you understand by an LNG Cycle? Describe with a

schematic diagram.
4. Describe upstream and downstream of LNG facility.

Unit 13
118
Notes
Petroleum Refining
Objectives
 Important Specifications of Petroleum Products and their Significance
 Refinery Process Configurations used to Meet the Specifications and
Market Demand
 Basic Process Schematics of Important Processes used in a Refinery
 Infrastructure Requirement and Broad Economics of Refinery
Operation
Introduction
What does a petroleum refinery do? Why do we need refining?
These are some of the questions that this unit will try to answer. It
will also trace the history of development of the various processes
in the refining industry.
Refining
In a nutshell the main functions of a refinery are:
Primary Separation: Crude oil is a mixture of around 500

components. They need to be separated into useful products. The
separation is not done to recover individual components but as
products which are mixtures of suitable boiling ranges. This is done
by distillation, where various cuts or fractions are taken out as
gasoline, kerosene, diesel etc. which are essentially raw material
or intermediate products.
Processing to Meet Quality Specifications: Typical examples

of this type of processes are those used for improvement of
octane number to meet gasoline specification. Raw gasoline cut
or naphtha as it comes out of distillation has low octane number
(may be around 40 to 60 ON). But for the market we need octane
numbers of 87 and above. Processes are used to improve the octane
number by converting the low octane components of gasoline to
high octane components. For example, Catalytic Reforming process
converts straight chain paraffin in the raw gasoline to aromatics
which have high octane number. Similarly, isomerisation process
119
converts normal paraffin components of naphtha to iso-paraffins
Notes
which have higher octane number.
Figure 1: Refinery under Construction
Processing to Meet Environment Related Specifications:

The most common processes of this type revolve around removal
of sulfur. Typical process units are Hydro-desulfurisation of
kerosene and diesel oil to meet the sulfur related specifications in
the product.
Conversion of Residual Products: The residues or heavy cuts

from the distillation or other process units of a refinery cannot be
used as value added product like gasoline or diesel. Molecules of
such stocks are broken into lighter molecules to get products like
diesel or gasoline by conversion processes called cracking.
Figure 2: Refinery Complex from Different Angles
Finishing and Blending Operations: This step involves getting

the product in finished form by treatment to get good marketable
colour, blending with intermediate products from the refinery,
120
putting additive to enhance certain properties.
Notes
Check your Progress
1. Molecules of residual products of refineries are broken into

lighter molecules to get products like diesel or gasoline by
conversion processes called _________________
2. Raw gasoline cut or naphtha as it comes out of distillation

has a low ___________________ number.
Product Specifications
Since most of the operations in the refinery are to meet certain
specification of products, it is necessary to know of certain important
specifications and their significance. Normally each country has
its own institutions to define the standards and specifications.
There are several items of specifications for each product. The
more important heads are stated below. The detailed specification
of some of the products as per Indian Standards Institution (ISI)
is given in the Table 1. There are standard laboratory procedures
and methods under controlled conditions to measure these
specifications for a product.
Table 1: Important Specifications for Main Refinery Products
No. Refinery Product Specification

1 LPG Vapor Pressure at 65oC, Propane content
2 Gasoline Octane No., Boiling Range, Sulphur, Aromatics
3 Naphtha Boiling Range
4 Kerosine Smoke Point, Flash Point, Sulphur
5 Jet Fuel Freezing Point, Flash Point, Boiling Range
6 Diesel Oil Cetane No., Carbon Residue, Pour Point, Flash
Point
7 Lubricating Oil Viscosity, Viscosity Index, Carbon Residue
Vapour Pressure: It is a very important property of LPG for

safety and handling, particularly as it is handled at home as
cooking gas. It restricts maximum pressure a cylinder can develop
and helps to set the design pressure for the cylinder. Propane
being more volatile of the other constituent (butane) of LPG, it can
develop more pressure and hence its content in LPG is limited by
specification.
Flash Point: It is the minimum temperature at which the product

generates enough vapour to form an explosive mixture with air.
121
Flash point is significant to the safety during storage. During
Notes
storage it can form explosive mixture in the empty part of the tank
above the liquid surface. It is preferable to store a product below
its flash point. Each country has its own specification of flash point
depending upon the climatic conditions of the country.
Octane Number (ON or O.N.): This signifies ignition quality

of the gasoline in automobile engines. The engine has cylinders
with pistons where the fuel (gasoline) and air mixture is injected.
The cylinders of an automobile pass through a cycle of expansion,
compression and ignition for movement of the pistons, which drive
the wheels through a crankshaft. For optimum delivery of power to
the engine, the fuel air mixture injected to the engine should ignite
at the right timing. Due to heat of compression, the temperature
in the cylinder goes high and there could be mistimed ignition of
the fuel due to the heat generated by compression. A high-octane
gasoline is better for ignition. A mistimed ignition creates knocking
in the engine and this results in loss of power.
The different hydrocarbon content in gasoline (like in crude oil) are:

straight chain paraffin, isoparaffins, naphthenes and aromatics.
Normally for the same carbon number and size of the molecule
straight chain paraffins have the lowest octane number. Branched
chain paraffins (isomers) and naphthenes have the higher-octane
number. Olefins also have high octane number but they are
undesirable in gasoline because they tend to polymerise to form
resins or gum in the tank.
Typical octane number of various constituents is given in the Table 2.

Table 2: Octane Number of Some Hydrocarbons
Carbon Number Hydrocarbon Octane No.

C6 Straight Chain n-Hexane 24.8
C6 Isomer Methyl Pentane 73.4
C6 Isomer Dimethyl Butane 91.8
C6 Naphthene Cyclohexane 83
C6 Aromatic Benzene 98
C7 Paraffin n-Heptane 0
C7 Isomer Dimethyl Pentane 88
C8 Isomer Iso-Octane 100
C7 Aromatic Toluene 107
Octane Number (ON) is defined as the percent volume of iso-

octane in a mixture of iso-octane and normal heptane that gives
the same knocking as that of the fuel when tested under defined
122
conditions. Iso-octane is assigned a value of 100 and normal
Notes
heptane is given the value of zero. Other octane numbers emerge
as relative ignition quality or antiknock quality of the component.
Aromatics: Although it has high ON, its content in gasoline is

being limited by specification due to its carcinogenic nature.
Pour Point: When heavy petroleum products like fuel oil or

diesel containing wax are cooled to certain temperatures, the wax
separates out from them making the oil immobile. It becomes
difficult to move or pump the oil. The temperature at which the
oil becomes immobile is termed as pour point. It happens because
separated wax forms honeycomb like structures. High wax crude
oils like Mumbai High have high pour point (30 to 35°C). Many of
the South East Asian crude oils have high pour point.
Boiling Range: The volatility of oil is indicated by its boiling

range and distillation characteristics. The oil should have suitable
boiling range (volatility) so that it can be used in a particular
application. For example, Motor Gasoline has certain boiling
range specifications. In case of naphtha, a specific boiling range is
chosen for use as feedstock for petrochemical plant. For example,
aromatics like Benzene, Toluene and Xylene are good feedstock for
petrochemical manufacture. A boiling range of naphtha is chosen
where concentration of these components will be high.
Smoke Point: It is the length of flame in a standard laboratory

test, which produces smoke. It is an important property of kerosene.
Smoke point depends on the type of hydrocarbon constituents of
the fuel. Paraffins have high smoke points followed by naphthenes
and then by aromatics. Higher smoke point means less smoky.
Cetane Number: While the octane number indicates ignition

quality of engines using spark ignition (gasoline fuelled cars), this
test is applicable to diesel fuels which use ignition by compression.
Cetane number is defined as the percent by volume of n-cetane in a
mixture of n-cetane and alpha methyl naphthalene that would give
the same ignition quality and engine performance as that of the fuel
under test. This test has reverse characteristics of octane number,
which gives low value to fuels which self ignite easily. Unlike octane
number, normal paraffins have higher cetane number followed by
naphthenes, iso-paraffins, olefins and aromatics.
Sulphur: Sulphur is corrosive to the fuel systems and also is a

pollutant to the environment. The specifications on sulfur content
123
in petroleum products are becoming more and more stringent
Notes
world wide. Sulphur specification is applicable to all products.
Considerable investments are taking place every year in the
refineries to improve sulfur related specifications.
Viscosity: Viscosity is the resistance to flow. It indicates

pumpability of the product. Viscosity is an important property for
lube oils because higher viscosity is required to prevent wear and
tear in the moving parts of a machine. For fuel oils, it gives flow
properties which are needed for pump selection for transporting.
Viscosity is measured in several ways. The most common units are
Centi-Stoking (CST), Centi-Poise (CP) and SSU (Saybolt Seconds
Unit).
Viscosity Index: This specification signifies change of viscosity

with temperature. This is an important specification for Lubricating
oils. In the machinery, friction generates heat. For any petroleum
product, viscosity is lower as the temperature increases. The lube
oil viscosity should not go down too much with heating as it will
lose its lubricating property. Higher the Viscosity Index less is the
effect of temperature on viscosity.
Carbon Residue: Fuel as it burns, forms a carbon deposit. This

carbon deposits on burner tips or cylinders reduces efficiency.
Carbon residue test gives an indication of the amount of carbon
that would form when the oil is cracked and burned.
There are several other specifications like colour, copper corrosion

test, bromine number etc. all of which have some significance on
the quality of the products.
Check your Progress
1. Test gives an indication of the amount of __________________

carbon that would form when the oil is cracked and
burned.
2. Viscosity is the ___________________ to flow.
Refinery Processes Overview and History

Types of Processes
Refining comprises of four types of processes:
• Primary Separation: The first step in refinery is atmospheric

124
and vacuum distillation of crude oil. Various product cuts
Notes
or fractions like LPG and gasoline come out of the top of
distillation column. The medium heavy liquids like kerosene,
ATF and diesel come out next in the lower part of the column.
The residue left is vacuum distilled to separate heavier liquids,
called gas oils. These products do not meet the specifications.
To meet the specifications, they require further processing.
For example, some of the gas oil from vacuum distillation form
base stock to make lubricating oil for further processing. Other
products are also treated to meet certain specifications. For
acceptance as high-value products, such as gasoline, much
more additional processing is required as given below.
• Conversion Processes: Conversion processes are essentially

breaking and rearranging of the molecules of the intermediate
products to convert them to high value products meeting
specification. We can put such processes in two sub-groups:
(a) Product upgradation: Certain products like gasoline are

processed to meet octane number or other specifications.
Examples of such processes are catalytic reforming,
isomerisation, etc. These processes are essentially
restructuring of molecules to improve the specifications.
(b) Conversion of heavy residues to light products: This is done

by cracking of the large heavy molecules into smaller and
lighter molecules under high temperature and pressure
with or without a catalyst. The cracking processes covert
residues and heavy gas oils to light products like gasoline,
kerosene and diesel resulting in value addition.
• Treatment Processes: To meet environment related

specifications and for giving finish to the products further
treatments are required. This is the final step before the
products are tested to meet quality and dispatched by tanker
or pipeline to the market. Examples of such processes are
Hydro- desulfurisation of distillation products to remove sulfur,
sweetening of gasoline to remove traces of sulfides, Hydro-
finishing of lube oil to give right colour with mild hydrogenation.
• Processing for Lube Oils: Processes to remove wax, asphalt

etc. from the lube oil base stocks to meet the quality requirement
of lubricants.
Processes for making lube oil is made into a distinct category because
125
lubricating oils can not be produced from all types of crude oils. When
Notes
a crude oil is suitable for producing lubricating oil, specific cuts called
lube oil base stocks are distilled during primary separation step and
passes through a series of processes to make lube oil. A common
terminology used for a refinery, which does not produce lube oils, is
Fuels Refinery. One which produces lube oil is called Lube Refinery.
History
Let us trace the history of development of the various processes in the
refining industry (Table 3). It can be seen from the table that at first
only separation processes were used. Then came gasoline upgradation
processes to meet motor gasoline specification and conversion of
heavies to lighter products like gasoline to meet the increased
demand of light products. Finally, the drive was environment related
specifications – processes to meet strict specification on sulfur and
other specifications like aromatic content and lead removal, etc.
Almost all the current processing in the refineries came into existence
by the fifties. Later the changes and innovations were related mainly
to minimising residues in the refinery and to meet sulfur and other
environment related specifications.
Table 3: History of Refining
Figure 3: Distillation Columns in a Refinery

126
Primary Separation
Notes
Let us discuss Primary Separation in greater detail. It is done
by Atmospheric Distillation and Vacuum Distillation. This is
diagrammatically represented in Figure 4.
Atmospheric Distillation
Atmospheric Distillation is the first step in the refinery processing
to separate out the raw products (cuts) by distillation under
pressures above atmospheric pressures (Atmospheric Distillation).
Atmospheric Distillation is done to separate the light cuts by
heating the crude oil to 350-370°C at pressures close to atmospheric
pressures. At these temperatures light and white products like
motor gasoline, kerosene, Aviation Turbine Fuel (ATF), diesel, etc.
are distilled out as raw products for further processing. Residue
which is left behind at the bottom of the distillation column after
atmospheric distillation is called long residue. The next step in
distillation is Vacuum Distillation of the long residue.
Vacuum Distillation
The limitation of distilling at higher temperatures is because
deterioration of crude oil starts at temperatures above 350- 370°C.
Crude oil starts ‘cracking’ at high temperatures i.e. the heavier
molecules start breaking into smaller molecules. Uncontrolled
cracking process results in coke formation and production of
unstable olefinic (double bonded) hydrocarbon products. Vacuum
distillation unit yields vacuum gas oil as distillate which are used
as feedstock for cracking to lighter products. Vacuum gas oil also
can form the base oil for processing into lubricating oils. In vacuum
distillation, the residue from atmospheric distillation is heated to
around 350-370°C and distilled under vacuum conditions. With
vacuum distillations, cuts like vacuum gas oil (feed for cracking or
lube oil manufacture) and bituminous residue etc. are generated
as shown in Figure 4. One or more gas oil cuts can be drawn out
of vacuum distillation. The residue which is left after vacuum
distillation is called short residue.
127
Atmospheric and Vacuum Distillation Cuts

Notes
Figure 4: Primary Separation
Conversion Processes
Primary separation processes are essentially physical separation of
the raw products by distillation. Conversion process means change
of the molecules of the raw products obtained from distillation by
reaction process under heat, pressure, along with or without a
catalyst, from one type of molecule to another.
As mentioned earlier, there are two types of conversion processes:
• Conversion for upgradation of product quality.
• Conversion to change heavy residual products into light and

high value products like gasoline and diesel. These are called
cracking processes.
Discussion on both the types of conversion processes follow.
Gasoline Upgradation
Gasoline upgradation is a typical example of conversion process
to meet specification of the product. Octane Number of gasoline
cut from distillation is low. Octane levels need to be raised to the
desired specification for engine performance requirements. In the
sixties and seventies, Catalytic Reforming was the most prevalent
process to increase Octane Number. The process essentially
converted paraffin in the gasoline cut into aromatics, which have
high ON. For further boosting the octane number, small dosage of
Tetra Ethyl Lead (TEL - Octane Booster) was added. Aromatics
generated by reforming process were found to be carcinogenic and
Lead was found to be health hazard. With lead addition eliminated,
new octane boosters (ethers like MTBE or other oxygenated
compounds) were developed.
With stricter aromatics specification in gasoline, use of reformate

gasoline (product from catalytic reforming) as gasoline blending
128
stock was reduced. New processes were developed for converting

Notes
naphtha to high-octane gasoline. Some such processes are:
• Isomerisation to convert straight chain paraffins to branched

chain isomers.
• Alkylation to combine paraffin components with butane to

form isomers.
• Polymerisation to transform some lighter hydrocarbons into

high octane gasoline.
• Fluid Catalytic Cracking (FCC) units also became one of the

main sources of high-octane gasoline.
Conversion of ‘Heavies’ to ‘Light Oils’

Conversion of heavy cuts (e.g. gas oil from vacuum distillation) and
residues which are dark coloured, low value products to light and
valuable products are important for refinery economics. This is
done by Cracking Processes. Cracking essentially breaks the large
heavy molecules into a number of smaller lighter molecules. The
process generates gases and white products by cracking the heavy
vacuum distillates and residues.
A typical reaction in cracking process:
Catalyst and heat (450-500°C)
C16H34 = C8H18 + C8H16
There are several components of the heavy oils undergoing such

reactions generating light products as well as gases. The common
cracking processes are thermal cracking, fluid catalytic cracking
and hydrocracking.
• Thermal Cracking is done with heat alone at high temperatures.

Depending upon severity of reaction conditions and nature of
feedstock, the thermal cracking processes are named as:
♦ Visbreaking
♦ Coking etc.
• Fluid Catalytic Cracking (FCC) is carried out with a fluidised

bed of catalyst. FCC yields gasoline of higher-octane number
along with gases, kerosene and diesel fractions. Some heavy oil
is also produced from FCC called cycle oil.
129
• Hydrocracking is cracking under heat, pressure and presence
Notes
of hydrogen. It takes wider variety of feedstock and gives
stable, good quality product.
Treatment Processes
Sulfur Removal
Hydro-desulfurisation is one of the processes to remove sulfur by
reaction of hydrogen with sulfur bearing components of oil. This
produces hydrogen sulfide, which is also toxic. Hydrogen sulfide
is converted to sulfur in the refinery by a process known as Claus
Process. With stringent specifications for sulfur in production,
deeper and deeper Hydro-desulfurisation is coming into application.
Finishing of Products
The final polishing of products is done to remove traces of
contaminants, to have the right colour of products and stability
by treating with hydrogen or other reagents. Examples of
such processes are Hydrotreating, Hydrofinishing and Merox
Sweetening of LPG and gasoline. It is important to note that
hydrogen finds extensive use in a modern refinery. In addition
to the basic processes mentioned above, there are a few other
important operations in the refinery of today:
Petrochemical Feedstock Generation

Propylene, naphtha and aromatics are separated or extracted out of
the refinery products as feedstock for production of petrochemicals.
Formulating and Blending

Formulating and blending is the process of:
• Mixing and combining the various cuts or fractions from

distillation, cracking and other process units. The multiplicity of
processing units in a refinery creates a number of intermediate
products of the same boiling range which are finally blended to
get the right amount of product of right quality.
• Dozing of the products with additives (chemicals to give

stability, storage life, performance etc.).
Formulating and blending gives the final finished products, which

are tested and marketed.
130
Lube Oil Manufacture

Notes
Lubricating oils need to be viscous, have stability during the heat
generated by friction of the machine and the viscosity should not
fall sharply with the rise in temperature due to friction. These
qualities are met by vacuum gas oils i.e. high boiling cuts distilled
by vacuum distillation of crude oil. These gas oil cuts are called
lubricating oil base stocks.
All crude oils do not give good lube base stock. For example, waxy
crude oils like Mumbai High or some South East Asian crude oils
are not good for lube oil manufacture. Yield of suitable lube base
stocks are lower in these cases (as the oil is light) and wax creates
a lot of operational problems during lube extraction process. Some
of the medium heavy Middle East Crude oils give good quality lube
base stocks.
The various processing steps are:
De-asphalting Unit: Here asphalt from the lube base stock is

removed by solvent extraction process because asphalt is not good
to meet lube oil specifications.
Aromatics Extraction: Aromatic hydrocarbons are removed by

solvent extraction process to improve viscosity.
De-waxing: This is another solvent extraction process which

removes wax from the lube base stock. This is also solvent
extraction process.
Hydro-finishing: After these series of extraction processes,

the lube oil base stock is treated with hydrogen (hydro-finishing
process) to improve colour and give stability.
Check your Progress
1. _______________________ process means change of the

molecules of the raw products obtained from distillation
by reaction process under heat, pressure, along with or
without a catalyst, from one type of molecule to another.
2. Hydrogen sulfide is converted to sulfur in the refinery by

a process known as ___________________
131
Summary Notes
Bride oil needs to be separated into useful products. The separation
is not done to recover individual components but as products which
are mixtures of suitable boiling ranges. This is done by distillation,
where various cuts or fractions are taken out as gasoline, kerosene,
diesel, etc. which are essentially raw material or intermediate
products.
Refining comprises of four types of processes: Primary Separation,

Conversion Processes, Treatment Processes and Processing for
Lube Oils.

1. List out the products produced with petroleum raw materials
as the base.
2. Why does crude oil need to be refined? What does a refinery do?
3. What are the product specifications for products to be refined

in a refinery?
4. Explain the different treatment processes.

132
Unit 14
Notes
Refinery Requirements
Objectives
 Refinery Process Configurations used to meet the Specifications and
Market Demand
 Basic Process Schematics of Important Processes used in a Refinery
 Infrastructure Requirement and Broad Economics of Refinery
Operation
Introduction
We will have a look at how the refinery configuration looked in
the sixties. There has been other health and environment related
specifications like limitation of aromatics in the automotive fuels.
As a result, there have been huge investments to meet the product
quality with respect to sulfur and other environment related
specifications, lowering the margins. A modern refinery has a
number of process units. A list of various types of process units in
a petroleum refinery is given in Table 1. The refinery may have
various combinations of process units out of the list given here. A
detailed description of the process and plants and technologies are
given later. At this point it is important to know the description of
the overall facility in a refinery complex.
Refinery Configurations
The previous section gave an overview of various types of processes
used in the refinery. The process units in the refinery and their
capacities are determined by:
• Product Demand
• Product Prices
• Product Specifications
• Crude Oil Characteristics

Unit 14: Refinery Requirements
133
Notes
Figure 1: Lube Processing Schematic
The investor arrives at optimum selection of process units and their

capacities by economic optimisation techniques. The techniques
as described later are based on investment and operating costs of
various units and yield and quality of products from them. The
combination of the process units is called refinery configuration.
Configuration of the Sixties

Out of the parameters mentioned above, the product specifications
have started changing the refinery configuration a lot since the
1960s. Let us first have a look at how the refinery configuration
looked in the sixties. Figure 3 depicts a typical configuration of a
refinery in the sixties. The crude oil was first distilled at pressures
close to atmosphere (Atmospheric Distillation) to separate out raw
cuts of naphtha, gasoline, kerosene and diesel oil. The residue left
was being used as a component of fuel oil.
Gasoline was processed in Catalytic Reforming Unit to boost

its Octane Number. Finally, Tetra-ethyl Lead was added to the
gasoline in small doses as Octane Enhancer. Sulfur specifications
were not very stringent those days. Wherever the sulfur content
exceeded the specification (diesel in the flow diagram), Hydro-
Desulfurisation Unit was used to remove the sulfur. Fuel oil
always fetched a low value, sometimes lower than the crude oil
resulting in negative return. A part or all of it was distilled under
vacuum to generate vacuum gas oil cuts, which go as feedstock
for lubricating oil manufacture. In the Lube Plant, processes
like dewaxing and other extraction processes like de-asphalting
were used to produce lubricating oils meeting specifications. Mild
hydrogen treatment of the lube oils in the lube plant was done to
meet the final specifications and improve the colour.
Gas oil cuts from vacuum distillation unit were also taken to Fluid
134
Catalytic Cracking Unit (FCC) to produce more of gasoline. FCC
Notes
unit was designed to produce gasoline as well as kerosene and
diesel. Some gases were also produced as a result of cracking.
Residue from vacuum distillation unit was often mildly cracked

in a Thermal Cracking Process called Visbreaker for use as fuel
oil. These units also produced some gases, gasoline and kerosene.
Gasoline, kerosene and diesel were made by blending the stocks
from crude distillation unit and the various cracking and other
conversion units.
This is a typical configuration, simple and without any integration

with any other kind of facility.
Figure 2: Refinery Complex
Configuration of a Modern Refinery

As stated earlier, strict specifications on sulfur content in finished
refinery product resulted in substantial investment in deep
desulfurisation. Whereas in the sixties 0.5 to 1.0% sulfur was
tolerable in some of the products like diesel or gasoline, now the
specifications are at the level of 25 to 50 ppm (parts per million)
sulfur in many parts of the world. Moreover, the desulfurisation
processes generate hydrogen sulfide (H2S) which is not allowed
to be vented as per current environment regulations. This has
led to extensive use of Sulfur Recovery Units in the refineries.
Further H2S bearing tail gases from the sulfur recovery units are
also treated to remove traces of sulfur before being discharged to
atmosphere.
135
Notes
Figure 3: Refinery Configuration of the Sixties
There has been other health and environment related specifications

like limitation of aromatics in the automotive fuels.
As a result, there have been huge investments to meet the

product quality with respect to sulfur and other environment
related specifications, lowering the margins. Lower margins and
stricter product specs are changing refinery configuration. Today
a stand-alone refinery complex is not economically viable. Many
of the refineries in the west are shutting down. For survival and
profitability, the configuration of today’s refinery has changed.
Low margins call for minimising fuel oil (residual stock and heavy
components) by converting them to high value products. This has
given to more extensive use of cracking processes like hydrocracking
and coking. Lowering aromatics specification in gasoline results in
addition of units like isomerisation to get high octane gasoline. The
reforming unit which produces a lot of aromatics serves to act as
source for aromatic feedstock for the petrochemical industry.
Integration of petrochemical plant to increase margin is quite

common today. Lower sulfur specs increases hydrotreating
applicationand generates need for a large hydrogen plant for the
refineries. Integration with a cogeneration power plant with coke
and fuel oil produced at the refinery has found favour to increase
margin. A typical configuration of a modern refinery taking into
consideration above trends is given in Figure 4.
136
Notes
Figure 4: Modern Refinery Configuration
The points to note in this configuration are:
• Extensive application of hydrogenation processes like

Hydrodesulfurisation, Hydrotreatment, etc.
• Combination of cracking processes by bringing in new units

like Hydrocracking.
• Use of isomerisation and other processes to get high octane

gasoline due to limitation of aromatics blending in gasoline.
Use of catalytic reforming products to extract aromatics like
Benzene, Toluene and Xylene (BTX) for use as feedstock for
petrochemical manufacture. This brings in higher value of the
products.
• The cracking processes generate propylene and butanes which

can be separated and sold as feedstock for petrochemical
manufacture.
It is worth noting that the refinery configuration as shown is still

not economically attractive. The trend today is integration with
petrochemical manufacture using the aromatics or olefins. Later we
shall show some examples of such integration done in the industry.
Balancing the Gases

Some gases come out of the crude during distillation. These are
mainly ethane, propane and butane, a part of which is taken out
as LPG. The cracking units generate some olefins like propylene
and butylenes which become valuable feedstock for making
petrochemicals like polyproylene, polybutylene, etc. So, recovery
of the olefins becomes important for value addition to refinery
products. The balance of gas is consumed in the refinery as fuel.
Figure 5 shows the same configuration as shown in Figure 4
137
without the main liquid streams. It shows the gaseous streams
Notes
in a refinery. It can be seen that hydro desulfurisation generates
some amount of hydrogen sulfide gas (H2S) which is toxic. The H2S
bearing gases are sweetened remove H2S, which is finally converted
to sulfur. Thus, sulfur becomes a product in the refinery by default.
The hydrogenation processes to remove sulfur, other hydrotreating

processes and hydrocracking process require a lot of hydrogen.
Catalytic Reforming process, which converts paraffins in naphtha
to aromatics by de-hydrogenation of paraffins, generates some of
the hydrogen required in the refinery. The balance hydrogen is
supplemented by installing a hydrogen plant in the refinery. Thus,
the processing requirements of the gaseous streams are met by:
• Gas sweetening unit
• Sulfur plant
• Propylene recovery unit
• Hydrogen plant
Figure 5: Balancing the Gases
Check your Progress
1. Lowering aromatics specification in gasoline results

in addition of units like isomerization to get high
__________________
2. The hydrogenation processes to remove sulfur, other

hydrotreating processes and hydrocracking process
require a lot of __________________________
138
Notes
Description of Overall Facilities
The process plant requires utilities like fuel gas, power, steam,
water etc. Also, infrastructure is required to provide logistics and
other support. It also requires facilities to store the raw materials,
QA/QC of products and facilities to handle and transport them
by pipeline or tankers. These are known as utilities and offsite
facilities. The facilities of a refinery complex can be categorised
into process units, utility blocks, storage and product movement,
buildings and waste treatment facilities.
Table 1: Process Units in a Refinery
S.No. Process Unit S.No. Process Unit

