Energy conservation
Conserving Energy Only Makes Sense
(an article from the Imperial Oil Review - Spring 2000 Volume 84
Nuimber 436)
From production wells to refineries,
energy conservation is good for the environment and for business by Russell
Felton
"Are you telling me oil companies care about
conserving energy?" my friend asked during an after-dinner discussion. "Why
would they? Their business is selling fuel. The more fuel that's consumed, the
more money they make - simple as that." Well, perhaps not quite so simple, at
least as far as Imperial Oil is concerned. "The fact is that energy
conservation, by our customers and in our own operations, is extremely
important to Imperial Oil," says Brian Fischer, senior vice-president of the
company's products and chemicals division. "It just makes good business sense
any way you look at it."
Fischer's point, although
probably not widely recognized, is well taken. Imperial and other petroleum
companies have continually improved the quality of their fuels and lubricants
over the years to complement more and more fuel-efficient engines and have
offered high-efficiency home-heating furnaces and other products. "That's what
our customers expect and demand," Fischer says. "Engine-cleaning detergent
additives for gasoline and octane levels suited for specific types of engines
are just two examples of fuel innovations that improve your car's gas mileage,
and improving mileage means conserving energy."
My
friend and other members of the public are no doubt familiar with these
products, but they are perhaps less aware of the fact that Imperial and other
oil companies have also significantly reduced the consumption of energy in
their own operations. This achievement is considerable given that the
petroleum industry is, in itself, one of the largest consumers of energy in
the world.
On average, the equivalent of more than eight
percent of the energy contained in all the crude oil and natural gas produced
in Canada today - almost a full month's supply each year - is consumed in
getting those resources out of the ground, transporting them by pipelines and
other means, and refining and manufacturing them into high-quality fuels,
lubricants, petrochemicals and other products.
Take, for
example, the transportation of natural gas from wells in Western Canada to
Canadian and U.S. markets. About 10 percent of the gas produced is used to
fuel the huge turbines that compress the gas and propel it through the network
of pipelines that crisscross the continent. And in a typical petroleum
refinery, the equivalent of about seven percent of the crude oil that flows
through the refinery is consumed in the refining process to generate heat
needed to distill the crude oil into its various hydrocarbon components and to
transform those components into products such as gasoline, diesel fuel, butane
and propane.
Imperial and other oil companies have also significantly reduced the
consumption of energy in their own operations
The manufacture of petrochemical products also consumes large amounts of
energy, especially to generate the very high temperatures required to "crack"
gases such as ethane and butane to form ethylene, which in turn is used to
make polyethylene, or plastics.
At Imperial, however, the
part of its business that requires the most energy is the recovery of bitumen
- a heavy, molasses-like form of crude oil - from the subterranean oil sands
at Cold Lake, Alta. Here, in the singularly beautiful region of the province
known as Lakeland, immense quantities of bitumen are suspended in layers of
sand that perhaps 100 million years ago were riverbeds. Since those sand
layers are almost half a kilometre beneath the surface of the ground, for many
years the bitumen was considered unrecoverable by any practical or economic
means.
Then in the mid-1960s, after years of research and
experimentation, Imperial began recovering bitumen using what is referred to
as the "in situ" or "in place" method. By drilling wells into the subterranean
layers and injecting steam at a very high temperature and pressure, Imperial
engineers were able to heat the bitumen until it flowed and could be pumped to
the surface. Here, heavy natural gas liquids could be added to the bitumen to
thin it so it could be transported by pipeline to Canadian and U.S. refineries
equipped to handle it.
Having proven that this in situ
recovery method worked, and having gained experience in working with it,
Imperial began bitumen-recovery operations on a commercial scale at Cold Lake
in 1985. Today, after a series of expansions, the Cold Lake operation is
Canada's second-largest source of crude oil, and its 132,000 barrels of
bitumen a day account for more than half of Imperial's total crude oil
production. Spread over about 60 square kilometres, the operation comprises
more than 3,200 wells, which are not scattered individually about the
landscape but arrayed in clusters, or "pads," of 20 to 30 wells each to
minimize the ecological impact on the evergreen forest that covers much of the
region. It is, in reality, one of the outstanding success stories in the
history of the Canadian oil industry and has also led the way for in situ
oil-sands recovery projects in other parts of the world.
This
steam injection process does, however, require enormous amounts of energy - in
particular, large volumes of natural gas to generate the steam that is
injected into the subterranean beds for up to six months at a time, as well as
to operate pipelines and other facilities. The "gas bill" at Cold Lake ($135
million in 1999) accounts for more than 50 percent of the total direct
operating expenses for the entire operation. Some of this gas is purchased
externally, but most of it is produced by Imperial at Cold Lake and other
operations and would otherwise be sold into commercial markets. The loss of
potential revenue to Imperial is substantial, and therefore the financial
prize - let alone the environmental one - for finding ways to improve energy
efficiency at Cold Lake is also considerable.
