USING CNG (COMPRESSED NATURAL GAS) AND …members.igu.org/html/wgc2006/pdf/paper/add11122.pdfUSING...

23rd World Gas Conference, Amsterdam 2006

USING CNG (COMPRESSED NATURAL GAS) AND LNG (LIQUEFIED NATURAL GAS) TO DEVELOP NEW MARKETS IN BRAZIL

Hijjar, J. R. A., D.Sc.

Brazil

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Verwijderd: MONETIZING PETROBRAS URUCU FIELD NATURAL GAS RESERVES - CNG AS A MARKET AND TECHNOLOGICAL DEVELOPMENT TOOL IN THE AMAZON¶

Verwijderd: de Xerez

Verwijderd: M

Verwijderd: Carvalho, R.N.¶Cordeiro de Melo, T.C.¶Paterman Brasil, N.¶

Verwijderd: ¶¶

ABSTRACT Bearing in mind the sparse natural gas pipeline network in Brazil and many incipient markets

away from direct influence of such network, alternative ways of transportation and distribution shall be considered in order to develop such markets.

Many cases have already been analyzed and, due to size and distance of specific markets,

the use of CNG or LNG to supply natural gas has been proved economically feasible when compared to the construction of a pipeline. In fact, there are now in Brazil some on-going CNG business cases and one LNG project under implementation. It shall be noted that in Brazil there is no importation of LNG, which implies relevant liquefaction costs.

This paper intends to identify the aspects to be considered when analyzing CNG and LNG

projects and to present how CNG and LNG can be strategically used to develop new markets. There are two possible ways: a) supply CNG or LNG on economic and long-term basis or; b) supply CNG or LNG temporarily to a relatively small and far target market until that market grows, making it feasible to be served by a pipeline. Then, using the mobility of CNG or LNG infrastructure (the “mobile pipeline” concept), redirect supply to a further market.

Some examples are analyzed, with due considerations on physical, economic and strategic

issues. Finally, conclusions are produced showing the feasibility of using CNG and LNG to develop

new markets in Brazil.

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Verwijderd: MONETIZING

Verwijderd: Monetizing the

Verwijderd: Urucú

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TABLE OF CONTENTS 1. Introduction 2. CNG and Small LNG Project Analysis 2.1 The The CNG Project 2.2 The Small LNG Project 2.3 Basic Differences to be Considered 3. The Use of CNG AND LNG to Develop New Markets in Brazil 3.1 Supply CNG or LNG on Economic and Long-term Basis 3.2 Supply CNG or LNG Temporarily to a Small and Far Market 4. The On-going Projects in Brazil 4.1 CNG Projects

4.2 The LNG Project - GEMINI 4.3 New Special CNG Projects 5. Conclusions


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Verwijderd: ¶ABSTRACT¶1. INTRODUCTION¶2. CNG AND SMALL LNG PROJECT ANALYSIS¶The CNG Project¶The Small LNG Project¶Basic Differences To Be Considered¶3. THE USE OF CNG AND LNG TO DEVELOP NEW MARKETS IN BRAZIL¶Supply CNG Or LNG On Economic And Long-Term Basis¶Supply CNG Or LNG Temporarily To A Small And Far Market¶4. THE ON-GOING PROJECTS IN BRAZIL¶CNG Projects¶The LNG Project - GEMINI¶New Special CNG Projects¶5. CONCLUSIONS¶REFERENCES¶

Verwijderd: ¶¶¶

1. INTRODUCTION The beginning of Natural Gas Industry in Brazil was marked by direct selling from Petrobras

(the brazilian state-owned oil company) to some big customers located close to oil production fields. Since the available natural gas in the country was associated to oil and the most important oil fields were located offshore, the gas pipeline network needed to supply those target market was built close to the coast and was, indeed, very small.

In the middle nineties, two facts showed up to change a great deal the situation. The

recently voted brazilian constitution defined a new regulation for the natural gas industry. The distribution of natural gas by pipeline was defined as a monopoly of the Federative States (public service). Many state companies were created to distribute natural gas as well as some private companies, that operated by concession (Local Distribution Companies – LDCs). It was also decided to implement a joint-ventured big pipeline project to import natural gas from Bolivia to the south of Brazil, primarily to be used in thermoelectric plants. At that point, we could say that a real natural gas market had just started and many efforts were made to achieve new markets.

Despite of that, the transportation and distribution pipelines are still very sparse (see figure 1

below), what leads CNG and LNG to play an important hole to develop new markets.

URUCU – PORTO VELHO

URUCU – MANAUS

PECÉM – SÃO LUÍS

NORDESTÃO II

GASFOR II

CATU – PILAR

GASENE

CACIMBAS - VITÓRIA

CAMPINAS – RIO

LORENA – POÇOS DE CALDAS

URUGUAIANA – PORTO ALEGRE

EXISTING PIPELINES

DESIGNED PIPELINES

PIPELINES BEING STUDIED Figure 1 – Transportation Pipeline Network in Brazil

2. CNG AND SMALL LNG PROJECT ANALYSIS

2.1 The CNG Project A typical CNG small project comprises one compressing station (where natural gas is

available and compressed to 220-250 kgf/cm2 and put into cylinders especially designed for that), the transportation of such cylinders on trucks, trains or boats and a receiving station (where the gas is

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Verwijderd: PETROBRAS ACTIVITIES IN THE AMAZON – THE URUCU PRODUCTION AREA

delivered to the customers). The empty cylinders are then returned to the compressing station to re-start the process again. A schematic figure is shown below.