Type of Process Type of Process
Primary Conversion of
Separation Heavies
1 Atmospheric 11 Visbreaking
Disttilation
2 Vacuum 12 Coking
Disttilation
3 Naphtha 13 Fluid Catalytic
Stabilization Cracking
14 Hydrocracking
15 Thermal Cracking
Gasoline Sulfur Removal
Upgradation
4 Catalytic 16 Hydrodesul
Reforming furization
5 Alkylation 17 Gas Sweetening
6 Isomerization 18 Sulfur
Recovery(Claus)
7 Polymerization 19 Tail Gas
Treatment
20 Hydrogen Plant
Petrochemical
Feedstock
Generation
8 Aromatics
Extraction
9 Xylene
Separation
10 Naphtha
Feedstock
Preparation
Utility and Offsite Facilities

Table 2 presents a list of utilities and offsite facilities in a refinery
139
complex. With the process units and other facilities listed above, a
Notes
refinery is a very huge facility requiring investments in terms of a
few billion Dollars. Optimisation of the operation of process units
and offsite facilities, logistics of product movement is and overall
management system in a modern refinery is very important to
refinery economics. This has been dealt with in the section on ‘IT
Applications in Oil and Gas Industry’.
Table 2: Utility and Offsite Facilities
S.No. Utility Facilities S.No. Offsite Facilities

1 Power Generation Safety Related
2 Steam Generation 16 Flare System
3 Cooling Water System 17 Fire Water System
4 Process Water System 18 Other Safety Facilities
5 Service Water System
6 Fuel System Infrastructure / Buildings
7 Istrument Aur System 19 Control Room
8 Plant Air System 20 Office Block
9 Water Treatment Plant 21 Laboratory
10 Nitrogen/ Inert Gas Plant 22 Fire Stations
23 Motor Control Stations
Environment Related 24 Warehouse
11 Waste Treatment Facilities 25 Workshop
Storage and Handling Storage and Handling
12 Crude Storages 26 Unloading Facilities
13 Intermediate Storages 27 Marine Tanker Loading
14 Product Storages 28 Railway Tanker Loading
15 Chemical Storages 29 Road Tanker Loading
Utility Facilities
A list of utility facilities is given in Table 2. Some of the facilities
are relatively small packaged units supplied by the equipment
vendors e.g. Instrument Air System comprising of instrument air
compressor and dryer to remove moisture from air. But items like
power generation, steam system and cooling water system have
large equipment system and spread throughout the plant by piping
network. For optimum use of energy, power generation and steam
generation are combined together in what is known as combined
cycle. For example, high pressure steam can be used to drive a
steam turbine to generate power and the steam at lower pressure
coming out of the turbine can be used as utility steam for heating
various process streams. The exhaust from a gas turbine can be
used to generate high pressure steam.
140
Cooling Water System comprises of cooling towers, large cooling
Notes water pumps and a network of piping to supply cooling water to
product coolers. The products generally come out hot after processes
like distillation and the final cooling is done in heat exchangers by
the cooling water. In the process, the cooling water gets heated.
The hot streams of cooling water are returned to the cooling towers,
where they are cooled by air cooling in cooling towers.
Figure 6: Utility Facilities
Storage and Handling of Crude and Products

This is one of the major operations beyond the process units in a
refinery. This involves:
• Receipt and storage of crude oil
• Storage of intermediate products, base oils and blending stocks.
• Blending and finishing of products.
• Storage and despatch of products.
A refinery is often located in coastal area. It can also be landlocked

far beyond coastal areas. In coastal refineries, crude oil is received
by marine tankers. Depending on the capacity of the refinery, crude
tanker size suitable for draft at the jetty and the size of storage
tanks are decided. In landlocked refineries, receipt of crude is
normally by pipeline. Road tankers, railway tankers, marine
141
tankers and pipeline are used for transportation of products.
Notes
Millions of tons of crude and products as well as blending stocks
is handled or transported to several destinations by tankers or
pipeline. The storage and product movement area of a refinery
presents a major logistics and operations management problem in
the refinery.
Figure 7: Refinery Storage Facilities
Product Blending Operations

As described earlier, numerous intermediate product streams
are formed in the various processing units of a refinery. They are
finally blended into finished products. The activities involve:
• storage of intermediate products,
• analysis of the intermediate products,
• blending operations,
• dozing with ‘additive chemicals’ wherever required and
• storage and analysis of the final blended products to ensure

quality requirements.
Control Room
Each of the refinery processes as well as the utility facilities
requires a large number of process parameters to be controlled
to meet the quantity and quality of products. Earlier there used
to be control room in each process unit with analog controllers.
In modern refineries computerised digital control system with
dynamic real time process models are quite common.
Typical room of a centralised control room of a refinery is presented

in Figure 8. A more detailed discussion on the subject is given in
the section on IT Applications.
142
Notes
Figure 8: Control Room
Check your Progress
1. For optimum use of energy, power generation and steam

generation are combined together in what is known as
________________________
2. In coastal refineries, crude oil is received by

___________________
Summary
In this unit, the history of development of the refining process and
refinery configuration was explained. The process units and utility/
offsite facilities required in a refinery was summarised.

1. What do you understand by thermal cracking of petroleum?
2. Define the Octane Number of gasoline. Name the processes

that give high octane gasoline.
3. State any two properties of crude oil that decrease the quality
and efficiency of the oils. How are they improved?
4. Write a note on the differences in the refineries in the 60s and

the modern refineries.
Unit 15 143
Notes
Case Study
Gas Processing at LLC
Leak Imaging, LLC performed a leak detection survey using an
optical gas imaging camera for a company in East Texas at one of
their gas processing facilities. The company was aware of the new
regulations coming and wanted to see what it would entail and what
they should do to prepare for it since they have never had any leak
detection program in place. The results were amazing.
The gas processing facility was less than a year old and we were
assured that there were no gas leaks to be found. The field
superintendent explained how all the equipment at the location was
new, properly installed and no wearing of the equipment would have
taken place in this short period of time. At the time of the study,
this facility was processing gas at a spot rate of 12,500 mcf per day.
After processing the natural gas, the daily production volume being
delivered to market was approximately 95%, with 5% accounted for
as line loss and/or fuel use.
In less than 30 minutes, the first leak was detected with several more
following. In all, 6 leaks were detected which were inexpensively
rectified. Using the criteria and emissions factors from the EPA,
they were losing 200 mcf a day in gas. The worst leak detected
was coming from the storage tanks where the valve was constantly
malfunctioning and releasing gas from the vent stack.
After the repairs were made, the company began seeing an extra
US$600/day (US$219,000/year) at today’s gas prices which they were
losing at just one facility.
The leak detection study just goes to show that the industry’s
acceptance of 5% for line loss and fuel use just turned the corner with
new technology. Line loss doesn’t necessarily tell the whole story.
It doesn’t matter whether a facility is old or new there is always
the possibility for fugitive gas leaks and the potential to increase
revenues.
Question
Critically analyse the case study
Source: http://leakimaging.com/gas-processing-case-study/
Block IV
Unit 16 145
Notes
Distillation in Refineries
Objectives
 Optimisation of Refinery Operations
 Description of Process units
 Vacuum Distillation
Introduction
The basic software for optimisation is available in the market
along with data bank on crude oil, possible refinery configuration,
cost data, process models, etc. One needs to define and give input
data on the specific problem and define what need to be optimised.
Let us now look into some of the process units in greater detail.
We will understand a generic processing system for refineries and
petrochemical plants and Vacuum Distillation.
Optimisation of Refinery Operations

A refinery is a highly capital-intensive plant. High prices of crude
oil and low margins on product prices require optimisation of the
refinery during design stage as well as optimisation of its operation.
In the design and conceptual stage, the optimisation of a

configuration is carried out in order to:
• Develop the best possible configurations of process units and

their capacities depending on market demand and specification
of products. This should meet the market demand pattern at
minimum cost.
• Select crude oil depending on its price, characteristics and

ability to give the desired products at optimum cost.
Let us look at the fixed parameters and variables for optimisation

as given below. The number of variables like type of process units,
choice of crude, products to be manufactured etc. are very large –
may run into hundreds. In this kind of situation, the optimisation
is carried out by Linear Programming (LP) modelling.
146
The major input required to develop a LP model and optimise the
Notes
configuration are:
Crude Assay: Crude characteristics and properties are fixed

parameters for crude selected for a refinery. If there is choice of
more than one crude, it becomes a variable. Yields of products
from distillation and other process units depend on the crude
characteristics and properties. An extensive laboratory study
report on crude characteristics and properties of various cuts taken
out of it is called crude assay. This is fed as data to the optimisation
model.
Product Demand Pattern: The refinery need to be optimised not

to exceed a specific product demand pattern of the market. This is
normally a fixed parameter and called ‘constraint’ in LP Modelling.
Product Specification: It is fixed for a particular country or

region, depending on the standard specification of salable products
in the market. These are also called ‘constraints’ in modelling for
optimisation.
Selection of Process Units and their Capacity: This gives

the largest sets of variables. There is a wide range of choice of
the processing units. Each gives a particular yield of products and
particular properties of the products to meet the specifications.
The final product quantities are arrived at by blending the
intermediate products from various process units to meet the
product specification.
Investment Costs: It will depend on the selection of process

units, as each process unit will have different investment costs
proportionate to its capacity.
Operating Costs: This again will depend on the selection of

process units, each of which will have different operating cost
heads like utility consumption, manning requirement, etc.
LP modelling is carried out in the following manner:
• Mass balance equations between process units, overall product

balance and heat balance are expressed in linear equations.
• Constraint equations such as product demand and specification

by blending of components (intermediate products from the
process units) are also used as linear equations. It defines
the constraints of which products should be produced in the
refinery and in how much quantity.
Unit 16: Distillation in Refineries
147
• Process unit models predicting yield and quality of products
Notes
based on crude oil characteristics, are built into modern LP
optimisation software.
• Equations for capital cost variation with capacity of the process

units, cost of operation of each unit.
• Overall cost optimisation equations form the complete matrix

of equations.
Non-linear models of processes (to give yield of products and

product properties) and blending correlation for the properties
form separate modules. The parameter to be optimised normally is
investment or profit margin.
Versatile LP software with built-in database and process models

are available today.
Such models give option to change:
• Crude oil and product prices
• Product specifications
• The quantity of products
• Plant sizes and operation modes
Thus, a lot of business sensitivity factors can be studied using such

models.
LP Models are today used for:
• Optimisation of configuration of new refineries
• Planning daily, weekly, monthly and long-term operation of

existing refineries
• Optimisation of operation of individual units
• Evaluation of different types of crude oils
Check your Progress
1. A refinery is a highly _______________ intensive plant.
2. Crude characteristics and properties are _____________

parameters for a crude selected for a refinery.
148
Notes
Description of Process Units
Generic Process Schematic
Having described refinery configuration, let us now look into some
of the process units in greater detail. First let us understand a
generic processing system for refineries and petrochemical plants.
Figure 1: LP Software Structure
A process plant processing liquid and gaseous material (which is

commonly done in refineries) would normally have the following
components:
• Pumping (for liquids) or compression (for gases) of the feed to

the processing unit.
• Heating to provide energy for the reaction to take place.

Sometimes cooling is needed if the reaction is exothermic i.e. if
it generates heat. Heating also includes recovery of heat from
the outgoing hot products by heat exchange with incoming cool
feedstock or raw material.
• Reactor vessel which gives time for the reaction to take place.
• Separation and purification of products of reaction. These are

physical separation processes like distillation, extraction etc.
The Figure 2 depicts the concept in the form of a process where two
raw materials (feedstock) A and B are processed to get products C
and D. A and B are pumped through heat exchangers which recover
heat from outgoing hot products C and D. Then, A and B are mixed
149
and heated in a furnace to the desired temperature. Reaction at
Notes
high temperature takes place in the reactor producing C and D as
products. C and D are separated by distillation and sent out to be
stored as product.
Figure 2: Generic Diagram of a Process Plant
Most processes will have similar configuration. The physical

separation processes like distillation or extraction does not have
the reactor part. Most reaction processes have the configuration of
Figure 2.
The primary separation processes in a refinery, atmospheric and

vacuum distillation do not have a reactor. It is a pure physical
separation process. Such processes where no reaction is involved
and revolve around separation of products are called ‘open art
process’ as there is no license involved in the technology, design
and operation of such processes. Normally most reaction processes
are licensed processes, where one has to pay a fees or royalty for
the purchase and use of then technology.
Pictures of the some of the process equipment described here are

given in Figure 3.
150
Notes
Liquid Outlet Heater
Liquid i
Motor
Hot Fluid Pumps
Out Cold Fluid
Shell Tubes
Out
Out
Figure 3: Process Equipment
With this generic description in mind, let us now get into the flow
diagram and description of some of the important processes in the
refinery.
Desalting
Crude oil arriving from oilfield generally contains around 1%
saline water and organic salts. The salinity of the water could be
in the range of 15,000 to 30,000 ppm. In the refinery, the crude
oil is heated and distilled. Part of the salts contained in the crude
oil, particularly magnesium chloride, tends to undergo hydrolysis
at temperatures above 120°C. Upon hydrolysis, the chlorides
get converted into hydrochloric acid and corrode the distillation
column’s overhead and condenser. A desalter is normally installed
in the preheat section of crude distillation unit of a refinery, before
the distillation column. Its function is to reduce the salt content to
around 20-40 ppm and water content to below 0.1%.
Description
As described in the next section on crude distillation, desalters are
normally integral part of distillation plant.
151
The desalter is normally installed in between the heat exchangers
Notes
of the pre-heat section of Crude Distillation Unit to operate at
temperatures between 120-150°C. The desalting operation is
carried out by flushing the crude with fresh water of low salt
content. The desalter carries out dehydration of the crude by use
of electrostatic field to facilitate coalescence of charged particles of
water into large drops.
Thus, it involves the following steps:
• Washing of the crude resulting in dilution of saline water

present in the crude
• Removal of the water under electrostatic field.
Normally saline water is present in emulsion form, so Demulsifier

chemicals (20-40 ppm) are also injected in the crude. This aids in
breaking the emulsion by changing the surface tension properties
of oil-water interface.
Figure 4: Desalter
Upstream of the desalter, the crude oil containing around 1%

of emulsion water is mixed with a fresh water stream, typically
about 4-6% on feed. Intense mixing takes place over a mixing valve
where high pressure drop is provided for to give turbulence. The
water added to the crude flushes the whole crude and dilutes the
concentration of salt in the saline water carried with the crude.
The desalter, a large vessel, containing an electrostatic grid, uses
an electric field to coalesce the water droplets, which drop at the
bottom. It operates between 120- 150°C, hence it is conveniently
placed somewhere in the middle of the preheat train of the
distillation column. In case of high salt content and viscous crude,
often multistage desalters in series are used with water addition
and dehydration repeated through two stages. Desalter can remove
over 90% of the salt in raw crude.
152
Crude Distillation
Notes
Atmospheric Distillation of the crude is the first step in the
processing of crude oil in a refinery. It is physical separation of
oil components at slightly higher than atmospheric pressure by
heating to around 350°C + and subsequently distilling into fractions
(raw product cuts). As crude oil starts cracking at temperatures
higher than 370-380°C, the residue from Atmospheric Distillation
is subsequently distilled under vacuum at similar temperatures.
This is called Vacuum Distillation. Distillation produces some
gases (LPG, Fuel Gas) and raw cuts of light products like gasoline,
naphtha, kerosene and diesel. The residue from the bottom of the
Atmospheric Distillation Column is vacuum distilled to produce
heavy gas oil, which form the base stock to produce lubricants.
The gas oil is also sent to Cracking Unit to produce further light
products.
Description
The fractionating column where multi-component distillation
takes place is the heart of the process. The crude needs to be
heated up before entering the fractionation column. This is done
at first in a series of heat exchangers where heat is taken from
outgoing products from the column, which need to be cooled before
being sent to storage. Heat is also exchanged against condensing
streams from the top of the column. Optimum design of this heat
recovery train or pre-heat train is extremely important for energy
efficient operation of the column. Typically, the crude will be
heated up in this way up to a temperature of 200-280°C by heat
recovery alone, before entering a furnace. As the raw crude oil
received from oilfields contains water and salt, it is normally sent
for salt removing first, in a piece of equipment called a desalter.
This has been discussed in the preceding section. The desalter is
put midway in the pre-heat train at temperature of around 130°C.
Downstream the desalter, crude is further heated up with heat

exchangers and starts vaporizing at about 200-280°C. Then,
the crude enters the furnace where it is heated up further to
about 330-370°C. The furnace outlet stream is sent directly to
the fractionation column. Here, it is separated into a number of
fractions, each having a particular boiling range.
At 350°C and about 1 barg, crude oil is partly vapourised and the
vapours rise up along the column through trays. The vapours come
into contact with liquid coming down from the top of the column.
153
The different fractions are gradually separated from each other
Notes
on the trays of the fractionation column. The heaviest fractions
condense on the lower trays and the lighter fractions condense
on the trays higher up in the column. At different elevations in
the column, with special trays called draw-off trays, fractions are
drawn out by gravity through pipes, for further processing in the
refinery. At the top of the column, vapours are routed to an overhead
condenser, typically cooled by water or air coolers. At the outlet of
overhead condenser, vapours are condensed into liquid (naphtha)
and gases are separated in an Accumulator at around 40°C. Gases
are routed to a compressor for further recovery of LPG (C3/C4),
while the liquids (gasoline or naphtha) are pumped to a stabiliser
column. Part of the cold, condensed liquid is put back at the top
if the column as reflux. This method of cooling the top part of the
column and providing heat at the bottom creates a temperature
gradient along the column. Top temperature remains close to 40°C
and the bottom temperature of the column is around 350°C.
The products are also drawn from different trays of the column.
These are called side draw-offs. The lightest side draw-off from the
fractionating column is a fraction called kerosene, boiling in the
range 150-280°C, which flows into a smaller column called side-
stripper. The purpose of the side stripper is to remove some light
hydrocarbons by using steam injection or an external heater called
‘reboiler’. It essentially helps to meet the properties specified for
kerosene, since in a multi-component distillation there is overlap
of constituents of various cuts.
The second and third (optional) side draw-offs from the main
fractionating column are diesel or gas oil fractions, boiling in the
range 200-400°C, which are ultimately used for blending the final
diesel product. Similar as with the kerosene product, the gas oil
fractions (light and heavy gas oil) are first sent to a side stripper
before being routed to further treating units.
At the bottom of the fractionation column a heavy, brown/black

coloured residue is drawn off.
All the top and side draw-offs go for further treatment to meet
product specifications. The residue is vacuum distilled (see section
on Vacuum Distillation).
154
Notes
Figure 5: Flow Diagram of Atmospheric Distillation Column
Check your Progress
1. Crude oil arriving from oilfield generally contains around

________ % saline water and organic salts.
2. Distillation of the crude is the first step in __________ the

processing of crude oil in a refinery.
Vacuum Distillation
As crude oil cracks above a range of 350-370°C after atmospheric
distillation, it is distilled under vacuum to distillation unit recover
additional distillates from atmospheric residue (also termed long
residue). The objective is to minimise the residual stock and
maximise yield of useful products.
Vacuum gas oil cuts are produced in the vacuum distillation unit
for use as lubricating oil base stocks and/or feedstock for conversion
(cracking). The residue from vacuum distillation (referred as short
residue) can be used as feedstock for to produce bitumen or as fuel
component. It can also sometimes be cracked further to produce
light oils.
Description
The process configuration is somewhat similar to atmospheric
distillation. The long residue is first preheated in a heat recovery
train to recover heat from the outgoing hot products. Then
it is further heated in a furnace before entering the Vacuum
155
Distillation Column. Vacuum Gas oil cuts are taken from top and
Notes
side of the column and cooled before dispatch to storage. Vacuum is
maintained with vacuum ejectors and sometimes also with liquid
ring pumps. Lowest achievable vacuum in lower part of the column
is in the order of 10 milli bar. Wet Vacuum Units use steam in the
column to reduce partial pressure of the oil. Dry Vacuum Units use
deeper vacuum with less or no steam.
Two types of vacuum units for long residue upgrading are:
(i) Feed Preparation Units: Takes out deep cuts out of long
residue for cracking in FCC or Hydrocracker. This is done
because most of such cracking units cannot take the heaviest
residual part of the crude as feedstock.
(ii) Lube Base Stock Units: These are high vacuum units from
where heavy gas oil cuts are drawn out as lube base stocks. The
lube base stocks are further processed to make lubricating oils.
For Bitumen production, the residue from vacuum distillation
called short residue, is treated to make bitumen or road tar.
Figure 6: Vacuum Distillation Unit
Catalytic Reforming
Catalytic reforming is a high temperature catalytic process to
convert low-octane naphthas into high- octane gasoline blending
components called reformates. Most straight run naphthas from
primary distillation of crude comprises of a lot of low octane
components like normal paraffins and five and six carbon
naphthenes. Reforming involves:
• Isomerisation of paraffins
156
• Dehydrogenation of naphthenes like cyclohexanes to aromatic
Notes
hydrocarbons
• Dehydrocyclisation of paraffins i.e. making them to cyclic

hydrocarbons and dehydrogenating them to aromatics.
This gives high octane gasoline blending stock. Also hydrogen is

generated as by-product.
Reforming process is also a source for feedstock for petrochemical

plants. Reformates can be produced with very high concentrations of
toluene, benzene, xylene and other aromatics useful both for gasoline
blending and petrochemical processing. Hydrogen, produced from
dehydrogenation and dehydrocyclisation reactions is separated
from reformate for recycling and use in other refinery processes
like hydrodesulfurisation. The typical operating conditions are 500-
530°C and 20-25 kg/Sq.cm pressure.
Description
The first step is hydrodesulfurisation of the naphtha feed. Then
the actual reforming process starts.
A typical flow diagram is presented in Figure 7. The reforming

process has three sections:
• Reaction section comprising of heat recovery, furnace and

reactors
• Hydrogen separation and recirculation
• Product recovery section (distillation)
In the reaction section, the naphtha feedstock is mixed with

hydrogen generated by reaction process itself, vaporised and passed
through a heat recovery train from outgoing reaction products.
Then it passes through a series of alternating furnace and fixed-
bed reactors containing a platinum catalyst or bimetallic (Pt- Rh)
catalyst.
The effluent from the last reactor is cooled and sent to a separator
to remove the hydrogen-rich gas stream. Hydrogen is recirculated
with a compressor and the excess hydrogen product is sent to other
users in the refinery.
157
Notes
Figure 7: Catalytic Reforming Unit
The liquid product from the bottom of the separator is sent to a

fractionator for product recovery. It makes a bottom product called
reformate; butanes and lighter hydrocarbons go overhead and are
sent to the other users.
The catalysts require regeneration after certain time period.

Depending on catalyst type and severity of reaction, the cycle
time and method of regeneration varies. Some catalytic reforming
systems continuously regenerate the catalyst.
Thermal Cracking
Thermal cracking is used for conversion of residues into more
useful products by cracking the large hydrocarbon molecules into
smaller ones, at a temperature level of 450-500°C. The degree of
cracking can be controlled by controlling temperature and time
of reaction (residence time). Long chain paraffinic hydrocarbon
molecules break down into a number of smaller ones by rupture of
a carbon-to-carbon bond.
Cracking also generates double bonded hydrocarbons (olefins).