Economic
considerations - that is to say, the opportunity to reduce costs by reducing
energy consumption - provide a powerful motivation for all of Imperial's
operations (in the "downstream," or manufacturing and marketing, sector, as
well as in the "upstream," or oil and gas producing, operations) to become
more energy efficient. Says Fischer: "Across Imperial's four refineries,
energy accounts for one-third of total operating costs. That adds up to around
$200 million a year or, to put it another way, more than one dollar for every
barrel of crude oil processed. When you consider that the industry's after-tax
profit margin has typically averaged between one and two cents per litre of
product sold, you can see that saving energy is sound business."
Consider, too, that under the Voluntary Challenge and Registry (VCR) program,
aimed at encouraging Canadian industries and companies to reduce emissions of
carbon dioxide and other so-called greenhouse gases from their operations,
Imperial has been exceeding a commitment to improve the energy efficiency of
its refining operations by at least one percent a year.
Imperial's most recent VCR submission, based on 1998 data, shows that total
greenhouse gas emissions from company facilities in that year were about the
same as in 1990 - a telling statistic given that Canada's overall emissions
increased by more than 10 percent during the period. "This has been achieved
through actions that make good business and economic sense," says Fischer.
However, he notes, it's important to recognize that improving energy
efficiency is not necessarily the same as reducing total energy consumption,
since the latter varies with the volume of production, which depends on a
variety of market and other factors. "To understand how efficiently energy is
being used, you need to look at the amount of energy consumed in producing one
unit of the final product," explains Fischer. "This is what we call the
'energy intensity.'"
An improvement rate of one percent
a year in energy efficiency might not sound significant, but it is, and
furthermore, it represents a major challenge to the refining industry - a
challenge that Paddy Roach takes very seriously. Roach, a quiet-spoken
chemical engineer who has been with Imperial for 33 years, is responsible for
managing energy improvement for the products and chemicals division. He is
based at the company's integrated refinery and petrochemical manufacturing
plant in Sarnia, Ont.
"First," says Roach, "consider the fact
that petroleum refining and petrochemical manufacturing are mature industries,
which means that the basic processes and technologies have been in place for
many years and that energy conservation principles have already been
incorporated into the design of plant equipment. Second, remember that, along
with all Canadian industries and indeed Canadian consumers, we significantly
reduced our energy consumption during the early to mid-1980s, when energy
prices were very high. Just as homeowners switched from inefficient
home-heating furnaces to newer, more energy-efficient models, we invested
heavily in more energy-efficient refinery equipment."
Indeed, reports filed under a cooperative initiative called the Canadian
Industry Program for Energy Conservation (CIPEC) show that between 1972 and
1990 the Canadian refining industry as a whole improved the energy efficiency
of its operations by fully 32.5 percent. Since 1990 the industry has used an
internationally recognized index to track its performance; a rating of 100
indicates efficient use of energy. For 1998 the index stood at 93.3 percent,
and reflected a 17-percent improvement since 1990.
All this
is to say, explains Roach, that relatively easy improvements in the area of
energy efficiency have already been made and that further gains are more
difficult and costly to achieve.
"The third, and perhaps most
important, consideration," he says, "is that in recent years we have seen
increasingly stringent environmental regulations governing fuel products, such
as requirements to remove benzene from gasoline and produce low-sulphur diesel
fuel. Meeting these requirements involves additional processing in the
refinery, which in turn involves using more energy to produce each litre of
fuel. In a sense, we've been caught in a squeeze - on the one hand being
required to use more energy and on the other being expected to consume less
energy. And looking ahead, new regulations requiring dramatic reductions in
the sulphur content of gasoline by 2004 or 2005 will further compound the
difficulties."
That Imperial and other refiners have
been able to improve their energy efficiency in these circumstances is, Roach
says, a considerable achievement. And, he adds, those improvements have come
the only way they could have come - in small increments, a little at a time,
day by day, every day.
The resources division has been singularly successful in reducing the
amount of so-called solution gas that is often flared at well sites
"We recognized some years ago that improving our energy efficiency would
require an ongoing, systematic examination of all the little things we do and
the pieces of equipment we use," Roach says. "A refinery, for example,
includes kilometres of pipes that carry hydrocarbons between the various
refining units. In many cases these pipes must be kept warm. This is
accomplished by surrounding them with copper tubing that carries steam, and
wrapping both the tubing and the pipes in insulation. This method of heating
is called steam tracing. Poor insulation or steam leaks mean a loss of heat
energy, but frequently and systematically checking every pipe and repairing
any minor leak right away reduces the problem significantly. The process is
simple enough, but it's by no means easy to execute. The Sarnia refinery alone
has more than 10,000 such steam tracing units. You must have a comprehensive
set of procedures and standards, work schedules, training programs and so on,
so that everyone in the plant understands what has to be done and focuses on
the need to save energy."
To help provide that focus,
Roach and others developed an "energy management framework" for Imperial's
downstream operations - a comprehensive set of standards aimed at optimizing
energy use by systematically measuring it, controlling performance and
identifying opportunities for improvement. "I realize this sounds deadly dull
and anything but dramatic," Roach comments with a knowing smile. "But the fact
is, it works" - works so well, it turns out, that a similar framework has been
developed for use at all refineries in the Exxon Mobil Corporation worldwide
network.