Other side reactions like condensation and polymerisation reactions
of olefins and of the aromatics also take place. Thus, thermal
cracking process leads to undesirable products like unstable olefins
and tar like polymerisation products. The type of products depends
on severity of cracking.
The olefins tend to polymerise and form gum or resin like polymers
due to their unstable double bond structure. That is why gasoline
or diesel blend produced from thermal cracking processes need to
158
be treated with hydrogen (Hydrotreating) to make them stable
Notes
usable product.
The thermal cracking is used either to reduce the viscosity for

blending with fuel oil (Visbreaking Process). Visbreaking, though
a mild form of thermal cracking, produces some of light liquids like
gasoline and gas oil. There is a more severe cracking to produce
coke, as well as useful light products like gasoline called Coking
Process. Besides a good yield of light products and gas, it yields
good quality coke. By selection of the type of unit, feedstock and
operating conditions, the yields and quality of the various products
can meet market requirements, of course with some limitations.
In modern oil refineries Visbreaking and Coking (Delayed Coking)
are extensively used.
Visbreaking
Visbreaking is a mild thermal cracking process. The objective is
to reduce the viscosities and pour points of vacuum distillation
bottoms to meet fuel oil specifications. Refinery production of
heavy oils can be reduced by 30% by Visbreaking. Visbreaker
also produces gas, gas oil stock and gasoline which go for further
processing.
The principal reactions which occur during the Visbreaking are:
• Cracking of the side chains attached to Cycloparaffin and

aromatic rings.
• Cracking of resins to light hydrocarbons (primarily olefins)
• Some cracking of Naphthalene rings under higher temperatures

of operation (500°C).
Description
There are two types of Visbreaking operations:
• Coil Cracking
• Soaker Cracking
Coil Cracking uses higher furnace outlet temperatures of around

500°C. It uses a reaction time of one to three minutes. All the
cracking takes place in a dedicated portion of the coil in the
furnace itself. Due to high temperature of operation and avoidance
of soaker drum, it offers the advantage of greater ease of operation.
The cracked products are separated by fractionation.
159
Soaker Cracking is a similar process but uses lower furnace outlet
Notes
temperatures of around 450°C and reaction times of over five
minutes. In this case some conversion takes place at the furnace
coil but major part of conversion takes place at the soaker drum
after the furnace (see flow diagram). Soaker cracking is more often
used due to its lower energy consumption as a result of less severe
temperatures.
Figure 8: Coil Visbreaker
Figure 9: Soaker Visbreaker
Delayed Coking Unit

Delayed coking is a thermal cracking process in which a heavy
hydrocarbon feedstock, mainly residue, is converted to lighter and
more valuable products and coke.
The main advantage of the process is that it can take residual

stock from a wide variety of process units in a refinery. Coking
Furnace and Coking Drums are the key elements in the process.
Cracking is initiated in the furnace tubes where short residence
time is allowed. Coking of the feed material is ‘delayed’ until it
reaches large coking drums with longer reaction time, downstream
of the heater. Three physical structures of petroleum coke: shot,
sponge, or needle coke can be produced by delayed coking. These
160
physical structures and chemical properties of the petroleum coke
Notes
determine the end use.
Description
The feedstock gets preheated by exchange of heat from outgoing
products and is partially vaporised in a specially designed coking
furnace. Mild cracking takes place in the furnace where thermal
cracking temperatures of 485 to 505°C are reached. From the
furnace, the liquid-vapour mixture goes to one of the two coking
drums operating in batch. The vapours undergo cracking as
they pass through the coke drum. The heavy hydrocarbon liquid
trapped in the coke drum is subjected to successive cracking and
polymerisation until it is converted to vapours and more coke.
The cracked products go to fractionation facilities downstream

where cracked gas, naphtha, kerosene and gas oil are separated.
The petroleum coke is formed in the drum due to high residence
time of cracking in the drum.
The feed stream is regularly switched between drums with one

operating and the other under decoking process. Decoking is done
using high pressure water jets. This generally follows a 12-16-hour
cycle.
Fluid Catalytic Cracking (FCC)

Basic reaction processes are similar to thermal cracking. Normally
vacuum gas oil from Vacuum Distillation unit is the feedstock for
cracking. The cracking reaction takes place in fluidised catalyst
bed. The reactions are directed more towards formation of useful
products like gasoline or diesel by suitable choice of the catalyst.
Figure 10: Delayed Coking

161
Description
Notes
Catalytic Reactor and Regeneration systems followed by
Distillation to separate cracked products are the key steps. Hot
feed, together with some steam, is introduced at the bottom of
the reactor via distribution nozzles. Here it meets a stream of
hot regenerated catalyst from the regenerator flowing down the
inclined regenerator standpipe. The oil is heated and vaporised
by the hot catalyst. The cracking reactions take place at 500°C.
The vapour, initially formed by vaporisation and successively by
cracking, carries the catalyst up a riser in the reactor. At the outlet
of the riser the catalyst and hydrocarbons are separated. The
catalyst, partly deactivated by coke deposit and the vapour enter
the reactor. The vapour passes an overhead cyclone separator for
removal of entrained catalyst before it enters the fractionators for
product separation. The catalyst then descends into the stripper
where entrained hydrocarbons are removed by injection of steam.
Figure 11: Process
Air is supplied to the regenerator by an air blower and distributed

throughout the catalyst bed. The coke deposited is burnt off and
the regenerated catalyst passes down the regenerator standpipe to
the bottom of the riser, where it joins the fresh feed and the cycle
recommences.
The flue gas leaving the regenerator entrains ‘fines’, dust formed
by mechanical rubbing of catalyst particles taking place in the
catalyst bed. Before leaving the regenerator, the flue gas therefore
passes through cyclone separators where the bulk of the ‘fines’ are
entrained catalyst is collected and returned to the catalyst bed.
Hydrocracking
As the name implies, hydrocracking is cracking in presence
162
of hydrogen. It is a catalytic process at high temperature and
Notes
high pressure. The initial development of the process had the
limitation of operation at very high pressures (above 200 bar).
The development of improved catalyst made it possible to operate
the process at considerably lower pressure, about 70-150 bar at
temperatures of 350 to 430°C.
The main advantages of hydrocracking process are:
• Its flexibility with respect to production of gasoline and middle

distillates
• Quality of its products
• Ability to handle a wider range of feedstock like cycle oils from

other cracking units
• Does not yield any coke as by-product
• Better conversion of the gas oil and residues into useful

products.
Although more expensive than other cracking processes, it is

competitive and often advantageous compared to other cracking
processes depending on market parameters.
Hydrocracker Reactions
The main reactions in hydrocracking are:
• Cracking
• Saturation of aromatics by hydrogenation
• And further cracking of it.
The other reactions occurring are:
• Saturation of any olefinic material present in feedstock.
• The reaction of desulphurisation, denitrogenation and

deoxygenation.
The latter reactions are essentially treating processes, which are

used as a separate processing step when other types of cracking units
are used. Thus, there are two steps of reactions in Hydrocracking:
cracking step and treating step. As a result, the product quality is
superior. A combination of catalysts is used. The cracking function
is provided by Silica Alumina catalyst or Zeolite catalyst.
163
Zeolite catalyst permits operation at lower temperatures for the
Notes
same conversion. Tungsten oxide or nickel oxide catalysts promote
hydrogenation reaction.
Description
When the cracking and treating step is combined in one reactor,
the process is called a Single-Stage Process.
This simplest of the hydrocracker configuration finds application in

cases where only moderate degree of conversion (say 60% or less) is
required. The single stage process can also be used for full conversion,
but with a limited reduction in molecular weight. An example is the
production of middle distillates from heavy distillate oils.
In a multi-stage Process, the cracking reaction mainly takes

place in an added reactor. There could be two stage or three stage
hydrocrackers. These processes were developed to overcome the
limitations of single stage process – the limitations of conversion
as well as catalyst poisoning by undesirable components. In the
two-stage process, the undesirable compounds are removed from
the unconverted hydrocarbons in the first reactor. In the first
reactor, desulphurisation and denitrogenation occurs besides a
limited amount of hydrocracking. These are exothermic reactions.
The catalyst is arranged in a number of fixed beds. Reaction
temperatures are controlled by introducing part of the recycle gas
as a quench medium between beds. The liquid from the first reactor
is fractionated to remove the product made in the first reactor.
Unconverted material, with a low nitrogen and sulfur content,

is taken out from the bottom of fractionation section. After, heat
exchange with reactor effluent and mixing with heated recycle gas,
it is sent to the second reactor. Here most of the hydrocracking
reactions occur. Effluent from the second reactor is cooled and joins
first stage effluent for separation from recycle gas and fractionation.
Saturation of any olefinic material is present in feedstock.
Check your Progress
1. The objective of ________________ is to minimise the

residual stock and maximise yield of useful products.
2. When the cracking and treating step is combined in one

reactor, the process is called a _______________ Process.
164
Notes
Summary
In this unit, the process units and utility/offsite facilities required
in a refinery was summarised. An overview of application of Linear
Programming techniques for refinery optimisation was presented.
A generic description of typical refinery process was given

highlighting the basic system and equipment involved. This was
followed by description of some of the important processes used in
the refinery along with flow diagram.

1. ‘Internal Combustion Engines – caused major developments in
petroleum refining’, explain the statement.
2. Explain the term ‘Fractions’. Give an account on Fractional

composition of crude oil.
3. Write a brief note on manufacture of lubricating oils.
4. Discuss the different types of catalytic cracking plants.
5. Draw a neat flow diagram of a fluidised bed Catalytic Cracking

Process.
6. Write a note on Catalytic Reforming of Naphtha.
7. What are the petrochemical feedstocks produced in a refinery

and what are the process units where they are generated?
165
Unit 17
Notes
Petrochemical Industry
Objectives
 What are Petrochemicals
 What are the Various Feedstock and Products – Overall Configuration
of a Petrochemical Complex
 What are Base Petrochemicals, Intermediates and Derivatives
 Key Elements in Planning and Integration of a Petrochemical
Complex
Introduction
Petrochemicals are usually plastic products and chemicals that
are derived from petroleum or natural gas and are made on a
large scale. The petrochemical industry means manufacture,
supply and distribution of plastics, fibres and chemicals which are
produced from one of the petroleum products as starting material
or feedstock. Petroleum products from refinery and natural gas,
supply over 50% of the feedstock for the entire chemical industry
and more than 50% of organic chemicals.
The petrochemical industry can use other organic or inorganic

material as feedstock along with feedstock of petroleum origin. For
example, polythene is made only with feedstock of petroleum origin
(naphtha or ethane as feedstock). But PVC, another petrochemical
product, besides having naphtha or ethane as feedstock, also uses
chlorine as another raw material in its manufacture.
It is amazing how much oil and gas has penetrated into our lives
today. Oil is not just petrol or diesel. The toothbrush we use to
start the day, the suit we wear, the fuel we use in our vehicles,
the car interiors, back home with cozy furniture, tapestry and
mattress of the bed we sleep on - petrochemicals have got into our
lives everywhere.
Petrochemicals consume only a tiny fraction (5 to 6%) of the world’s

oil production to give high value products.
166
Notes
Polyester Clothing Nylon Can
PVC Pipes Acrylic Carpet
Figure 1: Petrochemicals in Our Lives
As one can see below, petrochemical industry starts with this

feedstock of petroleum origin, undergoes processing to generate
intermediate chemicals. These intermediate chemicals are further
processed mostly through polymerisation, but also some times
through other synthesis processes to generate finished products.
A vast majority of the petrochemical products are polymers, whose

molecular size and structure are tailored by reaction process to
suit specific characteristics or properties.
Most of the petrochemical products are polymers, which means

molecules formed by combination of several (in thousands) small
molecules of olefins called monomers. Polymers are essentially
used as plastics or fibres as shown in Table 1.
Table 1: Polymers in Petrochemical Industry
Plastics Fibers
Polythene Polyester
Polypropylene Polypropylene
Polystyrene Nylon
PVC Polyurethane
Polycarbonate Cellulose
Polyester Polyacrylonitrile
Polymerisation Basics
Here we will talk about the basics of Polymerisation.
Unit 17: Petrochemical Industry
167
Monomers and Polymers
Notes
Some organic molecules with double or triple bond have tendency
to join together several times to form a large molecule. Such
molecules are called monomers. Monomers are tiny molecules e.g.
ethylene (mol. wt. 28). The end product is a large molecule called
Polymer. A polymer could be of molecular weight of thousands or
million.
‘A’ is a monomer that combines to form a polymer.
When another different monomer ‘B’ join the same

polymer chain, the polymer is called co-polymer
A–A–A–A–A–A–A
A – AB– A – AB– A – AB– A
Figure 2: Monomers and Polymers
Example: Propylene Polymerisation
Monomer in this case is Propylene: CH2 = CH – CH3
A number of propylene molecules chemically combine to form

Polypropylene molecule as depicted below:
-CH2 – CH – CH2 – CH – CH2 – CH – CH2 – CH –CH2 – CH –
| | | | |
CH3 CH3 CH3 CH3 CH3
If ‘n’ molecules of propylene combine to form a polymer, its chemical

formula is depicted as:
It creates numerous possibilities of molecules of different sizes

and configuration. The polymer molecule can be tailor made to
suit specific application. By selecting the catalyst and operating
conditions for polymerisation, one can tailor the size and structure
of the polymer molecule.
Co-polymer
When a polymer is made by linking only one type of small molecules
or monomers together, it is called a homo-polymer.
168
When two different types of monomers are joined in the same
Notes
polymer chain, the polymer is called a co-polymer. Two monomers
A and B can join together in different manner to form co-polymers:
Alternating Co-polymer: A– B – A– B– A – B –A – B–A– B –
Random Co-polymer : A– B – A– A– A – B –B – A–A– A –
Block Co-polymer : A – A – A – A – A– B –B – B–B – B –
Graft Co-polymer : A – A – A – A– A – A –A – A –A– A –
| |
B B
| |
B B
| |
B B
Again, it creates numerous possibilities to generate polymers with

different characteristics.
• Number of molecules of ‘A’ that can be combined together to

form various polymers – it can be 2000, 5000, 10,000 or some
other number.
• Various combinations of copolymers.
• Number of molecules of ‘A’ and ‘B’ that can form the co-
polymers.
Thus, polymer chemists can develop polymers of different molecular

sizes with varying properties to suit a particular application. In
other words, to a certain extent, the polymers are tailor made.
In the next section, a wide range of polymer products are described.

This gives an idea of the wide range of chemicals that are made.
169
Check your Progress
Notes
1. __________________ are organic molecules with double or
triple bond that have a tendency to join together several
times to form a large molecule.
2. When a polymer is made by linking only one type of small

molecules or monomers together, it is called a ___________
Some Common Polymer Plastics

In this section some common polymer plastics are described along
with examples of how they are tailored to suit a particular product
application.
Polythene
Polythene is among the most widely used polymers. It has simple
structure with several ethylene molecules forming a chain. In this
case ethane or naphtha is cracked to make ethylene, which is then
polymerised.
Examples of polythene products are – grocery bags, shampoo

bottles, toys and even bullet proof vests. Sometimes some of the
carbons, instead of having straight chains of ethane monomers
joining together, have branches of a number of monomers together.
This is called branched, or low-density polyethylene, or LDPE.
When there is no branching, it is called linear high-density

polyethylene, or HDPE. HDPE is much stronger than branched
polyethylene, but branched polyethylene finds special application
for making low cost products (polythene bags) as it is cheaper.
Linear polyethylene is normally produced with molecular weights

in the range of 200,000 to 500,000. This means polymer with 7,000
to 17,000 ethylene monomers joining together. Polyethylene with
molecular weights of three to six million is referred to as ultra-
high molecular weight polyethylene, or UHMWPE. UHMWPE is
so strong that it is used for making bullet proof vests.
LLDPE Film Rolls HDPE Container

and Extruder for films and carry bag
Figure 3: Polythene Products

170
PVC
Notes
Polyvinyl chloride is the plastic commonly known as PVC. It finds
wide applications in PVC pipes for transportation of water.
PVC is made from vinyl chloride as monomer. Vinyl chloride is

a copolymer of acetylene and chlorine. Acetylene is of petroleum
origin produced by cracking of ethane or naphtha.
PVC is useful because it resists two things:
• It resists water
• It resists fire
It is used for making water resistant such as raincoats, shower

curtains, water pipes and floorings etc. It has flame resistance
too, because it contains chlorine. When PVC catches fire, chlorine
atoms are released and chlorine atoms inhibit combustion.
Figure 4: Vinyl Floorings
Synthetic Rubber
In the middle of nineteenth century, scientists cracked natural
rubber molecules into oil, tar and a volatile compound– which
they called ‘spirit’. The spirit molecule was identified as C5H8 and
named Isoprene.
Manufacture of Synthetic Rubbers is reverse process of above.

Synthetic rubbers are polymer products from monomers (e.g.
Isoprene) obtained from processing of feedstock from petroleum.
171
In 1960s, Bayer developed two types of synthetic rubber by
Notes
polymerising Butadiene and named ‘Buna’:
• Buna S – styrene butadiene rubber, SBR
• Buna N – butadiene acrylonitrile rubber, NBR
The other major elastomers (polymers with elastic properties

like rubber) developed during mid-twentieth century are poly-
chloroprene and butyl rubber (poly isobutylene). Development of
new elastomers is taking place continuously.
TREAD OF TYRE:
made of random copolymers

of styrene and butadiene.
SIDE WALLS:
made of polyisoprene.
INNER LINER:
made of polyisobutylene.
Polyisoprene
Figure 5: Automobile Parts
Check your Progress
1. ______________is the plastic commonly known as PVC
2. Synthetic rubbers are polymer products from __________
Petrochemicals in Our Lives

As explained in the beginning, there are numerous plastic polymers
of petroleum origin playing major role in our lives. Let us take a
quick overview of some more plastics of petrochemical origin.
Automobile Parts
Auto body parts are made of polymer like acrylonitrile-butadiene-
styrene plastic, called ABS.
172
Notes
Figure 6: Car Body Part Made of ABS Plastic
Electronic Industry Components

Electronics industry is based on materials like copper which are
good conductors. For effective functioning, all conductors need
good insulators.
Polymers being good insulators, cables are insulated with polymers

like polyethylene and polyisoprene.
For wires that get heated up, insulation made from a fireproof
polymer called polyvinylidene fluoride is used.
These are other examples of how polymers are tailor made to suit
a particular application.
Figure 7: Cables, Wires and Connectors
Fabrics and Fibres

Fibre industry forms another stream of the petrochemical industry.
Many of the fibres start with aromatics like Benzene and Xylene
extracted from naphtha as the starting material. The aromatics
pass through a number of processing and synthesis steps to form
plastics like:
Poly-ethylene terepthalate (PET) which are glass like material

used to make transparent bottles. Polyester fibres, Nylon etc.
which get into our clothing.
Polycarbonates which are hard and can be used as engineering

plastics to make items like gear in our car speedometers.
173
Sweaters : acrylics, like Dresses :polyester

polyacrylonitrile or rayon Notes
Socks have same polymers like nylon

(and cotton/ cellulose) and spandex a kind
of polyurethane.
Figure 8: Fabrics and Fibres
Sweaters: Acrylics, like polyacrylonitrile or rayon
Dresses: Polyester
Socks have same polymers like nylon (and cotton/cellulose) and

spandex a kind of polyurethane.
Check your Progress
1. Auto body parts are made of polymer like ______________

plastic.
2. ____________________ are hard fibres and can be used

as engineering plastics to make items like gear in car
speedometers.
High Impact Plastics

Generally, telephone or mobile phone dropping to the ground still
works. That is because it is made of plastics which are hard and
can take impact. The outside casing is made from a special kind
of high-impact polystyrene. It is a copolymer of polystyrene with
a rubbery polymer, polybutadiene. It is much less brittle than
regular polystyrene.
This again is an example of tailoring a polymer molecule to suit a

specific application.
Many of the toys for kids, which have to bear the impact of falling
from hands and still work, are made from polystyrene.
174
Notes
Figure 9: High Impact Plastic
Foam
Fast food often comes in boxes made of polystyrene foam. Napkins
are made of paper, which is a form of a polymer called cellulose.
Polystyrene again comes from aromatics as starting material. Each
of such petrochemicals passes through transformation into other
intermediate chemicals and then polymerisation into final products.
Aromatic called ethyl benzene is one of the starting materials to
make polystyrene. Another variety of foam is polyurethane foam.
These are commonly used to make mattresses.
Figure 10: Foams
Polypropylene
Polypropylene as the name suggests is a polymer of propylene.
Propylene is made by cracking petrochemical feedstock like
propane, butane or naphtha. The usefulness of propylene comes
from its ability to stand rain and humidity. It is used for carpeting
indoor and outdoor, making containers, water pipes, stationery
and file covers.
175
Notes
Figure 11: Polypropylene Products
Polymethyl Methacrylate
• Blended with aluminium oxides becomes heat resistant – sold
as laminating material for furniture
• Used as kitchen countertop
Figure 12: Kitchen Countertop
Capsule Tray
and
Capsules
First Aid Kit
Disposable Surgery Kit
Figure 13: Pharmacy Products

176
Pharmacy and Cosmetics

Notes
Petrochemicals have invaded in this industry also in the form of
numerous products like:
• Capsule shell
• Disposable syringes
• Containers for medicines
• Packaging for medicines
Check your Progress
1. High impact _______________ is a copolymer of polystyrene

with a rubbery polymer, polybutadiene.
2. _______________ is made by cracking petrochemical

feedstock like propane, butane or naphtha.
Types of Plastics
Now having identified plastic materials let us look at broad
classification based on its thermal (transformation by heat or
moulding) properties:
Thermoplastics
Organic long chain polymers that can be soft when heated are
suitable for moulding. As explained earlier, the polymers can have
different properties and application by manipulating molecular
weight. Typical examples below are of polythene (also called
polyethylene):
• LLDPE (Linear Low Density Polyethylene): Used to make

thin films
• LDPE (Low Density Polyethylene): Films, sheets, moulded

articles
• HDPE (High Density Polyethylene): Bottles, moulded

containers, pipes
• Polypropylene: Moulded articles, coarse fibres
• Polystyrene: Car interiors, disposable food containers
• PVC: Table cloth, shower curtain, shoes, auto upholstery

177
Waste from these can be reclaimed and remolded.
Notes
Thermosetting Resins
Plastics of these types undergo changes during processing such
that they cannot be softened and remolded. Hence it is difficult to
reclaim such plastics. Examples of this type are:
• Phenol formaldehyde resins: glues, plywood industry,
• Urea formaldehyde resins: Storage vessels
Check your Progress
1. _________________ is used to make bottles, moulded

containers and pipes.
2. ___________________ is used to make Car interiors and

disposable food containers.
Summary
It is amasing how much oil and gas has penetrated into our lives
today. Oil is not just petrol or diesel. The toothbrush we use to
start the day, the suit we wear, the fuel we use in our vehicles,
the car interiors, back home with cosy furniture, tapestry and
mattress of the bed we sleep on - petrochemicals have got into our
lives everywhere.

1. What are monomers, polymers and co-polymers?
2. List the different kinds of polymers in use.
3. What are high impact plastics? Explain the different types.
4. What are the various Thermoplastics in use? Give examples.

178
Unit 18
Notes
Production of Petrochemicals
Objectives
 Petrochemicals
 The various Feedstock and Products – Overall Configuration of a
Petrochemical Complex
 Base Petrochemicals, Intermediates and Derivatives
 Key Elements in Planning and Integration of a Petrochemical Complex
Introduction
This unit summarises various feedstock of petroleum origin,
intermediate step of processing the feedstock and the end product.
This is further elaborated in the form of a macro-level diagram of
the whole petrochemical industry.
Feedstock to Products in Petrochemical

Industry
The petrochemical industry comprises of a number of processing
steps:
The feedstocks are:
• Refinery products such as naphtha, gas oil
• Refinery gases containing olefins
• Ethane, propane, butane and NGL separated from natural

gas. Methane, which forms the bulk of the natural gas, is also
a source for petrochemicals.
The first step is to produce the base petrochemicals or primary

petrochemicals e.g. olefins (ethylene, propylene) which are
monomers, aromatics which are starting point for fibre industry
and synthesis gas (CO and H2) which is the starting point of urea
fertilizer and methanol manufacture.
Petrochemical intermediates are generally produced by chemical

conversion of base petrochemicals to form more complicated
Unit 18: Production of Petrochemicals
179
derivative products.
Notes
Table 1: Various Feedstock of Petroleum Origin
Figure 1: The Petrochemical Industry
Petrochemical derivative products can be made in many ways–

directly from base petrochemicals; through intermediate products
which are based on only carbon and hydrogen; and through
intermediate products which add chlorine, nitrogen or oxygen in
the finished derivative.
Some typical petrochemical intermediates are:
• Vinyl chloride for polyvinyl chloride (PVC) resin manufacture.
• Ethylene glycol for polyester textile fibres.
• Styrene which is important in rubber and plastic

manufacturing.
180
Notes
Figure 2: Natural Gas to Petrochemicals
Then, there are polymerisation and other synthesis processes

to make the bulk plastics (polymers), fibres and other bulk
petrochemicals.
There are numerous intermediate chemicals and derivatives often

needing each other to make final product. Cross flow of chemicals
take place to various process units to get into the end products.
Figure 3: Naphtha to Petrochemicals
Simple schematic diagram of petrochemical industry based on

natural gas route and naphtha route are given in Figure 3 and
Figure 4.
Steam reforming of methane gives intermediates to manufacture

urea fertilizer and methanol. Cracking of ethane, propane, LPG etc.
give olefins as intermediates, which are polymerised into plastics.
181
The naphtha route has two sub-routes – the cracking route which
Notes
produces olefins to give polymer plastics and the aromatics route
which gives intermediates to produce fibres.
Check your Progress
1. Petrochemical intermediates are generally produced by

________________ of base petrochemicals to form more
complicated derivative products.
2. The ___________________ route has two sub-routes: the

cracking route and the aromatics route.
Production of the Base Petrochemicals

The three main units to generate the base petrochemicals are:
Steam Cracking of Gases and Naphtha

In this unit, the feedstock is cracked in presence of steam under high
temperature. It takes ethane, propane, LPG, NGL, naphtha or gas
oil as feedstock and produces olefins such as ethylene, propylene,
butylene, butadiene and other intermediates by cracking.
If naphtha is cracked, besides olefins, pyrolysis gasoline containing

benzene and other chemicals are formed. Naphtha cracker also has
the advantage compared to ethane crackers that due to numerous
components of naphtha being cracked, a wider range of olefins
are formed as intermediate products. This gives the opportunity
to produce a wider range of petrochemicals compared to ethane/
propane cracker, which gives mainly ethylene and some propylene
as intermediates for making polymers.
On the other hand, investment cost for naphtha cracker is higher

than that of ethane cracker.
Aromatics Extraction Unit

This unit takes reformate product from the catalytic reforming
unit of a refinery and pyrolysis gasoline from Naphtha Cracker as
feedstock. The reformate is rich in aromatics. By solvent extraction
process, the aromatics are extracted out of the reformate. Then
fractionation is done to separate the aromatic components to
produce BTX (Benzene, Toluene and Xylenes). The BTX forms the
intermediate product to manufacture synthetic fibres.
182
Notes
Figure 4: Production of the Base Petrochemicals
Steam Reforming
Takes natural gas, methane or naphtha as feedstock and produces
synthesis gas (CO+H2), which become precursors to urea fertilizers
and other petrochemical products. Methanol is an intermediate
product from which other petrochemical products like formaldehyde
and acetic acid are manufactured.
The next section describes how the base chemicals lead to products.
Check your Progress
1. Investment cost for naphtha cracker is higher than that of

________________________ cracker.
2. ____________________ takes natural gas, methane

or naphtha as feedstock and produces synthesis gas,
which becomes precursors to urea fertilizers and other
petrochemical products.
Ethylene Production by Steam Cracking

Cracking to Produce Olefins
A block diagram of the process is presented in Figure 5. The
feedstock (e.g. ethane, naphtha) is cracked in tubular furnace at
high temperature (~850°C) in presence of steam. The extent of
cracking and product slate depends on operating conditions and
feedstock used. Cracking produces olefins and other products.
Ethane as feedstock will produce mainly ethylene while naphtha
cracking will produce a wide array of olefins like ethylene,
183
propylene, butylene and butadiene. Some pyrolysis gasoline, rich
Notes
in aromatics, is formed when naphtha is cracked.
At the reaction temperature the products are in gaseous state.