A key to finding opportunities for improvement,
Roach says, is measurement: "For example, gas-fired furnaces used at the
Sarnia site rely on a mixture of air and gas. Optimum usage involves mixing
only as much air as necessary to ensure that all the gas gets burned. By
carefully monitoring and measuring the excess air, we've been able to maximize
the gas-burning efficiency of the furnaces. In the past, the excess air has
been as high as 30 percent. Today we operate with less than half that."
Seeking out such opportunities for incremental energy-efficiency improvements
in a mature industry isn't glamorous work, admits Roach, but with constant
attention from management and operating personnel alike, the commitment to
continue to improve can be met.
The challenge to conserve
energy in Imperial's upstream operations is in some ways similar to that faced
in the downstream. In other ways, it is quite different, according to Milt
Fischbein, a chemical engineer who, as energy management adviser for the
company's Calgary-based resources division, is Roach's counterpart for oil and
gas production operations.
"A refinery or petrochemical plant
generally contains a relatively small number of large energy users located in
a concentrated area, whereas upstream operations generally contain a large
number of small energy users spread over a large area," Fischbein explains.
For example, Imperial's resources division operates approximately 5,000
pumpjacks located all over Western Canada and the Northwest Territories. Each
pumpjack consumes an average of about $2,000 in electricity each year. While
the prize for reducing the amount of energy used by the pumpjacks is huge - a
portion of $10 million a year - the logistics involved in reducing these
energy costs are complicated. "We've adopted an approach similar to that of
the downstream, based on systematically identifying opportunities to improve
our efficiency."
That approach, Fischbein reports, has
led to the development of a comprehensive energy management system for the
resources division, including a network of energy specialists, one for each of
the division's operating areas. "Working together, we've been able to develop
a set of useful indicators for monitoring and measuring energy use and
improvement initiatives at all our operating sites," he says. "And through a
workshop process, we're identifying specific energy-saving opportunities. We
successfully completed workshops at our oil-producing facilities at Norman
Wells, N.W.T., and at Boundary Lake, B.C., in 1999, and we expect to have
covered all major upstream operating facilities by the end of 2000."
The resources division has been singularly successful in reducing the amount
of so-called solution gas - natural gas that comes out of the ground mixed
with crude oil - that is often flared, or burned off, at well sites. This gas
flaring not only wastes potentially useful energy but also presents an
environmental concern. As a result of a strongly focused effort across all its
field operations, Imperial's resources division now has the best solution-gas
conservation rate in the industry. A 1997 survey of 488 oil-producing
companies conducted by the Alberta Energy and Utilities Board found that
Imperial conserves 99.4 percent of all the solution gas it produces - compared
with an industry average of 94 percent. And, Fischbein says, the continuing
emphasis on this area should lead to an even higher conservation rate in
future.
At Cold Lake, energy consumption has been reduced
since 1987 by the equivalent of five million gigajoules a year, based on 1999
production rates. "To put that in some perspective," says Fischbein, "five
million gigajoules is enough energy to provide heating for about 25,000 homes
for a full year."
Interestingly enough, CIPEC reports
show that energy use per unit of production in Canada's oil-sands sector as a
whole in 1997 stood at about 85 percent of the 1990 level.
As
in Imperial's downstream operations, most of the energy savings at Cold Lake
have come from "little things," such as improved heat recovery, rather than
major technological breakthroughs, says Fischbein. "The bitumen that comes out
of the ground is hot, and the more heat that we can capture - through improved
heat-exchanger technologies and careful management - and use to generate steam
for injection back into the ground, the less natural gas we have to use," he
says. "During 1999, we were able to identify numerous opportunities to the
extent that we lowered Cold Lake energy costs by a further $700,000 per year.
As we continue to monitor our energy consumption through the use of energy
indicators, I believe that we will continue to find similar opportunities.
It's a never-ending game."
One potentially very large
opportunity for reducing energy consumption and costs both at Cold Lake and in
Imperial's Sarnia refining and petrochemical plant operations may lie in the
development of what are called cogenerating facilities.
Cogeneration involves building an independent electricity-generating plant
(utilizing natural-gas-fired turbines) as opposed to purchasing electricity
that is generally generated by coal, oil or nuclear power. The gas-fired
turbines not only generate electricity directly but provide heat to generate
steam. When an industrial use is also available for the steam generated - as
is the case at Cold Lake and in Sarnia's industrial sector - the energy and
cost savings can be substantial, and in addition, surplus electricity can be
sold to a local utility for general use in the community.
Current, although not final, plans call for a co-generation plant to be
included in a further expansion at Cold Lake, and a proposal is being
discussed for a cogeneration project sponsored by a number of local industries
in the Sarnia area.
Those projects, however, remain in the
future. In the meantime, Imperial continues to examine, analyze and diagnose
every aspect of its operations, from remote well-drilling and gas-production
sites in Western Canada to its refineries and chemical-manufacturing
facilities in Ontario, Alberta and Nova Scotia, in search of elusive, but
important, opportunities to save energy. As Brian Fischer says, it makes good
business sense any way you look at it.
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