Cracked gases are rapidly quenched with water to control the
reaction. Further steps are:
• Removal of heavy components like pyrolysis gasoline
• Compression of the gases.
• Removal of acid gas and bulk water
• Drying
• Liquefaction of the gases by cryogenic (sub-zero temperature)

processing.
• Fractionation of the liquid to separate the olefins.
Thermodynamic and kinetic considerations require following

process conditions:
• Very short retention time to minimise the development of

slower condensation processes.
• Effective quench of the reactor effluents to fix the composition

and prevent any subsequent reactions.
Figure 5: Cracked Gas Processing
Feedstock pricing and product demand determines the selection of

feedstock for cracking to olefins.
Effect of Feedstock
The effect of feedstock on the yields of intermediates is shown in
Table 2. As stated earlier, naphtha and gas oil yield a wider range
of intermediates including aromatics compared to ethane.
184
Table 2: Influence of Feedstock on Steam Cracker Yields (% wt)
Notes
Check your Progress
1. The extent of cracking and product slate depends on

________________ and __________________
2. Feedstock pricing and ___________________ determines

the selection of feedstock for cracking to olefins.
Steam Reforming
Methane or naphtha is steam reformed to produce synthesis gas,
which is essentially a mixture of carbon monoxide, hydrogen and
carbon dioxide. CO and H2 form the basic material from which urea
fertilizer and methanol are made.
Natural gas is first treated to remove traces of H2S. Then, a

mixture of purified natural gas and steam is superheated to 850°C
in a furnace (reformer), where it is converted to synthesis gas
consisting of hydrogen, carbon monoxide and carbon dioxide.
The reactions involved in steam reforming are:
• CH4 + H2O = CO + 3H2
• CO + H2O = CO2 + H2
When hydrogen is the desired product, the reforming reaction is

followed by the well-known water gas shift reaction to convert
essentially all of CO to CO2. This is done when the process is meant
for manufacture of ammonia, which is an intermediate step for
185
making urea fertiliser.
Notes
Various steps in the process are:
• Methane-rich gas (feed) at around 40 to 50 bar pressure is

preheated by reformer flue gas or outgoing process synthesis
gas.
• Preheated feed then enters the desulfuriser to ensure removal

of H2S and other sulfur compounds to a specification of 0.1
ppm.
• Steam is added to desulfurised feed and further heated to

850ºC before entering the primary reformer.
• Product gas is cooled to 340-455°C and the gas enters high

temperature shift reactor containing a catalyst.
• Removal of CO2 to get hydrogen.
To make ammonia, nitrogen produced by liquefaction of air and

distillation, is reacted with the hydrogen. Further reaction of
ammonia with carbon monoxide produces urea.
Methanol Synthesis
There are two main chemical reactions which occur in this process
step:
• CO + 2H2 = CH3OH
• CO2 +3H2 = CH3OH + H2O
These reactions are also carried out over a catalyst at around

130°C.
The net effect of these reactions is the production of a crude

methanol stream which is about 80% methanol and 20% water.
Crude methanol from the reactor is fed to the product purification

section. This section consists of a topping column and a refining
column. Hot reformer gas provides heat for distillation. The
product methanol specification is for a water content of less than
0.10 wt %.
186
Flue Gas
Notes
H2O
CH4 Reformer To hydrogen
To Burner consumer
Natural Gas Steam
CO+H3
CO+
2 H 2 Methanol H2 Methanol
Converter Purge Gas
Synthesis Gas
CHO
3 H/HO
2
Distillation
Methanol/Water
Water
Figure 6: Methanol from Synthesis Gas
Check your Progress
1. Methane or naphtha is steam reformed to produce

________________________
2. CO and H2 form the basic material from which ___________

and ______________________are made.
Aromatics Production
Key Aromatic Intermediates
As described earlier the main products are benzene, toluene and
xylenes (BTX), which go as feedstock for manufacture of synthetic
fibres like nylon, polyesters, etc.
Figure 7: World Consumption of Benzene-2010

187
Composition of Reformate and Pyrolysis Gasoline
Notes
Pyrolysis gasoline comes from the steam cracking of naphtha
for the production of ethylene, propene and higher olefins. As
indicated in Table 3, pyrolysis gasoline is quite rich in aromatics.
Table 3: Composition of Reformate and Pyrolysis Gasoline
Aromatics Recovery Process

The first process unit for production of aromatics is Catalytic
Reforming of naphtha. As described earlier, this unit is normally
located in a refinery. To produce the key components (BTX), a
naphtha cut is prepared in the refinery which is in the boiling
range of BTX and then it is sent for reforming process. Reforming
converts paraffins and naphthenic components of naphtha to
aromatics.
The next step is Aromatics Extraction. Benzene, toluene and

xylenes are taken out of the reformer product by solvent extraction
process. A series of distillation columns follow to separate out the
benzene, toluene and xylene components. Benzene and toluene are
distilled out in the first three columns. Xylenes fraction, which is a
mixture of the isomers ortho-xylene, meta-xylene and para-xylene
are sent to the next series of columns to separate them.
Check your Progress
1. _____________ comes from the steam cracking of naphtha

for the production of ethylene, propene and higher olefins.
2. The first process unit for production of aromatics is

____________________
Intermediate and Derivative Petrochemicals

The next step is to create a number of other chemicals called
derivative chemicals from the base petrochemicals.
188
The idea is to create new products with various permutation and
Notes
combinations of reaction between the intermediate chemicals.
It is like kaleidoscope creating different symmetrical images

through combination of bits of glasses of different colour. The
intermediates are like the bits of glasses. The finished plastics are
the end images.
Let us see some typical examples. The ideal example is the ethylene
derivatives or intermediate petrochemicals based on ethylene.
A simple configuration of petrochemicals based on ethylene is
presented in Figure 9. Here the primary processing of cracking
generates the base petrochemical (ethylene).
From base petrochemical, the intermediate petrochemicals are

synthesised, e.g. Vinyl chloride monomer and styrene.
The final products in the block diagram polythene, VCM are

ethylene derivatives.
Figure 8: Reforming and BTX Production Process
Figure 9: Ethylene Product Chain
Processing for End Products – Polymerisation

So far, we looked into the various methods to produce the base
petrochemicals. The base petrochemicals pass through a number
of processing steps to produce the end products.
189
The products are numerous. So are the processes. Let us look at
Notes
a few examples to understand the various steps leading to end
products.
Polymerisation
Polymerisation is the final step in getting commercial grade
plastics or fibres. Polymerisation processes are carried out in the
presence of a catalyst. There are various techniques of initiating
and controlling the polymerisation reaction. Polymerisation could
be in vapour phase or liquid phase or with suspension of catalysts
in a liquid medium. The operating temperatures and pressures
vary widely from process to process.
Generally, the reaction is highly exothermic. Hence removal of

heat during the reaction is important in controlling the reaction.
Polymers are formed as granules in the reactor. They are separated,
dried and finally packed as bulk product.
Polythene Production
Ethylene is fed to the reactor bed reactor where polymerisation
occurs. The temperature is controlled by circulation of the contents
of the reactor through a cooler. The polyethylene are withdrawn
from the reactor and treated to stop residual catalyst activity.
Depending on the requirement of the polyethylene grade and

end product application, the polyethylene is either conveyed to
the extruder systems where additives are combined to produce
natural pelletised grades or to the compounding facility, where
the product is combined with dedicated colour master batches to
form fully formulated compounds.
The resins are then dried, homogenised and bagged for delivery.
Figure 10: Processing for End Products

190
Polyvinyl Chloride (PVC)

Notes
Polyvinyl Chloride is a chlorinated hydrocarbon polymer. It
is produced from vinyl chloride monomer (chemical formula
CH2=CHCl). The monomer is called VCM.
It is one example where besides feedstock of petroleum origin, an

inorganic compound also is one of the raw materials. Vinyl Chloride
Monomer (VCM) is produced from the raw materials of ethylene
and chlorine.
For the production of PVC, VCM need to be produced first. VCM is

produced in three steps in figure 11.
Direct chlorination: Ethylene and chlorine are combined in a

continuous process to form Ethylene Dichloride (EDC).
EDC cracking: EDC is thermally decomposed into VCM and

hydrogen chloride.
The hydrogen chloride is recycled as feedstock to a further stage,

the oxychlorination. Unconverted EDC is separated and recycled.
The VCM is purified for use in PVC production.
Oxychlorination: Recycled hydrogen chloride is reacted with

further ethylene feedstock in the presence of copper chloride
catalyst and oxygen. This produces further quantities of EDC,
while excess hydrogen is oxidised to form water.
VCM thus produced is taken to the next step, which is polymerisation

to PVC.
Hydrogen Chloride Recycle
Ethylene EDC Recycle

Oxychlorination
Oxygen
EDC Purification EDC Cracking VCM
Ethylene
Direct Chlorination
By Product
Water
Chlorine
Figure 11: Process for VCM

191
Notes
Figure 12: PVC Process
Check your Progress
1. Polyvinyl Chloride is a chlorinated ____________________

polymer.
2. For the production of PVC, __________________ needs to

be produced first.
Summary
In this unit, an overview of the processing steps in the petrochemical
industry was presented with macro-level block diagram, defining
the feedstock and the final products. The steps were further
elaborated for each of the major feedstock like naphtha and ethane.
The primary petrochemical units like steam cracker, steam

reforming and aromatics unit were described with flow diagram.
The base petrochemicals produced by the primary units were

defined.
The processing steps required converting the base petrochemicals

into derivative petrochemicals and final products were described.

1. What is the feedstock for petrochemical production and how is
the feedstock generated? Trace from the oil and gas as starting
material with block diagram.
192
2. Identify 10 items of daily use of petrochemical origin and
Notes
identify the base petrochemical from which they are made.
3. Describe with a block diagram use of methane as feedstock.
4. Describe ethane cracking process with block diagram.
5. Draw a block diagram tracing the origin of polythene from the

gas field.
6. What is polymerisation? What are copolymers? Describe the

process to make PVC.
7. Expand the following:
(a) PVC
(b) VCM
(c) LLDPE
8. Describe thermoplastic and thermosetting resins with

examples.
Unit 19 193
Notes
Transportation of Oil, Gas and

Products: Pipelines
Objectives
 Basic Configuration of Pipeline and its Hardware Components
 Special Technologies used in pipeline like SCADA, Intelligent Pigging,
etc.
 Salient features of Offshore and On-land Pipeline
Introduction
Hydrocarbons need to be transported from the place where it is
produced, to the different users. This unit talks about the different
forms of transportation of such Hydrocarbons through pipelines.
Modes of Transportation
Hydrocarbons, liquid or gas can be transported from the source
of generation to the bulk user in different ways depending on the
location of the source and the user; whether they are located at
land or sea, the distance and terrain between the two and the
quantity to be transported.
Bulk transportation is done by:
• Pipeline
• Marine Tankers and Barges
• Road and Railway Tankers Pipeline
Pipeline is used for transportation on land (onshore pipeline) and

also along the bed of sea (subsea or offshore pipeline), up to a few
hundred meters of water depth. For bulk movement of hydrocarbon,
pipeline is often the most economical way of transportation. Long
distance pipeline is also termed as cross-country pipeline, since
the pipeline crosses through several hundred kilometre of land
across the country or covering a number of countries. Land based
pipeline is far more economic. Subsea pipeline is used where either
194
pipeline has got to cross the sea or the land is inaccessible due to
Notes
unfriendly terrain or other reasons.
Marine Tankers and Barges

Marine tankers and barges are used for bulk supply across the sea,
where for some reason transport by subsea pipeline is either not
economical (e.g. due to depth of sea) or technically or politically
not feasible. Supply of the cargo is affected in batches and not
continuous.
Road and Railway Tankers

Road and railway tankers are used for transport where the bulk
quantity of the cargo is comparatively less, transport is on land
and the distances are also comparatively less.
Oil and Product Transportation in India

A vast network with combination of marine tanker, pipeline, road
and rail transportation mode is used:
• Crude oil from indigenous sources is brought to the refinery by

pipeline. For imported crude oil, import up to the port terminal
is by marine tankers and it is taken further by pipeline.
• The products distribution network from refineries to depots is by

road, railway and also product pipeline. Marine transportation
is also used for products.
• Transportation to the retail outlets from depots is normally

done by road tankers.
Transportation of gas is normally by pipeline. LNG is transported

by marine tankers. LPG can be transported by pipeline, marine
tankers, road and railway tankers.
Figure 1: Modes of Transportation

Unit 19: Transportation of Oil, Gas and Products: Pipelines
195
Check your Progress
Notes
1. For bulk movement of hydrocarbon _______________ is
often the most economical way of transportation.
2. Long distance pipeline is also termed as _________________

pipeline
Pipeline Systems
Pipeline is the most preferred option to transport oil, gas or
products in bulk. It could be thousands of km long, branched and
networked.
Configuration of both oil and gas pipeline are very similar. A cross
country oil or gas pipeline system normally starts with pumping
of oil or compression of gas to develop the requisite pressure to
travel a long distance. The pressure required for pumping of oil or
compression of gas depends on pipeline length, pipe diameter and
destination pressure requirements. For long pipelines (hundreds
of km), booster compressors for gas pipeline and booster pumps for
oil pipeline are required along the length.
Gas or oil (or any other liquid being transported) is distributed along
the length to many customers. Normally the following minimum
processing facilities are required upstream at the oilfield, which
has been described earlier:
• Separation of oil, condensate and free water
• Compression of gas, if necessary, to deliver at required pressure

at shore
• Pumping of oil
• Dehydration of gas to protect the pipeline from corrosion
• Sweetening, if necessary, to remove H2S
• Metering
• Corrosion inhibitor injection
Configuration of Cross-Country Pipeline

A typical cross-country pipeline system starting from an offshore
field has the following facilities along its route as shown in Figure 2:
• An offshore platform where the oil or gas is produced.

196
• PLEM near the platform (Pipeline End Manifold) from where
Notes
the pipeline starts (or a Dispatch Terminal on land).
• An SPM (Single Point Mooring) connecting the subsea pipeline

to a tanker, if oil is transferred from a tanker instead of
platform.
• Pig Launcher.
• Subsea pipeline reaching shore at what is called Landfall

Point.
• A Receiving Terminal at the landfall point. It has equipment like

pig receiver, filter, storage for oil, pumping for gas, processing
of gas, compression and dehydration. The description of the
various equipment is given in later part of this unit.
From the receiving terminal oil or gas is sent through cross country
pipeline, which could be hundreds of kilometre in length to several
customers along the route. There could be several customers along
the routes like power stations, fertilizer plants or other industries.
For distribution to each customer, there will be a Distribution

Terminal having filter, meter, etc.
Normally, there are booster stations with booster compressors for

gas and booster pumps for oil after every few hundred kilometre to
compensate for the pressure loss in the pipeline.
The entire facility is monitored and managed by SCADA system.

SCADA is a central monitoring system, which monitors the entire
pipeline parameters over several hundred kilometre by telemetry
and telecontrol.
Normally, LPG and petrochemical feedstock like ethane/propane

are taken out before giving the gas to the industrial consumer.
The bulk of the remaining gas is mainly methane (above 90% by
volume).
Figure 2: Pipeline Configuration

197
Example of Cross-Country Pipeline
Notes
There are several pipelines in Europe and the Americas over
thousand-kilometre-long, carrying gas, or oil or products. In India
the longest pipeline so far is the HBJ Pipeline (Named after the
land route Hazira-Bijapur- Jagdishpur) along with its origin at the
offshore fields at the west coast.
The line originates at offshore, carrying associated gas from

Mumbai High and free gas from South Bassein fields to Hazira. It is
a 36-inch diameter pipeline. It was designed to carry 20 MMSCMD
of gas, expandable to 30 MMSCMD capacity. After treatment of
gas at Hazira, the HBJ pipeline starts with compression of the
gas. Its first phase was 1700 KM long, traveling through Gujarat,
Rajasthan, Madhya Pradesh to UP and North India. Along its
entire route, it provides feedstock to a number of fertilizer plants
and power plants at a number of places (Guna, Vijaipur, etc.) LPG
plants extract the LPG before the gas is given to the buyer. Also
there are five booster stations.
Figure 3: HBJ Pipeline
Pipeline Facilities Description

Now let us look at the some of the equipment described in the
previous section in order to get a better understanding.
198
PLEM and SPM

Notes
Figure 4 shows offshore platform linked to a PLEM, from where
the pipeline starts. PLEM means Pipeline End Manifold, which
is essentially a set of valves and flanges along with pipe header
supported by steel structure, from where the pipeline carrying oil,
gas or any other material starts. Piping from the platform carrying
oil or gas is joined at the PLEM, which is fixed at the sea bed by
piling.
PLEM also has pig launcher, the function of which will be explained
later.
Figure 4: Offshore Platform and PLEM
Figure 4 also shows a tanker being loaded with the oil produced in
the platform. For this a floating manifold called SPM (Single Point
Mooring) is utilised. A more detailed picture of an SPM is given in
Figure 5.
It essentially is a floating manifold in a buoy, connected by flexible

hose to the PLEM and permanently anchored in the seabed. An
oil tanker can be anchored near the SPM, get connected to the
manifold at the SPM and receive the oil through the PLEM.
Figure 5: Tanker Receiving Oil from an SPM
SPM (also known by various trade names like SBM i.e. Single Buoy
Mooring) can also be used to unload from a tanker and take oil and
product to storage terminal at shore. In such cases where product
199
or oil is imported by tanker, the tanker anchors near the shore,
Notes
as near as it can come with available draft in the sea. An SPM is
anchored at that point connected to a PLEM. PLEM has pipeline
leading to the shore terminal.
Pigging and Pig Launcher/Pig Receiver

Long distance pipelines need cleaning and monitoring from time to
time, which is done by Pigging. A pig is a cylindrical or spherical
in shape, made of metal or plastic with or without brushes at the
edge and having diameter close to the pipe diameter. It is pushed
inside pipeline through a pig launcher normally at the pumping or
compression station. Originally it was developed for cleaning and
pushing the condensate out of pipelines.
Pigging is primarily the processes or activities of sending a Pig

through a pipeline. It may also include defining the purpose of
pigging, selection of suitable Pig, launching and receiving the Pig
and tracking the Pig as it passes through the pipeline. The main
purpose or functions of pigs are:
• To clean and remove debris.
• For pre-inspection and certification of newly built pipeline.
• To maximise efficiency and ensure continuous operation by

removing pipeline deposits.
• To monitor corrosion and damage on the internal surface of the

pipeline.
Today intelligent pigging is an accepted way of pipeline monitoring

and maintenance. Intelligent pigs have electronic device that scans
and monitors pipeline inner surface and thickness and records the
data. They are also known as smart pigs.
Pictures of various types of pigs are presented in Figure 6.
Figure 6: Pigs of Various Types

200
Pig Launcher is used for launching and dispatching pigs to the
Notes
outgoing pipeline. The launching station is located at oil/gas
source. The launching station comprises of a pig launcher. After
the pig is launched into the pipeline, it is trapped at the other end
of the pipeline by Pig Receiver.
Metering and Quality Measurements

Metering is very important equipment in oil and gas pipeline
distribution system. They have to be accurate, standardised and
calibrated. It has to be certified and accepted by both oil/gas
producer and the customers, since the huge financial transaction
takes place based on quality and quantity of the oil or gas being
distributed.
Along with the meter to measure the quantity of oil or gas being
transferred, there has to be an instrument for online measurement
of quality. For example, for oil it is important to measure water
content. Also, temperature and pressure need to be measured for
volume standardisation.
For gas, the temperature and pressure are measured to quantify the
gas under standard conditions. The composition is measured online
for the quality of gas in terms of calorific value and contaminants.
Storage and Pumping of Oil

Storage and pumping of oil in the terminals or booster stations
in the oil pipeline system is one of the most important facilities.
Often a large Storage Terminal is built for the refinery. A typical
flow diagram of oil, storage, pumping and pig launcher facility
is shown in Figure 7. Normally there is a booster station every
few hundred kilometre. There are pig receivers and pig launchers
besides storage and pumping system.
Gas Compression Facility

As in case of the oil, besides compression at the source, for a
cross country gas pipeline, booster stations are required every
few hundred kilometre to maintain the pressures in the pipeline.
Normally, pipeline pressures are maintained above desired
pressure as the additional compression provides some for gas
storage in the pipeline.
201
Notes
Figure 7: Oil Storage and Pumping
Filter/Coalescer
In gas pipelines, Gas Filter Coalescer is used for the cleaning of the
arriving gas from dust particles and for removal of any entrained
liquid from the gas. Normally, there will be two filters arranged in
parallel in the system – one in operation and the other in standby
condition.
Pressure Reducing Station

Often gas has to be delivered at specific pressures, which may be
lower than the pipeline pressure. Pressure Reducing Station is
used for reducing the pressure of the incoming upstream gas to the
required downstream pressure.
Burial Philosophy – Onshore Pipelines

Onshore pipelines should be buried to protect them from mechanical
damage, fires and tampering. A depth cover of 0.8 M to 1 M would
be adequate in most cases. The location of buried pipelines should
be clearly identified by markers.
In areas where the risk of interference by mechanical excavators

is high, a warning tape should be installed in the excavation above
the pipeline to further lower the risk.
Burial Philosophy – Offshore Pipelines

The section of the pipeline within the shore approach should be
buried to a depth to ensure that it is not exposed due to erosion of
sand. There is otherwise no requirement to trench or bury offshore
pipelines, unless necessary in order to achieve pipeline stability,
mechanical protection or thermal insulation.
It should be noted that protection against dragging anchors from

202
large ships, particularly in soft soils, requires significant burial
Notes
depths.
Special Features and Systems for Pipeline

Installations
Pipeline Corrosion Control
Pipeline facility requires huge investment and carries large bulk of
oil and gas resources vital to the economy of a country. Protection
of pipeline from corrosion and corrosion control are vital for
preservation of the asset. It should be noted that most pipelines
are buried more than 1.5 meters deep for safety and environmental
considerations.
There are two types of corrosion in the pipeline:
• Internal Corrosion due to chemical reaction of metal with

corrosive components of the gas like CO2, H2S.
• External Corrosion due to the external environment of the

pipeline i.e. soil, water, etc. Caused by electrochemical process.
The internal corrosion (due to the presence of CO2, H2S) is prevented

by ensuring that there is no condensation of moisture in the
pipeline. Both CO2 and H2S become corrosive when water in liquid
form is present. This is generally accomplished by dehydrating gas
at supplier’s end and corrosion inhibitors can also be injected in
the pipeline.
The external corrosion can be quite severe as shown in Figure 8.
Figure 8: Corrosion on Unprotected Buried Pipe
External corrosion in a buried pipeline is electrochemical type of

corrosion and takes place due to formation of anodic and cathodic
sites on the body of the pipeline. Anodic and cathodic sites form for
many reasons:
203
• Impurities or inclusions in the metal
Notes
• Localised stresses
• Grain size or composition differences
• Discontinuities on the surface
• Differences in local environments (e.g., temperature, oxygen,

or salt concentration)
Cathodic protection is a procedure by which an underground

metallic pipe is protected against corrosion. A direct current is
impressed onto the pipe by means of either a sacrificial anode or
a rectifier (DC Source). Corrosion will be reduced where sufficient
current flows onto the pipe.
Pipeline Coating
All buried pipelines are coated externally (Figure 9) by a suitable
anti-corrosion coating, supplemented by cathodic protection which
covers any damaged or deteriorated area of the coating. For each
specific pipeline system, the selection of the coating material
is based on the specific corrosion problems to be encountered.
Coating material used for the external protection of oil and gas
transmission pipeline systems are:
• Hot applied asphalt or coal tar enamels
• Polyethylene coatings (PE)
• Fusion bonded epoxy coatings (FBE)
• Plastic tape wrappings
• Asphalt mastic coatings
• Cold applied epoxy coal tar coatings.
Figure 9: Coating Being Applied on Pipeline

204
Flare and Venting
Notes
The pipeline system is provided with flare and venting system,
which handles the relief and blow-downs of the contained
hydrocarbon in the system.
Control and SCADA

Control of pipeline spanning several hundred kilometres poses
a difficult challenge. The monitoring and critical control is done
from Master Control Station using SCADA System. The SCADA
System provides the operational interface to support the operation
of natural gas pipeline system. The interface provides the capacity
to acquire pipeline and pipeline facilities operation conditions and
status.
SCADA stands for Supervisory Control and Data Acquisition. A

simple schematic representation of SCADA System is given in
Figure 10 and 11.
It refers to the combination of the fields of telemetry and data

acquisition. SCADA encompasses the collection of the information,
the method of transfer from the remote site, the analysis and
control of the system and display of the received information.
It is done with measurement of data and parameters at various

locations and transmission using communication medium like
optical fibre or microwave or satellite communication linked to
computers.
Figure 10: SCADA System
SCADA facilitates the capability to monitor and control network

operations in real time. SCADA systems are distinguished from
traditional control systems by their extensive use of telemetry to
link physically isolated measurement and control points.
The use of SCADA system facilitates:

205
• Operation and Maintenance
Notes
• Planning
• Safety Management
• Accounting
SCADA is also used for Leak Detection along with flow modelling
software. Dynamic Fluid Dynamic models for pipeline flow of oil
and gas can monitor the flow measurements at various locations in
the pipeline, match them with the supply volumes and consumer
withdrawals and predict leakages and approximate location of the
leakage.

Figure 11: Pipeline Real-Time Telemetry System
Check your Progress
1. SCADA facilitates the capability to monitor and control

network operations in _________________ time.
2. Cathodic protection is a procedure by which an underground

metallic pipe is protected against ___________
Pipeline Project Implementation

Like any other project, a cross country pipeline project too passes
through various phases of implementation from feasibility study to
design, construction and operation as shown in Figure 12. But like
any other industry, there are certain special aspects that need to
be taken care of in a pipeline project.
206
Notes
Figure 12: Pipeline Project Implementation
Safety and reliability in design and construction is important as

pipeline carries a huge reservoir of explosive substance through
environmentally sensitive areas.
Also, since access is required on the land through which the

pipeline passes, legalities involved in getting Right of Way (ROW)
is a very important.
Some of these aspects will be discussed in this section.
Pipeline Design Features

Basic Parameters
The pipeline is designed taking into consideration the operating
conditions and requirements over its entire projected life cycle
including final abandonment, i.e.
• The maximum planned throughput and turn-down
• The characteristics of the fluids to be transported
• The pressure and temperature requirements
• The mode of operations
• The geographic location and the environmental conditions.
Hydraulic Design
In order to determine the possible range of operational parameters
of the pipeline, a hydraulic analysis should be performed.
207
For a given pipe size, fluid properties and flow rate, the hydraulic
Notes
analysis should provide the pressure and temperature profiles all
along the pipeline for steady state and transient conditions.
Full account should be taken of possible changes in flow rates

and operational modes, over the complete operational life of the
pipeline.
The hydraulic analysis should provide information on: surge

pressure during shutdown of a liquid line, turn-down limitations
and inhibition or insulation requirements to prevent wax or
hydrates deposition, effect of flow conditions on the efficiency of
corrosion inhibitors, liquid hold-up and slug control requirements
at the downstream end of two-phase lines.
Three most important end results of design are:
• Material of pipeline
• Diameter of the pipeline
• Wall thickness
Pipe Material Selection

The selection of the pipeline material type is a fundamental issue
to be decided at the conceptual design stage of a pipeline project.
The most frequently used pipeline materials are carbon steel.
When the fluid is corrosive, due to presence of hydrogen sulfide,
carbon dioxide, or oxygen, special steel is used. The potential long-
term impact of corrosion has to be considered during design and it
can be demonstrated that the pipeline can remain fit-for- purpose
throughout its lifetime.
Diameter of the Pipeline

The diameter depends on:
• Available pressure drops i.e. the difference between starting

pressure (P1) and desired delivery pressure (P2)
• Actual pressure drop depends on design flow rate (Q) selected

and friction factor.
• Static head adds up to pressure differential in case of liquids.
• Actual pressure drop should be less than available pressure

drops
208
Wall Thickness
Notes
Wall thickness of the line pipe depends on the strength of pipe
material and the internal pressure of the fluid inside the pipeline.
Pipeline Risks
The most common pipeline threats which may lead to the loss of
technical integrity are given below:
• Internal corrosion and Hydrogen Induced Cracking (HIC)
• Internal erosion.
• External corrosion and bi-carbonate stress corrosion cracking
• Mechanical impact, external interference.
• Fatigue, e.g. sudden surges of pressure in the fluid
• Hydrodynamic forces
• Geo-technical forces
• Growth of material defects
• Over-pressurisation
• Thermal expansion forces
Environmental Impact Assessments (EIA)

The factors which are critical to public safety and the protection
of the environment should be analysed over the entire life of the
pipeline, including abandonment. The risk should be reduced to
as low as reasonably practicable, with the definite objective of
preventing leaks. The level of risk may change with time and it is
likely to increase to some extent as the pipeline ages.
An environmental impact assessment is carried out for all

pipelines or groups of pipelines. EIA is a process for identifying the
possible impact of a project on the environment, for determining
the significance of those impacts and for designing strategies and
means to eliminate or minimise adverse impacts.
Pipeline Routing
The selection of the route is done by taking full account of the
associated risks, particularly safety and environmental risks, the
accessibility for maintenance and inspection, as well as normal
209
direct cost considerations.
Notes
Pipeline Construction
Pipeline construction is performed in accordance with the relevant
sections of the ANSI/ASME Codes and has to comply with any
additional criteria resulting from the design. The construction
procedures ensure that the pipeline is installed safely, on time and
with minimum impact on the environment.
Steps in onshore pipeline construction are:
• Survey and Route Selection
• Securing Right of Way (ROW)
• Site Preparation
• Coating and Delivery of Pipe Pieces at Site
• Welding and Stringing
• Inspection and Testing
• Laying of Stringed Pipe
• Hydro-testing
• Mechanical Completion
• Site Restoration
Survey and Route Selection

The selection of the route is done by taking full account of the
associated risks, particularly safety and environmental risks,
the accessibility for maintenance and inspection, topography,
soil data, river crossings, road crossings as well as normal direct
cost considerations. This involves a lot of surveys and analysis of
possible routes based on maps, aerial surveys, satellite imagery,
GPS (Global Positioning System) and other techniques.
Securing Right of Way

For the most part, cross country pipelines are not visible because
they are located under the street or are buried in rights-of-way
(ROW) secured by an easement. Easement implies right held by
one person to make use of the land of another person for a limited
purpose, right of way, license or permit.
210
Before a pipeline is constructed, ROW is obtained to secure the land
Notes
rights necessary to construct, operate and maintain the pipeline.
The ROW agreement restricts the landowner’s rights within the
ROW corridor to uses that are compatible with the operation and
maintenance of the pipeline.
The ROW width is normally 30 meters for construction and 15

meters for operation.
Site Preparation
The route is cleared of trees and plant life, the topsoil removed and
all material stockpiled for re-instatement (clear and grade). Pipe
is delivered by truck and laid along the route (see Figure 13 and
Figure 14).
Coating of Pipeline
Exterior of pipes is generally coated at the shop or site. But at
the time of stringing coating may be partly damaged. The coating
is repaired and welded joints are freshly coated for corrosion
protection.
Stringing
The pipelines themselves are fabricated from 12 metre pipe
lengths. They are then welded into 250 metre lengths, known as
strings. The pipe is then lowered into the trench. Backfill material
is added beneath and around the pipe to secure it in place.
When the pipe is covered to a depth of at least one meter, restoration

of the area begins.
If necessary, the pipe is bent to follow the natural contour of the

land. Welds are stringently tested to ensure their integrity. This is
done while laying the pipeline in a string (see Figure 19.14).
Inspection and Testing

1. Non-Destructive Testing (NDT): Pipelines are tested by
NDT methods. The two techniques most used are:
♦ Radiography Testing (RT): X-ray plates are obtained using

Gamma isotopes for all weld joints.
♦ Ultrasonic Testing (UT): In this method high-frequency

sound waves are used to detect imperfections or changes in
a material. Reflections or echoes are returned from spots in
211
the material, where the density is lower (weld penetration
Notes
is inadequate).
♦ Other methods of NDT are:
♦ Magnetic Particle Testing (MPT)
♦ Liquid Penetrant Testing
2. Hydro-Testing: After full length of the pipeline is laid, the

Hydrotesting of the pipeline is normally conducted from end to
end.
Figure 13: Laying of Pipeline
Figure 14: Pipeline Right of way
Operating and Monitoring of Pipeline

There are three important features of operation and monitoring of
212
pipelines:
Notes
(1) Overall control and monitoring of pipeline by SCADA
system from a Master Control Station (MCS) as described
earlier.
The types of instrumentation in a pipeline system can comprise

the following:
♦ Flow, pressure, temperature measurements (Flow

indicators, Pressure indicators, Temperature indicators)
♦ Quality measurements
♦ Safety systems
♦ Supervisory Control and Data Acquisition (SCADA)

systems.
♦ Leak detection systems.
The data is transmitted from various locations in the cross-

country pipeline system to the MCS from where the whole
pipeline operation is monitored.
The SCADA system is also used for leak detection by comparing

mass flow rates through the pipeline at various locations along
the route. It can detect leak up to 0.5-1.0% of the total flow and
locate it.
Other applications of SCADA system are:
♦ Pipeline efficiency monitoring
♦ Monitoring movement of pigs
♦ Pipeline integrity monitoring and leak detection
♦ Gas quality monitoring
♦ Early warning of adverse operating condition
(2) Inspection and Surveillance all along the Route (ROW):

Inspection and maintenance of the pipeline and accessories all
along the ROW is carried out at regular intervals.
The pipeline can be swiftly shutdown if control centre operators

observe abnormal conditions. Automatic shutdown is also
prompted by the SCADA system when preset safety limits are
exceeded.
213
Surveillance and protection along ROW are carried out by:
Notes
♦ Using aircraft, land vehicle or foot patrol, to look for
potentially damaging activities such as unauthorised
digging and construction.
♦ Using high resolution satellite imagery for outside

intervention and sabotage attempts.
♦ Adding traffic barriers to above ground equipment near

roadways.
♦ Reviewing locations of and supplementing where

appropriate, to the existing ROW markers.
♦ Increasing ground surveillance of lines in densely populated

areas.
(3) Monitor and Protect the Pipeline from Corrosion:

Intelligent pigging with sensors in the pig, transmitting data
on pipeline inside surface is used for:
♦ Corrosion monitoring – Curvature monitoring – Leak

detection
♦ Metal-loss/corrosion detection
♦ Photographic inspection
♦ Crack detection
The cathodic protection system for the external corrosion of the

pipeline also needs regular monitoring.
Cost Comparison of On-Land and Sub-Sea

Pipelines
The major cost of on-land pipeline will comprise of:
• Survey of Route
• Acquiring ROW
• Line Pipe
• Wrapping and Corrosion Coating
• Welding of Line Pipe
• Trenching
214
• Laying of Pipes
Notes
• Backfilling and Restoration
• Cathodic Protection by Impressed Current System
• Placement of Route Markers
The major cost of subsea pipeline will comprise of:
• Survey of seabed route including measurement of current and

wave
• Line Pipe
• Concrete Coating for Weight Enhancement
• Cathodic Protection by Sacrificial Anodes
• Laying of Pipes by Laybarge
• Welding of Line Pipes (partly on barge)
• Installation of Pipe Risers (vertical line from the platform to

sea bed)
The cost of line pipe may be almost the same for the same quantity
of fluid flow (except in case of subsea pipe line the thickness
may be increased for stability and safety). The major difference
between on-land pipeline and subsea pipeline is the cost of concrete
coating, cathodic protection (sacrificial anode is much costlier than
impressed current system) and the pipeline laying method.
The on-land pipeline is laid by side boom tractors, whereas for the
subsea pipeline the laying is by lay-barge. The rates for lay-barge
is much higher than rates for side-boom tractors.
Check your Progress
1. __________________ is a process for identifying the possible

impact of a project on the environment, for determining the
significance of those impacts and for designing strategies
and means to eliminate or minimise adverse impacts.
2. The most frequently used pipeline materials are

________________
215
Summary Notes
In this unit, the various modes for bulk transportation of
hydrocarbon resources were described at the beginning. This was
followed with a detailed description of pipeline transportation
facilities. At first a system description of a cross country pipeline
starting from an offshore or onshore oilfield was given. Subsequently
each component of the system such as terminals, pigging, pumping
or compressor stations etc. was described in detail.
A macro-level description of parameters taken into account in

design and optimisation of a pipeline was given. Also, various
steps in implementing pipeline projects and construction of cross
country pipeline was described. This was elaborated with an
example of a cross country pipeline project. Various factors taken
into consideration for a grass roots project example (HBJ Pipeline)
were elaborated.

1. Which are the different modes of transportation of
Hydrocarbons?
2. Pipeline is the most preferred option to transport oil, gas or

products in bulk. Why?
3. Explain the configuration of a cross-country pipeline.
4 Explain the following terms:
(a) SCADA
(b) PLEM
(b) SPM
5. Explain the process of pigging.
6. What is Pipeline Project Implementation? Explain.

216
Notes
Unit 20
Case Studies
Case Study 1: Loading Arm
As one of the few Australian companies with Loading Arm experience,

Camco was contracted by a major gas producer to refurbish their
Condensate Loading Arms. The Loading Arms were removed by
our team and transported Perth for refurbishment. The overhaul of
the Loading Arms required a significant commitment of workshop
facilities and available engineering disciplines.
Problem
The Loading Arms were in poor condition and needed a dedicated

team backed by technical support with a specialised facility to repair
and manufacture components. Adding to the complexity of the
repairs was the difficult task of removing the Loading Arms from
the wharf between ship movements whilst unpredictable weather
conditions prevailed.
Question
Critically analyse the case.
Source: http://www.volunteeringaustralia.org/files/1E8H8EVUL8/Case%20Studies.pdf
Unit 20: Case Studies
217
Case Study 2: LNG Unloading Arm Installation at Notes
Kochi Seashore
The project site, LNG (Liquefied Natural Gas) receiving and regas
(regasify) terminal, is a part of newly created Special Economic Zone
located on the sea shore of south-western India. To meet the civil
and industrial demand of natural gas in this deficit area where no
piped natural gas is available, the first LNG terminal in south India
was formed in 2007 using reclaimed land with dimensions of 840 m
X 400 m and a 330m long x 5m wide jetty trestle extending from the
land at the south side.
At the end of the trestle, a reinforced concrete unloading platform

was built to accommodate four sets of Unloading Arms (ULA) which
serve to unload the LNG from the cargo ship to the LNG storage tank
via cryogenic pipelines. The unloading arms are the most important
and critical units installed in the LNG receiving terminal, which
require a higher stability for their installation to avoid any potential
damages or leakage during the unloading of LNG from ship.
It was planned to finish the unloading arms installation from the

landside using a temporary bund before arrival of the summer
monsoon, however it didn’t happen due to logistic reasons. To meet
the schedule, it was decided to install the unloading arms using a
floating barge with a mounted crane, trying to finish the installation
by the end of May 2011.
However, when the ULA risers were installed on 27 May, 2011, the
summer monsoon (southwest monsoon) arrived from the Indian
Ocean, sweeping the south of India with abundant rainfall and
wind. The floating barge was hit by the waves and winds and the
250-ton crane could not be kept steady to install the ULA main
units. To secure the ULA, the management decided to suspend the
installation and transport the ULA to the safe place for temporary
storage.
Questions
1. Bring out the critical points in this case.
2. Do you think the management’s initial decision was right?
3. What should the management do next?
Source: http://www.isope.org/publications/proceedings/ISOPE/ISOPE%202012/data/
papers/vol1/2012- LKC-07Khetarp.pdf
Block V
Unit 21 219
Notes
Transportation of Oil, Gas and

Products: Other Modes
Objectives
 Overview of Transportation by Road and Railways
 Overview of Transportation by Marine Tanker
 Methods of Storage of Liquids and Gases
Introduction
In the earlier unit, you learnt about transportation of Oil and Gas
through pipelines. In this unit, you will learn about transportation
through Marine Tankers and by Road and Rail transport.
Transportation by Marine Tankers

The following paragraphs talk about Transportation of Oil and
Gas by Marine tankers.
Oil and Product Tankers

Oil tankers come in two basic types, the crude carrier and the
clean products carrier. The crude carrier normally carries crude
oil and the other type carries the refined products, such as petrol,
gasoline, aviation fuel, kerosene and paraffin. Tankers range in all
sizes, from the small bunkering tanker (used for refueling larger
vessels) of 1000 DWT (Dead Weight Tons) to the real giants: the
VLCC (Very Large Crude Carrier) of between 200,000 to 300,000
DWT and the ULCC (Ultra Large Crude Carrier) of over 300,000
DWT.
Typical sizes for oil carrying tankers are given in Table 1. A picture
of an oil tanker is shown in Figure 1.
220
Table 1: Oil Tanker Sizes
Notes
Figure 1: VLCC Tanker
LNG Transportation by Marine Tankers

The shape of the LNG carrier is quite unmistakable, with the
spherical thermo-flask like shape of the Moss tanks visible along
the deck (Figure 2). Although, the carriage of huge quantity of
explosive liquefied gas - kept at below freezing temperatures as
an unstable liquid appears extremely hazardous, however LNG
carriers have the best safety record of all maritime vessels. The
vessels themselves are maintained meticulously and renewed
frequently. There have been accidents involving LNG/LPG carriers,
but where such events have occurred, so far, they have been
successfully managed to vent off the cargo into the atmosphere,
thus rendering the lethal cargo harmless.
Figure 2: LNG Carrier
Tanker Loading and Unloading Systems

Oil, LNG and products are normally loaded and unloaded with
the tanker berthed alongside a Jetty, having loading arms and
Unit 21: Transportation of Oil, Gas and Products: Other Modes
221
unloading arms (Figure 3). Once the tanker berths, the loading
Notes
arm or unloading arm is connected to the tanker. For unloading,
a pump in the tanker pumps out the oil or products. A tanker may
carry a number of products, which can be pumped out in batches,
separated by pigs.
Oil and products are also loaded or unloaded by SPM connected to

a pipeline to the shore terminal.
Figure 3: Loading and Unloading System
Figure 4 depicts picture of a tanker unloading at a jetty with blown-

up figures of the loading arms.
All large coastal storage and handling terminals have this kind
of facility. Where there are limitations of draft for the size of the
tanker, use of SPM is made for loading and unloading.
Figure 4: Crude Loading and Unloading Facility

222
Check your Progress
Notes
1. Oil, LNG and products are normally loaded and unloaded
with the tanker berthed alongside a ________________,
having loading arms and unloading arms.
2. Once the tanker berths, the ____________________ arm is

connected to the tanker.
Road and Railway Transportation

Road Tanker Loading Systems
Two systems exist for the loading of bulk road tanker:
Top Loading: In traditional top loading the product is loaded by

inserting a loading arm from the top through the open manhole in
the tank compartment of the vehicle.
Bottom Loading: In bottom loading the product is loaded by

connecting the loading arm/hose to a dedicated self-sealing coupling
at the bottom of the vehicle.
The displaced vapours are evacuated via a second arm/hose

connected to the vapour collection coupling at the bottom of the
vehicle.
Typical facilities for tanker loading comprise:
• Loading pump pumps the product to the gantry to one or more

loading arms
• Emergency Shut Down (ESD) valve to isolate the system

rapidly in an emergency
• A filter to ensure product cleanliness and to protect the flow

meter
• A flow metre
• A flow control valve to control the flow
• The loading arm connected to a dry-break coupling
• The vapour return hose
• The overfill protection sensor to give a signal if the road vehicle

is overfilled
• The earthing connection (combined with overfill protection

223
connection) to discharge the static electricity which is generated
Notes
during loading
• The interlock system in order to check if all conditions for safe

operation are fulfilled (e.g. earth connected, no overfill, vapour
return hose connected, etc.).
Top loading has been predominant. The system is very flexible;

almost any type of vehicle can be loaded through an open manhole
and dedicated (often specific) couplings as needed in bottom loading
are not required.
The system is also relatively simple; the personnel can follow the
loading operation through the open manhole and fill to a level
indicator in the tank compartment. For bottom loading, level
sensors are necessary.
However, increasingly the trend is towards bottom loading, due

to environmental legislation on vapour emissions both at loading
terminals and retail outlets. Bottom loading should be employed for
solvents and common white oil products from safety considerations.
Figure 5: Front View Showing Hose Loader in Parked Position
LPG Transportation by Road Tankers

The storage and transportation of LPG (Liquefied Petroleum Gas),
imposes stringent technical requirements. The material must be
224
carefully selected, continual quality checks must be performed
Notes
during manufacturing and comprehensive tests must be performed
on completed tanks. The LPG carriers could be truck mounted.
Figure 6 shows the two types with capacities mentioned.
Figure 6: LPG Road Tankers
Railway Tankers
The railway tankers are similar in design as road tankers except
that several rakes together form one train. Hence loading or
unloading facility should have several loading arms or unloading
arms in a row along the railway line inside the battery limit of the
plant or storage terminal.
Figure 7 (a): Railway Tanker

225
Notes
Figure 7 (b): Railway Tanker
Figure 8: Railway Tanker Loading Facility
The railway wagons normally carry 20 to 25 tons of cargo. Size of

the wagon is such that it can be fitted on a standard (4 wheel and
8 wheel) railway wagon.
There are 4-wheeler and 8-wheeler tank wagons used to transport

LPG all over India. These tank wagons are operational both on
broad gauge and meter gauge of Indian Railway.
Several tankers are hauled in tandems are called rakes. The

number of tankers in a rake is dependent on the hauling capacity
of the engine.
Some of the tankers (handling crude oil, fuel oil) have tank cleaning
facility to remove congealing.
Tank wagon loading gantries are available at PSU facilities only.

No private marketeer has tank wagon loading gantry facilities.
Public sector refineries have large railway yard with loading bays.
There are approximately 2600 tank wagons operational. IOC
controls maximum number of tank wagons.
From safety considerations the following rules are followed:

226
• Tank wagon should be loaded and dispatched within one
Notes
calendar day.
• Overnight stay at the depots is generally not permissible by

the industry.
• The loading system has automation with a lot of system safety

features.
• There are vapour losses during loading/unloading operations.

To minimise such losses modern refineries have got vapour
recovery system.
Check your Progress
1. Tank wagon loading gantries are available at

_________________ facilities only.
2. Size of the wagon is such that it can be fitted on a standard

_______________________
Storage of Liquids and Gases

Liquid Storage
Normal liquid petroleum and product storages are made of steel.
But depending on the nature, corrosivity and operating conditions,
special steel or alloys can be used. Various types of storages used
in the petroleum industry are summarised below:
Rectangular Tanks
The rectangular tanks are the simplest tank for atmospheric
pressure service of non-hazardous liquids like water.
Cone Roof Tanks

These types of tanks are very widely used for storing oil, products
and chemicals at atmospheric pressures. These are designed for
low internal pressures as per API 650 code with design pressure
of maximum 2.5 psig and normally with a few inches of water as
design pressure. These tanks cannot tolerate pressure or vacuum.
These are normally equipped with pressure-vacuum relief.
Floating Roof Tanks

These are atmospheric tanks improved over normal cone roof
tanks. These are widely used for the storage of many petroleum and
227
chemical products. These tanks may be of an open top (external)
Notes
design or may include a fixed roof to aid in the protection of the
(internal) floating roof. As the roof floats over the liquid, it prevents
vapour losses and atmospheric pollution.
Dome Roof Tank

Used for highly volatile liquid, that can boil at normal ambient
pressures and temperatures e.g. pentane, Condensate, NGL, etc.
Operating pressures of such tanks is slightly higher than conical
roof.
Figure 9: Liquid Storages
Storage of Gases and Liquefied Gases

Storage of Gas
Gases occupy very large volume and it is uneconomic to build
storage for very large volume of gases. Existing caverns or depleted
reservoirs are often used as underground storage of gas.
A long-distance pipeline over several hundred kilometre has very

large hold-up of gas. Compressing the gas above required pressure
along the pipeline can create a large hold-up of gas. This is called
packing the line with gas.
In view of the fact that building a gas storage is not economic,

228
normally gas is stored either under high pressure or in liquefied
Notes
form. For very large volumes, liquefied gas storage is more
economic.
Ethane, Propane, Ethylene or LPG can be stored under pressure.

The storages are either cylindrical (bullets) or spherical in shape
(spheres).
Storage of Liquefied Gas

The same gases mentioned above are also stored in liquefied form.
Choice of type of storage is a matter of economic evaluation. As a
thumb rule, larger the storage requirement, more economical is
the liquefied storage.
As described in Gas Processing, LNG is transported and stored in

liquid form at below –160°C. LNG storage is made of special Nickel
alloy to withstand such low temperatures where most metals
become brittle. Also, special insulation and safety features put into
an LNG tank makes it very expensive.
Liquefied gas storages are often buried under the ground with just
the roof protruding out of the earth for safety reasons. Such buried
storages are called mounded tanks. Many operating companies
have preference for mounded tanks for liquefied gas storage.
Figure 10: Liquefied Gas Storages
Figure 11: Storages and Storage Terminals

229
Check your Progress
1. __________________ are atmospheric tanks improved over Notes

normal cone roof tanks.
2. LNG is transported and stored in liquid form at below

_______°C.
Summary
The unit included description of transportation system by marine
tankers and brief description of road and railway wagon as means
of transportation.
Also, the various types of storages used for petroleum and products,
both liquid and gas were described.

1. Which are the different marine tankers used for transportation
of oil and gas?
2. What is road tanker loading systems?
3. How are gases and liquids stored?

230
Unit 22
Notes
Health, Safety and Environment
Objectives
 Health and Environment Hazards involved in the Industry
 What is Hazard and how to Identify and Minimise Risks
 Causes of Accident
 Sources of Environment Pollution and Method to Treat them
Introduction
Hydrocarbon (oil and gas) and petrochemical products pose hazard
to the environment if not handled in a safe manner. Health, safety
and environment considerations start from conceptual stage of a
project to operation and abandonment stage.
Oil and gas are highly flammable material that can cause explosion
if not handled properly. Also, a lot of toxic chemicals are handled
during processing, particularly in the downstream facilities.
That is why a lot of importance is given today on learning and

implementing methods to take care of Health, Safety and
Environment (HSE) all over the hydrocarbon industry. HSE norms
and practices are followed at every stage of the plant life cycle. A
lot of investment in hardware and services is essential today to
take care of HSE.
Hazards – Definitions, Causes and Types

Definitions of Hazards
Dictionary meaning of hazard is danger, risk or peril either to
health, safety or to environment. In the process industries, the
following terms are used:
Hazards: These are defined as having the potential to cause harm,

including ill health and injury, damage to property, products or the
environment, production losses or increased liabilities.
Threats: These are possible causes that could potentially release

the hazard and produce an incident.
Unit 22: Health, Safety and Environment
231
Incidents: These are defined as an unplanned event or chain of
Notes
events, which have caused or could have caused injury, illness and
or damage (loss), to assets, the environment, or third parties.
Causes and Types of Hazards

The hazards encountered in a hydrocarbon process plant are
primarily due to loss in containment (i.e. leakage) of the hazardous
material, which may then lead to hazard. Resulting hazard can be
divided into three categories:
• Hazards resulting in fire and explosion,
• Hazards resulting from the toxic properties of materials

handled (chemical hazard), and
• Hazards associated with the physical operations in the plant

(unsafe operations).
The Fire Triangle

For fire or explosion to take place, the presence of all the three
items mentioned below simultaneously is essential:
• Flammable material
• Air or oxygen
• Source of ignition
The presence of the three together makes what is called fire

triangle.
Large storage tanks present one of the potential threats of fire and
explosion (Figure 1). If a flammable mixture of vapour and air exists
inside a storage tank and a source of ignition is also available, a
fire and/or explosion may result. It is the vapours left behind after
liquid removal or those rising from the surface of a flammable
liquid which ignite and burn. Static electricity accumulated could
be a source of ignition, causing spark.
Figure 1: Refinery Tank Fire

232
Obviously, the methods of prevention of fire and explosion hazard
Notes
is elimination of one or two of the items in the fire triangle or
preventing all the three being present together. For example, if a
source of ignition can be excluded or oxygen levels surrounding can
be kept below certain limits as explained below, a fire or explosion
cannot occur.
Flammable Material
Mixtures of hydrocarbon vapours and air will ignite only if the
hydrocarbon to air ratio is within certain limits. If the mixture is
too lean (too low concentration of hydrocarbon) nor too rich (too
high concentration of hydrocarbon and shortage of air), then the
ignition does not occur. The Lower Flammable Limit (LFL) and
the Upper Flammable Limit (UFL) for most hydrocarbon mixtures
are typically at about 1% and 10% by volume hydrocarbon vapour
in air respectively. However, ‘rich mixtures’ (above the UFL) may
be locally diluted to within the flammable limits by air entering
the tank at tank openings, such as manways, hatches, vents, etc.
Similarly, lean mixtures may be enriched locally due to a pocket
of hydrocarbons, or application of heat. If a source of ignition is
present in such areas, explosion and/or fire is likely to occur.
Check your Progress
1. _____________ are defined as having the potential to

cause harm, including ill health and injury, damage to
property, products or the environment, production losses
or increased liabilities.
2. _________________ are possible causes that could

potentially release the hazard and produce an incident.
Chemical Hazards
Major Chemical Hazards
Chemical hazards can arise from:
• Skin contact with the hydrocarbon liquid.
• Inhalation of hydrocarbon vapours.
• Accidental swallowing of liquids or solids.
A number of chemically hazardous substances are handled in the

233
hydrocarbon industry. Hydrogen Sulfide and sulfur dioxide are
Notes
more common in the oil production and refining industry. In the
petrochemical industry, there are numerous hazardous chemicals
handled due to the multiplicity of raw materials and products.
Examples of some of the toxic chemicals handled are given below:
Hydrogen Sulfide (H2S): It is a highly toxic gas. At low

concentrations it has the odour of rotten eggs, although this can
be masked by the presence of other vapours. H2S quickly deadens
the smell at about 100 ppm and higher and this may lead to a
false sense of security, since the disappearance of the smell after it
has been first recognised may be due to an increase, rather than a
decrease in the atmospheric concentration. All petroleum products
and crude oils contain sulfur in varying amounts, usually combined
with hydrogen and/or carbon. Some crude oils contain free sulfur
and H2S. Sulfur is an undesirable element in petroleum products
and various processes exist to remove it, whereby H2S is often
formed during intermediate stages. Whilst the H2S is subsequently
removed, certain amounts may still be present in the product.
Polycyclic Aromatic Hydrocarbons: Some heavy refinery streams

or products may contain small amounts of Polycyclic Aromatic
Hydrocarbons (PCAs). Typical streams are gas oils, fuel oils,
catalytic cracker recycle oils and vacuum distillation residue. The
toxicity of PCAs will differ, depending on the structure. Frequent
and prolonged contact with these can lead to a variety of skin
disorders.
Table 1: Effect of Hydrogen Sulfide Concentration
Benzene: Benzene is an aromatic hydrocarbon, which can be

present in very low concentrations in some crude oils. It is often
produced in certain refinery processes. It is also manufactured as a
finished product in the petroleum industry. The chief route of entry
by benzene into the body is by inhalation of the vapour. Whether
as the pure compound or as part of a mixture such as gasoline,
234
benzene may give rise to the following health hazards:
Notes
• Inhalation of high concentrations of benzene vapour (above
700 ppm) can lead to loss of consciousness and, if allowed to
continue, respiratory failure and death will result.
• It may also cause bone marrow damage, leading to blood

disorders of varying severity which are usually reversible after
removal from exposure, and,
• More rarely, leukaemia (cancer of the blood), which may occur

long after exposure has ceased.
Other Toxic Chemicals

Numerous other toxic chemicals are handled in the oil, gas
and petrochemical industry. Some examples are:
• Chlorine for manufacture of PVC
• Methanol
• Hydrogen Cyanide in the manufacture of acrylates, etc.
Causes of Accidents
The various causes of accidents are:
• Defect in Design
• Defect in Construction
• Defect in Material of Equipment
• Faulty Operation or Maintenance
• Lack of Monitoring
Defect in Design: Sometimes adequate design factors have not

been provided while doing the design. Design factors are essential
component in order to give a margin of safety in the design. Design
factors may be appropriate in either the mechanical engineering
design or in the process design where factors are often added to
allow some flexibility in process operation. For mechanical and
structural design, the magnitude of design factors should allow for
uncertainties in material properties, corrosion, design methods,
fabrication and operating loads. It is also possible that appropriate
material for equipment and piping has not been specified leading
equipment failure or piping failure resulting in the release of
hazardous or flammable or toxic material.
235
Defect in Construction: Defect in material for equipment
Notes
and piping, defect in manufacturing, fabrication and defect
in construction or installation including improper inspection
and testing may lead to equipment or piping failure. Release of
hazardous or flammable or toxic material can occur as a result.
The ‘Sinking of P-36 Platform’, depicted in Figure 2 is one of

the examples which could be due to defects both in the design
and installation. Considerable cost reduction was done for
P-36 during design and construction stage.
Figure 2: P-36 Disaster
Faulty Operation and Maintenance: Erroneous operation and

maintenance like not following correct procedure may lead to
accident. Inadequate maintenance also can be cause of accident,
for example:
• Failure to interchange operating and standby equipment as

and when required.
• Lack of attention to the special instrument like vibration

monitor, corrosion monitors, gas humidity analyser, etc.
An example of accident due to not following the procedure during

maintenance is the collapse of a storage tank shown in Figure 3.
The tank collapsed because a plastic bag with which the tank vent
was covered during painting of the tank was not removed before
operation. When the product was pumped out of the tank during
operation, vacuum was created as the vent was blocked with the
plastic bag. The steel tank collapsed but the plastic bag did not
break.
Covering of the vent valve during tank painting is fairly standard

practice. Unfortunately leaving it covered when drawing out of
the tank is very non-standard practice. This was an expensive,
embarrassing mistake that could be entirely preventable. For
some, it is hard to believe that the plastic over the vent valve is
236
stronger than the steel tank under the vacuum conditions that are
Notes
created when drawing product out of the tank.
Figure 3: The Power of the Plastic Bag
Another common example of accident due to faulty maintenance

procedure is explosion due to pyrophoric deposits in distillation
columns (Figure 4). These are highly explosive deposits that take
place in the column during periods of operation with crude oil. Once
the unit is shut down for maintenance and the column manholes
are open, pyrophoric deposits, which are highly flammable, come
into contact with air and catch fire immediately. Again there are
procedures that need to be followed to prevent such accidents.
Figure 4: Destruction by Pyrophoric Fires

237
Human Error: Human error, often due to inadequate training
Notes
causes accident. For example:
• Opening or closing wrong valves without fully understanding

operating instructions, may lead to rise in pressure, temperature
or flow in the system and resulting in the release of hazardous
or toxic material.
• Operator taking wrong reading of parameter indicators

(pressure, temperature, flow etc.) and taking wrong actions
which may lead to accident.
• Adjusting the set point of a control to a wrong value, thus

leading to accident.
There could be several other causes of accidents:
• Natural calamities like earth quake.
• Lack of monitoring.
• Lack of training.
It is difficult to avoid accidents due to natural calamities, unless the

impact of natural calamities has been considered during selection
of the site and designing of the facilities to withstand the impact.
Even then unforeseen events may occur. It is very important to
have an Emergency Response Plan and mitigation plan for such
contingencies.
Lack of monitoring as per operating and maintenance procedures
are often cause of accidents. As a simple instance, let us take the case
of a long-distance cross-country pipeline carrying hydrocarbons.
Regular surveillance of the pipeline is very important to avoid
unauthorised work along the pipeline route, digging, sabotage etc.
Normally this is done by use of helicopters, automobiles, satellite
images etc. Still a surprisingly high number of accidents occur in
gas pipelines due to unauthorised digging.
Training is a very important aspect for minimising the risk of

accidents. Training is needed for all disciplines and levels and for
all aspects of management and operation of the facilities. While
developed countries pay a lot of attention to it, in developing
countries like India it is often ignored and overlooked. In case of
an accident, cost of loss in assets and human lives can be so large
that expenditure on training can always be justified.
238
Drill also forms part of training. An emergency response plan can
Notes
fail totally if drill is not carried out at regular intervals. In the
developed countries, even in commercial office buildings, a fire
incident drill is carried out at regular intervals by sounding fire
alarms to ensure that:
• All equipment and facilities for firefighting are working,
• People know how to use them, and
• People are aware of building evacuation plan.
Safety Management Techniques in Plant Life Cycle

In the entire life cycle of a process plant, starting with the project
conceptual and engineering design phase, there is considerable
scope to remove or minimise hazards. It is during this phase that
provision can be made to reduce the risks associated with a process,
system or facility to a level that is as low as reasonably practical
(ALARP).
This can be achieved in a number of ways. In order of preference

these are:
• Removal of hazards in design phase.
• Reducing the probability of hazardous events occurring.
• Minimising the risk of escalation in case a hazardous event

occurs.
Once the hardware has been installed, retroactive implementation

becomes relatively more difficult and considerably more expensive.
It is crucial therefore that the opportunities available for minimising
risk in the design and engineering phase are not lost.
Concept Development
It is during this phase that most of the major hazards and effects
will be identified and an initial assessment of their importance will
take place. In this phase there is considerable scope for removing
potential hazards. As an example, even site selection is important
for HSE.
HSE Aspects of Site Selection

The importance and vulnerability of various components in the
existing environment should be assessed. These include:
• People living in the vicinity who could be exposed to noise,

239
vibrations, dust and gaseous contaminants, or other health
effects associated with water and food contamination. Notes
• The potential consequences of accidents (fire, explosion, escape

of toxic materials) must be considered.
• Wildlife and natural habitats which could be damaged during

the clearance and construction stages or later when the project
is operational. Examples are forest damage by air pollution
and death of fish or other aquatic organisms by effluents. A
key component is consideration of the amount of damage that
may be tolerated by the habitats and species concerned.
• Resources (agricultural and others) which may be susceptible

to damage from the project in a similar manner to natural
habitats.
It is necessary to use environmental specialists to conduct a

baseline study to describe the physical and biological status of
environmental components which are likely to be affected.
In less industrialised areas, where local restrictions may still be

limited, it is important to be aware of potential future developments.
In industrialised areas, local regulations determined by authorities
often define the environmental conditions for the project during
construction and operations.
The project should consider various operations and the predicted

flow rates of pollutants in gaseous emissions and aqueous
discharges, together with physical nuisances such as noise and its
impact on health, safety and environment in the neighbourhood.
The selection of site should also include consideration of wastes.

These include industrial waste, in particular hazardous waste in
the form of liquids, solids and semisolid materials. The manner
in which these wastes are handled could be a significant factor in
the overall impact of the operational activities on the environment.
The tragedy at Bhopal due to toxic gas leakage from Union Carbide
plant is an example of tragedy due to faulty site selection for a
plant handling lethal chemicals.
Techniques of Hazard Identification (HAZID)

What is HAZID?
HAZID (HAZard IDentification) is a technique for early
240
identification of potential hazards and threats. The technique
Notes
has two styles, Conceptual and Detailed and should be applied at
the very outset of a new venture or during the early stages of the
project. It is therefore likely to be the first formal HSE related
study for any new project. The major benefit of HAZID is that early
identification and assessment of the critical HSE hazards provides
essential input to project development decisions. This will lead to
safer and more cost-effective design options being adopted with a
minimum cost of change penalty.
HAZID study addresses the layout and operation of the entire

system under review. A HAZID study uses a guideword driven
methodology based on a comprehensive list of typical hazards. The
installation or subject of review is divided into areas of a similar
nature (e.g. process area, utilities) based on the location of these
areas and their function. The broad nature of the guide words helps
in the identification of the hazard. For each identified hazard the
potential consequences are described and the control/mitigation
measures are listed.
Why Use HAZID

HAZID has been developed specifically to reflect the importance
of HSE issues on the fundamental (and often non-HSE-related)
decisions that are made at the inception of all development
projects (e.g. design concept and location). HAZID is the first
opportunity to collect experienced line and HSE staff together
to address, in a short time frame, the issues surrounding a
new venture or development.
The benefits of using HAZID include:
• Full recognition of the importance and interdependence of all

HSE aspects at the outset of the development.
• Identification of specific hazards and threats within a project

life-cycle phase or during operation.
• Identification of all the intended continuous emissions from

the facility. This will focus design effort on the minimisation of
such emissions as well as compliance with company and third-
party requirements.
When to Use HAZID

Normally HAZID is carried out during conceptual and development
241
phase of the project. There are two types of HAZID – Conceptual
Notes
and Detailed.
Conceptual HAZID
The optimum (early) timing of a conceptual HAZID study inevitably
means that the formal documentation available to the team will
be minimal and at conceptual or policy level. Some of the key
documents or information used for conceptual HAZID are:
• Project Initiation Notes
• Policy Statements
• Feasibility Studies
• Key (development) Discussion Papers
• Project Development Plans
• Relevant Company Group Standards
• Project Design Basis
• Description of Operational Environment
• Key Legislative Documents
• Key Philosophy Documents (e.g. Operations Philosophy, Safety

Logic, etc.)
• Environmental Regulations
Detailed HAZID
The detailed study is conducted later in the engineering design
process, once design options have been identified but before any
final decisions have been made. A significant number of additional
documents and drawings will be available. The additional
documents would include, for each design option, preliminary
issues of:
• Process Flow Schemes (PFS) – with possibly Process

Engineering Flow Schemes (PEFS) at block diagram level with
mass balance information (for each competing design option)
• Plot Plan and Layouts
• Process description including all planned operating cases
• Project description including all options, life cycle issues and

242
planned plant flexibility
Notes
• Safety philosophy
• Operating philosophy
• Raw material and product handling
• Environmental assessment
HAZOP and Fault Tree

Special techniques like HAZOP, Fault Tree Analysis, FMEA, What
If are used at this stage.
Figure 5: Hazard Identification at Design Stage
They show outcomes in all possible situations and tell how likely
they are to occur. What this means for the decision makers is that
they finally have, if not perfect information, the most complete
picture possible. They could see what could happen, how likely it is
to happen, and therefore be able to judge accordingly which risks
to take and which ones to avoid. Design need to be modified as per
outcome of the process (Figure 5).
The essential features of a HAZOP study are:
• It is systematic and detailed. A series of guide words is

repeatedly used to ensure consistency and repeatability.
• It is conducted by a team who know most about the project

or facility, typically those who designed and those who must
operate it.
243
• It concentrates on exploring the consequences of deviations
Notes
from the usual operating conditions.
• It is an audit of the completed part of a design.
Traditionally the HAZOP procedure examines process equipment

on a system by system basis, reviewing the process parameters
using a checklist of guide words, which suggest deviations from the
normal operating conditions.
Safety Audit – A Key to Safe Operation

Safety Audit is the act of verifying the existence and implementation
of elements of safety and health system and for verifying the
system’s ability to achieve defined safety objectives. It checks
the design, selection/construction and maintenance of premises,
plant, equipment and substances. It monitors performance of
the system and compares actual performance with the standards
or appropriate performance indicators. It performs quality
management and environment management. It identifies data
critical to the management of health and safety. It is periodic in
nature.
Objectives of the safety audit are to identify:
• Design deficiencies
• Weaknesses which might have cropped up during modifications

/additions
• Fire protection arrangements and safety systems
• Operating /maintenance procedures-degraded with time
• Training methods, adequacy and implementation
• Preparedness for handling emergencies
In summary, safety audit is a systematic independent review to

verify conformance with established guide lines or standards. It
employs well defined review process to ensure consistence and to
allow the auditor to reach conclusions.
Due to complexity of a large plant, use of IT is made for implementing

such an audit.
244
Safety Facilities in Process Plant
Notes
For safe operation and control of a plant a number of safety features
are put in the design stage. Some examples of typical systems for
safe management of the production process are:
• The Process Control System (PCS) – which maintains the

process within defined operating limits of flow, temperature,
level and pressure. Completely computerised digital systems
with graphics of the plant is used for process plants.
• Process Shutdown System (PSD) – designed to shutting

down of selected equipment and control devices on the platform
that will stop production totally but will not blow down the
hydrocarbon contents of the equipment. This shutdown is
initiated either automatically or manually through field
instrumentation, for conditions like gas detection, or any
unusual operating situation.
• Emergency Shutdown System (ESD) – designed to shutting

down of all process facilities and utilities (except emergency
facilities such as firewater system) accompanied by blow down
of hydrocarbon/chemicals contained in all process facilities.
This type of shutdown is initiated automatically through
detection devices upon detection of fire or smoke. It can also
be manually activated through shutdown hand stations (push
buttons).
• Pressure Safety Valves mounted on equipment, which will

relieve over pressure, letting the released process fluid to go to
the flare.
• Temporary Shutdown (TSD) – which will occur on a limited

number of process inputs and will cause production to stop, but
will leave the systems in such a state as to facilitate a prompt
restart.
• Gas Detection, Smoke Detection and Fire Detection

Systems are installed which can not only detect but also trigger
alarm system or shutdown system as per design specifications
of the plant.
• Fire Fighting Facilities are provided which include Fire Water

System, Foam Tenders, Halon System, etc.
245
It is imperative that an operating company develop its
own safety philosophy, which can form the basis of safety Notes
considerations in the design stage itself.
Construction Safety
The duration of the construction phase for a typical process plant
such as oil, gas processing or refinery complex is much shorter
than the facility’s subsequent operational life. But the nature of
the activities involved and the total manhours spent in a typical
construction project can expose the construction workforce to
a level of risk higher than that of the personnel involved in the
subsequent, longer operational phase. In addition, a high proportion
of construction activities take place on ‘brown field’ sites (meaning
sites where plant is already operating), where hydrocarbons are
likely to be present, thus increasing the potential consequences of
incidents.
The difficulty in implementing HSE norms in construction phase

is due to the nature of the circumstances under which construction
contracting is carried out:
• High turnover of personnel, often new to the country and not

familiar with the work culture.
• Communication difficulties between people from countries

with language and cultural differences.
• Pressure to work in short time horizons and comply with the

‘fast-track’ approach.
• Diversity of parties involved (contractors) and resultant long

communication lines and frequent use of subcontractors.
This in turn can result in the following effects:
• Low priority on construction planning at an early

enough stage: There is often a perception that all construction
activities are similar. There is therefore a tendency to believe
that the next project can be treated like the last one with much
of the planning work done once contracts are awarded and site
work commences.
• Use of inappropriately qualified contractors: Often this

is caused by a change to the management and/or workforce of
a previously acceptable contractor.
246
• Inadequate training (e.g. workers unaware of hazards):
Notes Sometimes by external pressures to accept locally resourced
contractors who may not have the highest levels of training
and expertise. This is because of low priority on training,
mobilisation of construction workers at a short time span and
lack of in-house expertise on HSE with the contractor.
• Short-cuts in order to meet ambitious schedules
• Hazardous nature of construction sites
The potential for the occurrence of injuries and fatalities can be

high due to:
• The close proximity of large numbers of personnel to heavy

equipment and movement of materials.
• Need to carry out activities in arduous weather conditions.
• Long working hours, particularly when trying to meet

ambitious deadlines.
• Working in locations that present extra risk (e.g. at height,

over water, underwater, in confined spaces etc.).
• Handling of toxic and hazardous substances.
• Perception by the workforce of it being satisfactory to ‘bend the

rules’ to achieve faster progress with little risk of incidents in
‘routine’ tasks and operations.
Surveys of incidents in the construction industry generally show

that a large proportion of injuries and fatalities occur, during the
performance of normal, routine general workplace practices (e.g.
scaffolding, welding, use of power tools), This is purely due to lack
of HSE System.
Thus, induction of contractors having a sound HSE Policy or

training the contractors on owners HSE Policy is of paramount
importance. HSE policy is now rigorously implemented in most
developed countries. It has not yet come in a big way in India.
Safety Layers in a Plant

It must be remembered at this stage that the plant is designed
with safety in mind. As the final layer of design safety, Safety
Instrumented Systems (SIS) are built in which cause shut down of
the plant in unsafe situations.
247
SIS is a system composed of sensors, logic solvers, and final control
elements for the purpose of taking the process to a safe state when Notes
predetermined conditions are violated.
But 100% safety is not possible and failures do occur. There are
multiple independent safety layers and SIS in the plant as shown
in Figure 6.
Figure 6: Safety Layers
As shown in the figure, the final layer is that of emergency response.

Every major hydrocarbon facility must have an Emergency
Response Plan.
Elements of an Emergency Response Plan

The Owner must develop an emergency response plan for
emergencies which must address the following as a minimum:
• Pre-emergency planning and coordination with outside parties.
• Emergency Command System
• Personnel roles, lines of authority, training and communication

in the command system.
• Emergency recognition and prevention.
• Safe distances identification.
• Site security and control.
• Emergency medical treatment and first aid.
• Emergency alerting and response procedures.
• List of emergency equipment and their location
• Emergency response organisations may use the local emergency

response plan or the state emergency response plan or both, as
part of their emergency response plan to avoid duplication.
248
Environmental Aspects
Notes
The environmental aspects can be stated as follows:
Sources of Pollution
The overall block diagram from oil well to petrochemical is

presented in Figure 7. The effluent or pollutant it generates
is presented alongside in Figure 8.
Figure 7: The Oil and Gas Chain
Figure 8: The Effluents – Oil Well to Petrochemicals
Hazardous waste is a waste which because of its physical,

chemical or infectious characteristics has the potential to cause
harm to human health or the environment when handled, stored,
transported, treated or disposed of.
The gaseous emissions, aqueous and gaseous effluents and

discharges of hazardous waste materials from operating units are
the major sources of pollution are known to have a negative impact
on the environment.
249
The effluents could be solid, liquid or gaseous. Some of the major
sources of effluent are summarised in the table below. Notes
The effluents are emitted in three ways:
(a) during the processing of oil and gas
(b) when we consume them as fuel
(c) when we consume the end products
Table 2: Solid, Liquid and Gaseous Effluent
Note: L = Liquid, S = Solid, G = Gaseous
The hydrocarbon industry is thus a major source of pollution in the

world. The three parties involved – the industry, the government
and the consumers have to partner together to control the effects
of pollution.
What the governments are doing:
• Stringent product specifications for reducing environment

impact by consumption of the product.
• Setting of stringent effluent discharge specifications
• Enacting environment related laws and enforcement
What the industry is doing:
• Investing in technology and treatment plants to meet the

specifications
• Improving the processing scheme to reduce pollutant generation
• Developing new technologies to treat the effluents

250
What the consumers can do:
Notes • Reduce wasteful consumption of products
• Reduce wasteful consumption of energy
In the next section we shall cover some major sources of pollutants

in the industry, the technologies for treatment of waste.
Waste from Oil Production

Produced water accounts for about 98% of the total waste in the
oilfield. The water coming out with the oil can be as high as 60-
70% of oil in a depleted field. Hence the volume of produced water
to be treated can be very large. For example, in the USA, about 21
billion barrels per year of produced water has to be treated.
The other waste in oilfield is mainly drilling waste i.e. wastes that
come out of the well during drilling before completion of well. The
drilling waste is mainly mud with oil and chemicals used during
drilling. These are often discharged in a pit at the well site.
Toxic drilling wastes fill an open reserve pit isshown in Figure 9.

Such pits are often abandoned by oil companies without treating
or cleaning it.
Figure 9: Drilling Waste
The major contaminants in the produced water are:
• Dissolved solids (primarily salt and heavy metals)
• Suspended and dissolved organic materials (hydrocarbons, oil)
• Hydrogen Sulfide/ Carbon Dioxide
The produced water is treated in the following step:
• Removal of oil by skimming and use of floatation cells, where

251
oil particles are moved to surface by dispersing gas through the
produced water. Notes
• Removal of dissolved hydrocarbons by biological process,

precipitation, ultraviolet irradiation and oxidation.
• Removal of suspended solids by gravity separation, filtration

and coagulation.
• Removal of dissolved solids by ion exchange, precipitation,

reverse osmosis, evaporation and biological process.
Pollutants during Transportation

One of the biggest pollution hazards facing the world today is oil
spill from large oil tankers carrying crude oil. Oil spillage occurs
when the ship leaks due to crashing in a reef or rock, any other type
of accident with the ship. Leakage can also occur during loading/
unloading and normal movement of the ship.
Oil spills cause enormous damage to ecosystem and marine life.
There are two stages of dealing with an oil spill – containment and
recovery.
Containment is done by containment booms, which could be of

floating type or inflatable type. These are laid around the spill area
by high speed boats (Figure 10).
Figure 10: Containment Boom
Once contained, the oil layer is recovered by skimmers (Figure 11)

or by adsorbents or by using microorganisms for biodegradation of
the hydrocarbons. The skimmed oil is put in a temporary storage
and treated for reuse.
For oil coming over to the beaches other methods including vacuum
cleaning is used.
252
Notes
Figure 11: Recovery of Oil Spill by Skimmer
Wastes from refinery include free and emulsified oil from leaks,
spills, waste caustic, caustic and acid sludge, tank bottom sludge,
acid water, waste catalyst etc.
Crude oil storage tanks also are a large contributor to refinery

waste. It includes oily water, organic sulfur compounds, suspended
matter, insoluble and soluble salts, asphaltic compounds, H2S and
CO2.
Most of the refinery waste come into the drainage headers along
with the waste water in various parts of the refinery and are
collected for treatment in the effluent treatment plant.
Petrochemical plant wastes are more complex due to wide range of

raw materials, intermediate chemicals and products. The design of
the Effluent Treatment Plant has to tailor made to suit the effluent
characteristics and discharge specifications. Wide range of effluent
processes are available to treat different types of effluents.
Waste Water Treatment

In this section, the discussion will be limited to normal waste water
treatment facility.
A typical generic schematic diagram for waste water treatment is

shown in Figure 12. Of course, the specific treatment method will
vary depending on the characteristics of the effluent. Some of the
equipment needed for the treatment are shown in Figure 13.
The major steps are:
• Removal of free oil particles by skimming
• Removal of emulsion particles by floatation of oil particles

aided by purging with gas or air bubbled from the bottom of
floatation cell.
• Oxidation of the organic material by aeration and bacterial

253
method using activated sludge.
Notes
• Finally, filtration to remove suspended solids.
Figure 12: Treatment of Waste
Figure 13: Waste Water Treatment Equipments

254
Check your Progress
Notes 1. Oil spills cause enormous damage to ecosystem and
__________________ life.
2. __________________ is a system composed of sensors,

logic solvers, and final control elements for the purpose
of taking the process to a safe state when predetermined
conditions are violated.
Summary
Health, Safety and Environment aspects have gained tremendous
importance in the entire plant life cycle. A plant can be made safe if
safety aspects are looked into and managed from conceptual stage
to operation and dismantling.
In this unit, at first the types of hazards, both fire/explosion and

release of toxic material were identified. Some accident cases were
presented to highlight the importance of management of safety at
all stages of plant life cycle.
This was followed by hazard identification techniques. Overview of

techniques like HAZOP were presented.
Safety aspects during plant operation and maintenance were

highlighted.
Lastly various sources of pollution and release of hazardous

material in the hydrocarbon industry were identified. Some major
pollutants were described and a few generic methods of combating
pollution were described.

1. List the various causes of accident in a hydrocarbon processing
facility.
2. What is a fire triangle? Give example from an actual plant.
3. Name two very toxic chemicals that oil and gas processing
industry has to handle and identify with block diagram at
what stages of processing there are likelihood of hazard from
these chemicals.
4. What is HAZOP? For what purpose it is used? Briefly describe

the technique.
255
5. Explain with block diagram various sources of solid, liquid
and gaseous pollutants from the entire chain of hydrocarbon Notes
industry from oil field to petrochemicals.
256
Unit 23
Notes
IT Applications in Hydrocarbon
Industry
Objectives
 Plant Life Cycle in the Oil and Gas Industry
 Overview of the Application of Information Technology during various
phases of Project
 Types of Software used and their Capabilities
Introduction
Like most of the other industries, the hydrocarbon industry is
also facing the pressure and challenges from expanding global
competition. Further, there have been huge investments and
expenditure arising out of the stringent environment and pollution
regulatory controls and greater concerns for safety. This is driving
the hydrocarbon industry towards more consistent higher quality
products involving stricter requirements on the traditional plant
operation.
Application of Information Technology

To be profitable in the venture, every industry is looking for
cost effectiveness in the total life cycle of the process plant in all
business sectors and professional disciplines. In order to achieve
these objectives and meet the challenge, the Process Industry in
Hydrocarbon area is endeavouring to reap the benefits of computing
technology. In that respect the role of software programs can never
be over emphasised.
Plant Life Cycle

The Plant Life Cycle (Figure 1) starts with exploration for oil,
and its production. This is followed by development of numerous
downstream plants. The life cycle comprises of their design,
operation, production, maintenance, safety, profitability, revamp
and expansion. It is a complex series of technical, commercial and
management activities, requiring high level of technological skills,
Unit 23: IT Applications in Hydrocarbon Industry
257
improvement of operating efficiency, information generation,
Notes
information management and overall management skills.
Information technology and use of computers plays an extensive
role in the design, operation and management of hydrocarbon
industry.
Substantial developments have taken place in the application

of IT in Process Industries, due to the collaborative efforts from
process engineers, professionals from all engineering disciplines
and software program developers. Use of IT during various phases
of plant life cycle is summarised in Figure 1.
Project Cost Estimation and Feasibility Study

Cost estimate is an assessment of the cost of a project based on
the facts available on the project and historical records of similar
projects. The better and more precise the facts, the more accurate
is the estimate.
Cost estimates of progressively increasing accuracy are required

at every stage of project since they provide the basis for economic
analysis, management decisions, approval of budgets and cost
control.
With larger projects, it is common to ask for phased approval of

expenditure because of the limited technical definition against
which preliminary estimates are often prepared. At first a ball-
perk type or order of magnitude type of estimate may be required.
For budgetary approval to pursue the project, a feasibility study
is required. If the preliminary estimate (feasibility report) looks
attractive, funds may be sanctioned to allow Front End Engineering
Design (FEED) to take place. A more definitive estimate is based
on FEED.
FEED allows for accurate sizing and layout of the equipment and
facilities in the plant and get more accurate and detailed cost
estimate from past data on similar equipment or fresh quotations
on the equipment and facilities.
258
Notes
Figure 1: IT Application during Plant Life Cycle
The final approval for a project to proceed is usually given on the

basis of this detailed estimate.
In short, there are two types of estimate done before start of a

project:
• Feasibility Study
• Detailed Feasibility Report (Also called Detailed Project Report

or Definition of Facilities).
In feasibility study stage often, the accuracy is defined as ±25 or

±30% estimate. In such cases factored cost figures are used. In
Detailed Feasibility Report or Project Definition Report a more
definitive cost (±10% accuracy) is required and more accurate
estimation of hardware and services are required and factoring is
minimised.
Key Features of Cost Estimate Software Programs

Software programs are available where estimates are broken
down and structured in such a way that they reflect the project
organisation, the requirements of any applicable budgetary control,
accounting requirements and agreements. The structure of such a
software is given in Figure 2. The programs generally have the
following features:
• Breakdown the project into cost heads (Table 1) and to a level

of detail appropriate for the type of estimate required. For
259
example, these could be equipment cost, hardware or bulk
Notes
material (piping, cables etc.) cost, services cost, financial cost
etc.
• Further breakdown of each cost head into discrete project

activities, unit rates for each activity covering the entire project
span and scope.
• One of the key elements is to estimate the equipment and

hardware cost as accurately as possible. Depending on the
accuracy required, it could be taken from an existing cost
data base, related to specification of the major equipment.
Again, depending on the accuracy of the equipment required,
approximate sizing or engineered specification of equipment is
done.
• Cost database in the software contains collection of data

obtained from records of plants built earlier. Data base are
correlated and updated from time to time. Usually the input
data is cost of equipment and major items obtained from
quotations or records.
• Major equipment cost forms the base cost for various types
of estimates. For feasibility study estimates, other cost
heads are often factored. It estimates cost of erection, piping,
instrumentation, electrical items, civil etc. by adding a series
of factors over the equipment cost. Inflation indices are
introduced.
• When an engineered detailing of the plant is done, often for the

sake of accuracy, current quotations and rates are taken from
vendors as input to the software database.
• Add appropriate allowances and contingencies to the individual

estimates at Hardware Item or Project Function level.
• Phase the components of the total cost estimate to obtain

expenditure profile which reflects the project schedule.
• Develop the complete estimate by adding up all the cost

heads from the definition of scope, through the definition of
quantities/services and the application of unit cost rates to the
final estimated-cost of the project.
• Most of the software have additional features like carrying

out cash flow calculations, financial analysis and profitability
based on the estimates made and inputs on financial cost and
260
operational cost.
Notes
It is possible to use these programs along with design or flow-
sheet simulation programs to optimize and estimate. Thus, by
use of modern cost estimate software, design and costing can be
brought together. There is an immediate feedback on information
on improved design and lower costs.
Table 1: Major Cost Heads for Process Plant
Some of the major cost heads for capital cost are:
 Equipment and Material Cost

 Land Development Cost
 Infrastructure Cost
 Construction Cost
 Commissioning Cost
 Project Management Cost
 Engineering and Design Cost
 Cost of Financing
 Contingency Allowance
Some of the cost heads can be factored based on equipment cost.
Linear Programming Applications in Process Plant

Linear Programming (LP) application software is used for process
plant cost optimisation or optimisation of production plan. It is
designed to provide plants with an economic advantage in today’s
highly competitive environment. This system uses feedstock
properties, plant models, and economic considerations to help
planners maximise profitability over a broad operating range–both
in conceptual and design stage as well as to optimise the operation.
It takes into consideration of all the constraints and variables
expressed in the form of linear equations. The ideal application of
LP model is where:
• There are many potential solution
• Certain objectives to be optimised
• Interconnectedness between the variable elements of the

system.
Oil refineries face an enormous number of options in their

operations:
• Which crude oils to refine
• What processing conditions to use

Unit 23: Indian Scenario
261
• Which products to sell
Notes
• How to blend them from the intermediate components
There is a straightforward objective to arrive at optimised

solutions: the profit. The operations of the refinery are intrinsically
interconnected: it is a sequential process with one decision affecting
the other; for example, choosing to process one crude means that
you have less processing capacity available for others. Thus, the
problems which a refinery faces have the characteristics of a LP
solution.
A typical structure of LP software for optimisation of a refinery

(conceptual stage) as well as optimisation of operation of existing
refinery is shown in Figure 2.
Figure 2: LP Software Structure
Check your Progress
1. _______________ is an assessment of the cost of a project

based on the facts available on the project and historical
records of similar projects.
2. __________________ application software is used for process

plant cost optimisation or optimisation of production plan.
IT Application in Design and Engineering

In the process industry, the design phase starts with the Process
Design and followed by Engineering Design for other disciplines.
Two of the most important drawing documents in this stage are:
A Process Flow Diagram (PFD) shows all equipment in the process

scheme like pumps, compressors, heater, reactor and distillation
262
column that is required for processing, and links them up in the
Notes
form of a flow diagram showing materials flow and heat flow
through each of the equipment.
Simulation and optimisation of the flow diagram is carried out

by making use of process simulation software available from
reputed software companies like SimSci, Aspentech, Hyprotech
and others. These enable the Process engineers to design new
processes, evaluate alternative plant configurations and arrive at
the optimum design.
The other most important drawing is Piping and Instrumentation

Diagrams (P&IDs) showing all interconnecting pipe sizes,
pipe specifications, control systems and control instrument
specifications. It also gives major equipment sizes and performance
specification.
In earlier days, P&IDs were being conceived and drafted totally

manually. Now P&ID software programs provide the capability
to build schematics intelligently as well as perform design checks
for consistency and compatibility of components. Once the process
simulation is done, the actual drafting works are carried out by
software programs like AutoCAD, Microstation and other software.
A typical P&ID generated by process design and drafted by Autocad

software is given in Figure 3.
Figure 3: A Typical P&ID

263
Detailed Engineering Using 3-D Model Notes
Once the process design is over, a multi-disciplinary engineering
team starts what is known as detailed engineering. While
mechanical engineers carry out the mechanical design and
drawings of the equipment, electrical engineers estimate the power
requirement in the plant and start making drawings for cable
layout and power distribution. Similarly piping engineers make
piping layout drawings and civil engineers start foundation and
structural drawings. For each discipline, there are specific design
tools (software).
The drawings were generally done earlier using 2-Dimension

drafting software like AutoCAD, MicroStation, etc.
With the complexity of integrating multi-disciplinary designs and

drawings, 2-D systems for drafting and modeling had become
inadequate. A number of good 3-D modeling for engineering design
of process plants along with data management and a lot of other
options are available now. Examples of such software are PDMS,
PDS, AUTOPLANT, etc. Some of the features in this software are
described below.
The 3-D software allows interaction between all disciplines in the

3D design workflow by allowing a comprehensive set of integrated
applications covering all engineering disciplines at its core.
Through the design, standard and automated deliverables can be
generated directly from the model. The in-built linkages within
the software allows for updating of sequential designs or drawings
for any changes in the input, minimising the possibility of errors,
when a series of drawings are generated.
Typical 3-D model generated by such software is shown in Figure

4. Such software allows the projects to be executed within an
unlimited, multi-user, multi-site access environment globally
using low bandwidth technology on multiple platforms.
The major advantages of the 3-D software provide over conventional

2-D software are:
• Saving in time
• Saving in material as the impact on bill of material for changes

in design is taken care of more effectively by this kind of
software.
264
• Visualisation of the 3-D model, which helps in better judgement
Notes
in design and operability. In the specialised world of plant
design, it is called ‘immersive group visualisation’– a theatre
style system enabling a group of engineers and their customers
to take a big-screen ride through a proposed new plant.
Figure 4 presents typical networking for a global engineering

design operation.
With the improvements in software system and communication,

engineering services outsourcing is gradually getting as common
as outsourcing in the IT industry.
Figure 4: Typical Networking for a Global Engineering Design Operation
Check your Progress
1. ____________________ show all interconnecting pipe

sizes, pipe specifications, control systems and control
instrument specifications.
2. Piping engineers make ________________ drawings.
IT Application in Operation
Nowadays computer and software application are extensively used
for operation, control and monitoring of a process plant.
First let us understand what kinds of functions are required for

optimum and safe operation of a plant. The main functions to be
carried out in a plant are:
• Local plant control and management

265
• Plant optimisation functions.
Notes
• Communication system between plants and between plant and
a central control station and management of the communication
• Plant maintenance functions
• Overall production planning, monitoring and control
• Management functions.
To do all these functions a lot of plant operating data and other

parameters need to be collected and processed. Let us understand
what kind of data is collected:
• Normally, an oil gas related plant is a complex of several

process units spread over a large area.
• In each process unit, there are numerous measurements

of operating conditions in various equipment which affect
the plant operation. Some of the parameters are pressure,
temperature, flow rate, level of liquid, composition of feedstock,
composition of products, properties of feed and products and
numerous other information.
• For optimum and safe operation of the plant many of the above
parameters need to be monitored and controlled.
Also, in each plant numerous equipment-oriented data are collected

such as:
• Equipment status (on-off, in line, isolated, on maintenance)
• Equipment health parameters (vibration, bearing temperature,

corrosion status)
For all these functions to be effectively done a lot of measurement

and recording of data, data processing, optimisation and control
of operating conditions to meet the production are required. Till
1960 it was done either manually or through local control. Later
with increasing computer application, a completely centralised
control system was developed. But after mid-seventies, with the
development of powerful micro-processors, Process Control System
(PCS) and software technology, modern distributed control system
(DCS) gained ground. Now Advanced Process Control System
are used, which combines DCS with process dynamic model and
management information system into one.
266
Notes
Figure 5: Advanced Process Control Hierarchy
Notes:
APC: Advance Process Control
DCS / DDCS: Distributed Control System/Digital Distributed Control System
Figure 5 depicts visualisation of a typical control of a petroleum

product storage and dispatch system. Here a large number of
parameters and logistics are to be managed and controlled:
• Filling of the tanks by products from the plant or raw material

from external sources,
• Emptying the tanks during loading in tankers or pumping to

pipeline,
• Measuring and monitoring the material received and

despatched,
• Quality of the various products and raw material are to be

maintained.
In a large storage terminal with a number of storages, pumps,

loading racks, tanker movements, it becomes a complex operation
and may have logistics problems. Today the whole operation is
carried out by DCS system using software to manage the logistics.
267
Notes
Figure 6: Automation of Storage and Handling of Products
For monitoring and control of facilities laid over long distances and
integrated together (e.g. pipeline) SCADA system was developed.
Enterprise Resource Planning software (ERP) now sits above DCS
and other software for overall planning and asset management.
Description of some of these IT applications is given below:
Distributed Control System (DCS) in Process Plant

Distributed Control System for plant operation and management
is very popular nowadays. It is so called, because in a large complex
of plant facilities the data is stored where they have been created
and where they will be needed. Similar principles hold for the
control and operating functions also. But certain information and
functions are centralised. Typically:
• Local control and supervision of plant is located next to the

plant instrumentation.
• Processing of data for higher purposes (optimisation,

calculations of set point value, etc.) is allocated in central
control room.
• Production planning and plant management is located closer

to the relevant plant management staff.
As shown in Figure 7, the operator’s console in the control room

is connected through a shared communication facility to several
distributed local control units.
268
Notes
Figure 7: DCS System
DCS has three essential features:
1. DCS distributes its functions into smaller sets of semi-

autonomous sub-systems covering specific process or geographic
areas of the plant complex.
The functions generally are:
• Data Collection
• Process Control
• Process Analysis and Supervision
• Storage and Retrieval of Information
• Presentation of Information and Reports
2. The second is to automate the manufacturing process by

integrating advanced regulatory control logic and procedural
languages with advanced application packages, expert
systems, including information to support such manufacturing
enterprise application as:
• Production scheduling and dispatching
• Preventive and predictive maintenance scheduling
• Information exchanges with business and logistics

application
3. The third characteristic is the system aspect of the DCS, which

organises information flow between the constituent parts so
that a single automation system unifying the semi- autonomous
sub-systems is created.
DCS has been used extensively for all round application in

operation, process control, maintenance, equipment availability
269
etc. A typical imprint from the monitor of a control room with DCS
Notes
is shown in Figure 8.
Figure 8: Monitor Imprint from Control Room
Dynamic Simulation Model and Advanced Process

Control (APC)
Building the system model involves entering the details about each
item in the process system. Much of the information needed to build
the model is obtained during the design stage. It is always best
to create the model during the design stage and keep the model
current through start-up and operation.
Dynamic model predicts responses of various equipment and

process parameters due to any change in:
• Feedstock quality or quantity
• Operating conditions
• Utility parameters (e.g. fuel gas quality for the furnace)
• Price of products.
The software can have in built process optimisation system. It

calculates the new sets of operating conditions required for each
part of the flow system to get the requisite yield and quality of
products in the most economical way.
The program allows the operator to calculate new control set points
to achieve optimum performance, carry out studies and determine
where problems are occurring and what the reasons are.
In Advanced Process Control System, the model transmits the

corrective actions required to the plant control system, which
automatically resets the plant operating parameters.
Training Simulators
Plant operating personnel need to know how the plant will operate
270
during a variety of conditions. They can either gain that experience
Notes
by actually putting the plant into that condition, or they can
simulate the operation using training simulators. Using software,
an operator can safely simulate the operation of the process system
in these infrequent or potentially dangerous system-operating
conditions. Thus, a plant operator gains experience in system
operation without affecting the operation of the physical plant.
The program allows the operator to determine optimum product

distributions based on current economic conditions, calculate
new control set points to achieve optimum performance, carry out
studies and determine where problems are occurring and why.
SCADA System
SCADA stands for Supervisory Control and Data Acquisition.
It refers to the combination of the fields of telemetry and data
acquisition. It is extensively used in facilities covering very large
area (e.g. cross-country pipeline or a complex of offshore platforms)
monitoring, control, operations, maintenance and management.
SCADA encompasses the following:
• Collection of the information
• The method of measurement and transfer of the information

from the remote site by telemetry and telecommunication.
• The analysis and control of the system and display of the

received information. SCADA facilitates the capability to
monitor and control network operations in real time.
SCADA systems are distinguished from traditional control

systems by their extensive use of telemetry to link physically
isolated measurement and control points. SCADA systems are
predominantly used in Oil, Gas and Petrochemical Processing and
pipeline industries. Basic SCADA structure comprises:
• Master Terminal Unit (MTU) or Master Control Station (MCS)

for processing of the data and presenting it to console operators.
• Communication System for transmitting remote data to the

MTU and control commands to the remote sight for device
controlling.
• Remote Terminal Unit (RTU) for acquisition of device status

and data at remote sites.
271
The communication could be through optical fibres, radio, cable
Notes
or satellite. But for its functioning extensive range of software
are used. Besides Operating System Software, the following are
essential for SCADA system:
Application software related to a specific application. For example,

for a typical pipeline SCADA system, the application software will
be transient model of pipeline dynamic flow operations including
real-time leak detection and location software.
The modules to be included are:
• Flow measurement
• Meter proving
• Batch tracking
• Interface detection/composition tracking
• Pig tracking
• Over or under pressure protection module
• Pipeline efficiency module
• Predictive module
SCADA software comprises System and database configuration:
• Generation of current raw database and processed data base

(telemetered information)
• Generation of historic data for trending and archival
• Alarm handling including information display and print out
• Generation, storage, presentation of mimic diagrams with

dynamic information (presented on VDUs)
• Display management for alarm, mimic diagrams, analog and

digital values, trend graphs, bar charts in high resolution
colour graphic modes
• The calculation software package
• Free format report generation storage and print out
• Transmission of control commands and configuration

parameters to out stations in system with fast update of related
information on Man Machine Interface (MMI).
272
Check your Progress
Notes
1. _________________ Unit in SCADA is for acquisition of
device status and data at remote sites.
2. __________________ Unit is for processing of the data and

presenting it to console operators.
Maintenance Management Software

The following are the different Maintenance Management Software
available:
Computerised Maintenance Management System

(CMMS)
CMMS integrates routine maintenance, preventive maintenance,
work orders, inventory and purchasing in an intuitive interface.
Specifically designed to be easy and powerful, minimising operator
input during startup and normal operations.
Planned as well as Preventive Maintenance Tasks are scheduled

by Days, Shifts or Meter readings. Any maintenance tasks that
are not completed are rescheduled for the next week. A critical
preventive maintenance work order is never missed because they
are automatically regenerated until completed.
Field condition and process information data are accumulated and

passed on to Computerised Maintenance Management System
(CMMS) software for analysis. However, this information can’t
tell the user what actually went wrong or how severe the problem
is. Specialised condition-monitoring equipment e.g. corrosion
monitoring to identify corrosion problems in piping and vessels,
vibration monitoring to identify rotor dynamic and bearing faults,
and performance monitoring to identify performance degradations,
are needed.
Condition Monitored Maintenance Software

Intelligent field devices and smart chips combined with maintenance
management software are now helping process industry companies
move toward predictive maintenance in their plants.
It collects data generated by ‘smart’ field instruments, organizes

this data for various maintenance functions, and monitors for
early warning signs of field device stress or deterioration so that
corrective action can be taken before a serious equipment failure
273
occurs. There are diagnostic software to actually carry out the
Notes
diagnosis of the problem and recommend preventive actions.
The program reduces overall maintenance costs and increases

process uptime by providing advanced warning about potential
equipment failures. Automating work order creation and
eliminating manual data entry further reduce the chance for human
error in handling maintenance information. By combining these
important maintenance tools, the user can establish a predictive
maintenance environment to keep the plant running at top
efficiency. Potential problems are corrected before serious damage
occurs, and the cost of maintenance is reduced significantly.
Direct interfaces between the Computerised Maintenance

Management System (CMMS) and other diagnostic and monitoring
systems such as compressor and pump automation, predictive
maintenance, and product quality testing equipment can assist
greatly in streamlining the maintenance process. It allows
maintenance personnel to respond to early warning signals before
they escalate into critical repair problems. CMMS build upon these
types of interfaces to automatically create work orders and update
equipment histories based upon alarms and test results received
through these interfaces.
CMMS provides maintenance professionals with:
• An easy-to-use library of possible problems for major capital

expenditure assets and critical patient care items
• Problem diagnosis techniques
• A recommendation to repair the cause of the problem and avoid

repeated wasting of money treating its symptoms rather than
the actual cause.
Check your Progress
1. _____________ integrates routine maintenance, preventive

maintenance, work orders, inventory and purchasing in
an intuitive interface.
2. Field condition and process information data are

accumulated and passed on to_____________________
software for analysis.
274
Notes
Enterprise Resource Planning and
Management (ERP)
What is ERP?
Earlier, most of the large process plant complex used to maintain
independent information centre/databank for individual functions
like Planning, Operation, Maintenance Management, Finance and
Marketing. However, now software programs integrate information
from those activities. But modern Enterprise Resource Planning
software (ERP) combines information, data and reports from all
departments together into a single, integrated software program
with a single data base, from which all can share information and
communicate with each other.
Members of staff of different departments see the same information

and can update it. Accountability, responsibility and communication
are the major benefit of the ERP.
In short, ERP consists of the following modules:
• Asset Management,
• Controlling,
• Financial Accounting,
• Human Resources,
• Industry Specific Solutions,
• Plant Maintenance,
• Production Planning,
• Project System,
• Quality Management,
• Sales and Distribution,
• Materials Management,
• Business Work Flow.
Major Benefits of ERP

ERP consists of the following benefits:
• Integration of financial information: ERP integrates and

creates a single version of format that cannot be questioned
275
because everyone is using the same system.
Notes
• Integration of customer order information: ERP systems
manages all information from enquiry to ordering, shipping,
delivery and payment. By having this information in one
software system, rather than scattered among many different
systems, companies can keep track of orders more easily, and
coordinate production, inventory and shipping. It helps in
reducing inventory.
• Standardize HR information: Especially in companies

with multiple business units, ERP can provide a unified,
simple method for tracking employees’ time, utilisation, and
communicating with them about benefits and services.
• Integration with Operation: ERP systems provide a platform

that links sales, inventory and quality with the production data,
operation and production planning. The inter- phasing with
the plant operation is done by interaction with DCS system by
transmitting key production and operating information for the
management. By providing the link between ERP and plant
operation, the program enables true plant optimisation.
• Integration with Maintenance: Like integration with

operation, ERP can sit over and inter-phase with the
maintenance software also.
Essentially through modern ERP system, all departments covering

management functions, production functions, maintenance
functions, marketing functions and safety functions are managed
and monitored.
Project Management
Discussion on IT application is incomplete without mention of
project management software like Primavera, MS Project etc. Such
software is extensively used to meet specific objectives to make the
project on time, within budgeted cost and meeting quality. Such
software has both text and graphic interfaces to carry out functions
like:
• Planning and scheduling: Gantt Chart, PERT Chart, Bar

Chart
• Cost control: Ordering, purchase order, budget vs. actual
• Resource Management
276
• Progress Monitoring: Engineering progress, ordering
Notes
progress, vendor shop status, delivery schedules, construction
progress, projected and actual progress curves (S-Curves).
Such software has the capability of integrating the project related

activities of the entire company (Figure 9)
Figure 9: Enterprise Project Management
Check your Progress
1. ________________ integrates and creates a single version

of format that cannot be questioned because everyone is
using the same system.
2. ___________________ software combines information, data

and reports from all departments together into a single,
integrated software program with a single data base, from
which all can share information and communicate with
each other.
Summary
This unit gave a complete overview of IT application in the
hydrocarbon industry. The entire operation in a project life cycle
from conceptualisation of the project to the project feasibility study,
design, construction, operation, maintenance and management
has extensive application of IT.
The project life cycle and application of IT in various phases of

plant life was at first identified. This was followed by description
of software application in each of the above phases. Examples of IT
application in design, operation and maintenance were explained
in detail. Capabilities and uses of modern ERP software were
explained.
277
Questions for Discussion Notes
1. What are the various phases in plant life cycle where IT
application is commonly used?
2. Explain the extent of integration in IT application for

management, operation and maintenance in the hydrocarbon
industry.
3. Expand the following terminologies:
(a) ERPLP
(b) P&ID
(c) PFD
(d) DCSAPC
(e) SCADA
(f) FEED
(g) DFRDPR
4. What is Condition Monitored Maintenance (CMM) and how is

it used for the purpose?
5. What is SCADA? Explain a SCADA system for a cross country

pipeline.
278
Unit 24
Notes
Economics and Technology Trends
Objectives
 Trends on Prices and Business Cycles
 Strategies being Adopted by Major Companies for Competitiveness and
to overcome Troughs in the Business Cycles
 Trends on Innovation and Emerging Technologies
Introduction
Oil and natural gas dominate as main source of energy due to low
cost and ease of handling compared to other commercially viable
energy sources.
Coal is cheaper as raw material but more difficult to transport.

Coal has lower calorific value, lower efficiency of combustion and
greater environment pollution problem.
Technology of non-conventional sources of energy like solar energy,

wind energy, ocean energy or fuel cells are getting more attractive
but still a far cry for bulk production. At currently prevailing prices
of oil and gas, any major shift towards other sources of energy is
not expected in the near future.
Between oil and natural gas, the latter is cleaner and more
efficient fuel. But it is difficult to transport, difficult to store and
to fill in automobiles. Till now gas played second fiddle to oil as a
resource. Natural gas being a clean and efficient fuel and due to
improvements in the economics of liquefaction and re-gasification
technology, natural gas is gradually increasing its share in the
world energy supply.
Price fluctuation, competitiveness and changing business cycles

are characteristics of hydrocarbon industry. The huge turnovers
often in billions of dollars by major players and large profits
during upswing period of business cycle, generates enough funds
to innovate and improve technology to remain competitive.
To get the feel of business in hydrocarbon area, it is necessary

Unit 24: Economics and Technology Trends
279
to know the various trends in pricing, business trends, economic
Notes
trends and technological changes. Some of these aspects are
highlighted in this unit.
Natural Gas Trends

The emergence of natural gas as fuel had been slow mainly due to
transportation costs. For example, gas pipelines are 3 to 4 times
more expensive than oil. Improvements in economics of liquefaction
and transportation have created large market for LNG. Also, very
large reserves of gas have been discovered in places like Qatar,
Indonesia and elsewhere, substantially enhancing the availability
of gas. Also, stricter environmental regulation both for product
specification and effluent discharge has made use of gas more
attractive.
The price of gas, availability of gas, environmental regulations and

efficiency of gas as fuel makes natural gas fuel for the immediate
future.
The price of gas at the source varies from place to place. Earlier
the stress was on exploration of oil. The gas fields found in course
of exploration were capped and not exploited. These are called
stranded gas in the USA. Such gases are often given negligible value
at source. The netback or profit comes after the gas is exploited and
distributed to the consumer through pipeline network. As a result,
gas has always been valued at a price much lower than crude oil
for equivalent amount of energy value.
Natural gas price unlike oil is expressed traditionally in terms

of calorific value as US$ per Million BTU or in short US$ per
MMBTU. One million BTU equivalent of gas is roughly equal to
0.182 barrels of crude (thumb rule conversion). That means to
convert US$/MMBTU to US$ per barrel, the conversion factor will
be roughly 1.0 divided by 0.182 or 5.5. Thus, we can use a factor
of 5.5 to multiply US$ per MMBTU to get equivalent US$ per Bbl
price for natural gas for comparison to oil price.
International Gas Price Scenario

It is interesting to note that, the USA in spite of having large
resources of gas available at a low price is looking into supplementing
its gas requirement by import of LNG.
In the early nineties, the price of LNG has been high compared to
280
the price of gas in the United States. Costs of delivery were around
Notes
US$2.50 to 3.00 per MMBTU (not including the netback price to
the owner of the stranded gas reserves). Assuming a US$1.00/
MMBTU netback to the producer, a total deliverable gas price of
around US$3.50 to US$4.00/MMBTU could possibly be attained on
a cost basis.
Now due to competition and improvements in technology, the total

cost of LNG production and re-gasification has been reduced.
This LNG price is almost US$1.00/MMBTU less than a decade ago.

This is a thumb-rule price, which will actually depend on the price
at source, distance of transportation, volume of supply and type of
contract.
Relationship between Oil Price and Gas Price

The price of gas has some effect on the change in the price of oil.
Only around 5 to 10% of the gas comprising of ethane, propane and
some of the methane goes into production of petrochemicals. Most
of the gas is used for generation of power and for heating in the
developed countries.
The other fuel used for these purposes are fuel oil and naphtha
from the crude. There are impacts of crude price variation on the
naphtha and fuel price. Natural gas for power plant needs to be
priced so that it is competitive with the naphtha price.
It is important to understand that there has to be a link between

oil price and LNG price. Japan, which is one of the largest buyers
of crude oil as well as LNG, has a definite correlation between the
two. This is presented in Table 1
281
Table 1: Relationship – LNG Price and Oil Price in Japan
Notes
One of the biggest anomalies in the North American natural gas

market over the past year has been how disconnected natural gas
prices have become from those of its close substitutes – oil and coal.
The historical relationship between the price of natural gas and
oil, which has averaged 10:1 over the past two decades, has now
moved to approximately 20:1.
Changes in environmental regulations that favour use of natural

gas over coal as feedstock for electricity generation facilities coupled
with a spike in coal prices, have caused natural gas to trade below
the ‘coal floor’ for more than a year. The coal floor is the price at
which electrical utilities shut down coal plants and increase use of
natural gas fired power plants.
In this section you will examine the connection between natural

gas prices and those of oil and coal from a variety of angles. Also, it
will show that while a number of factors may move prices beyond
historical norms in the short-run, there still exist powerful forces
that will revert these relationships back to the mean in the long-
term. A reversion to historical pricing norms is strongly bullish for
natural gas prices.
It provides several ways to profit from this trend. While there has
been much written about the correlation between gas and oil prices
over the years, no authors have presented the relationship more
succinctly than Stephen Brown and Mine Yucel, two researchers
at the Federal Reserve Bank of Dallas. In their 2007 white paper/
presentation entitled, ‘What Drive Natural Gas Prices?’ the authors
282
presented a very thorough review of three of the most commonly
Notes
used rules of thumb when comparing oil and gas prices. They are
as follows:
Under the 10-to-1 rule, the natural gas price is one- tenth the
price of oil. For example, a US$50 price for a barrel of WTI crude
oil would indicate that natural gas should trade at US$5.00 per
million BTU at Henry Hub. The 10-to-1 gas/oil relationship has
been the most accurate rule of thumb over the past 10 years as
evidenced by the below figure:
Figure 1: The 10-to-1 gas/oil relationship
6-to-1 rule: Another common rule of thumb for the relationship

between gas and oil prices reflects the energy content of the two
commodities. Since one barrel of oil contains the energy equivalent
of the 5.825 million BTU of natural gas, the 6-to-1 rule was
developed. Applying this rule, should oil prices trade at US$100
per barrel of WTI, natural gas should trade at US$16.7. Brown and
Yucel observed that although the 6-to-1 rule is less accurate than
the 10-to-1 rule over long observation periods, in times of rising
gas prices, the 6-to-1 rule is a more accurate predictor of natural
gas prices. In periods of declining natural gas prices however, the
10-to-1 rule is a more accurate predictor.
Burner Tip Parity: The burner tip party rule is more complex than
either of the two previously discussed rules in that it takes into
account the relationship between natural gas and the petroleum
production with which it competes at the burner tip. According to
Brown and Yucel, the burner tip parity rule ‘shows natural gas
283
pricing yielding parity with residual fuel at the burner tip, and the
Notes
price at Henry Hub adjusting to whatever is necessary to achieve
burner-tip parity.’ Since a barrel of residual fuel has an energy
content of 6.287 BTU, and historically residual fuel is priced at
95% of WTI, the burner tip parity rule would suggest that a US$50
price per barrel of WTI would result in a US$7.06 per million BTU
price for natural gas.
In addition to the above three rules for describing the correlation

between oil and natural gas prices, Brown and Yucel also discuss
other factors that impact the oil-gas price relationship. One little
discussed influence on U.S. natural gas prices is the worldwide
price of petrochemical products. The authors point out that since
the U.S. petrochemical industry relies heavily on natural gas
as a feedstock, while a significant portion of the international
petrochemical industry uses oil as a feedstock in its manufacturing
processes, a pricing arbitrage exists during periods of low gas
prices in the U.S. Therefore, should U.S. natural gas prices remain
below their historical norms for an extended period, petrochemical
imports into the U.S. will decline and domestic manufacturing will
expand and increase demand for natural gas.
Another factor influencing the oil to gas price relationship in

the U.S. is the price of Liquefied Natural Gas (LNG). With an
increasing percentage of the world LNG pricing linked to world
oil prices (exporters are now demanding oil linked pricing), LNG
imports into the U.S. will remain at very depressed levels unless
natural gas prices rise substantially. Imports into the U.S. are
currently approximately 1 billion cubic feet per day (bcf/d) despite
approximately 12 bcf/d of import capacity. However, if we look
at gas prices in the U.K., a country which has seen domestic gas
production fall and now relies more heavily on LNG imports, we
see a much closer link between oil and gas prices. On 1/26/2011
spot natural gas in the U.K. was priced at US$8.64 per million
BTUs and Brent crude priced at approximately US$95. Therefore,
the current gas-to-oil ratio in the U.K. is approximately 11:1. Since
the U.S. imports virtually no natural gas via LNG on a long-term
fixed contract basis and the UK will likely continue to offer the
best terms for spot cargoes in the Atlantic Basin due to further
declines in domestic production, there will be no increase in LNG
imports into the U.S. until spot prices are well over US$8.00US per
million BTUs.
Brown and Yucel’s final reason oil prices drive natural gas prices
284
is the reallocation of drilling funds by natural gas producers away
Notes
from natural gas projects and towards oil projects. In today’s world
of approximately US$109 per barrel WTI oil prices and US$8.77
per thousand cubic feet (mcf) natural gas prices, operators are
aggressively redirecting funds towards oil projects. It comes as no
surprise that most independent operators are now concentrating
on their oil projects given that oil and gas wells cost about the
same to drill and oil wells generate nearly three times the revenue
on a barrel of energy equivalent basis. The focus on oil projects and
liquid rich natural gas projects has led to a drop off in the natural
gas directed rig count in recent months and a concurrent increase
in the oil directed rig count. We see the preference for oil drilling
over natural gas drilling displayed very clearly in the weekly Baker
Hughes rig counts. The below graph shows the large upswing in
both gas and oil directed drilling over the past two years as well as
the recent fall off in natural gas directed drilling:
There are two important reasons oil directed drilling will continue
to rise and natural gas directed drilling should continue to fall.
First, a significant portion of today’s natural gas directed drilling,
as much as 25%, is being conducted to hold soon to be expiring
leases. Many leases in the Haynesville and Fayetteville shale were
signed with terms stipulating that to maintain the lease in good
standing; a well must be drilled within three years of lease signing.
With much of the prospective acreage already held by production
(HBP) in these two shale plays, operators have begun reducing
operations in these areas until economics improve. According to
Baker Hughes, Louisiana and Arkansas, home to the Haynesville
and Fayetteville shale plays, have fewer rigs operating than at the
same time last year due to declines in shale directed drilling. While
rig efficiency gains, such as pad drilling will reduce drilling time
per well and will certainly offset fewer rigs active in natural gas
shale plays, drilling more shale wells closer together will not grow
shale gas production enough to offset an expected 10% decline in
conventional US natural gas production this year.
A final reason oil prices are now driving natural gas prices is that
inflation in oilfield services, especially pressure pumping, have
driven up drilling costs to the point where most natural gas wells
are uneconomic at today’s prices. Pressure pumping is the pumping
of water and sand into a wellbore that has been perforated to prop
open fractures to allow hydrocarbons to flow to the wellbore. With
new unconventional oil plays coming online in the past year and
operators drilling more and longer lateral wells requiring more
285
fracture stimulation jobs than ever before, demand for pressure
Notes
pumping services has risen dramatically.
Check your Progress
1. The _________________ rule shows natural gas pricing

yielding parity with residual fuel at the burner tip, and
the price at Henry Hub adjusting to whatever is necessary
to achieve burner-tip parity.
2. Under the _________________ rule, the natural gas price is

one-tenth the price of oil.
Coal vs. Natural Gas

A number of factors have distorted the traditional relationship
between coal and natural gas prices to unsustainable levels. Since
most of America’s utilities have the ability to employ natural gas
fired power plants in lieu of coal fired power plants when natural
gas is priced advantageously, utilities have been ramping up
natural gas consumption and reducing their usage of coal. With
the price of Central Appalachian (CAPP) coal currently trading
at US$53 per ton, up from US$40 per ton for much of last year,
a recent study by Credit Suisse (CS) indicates that natural gas
prices would need to rise to approximately US$9 per mcf before
coal and natural gas trade at parity for electricity generation. As
you can see, natural gas is well below parity for not just 2013 but
also for the next several years:
With such a large gap between coal and gas pricing parity, we
have already seen a substantial amount of switching by utilities
from coal to natural gas. According to CS, in October 2012,
natural gas usage for electricity generation was up 6% year over
year while consumption of coal for electricity generation was
down 4% year over year. More importantly, CS sees even more
switching to natural gas in the months and years ahead as tighter
environmental rules make coal usage increasingly expensive. For
example, CS sees natural gas demand increasing 5 bcf/d should
new EPA rules regarding release of nitrogen oxides, sulfur oxides
and mercury by coal fired power force the closure of all small coal
fired power plants without environmental controls (60 GW of 340
GW total) by 2017 and a potential 10.2 bcf/d should all small and
large dirty coal plants (100 GW total) be closed by 2017.
286
Despite the all of the evidence that today’s natural gas prices are
Notes
unsustainable in relation to oil or coal, many of today’s biggest gas
traders are still betting big that the recent jump in prices to US$4.75
per mcf on the NYMEX was just a fluke. No natural gas futures
contract on the NYMEX trades over US$5.00 until January 2012.
While shorting natural gas has been a very profitable strategy over
the past two years, and a very popular one as well, the fundamentals
of natural gas will soon get the long-awaited rally in natural gas
started. When shorts start covering, we will see a spectacular rally
in natural gas. There are many great ways to participate in the bull
market for natural gas such as the several gas-weighted equities in
my newsletter Model Portfolio as well as several commodity ETFs.
As a result of all this the following changes have taken place in

LNG trade:
• LNG contracts in the eighties were very rigid with stringent

penalty clauses for failure to supply as well as failure to lift
agreed quantities. They were also long-term contracts so that
huge investment needed for production (seller) and utilisation
of LNG (buyer) get paid out. LNG contracts are now gradually
becoming less rigid and more flexible.
• New long-term contracts between seller and buyer specify

a relatively smaller commitment of supply which can be
later supplemented by short term contracts for additional
requirements. Thus, it is more flexible.
• Short term contracts as a result have grown from 1% in the

early nineties to around 10%.
The future is going to see increased activity in LNG trading to

satisfy the increasing energy needs of some countries. There
are today 150 LNG tankers with another 50 plus tankers under
construction to be added in near future.
India and China are going to become major buyers of LNG.

European countries which do not have major gas resources and
USA will also be the major players in LNG downstream.
Indian Scenario
Gas Demand and Supply
The demand of gas has been projected by various estimates
depending on assumed user pattern at figures between 150 to 200
287
million SCMD. Major consumption of Natural Gas in India will be
Notes
in the Power and Fertilizer sectors. Thus, there is a large gap to
be filled.
A major part of the gap is expected to be filled by LNG. Petronet

LNG Ltd. was formed by participation of PSUs. Petronet has
entered into agreement with Ras Gas (Qatar) for import of LNG.
Their terminal at Dahej is nearing completion and another will
come up at Kochi. Shell is constructing a LNG Terminal at Hazira
with Shell Oman as supplier of LNG. A number of other projects
are expected to come up.
Other possibility of gas import is directly by pipeline from Iran,

Turkmeinistan, Bangladesh or Myanmar and connecting them to
existing gas grid like HBJ Pipeline.
Indian Pricing Scenario

The pricing of natural gas in India is currently based on a pooling
concept, with the consumer price being fixed by the Government.
The consumer price of natural gas is currently subsidised, with

the subsidy being borne entirely by the nationalised oil companies,
which receive sub-optimal prices for their production of natural
gas. The private sector joint ventures receive international prices
for the natural gas they produce.
This was feasible as long as the gas ownership and distribution

was by public sector companies. However, this pricing mechanism
is set to change due to:
• The recent gas finds in the Krishna-Godavari Basin by Reliance
• Commencement of LNG imports.
Natural gas from these two sources would have cost structures
quite different from that for the existing sources of supply. The
supply from these sources would also be of substantial volume
exceeding the current availability of gas. This would lessen
government control on gas pricing and would force changes in the
pricing mechanism.
Perhaps in the long run, the market forces will settle the gas price
in India.
Energy Source – Trends

Hydrocarbon will continue to maintain its base as prime energy
288
source for at least the next 20 years. Between oil and gas, their
Notes
will be substantially increased share of gas as energy source for
two reasons:
• Natural gas is clean and environment friendly fuel
• There have been very large finds of natural gas in recent times
(e.g. Qatar, Indonesia). In future too greater proportion of gas
finds (compared to oil) are expected.
Dominance of natural gas as fuel had been slow mainly due to

transportation costs. For example, gas pipelines are 3 to 4 times
more expensive than oil. Improvements in economics of liquefaction
and transportation have created large market for LNG. Price of
gas, availability of gas, environmental regulations and efficiency
of gas as fuel makes it fuel for the immediate future.
Synfuel as Alternative to LNG

The key thing is to solve the transportation aspect by converting gas
to liquids. There are choices now for conversion liquid – Convert it
to methanol, LNG or Synfuel. With oil price crossing US$ 109 per
barrel, two important sources of energy may start gaining ground:
• Synfuel - It is essentially natural gas converted to light oil by

reaction processes with gasoline and diesel as products.
• Fuel cell - Which converts fossil fuel directly to power.
Synfuel technology is also called GTL (Gas to Liquid). A number

of technologies are available such as Fischer Tropsch technology,
Mobil, Haldor Topsoe, etc. The Fischer Tropsch route has the steps:
• Steam reforming at 800°C: CH4 +H2O = CO + 3H2
• Conversion of CO and H2 to long chain hydrocarbons by reaction

between the carbon atom of CO and H2.
Fuel Cell
A fuel cell is an electrochemical energy conversion device, similar
to a battery.
It provides continuous DC power, which converts the chemical

energy from a fuel directly into electricity and heat.
When operated directly on hydrogen, the fuel cell produces this

energy with clean water as the only by-product.
289
Unlike a battery, which is limited to the stored energy within, a
Notes
fuel cell is capable of generating power as long as fuel is supplied.
Hydrogen is the primary fuel source for fuel cells. Reforming

process is used for the extraction of hydrogen from more widely
available fuels such as natural gas and propane or any other
hydrogen containing fuel. There is R&D effort going on to extract
hydrogen from water.
Fuel cell systems offer the potential for reliable, efficient, and cost-
effective energy generation. Capable of operating on multiple fuels,
such as natural gas, propane and hydrogen, fuel cell systems can
be deployed to operate in parallel with the grid, as independent
energy sources or to complement solar and wind power generating
systems.
With a higher efficiency than conventional power generation, little

or no pollution and greater flexibility in installation and operation,
they will offer commercially viable alternatives to existing power
sources.
Check your Progress
1. Major consumption of Natural Gas in India will be in the

___________________ and ____________________ sectors.
2. _________________ is the primary fuel source for fuel cells.
Petrochemical Business Scenario

In the paragraphs given below we will learn about the
Pertrochemical business scenario right now.
Petrochemical Business Cycle

It has been noticed that the petrochemical business follows a
definite business cycle. These cycles follow a span of around 7 to
10 years.
There is a set pattern. Most operating companies in the

hydrocarbon process industry study the business cycle and trends
thoroughly and expand the petrochemical business, matching the
construction of new facilities during the lean period. As a result,
the new projects start-up during peak period. This results in over
saturation. Consequently, supply exceeds demands resulting in
dropping of margins after a period. Other sectors of the industry
290
too undergo difficult times. The industry had been through the lean
Notes
period till 2003. But many large naphtha/ethane/propane crackers
are in the offing and the political scenario is changing. These too
affect the cycle.
This has lead to a situation where companies have evolved

strategies to survive the lean period and make profits in the up-
swing period.
The Ethylene Based Petrochemical Industry

Ethylene is called the king of petrochemicals. Ethylene based
petrochemicals have the largest share of the petrochemical
industry. Ethylene demand determines the petrochemical business
cycle.
Polythene, Ethylbenzene (EB- goes to make Polystyrene), Ethylene

Oxide (EO- leads to Ethylene Glycol), Ethylene Dichloride (EDC),
PVC and many other useful petrochemical are ethylene derivatives.
Polythene takes the major share of ethylene based petrochemicals
and is perhaps the most important petrochemical.
The growing economies of China and India still have relatively

small share and is expected to determine the growth of the industry.
Global Trend
Earlier the ethylene business was more regional limited to

trade within European region, the Americas and the Asia
Pacific region. Now global players are emerging in the ethylene
and derivative market. The Middle East is emerging as large
manufacturing base to supply globally. China is emerging as
a major producer.
However, most of the big players are still making a profit,

just not as big as the profits they made over the past two
or three boom years. Other positive factors include lower oil
prices meaning lower feedstock prices and the drop in the
cost of raw materials has meant that many companies have
been able to trim billions of dollars from major projects.
Planning for Competitive Edge
Business Strategy
With the low margins in the refining industry and fluctuation of
fortunes in the petrochemical industry, the major investors and
291
companies have adopted strategies to make the industry attractive
Notes
using the well-known principles:
• Economy of scale
• Integration under same ownership
• Mergers
• Proximity of raw material provider, and user
• Shared infrastructure and shared utilities
• Shared effluent treatment
• Technological innovation and energy audit
Integrated Refinery and Petrochemical Complex

In the 1970s and 80s, the oil companies were mainly in the refinery
business besides oil production. With the low margins in the
refinery industry, integration with petrochemicals has become one
of the key strategies for major companies. One tries to integrate
as much as the business environment permits and availability of
funds and market.
One of the best examples of integration is Reliance Industries, who

started as a fabric company. Later they step by step integrated
vertically to fibres, then to petrochemicals to make the fibres,
refinery to make the petrochemicals and then to oil and gas
production. In India the PSUs also are trying to integrate into
their non-traditional areas. For example, companies like IOCL
and BPCL are planning to get into both petrochemicals and oil/gas
exploration. Similarly, ONGC is investing in refineries.
Mergers and Acquisitions

Integration of operation between upstream and downstream and
mergers have been the major consolidation done by many major
organisations in order to get a competitive edge. Some examples of
merger are:
• Exxon and Mobil- merged to form ExxonMobil
• BP/Amoco/Arco merged. BP acquired other companies like

Erdoel Chemie
• Total/Fina/Elf Aquitaine merged to form Total Fina Elf

292
• Chevron/Texaco
Notes
• Dow/UCC
• Montell/Targor/Elenac merged to form Basell
• Chevron/Phillips merged chemical interests
• Dow/UCC merged
Each of them has a wide portfolio of a range of oil, gas, petrochemical

and chemical business areas. One can see that oil companies have
integrated their business into refinery and petrochemicals.
Check your Progress
1. Exxon and Mobil merged to form _____________
2. Total, Fina and Elf Aquitaine merged to form __________
Future Developments
Given below are the future developments that have been planned
in this area.
Hydrates as Energy Source

Hydrates are unstable compounds of hydrocarbons like methane
and water. They are solid and look like ice. In natural gas, the
saturation level moisture contained forms hydrates at moderate
temperatures (5 to 20°C) at high pressure.
In many parts of the world huge deposits of hydrates have been

identified below the sea. Natural gas that seeped out of the deposits
below the earth, under pressure of water at certain depths of sea,
at the prevailing temperature formed hydrates. The quantities are
huge and research is going on how to mine them from sea bed.
Another application of hydrates could be in the transportation of

natural gas by converting gas to hydrates instead of liquefying to
LNG.
Norwegian University of Science and Technology has carried out

R&D in this area and found that:
1. Large-scale and long-distance transport of natural gas at

atmospheric pressure in hydrate form is feasible.
293
2. Experimental studies in Norway and Russia have shown that
Notes
natural gas hydrates are stable for up to two years when stored
at -15 to -5°C at atmospheric pressure, compared to LNG at
-160°C.
3. The estimated total capital cost of hydrate production and

melting processes was approximately one-quarter less than
LNG’s equivalent liquefaction and re-gasification processes.
4. For the same natural gas carrying capacity, the capital cost
of seven Natural Gas Hydrate ships was also estimated at
approximately one-quarter less than that of three LNG ships.
Gasification of Refinery Residues

Refineries always look for elimination of the residues which are
difficult to dispose of as fuel due to environmental regulations.
Integrated Gasification Combined Cycle (IGCC) is gaining ground
for the utilisation of refinery residues to generate power. Refineries
in the USA and Europe have taken lead in the IGCC projects. The
IGCC process essentially converts the residue into synthesis gas
(mixture of carbon monoxide and hydrogen) by reaction with steam
at high temperatures. The acid gas bearing sulfur is removed to
purify the synthesis gas.
Synthesis gas generated through the gasification of refinery offers

scope to manufacture chemicals like methanol as co-production
and get further downstream into petrochemicals. Larsen and
Toubro has carried out some work in this direction and proposed
integrated approach for co-production of methanol and acetic acid
along with power generation.
Smart Chips
Use of microchips for equipment conditions and health is expected
to find widespread application. There could be smart chips
embedded in various parts of equipment conveying many aspects
of equipment status, health, functioning, warnings and even
diagnosis of problems.
Business Diplomacy to Overcome Politics

Till the recent past, oil and gas have generated politics, power
struggle and war. But in South Asia, diplomatic moves are on to
overcome the politics that divides the subcontinent with gas as the
driving force behind it.
294
India is hungry for energy supply, with current annual average
Notes
growth, expected to go up. Turkmenistan and Iran have huge
reserves of gas, which they want to transmit to India by pipeline
through Pakistan. But 50 years of quarrel and suspicion is the
obstacle towards its implementation.
Bangladesh and Myanmar have gas and India is their nearest

market. But politics in Bangladesh is trying to prevent sale of
gas to India. A pipeline from Myanmar through Assam (a gas rich
state) makes good business sense.
Major multinationals have their eyes on these potential mega-

projects. They are also beneficial to each of the participating
countries. To quote The Times of India, ‘The great game– or the
potent mix of oil, gas and diplomacy in Central Asia – has reached
India. The three pipelines have the potential to metamorphose the
geopolitical and economic topography of Central and South Asia.’
The economic need of the countries involved, pressure from the

multinationals and vested interest of some major countries is
generating business diplomacy, which could spur growth in
Central and South Asia and give peace a chance in the Indian sub-
continent.
South East Asia had set the trend of looking into business as the
driving force giving politics a back seat. China is following the
same path. Could the Indian subcontinent be the next?
Check your Progress
1. ___________ are unstable compounds of hydrocarbons like

methane and water.
2. Experimental studies in Norway and Russia have shown

that natural gas hydrates are stable for up to two years
when stored at ______°C at atmospheric pressure.
Summary
We started with the description of history and trends in the prices
of oil and natural gas. Emergence of natural gas as a source of
energy in the immediate future was noted. The growth in LNG
trade for supply of natural gas to both developed countries and
emergent economies of China and India was described.
Hydrocarbon resources being limited, major companies are

295
working towards developing new sources of energy. Gas to Liquid
Notes
technology, Hydrates and Fuel cells as a future source of energy
was identified.
The economics of the refining industry was discussed and low

margins in the industry were identified. This was followed with
description of the business cycle in the petrochemical industry was
described.
The strategies adopted by major companies to be competitive

and overcome the low periods of business cycle were stated with
examples.

1. What are the factors that affect crude oil price?
2. Why is natural gas emerging as major source of energy supply?
3. What are hydrates? What are the new ideas coming up with
respect to the hydrates?
4. Describe the principles of fuel cells. Explain with sketch.
5. What are the principles adopted to make oil, gas and

petrochemical business competitive? Explain with examples.
6. Name five petrochemical products based on ethylene.

296
Unit 25
Notes
Case Study
BP Oil Spill
The Gulf of Mexico is bordered by five of the United States: Florida,

Alabama, Mississippi, Louisiana, and Texas. It is also bordered by
Mexico and is the location of Cuba. The gulf itself covers an expanse
of 600,000 square miles and has a developed a circulation pattern
for the waters (General Facts about the Gulf of Mexico, 2011). Water
enters the Yucatan Strait, flows through the Loop Current, and exits
through the Florida Strait (2011). The way in which the water flows
creates the well-known current, the Gulf Stream. The Gulf Coast acts
as a major drainage pool for the thirty-three major rivers and two-
hundred and twenty-seven estuaries from the United States alone
(2011).
The states that line the Gulf have excellent opportunities to take
advantage of the resources the gulf has to offer. With 16,000 miles
of coast in the United States alone, the Gulf provides easy access
to fishing, natural resources, and recreation opportunities (2011).
The population of the Gulf is expected to hit 61.4 million by 2025
with Florida and Texas expected to house most of the new population
(2011). Tourism boosts the economy by US$20 billion each year and
seven of the top-ten seaports are located along the Gulf Coast (2011).
The Gulf ‘yields more finfish, shrimp, and shellfish annually than
the south and mid-Atlantic, Chesapeake, and New England areas
combined,’ and is home to about 45,000 bottlenose dolphins (2011).
About the Oil Spill
On April 20, 2010, a tragic disaster hit the Gulf Coast. British
Petroleum’s (BP) Deepwater Horizon rig exploded spewing crude oil
into the ocean from the three major cracks in the rig. It rivaled the
1989 Exxon Valdez spill within days of exploding (Gerstein, 2010).
A few years earlier, BP was fined US$20 million for neglecting to
prevent leaks in a pipeline in Alaska’s Prudhoe Bay (2010). From
June 5, 2010 to June 14, 2010, BP had collected 127,000 barrels of oil
in their containment cap alone; while it is believed that a total 60,000
barrels of oil a day are gushing into the Gulf (Gerstein, 2010). The
oil slick can be seen from space and covers an area of 130 miles by
70 miles even though BP has dumped 50,000 barrels of heavy mud
on the leaks to help stop the flow of oil (2010). After the insistence
from government officials, BP began drilling a relief well that will
Contd...
Unit 25: Case Study
297
intersect with the original well and will pull up oil so that BP can
Notes
dump more mud and concrete into the old well and retire it for good
(Walsh, 2010). During the period between the explosion and BP’s
decision to drill the relief well, they had attempted to use a variety
of tactics to quell the leaks.
How the Spill has Affected the Gulf
‘‘I’m not too worried about oil on the surface,” says one scientist.
‘It’s the things we don’t see that worry me the most’ (Begley, 2010).
The oil that has been leaking from the well has done more than
float to the surface and become an eyesore; it has also been trapped
beneath the surface of the waves and carried methane to other parts
of the Gulf (2010). At first officials (both for the government and
BP) attempted to dispel these finding, however, the independent
scientists who boldly made these claims have been proven correct
(2010). Not only has the oil spill affected the shorelines and marshes,
it has also seeped into unexplored ocean and could possibly disrupt
the natural ecosystems that thrived there before the spill (2010).
Louisiana State 2 University chemist, Ed Overton, said, “It's [the oil
spill] going to cause very substantial and noticeable damage–marsh
loss and coastal erosion and impact on fisheries, dead birds, dead
turtles–but we'll know what that is. It's the things we don't see that
worry me the most. What happens if you wipe out all those jellyfish
down there? We don't know what their role is in the environment. But
Mother Nature put them there for a reason,” (2010). The dispersants
that are used to help break up oil spills are making the environment
under water even worse by ‘‘changing the chemistry and physics of
the oil,’ says biological oceanographer Ajit Subramaniam of Columbia
University's Lamont-Doherty Earth Observatory. ‘They are creating
micro layers of oil that are being carried by the deep currents.’ Even
without dispersants, the crude gets broken into zillions of droplets
suspended in the water column and corralled there, prevented from
rising to the surface’ (2010). Two main plumes of the oil and methane
mix have been found and the largest is 22 miles long, 6 miles wide,
and 3,000 miles thick (2010). Not only do the plumes deprive the
areas of oxygen but they also suffocate marine-life by clogging up
their respiratory systems with oil (2010).
If large marine animals are not affected directly as a result of the oil
spill, their dietary needs will eventually harm them as an indirect
consequence of the oil spill. Plankton will likely ingest the oil and as
one of the lowest organisms on the food chain, the oil they ingest will
find its way up to the top of the food chain; and linchpins (organisms
that act as the garbage collectors underwater) will fail to clean up
the dead organisms that will pile up on the ocean floor, therefore,
Contd...
298
depriving other creatures of nutrients that are by-products of the

Notes
disposal of the dead organisms (2010). The list of marine-life that
could potentially be affected by the oil spill goes on and on, anything
from coral reefs to fish to crustaceans to tube worms (2010).
The costs of the spill are overwhelming: 12,000 people from Louisiana
alone have applied for unemployment since the spill, most from the
southern part of the state; the cost of the spill for BP as of June
14, 2010 was US$1.6 billion; it is estimated that the spill will cost
taxpayers US$1.5billion because the government had put a US$75
million cap on oil company liability for oil spills (though this cap
may be raised to US$10 billion); and as of June 14, 2010, 26,500
Gulf residents have been paid US$62 million in tax claims due to the
oil spill (Gerstein, 2010). It is estimated that four hundred species
are going to be affected by the spill; at least thirty species of birds
will be affected due to the spill also coinciding with breeding season;
25 million migrating birds could potentially be scarred by the spill
(2010).
It is not just wildlife being affected by the spill. The tourism

industry has also been pummeled. Oil coming onto shores has
caused authorities to advise people against going to the beaches for
swimming and people have been cancelling their trips to the Gulf.
For Mississippi, it could mean a loss of US$120 million in revenue
from tourism (Jervis, 2010). A big fear for tourism agencies in the
Gulf is that previous repeat tourists who were forced to travel
somewhere new for the summer will continue to go to new places in
future years (2010). This in turn will continue to decrease revenue
brought in by tourism.
Questions
1. For the states affected by the oil spills, what would be some
ideas on how to invigorate their tourism numbers? What types
of strategies could be employed?
2. Has BP done enough to help the Gulf Coast? Why or why not?
Source: http://www.castonline.ilstu.edu/hurd/KNR378/Articles/BP%20Oil%20Spill%20case_
class.pdf

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Understanding Oil and Gas Business

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MDSO-801D

Dr. Kamal Bansal Ms. Deepa Verma Mr. Ashok Sahu

SLM Development Team

Dr. Raju Ganesh Sunder Dr. Rajesh Gupta

Mr. Tarun Batra Mr. Rahul Sharma Mr. Shantanu Trivedi

Dr. Raju Ganesh Sunder, Mr. Rahul Sharma

Course Code: MDSO-801D

Unit 1 Basic Concepts .............................................................................................................03

Unit 2 Crude Oil and Natural Gas Concepts ........................................................................15

Unit 3 The Macro-system ........................................................................................................35

Unit 4 The Indian Perspective .................................................................................................49

Unit 5 Case Study .....................................................................................................................67

Unit 6 The Exploration of Oil .................................................................................................75

Unit 7 Production Methods .....................................................................................................91

Unit 8 Onshore Oilfield Processing .......................................................................................109

Unit 9 Offshore Oilfield Processing ......................................................................................125

Unit 10 Case Study

Unit 11 Gas Processing

Unit 13 Petroleum Refining ....................................................................................................175

Unit 14 Refinery Requirements ..............................................................................................189

Unit 15 Case Study ...................................................................................................................205

Unit 16 Distillation in Refineries ...........................................................................................211

Unit 17 Petrochemical Industry ............................................................................................225

Unit 18 Production of Petrochemicals ....................................................................................241

Unit 19 Transportation of Oil, Gas and Products: Pipelines .................................................263

Unit 20 Case Study...................................................................................................................279

Unit 21 Transportation of Oil, Gas and Products: Other Modes .........................................285

Unit 22 Health, Safety and Environment ..............................................................................303

Unit 23 IT Applications in Hydrocarbon Industry .................................................................323

Unit 24 Economics and Technology Trends ............................................................................341

Unit 25 Case Study...................................................................................................................357

Let us understand the importance of oil and gas industry by looking

But the world is keeping on adding new hydrocarbon finds and

Hydrocarbons came from remains of the bodies of pre-historic land-

Petroleum is essentially composed of hydrocarbons with some other

• It can be in gaseous form as natural gas, which can be associated

• It can be in liquid form as crude oil (dark and viscous), or

• The solid and semi-solid forms of petroleum are called asphalt

Petroleum as a general term is used for all three mentioned above.

Table 1: Light and Heavy Hydrocarbon Molecules

Methane CH4 Gas

Hexane C6H14 Liquid

Octane C8H18 Liquid

Wax C20H42 Solid

Check your Progress

State whether the following statements are true or false:

1. Hydrocarbons in petroleum could be in gaseous, liquid or

2. Petroleum is a word derived from the Latin words Petra

When huge quantity of recoverable hydrocarbon is trapped in rock

Figure 1: Hydrocarbon Formation

What is Well Fluid?

Other components like sulfur compounds, carbon dioxide, nitrogen,

Check your Progress

1. The fluid that comes out of the well in an oilfield or gas

2. When huge quantity of recoverable hydrocarbon is

Crude Oil and Natural Gas

What is Crude Oil?

What is Natural Gas?

Check your Progress

1. ______________ is also called Petroleum.

Units Specifically Used in Oil and Gas Industry

• Crude-oil volume is usually measured in barrels.

• One barrel holds 42 gallons (159 litre).

• Weight or mass of crude in India is in metric tons (tonne).