CompressingStation

Target Market

(NGV StationIndustry, etc.)

“Mobile Pipeline”

DistributionPipeline

Figure 2 – The CNG Project

2.2 The Small LNG Project A typical small LNG project comprises one liquefaction station (where natural gas is

available, refrigerated to a temperature of -163º C and put into recipients designed for that), the transportation of such recipients on trucks, trains or boats, one regas station and a receiving station (where the gas is delivered to the customers). The empty recipients are then returned to the liquefaction station to re-start the process again. Some tanks are normally used to storage liquefied gas throughout the process.

FIMFIM

Liquefying StationTarget Market

“Mobile Pipeline”

Distributionpipeline

Regas Station

StorageTank

StorageTank

Figure 3 – The LNG Project

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2.3 Basic Differences to be Considered When natural gas is compressed to 220-250 kgf/cm2, it shrinks to a volume of approximately

300 times less the original one. If it is liquefied, the volume reduction is of about 600 times (no high pressures are needed). Also, the cylinders designed to support high pressures are very heavy, when compared to the recipients to be used with LNG. Those factors cause transportation cost for CNG to be bigger than for LNG.

On the other hand, the liquefaction station is much more expensive than the compression

one and LNG process includes one more step of regasification, whose cost shall be considered too. It shall be noted that in Brazil, at the present time, there is no importation of LNG.

Summarizing, to compare CNG, LNG and pipeline projects, one must consider the feasibility

of such complex logistics and also the comparative economics, since CAPEX and OPEX can vary significantly for each case.

It is normally accepted that when the demand is small as it is the distance between the

market and the gas supply station, CNG projects are very feasible. For long distance and big gas demand, the pipeline seems to be the best solution. Finally, for long distance and moderate demand, LNG projects fit quite well. Although, the results of most business cases in Brazil have agreed with those assumptions, some specific cases showed that, despite common sense, it is a good idea to consider different options when analyzing such opportunities.

3. THE USE OF CNG AND LNG TO DEVELOP NEW MARKETS IN BRAZIL There are two possible ways to use CNG and LNG to develop new markets in Brazil: supply

CNG or LNG on economic and long-term basis or supply CNG or LNG temporarily to a relatively small and far target market until that market grows, making it feasible to be served by a pipeline. In that case, using the mobility of CNG or LNG infrastructure (the “mobile pipeline” concept), one can redirect supply to a further market.

3.1 Supply CNG or LNG on Economic and Long-term Basis Due to the scarcity and location of brazilian pipeline network, there are many small markets

away from direct influence of such network. As Local Distribution Companies (LDCs) tend to reach the more profitable markets and other ones are not considered in their development plan to be served by pipeline in the near future, a great opportunity for CNG and LNG projects has been created. It will always be the risk of a pipeline to be built to reach that market, but one can always work together with LDCs.

3.2 Supply CNG or LNG Temporarily to a Small and Far Ma rket As part of their strategy, some LDCs began planning the development of market away from

the existing pipelines. The so-called Interiorization plans have been idealized in two different ways. Some LDCs are in the process of building pipelines (but just to some point inside the state) and others have decided to use CNG and LNG projects to expand the border of gas supply in consecutive phases. In other words, serve a specific market inside the state by trucks, make the market big and, finally, build a pipeline. After that, a new phase begins from that point on. In order to keep focusing on their normal job (pipeline distribution), many LDCs tend to have partners to implement that program.






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Verwijderd: The Urucu Production Area¶¶The Urucu Production Area is located in the Coari County, the middle of the Amazon jungle, distant some 650 km from Manaus, the capital of the Amazon State. It received its name after the Urucu River, one of the Solimões River affluents. Petrobras started its production activities in Urucu after the discovery of a significant reserve of oil and natural gas in 1986. Many challenges have been conquered to establish production activities in such a remote area since 1988 when the first commercial well started production. In 1998 the multi-product pipeline Urucu-Coari started operations, transferring the Production Area production to the port facilities in Coari in the Solimões River. By 2001 figures, local operations in the Urucu Production Area involved up to 900 people, working on a facilities complex composed of an airport, two river ports, 70 km of paved roads and 40 km more of non-paved roads, a pipeline network connecting more than 90 geographically disperse wells (among production, gas and water injection) to an industrial plant called Polo Arara, where oil and gas are processed. The

Verwijderd: The Urucu-Coari-Manaus gas pipeline¶¶The re-injection volumes are

Verwijderd: URUCU FIELD NG AND PREVIOUS ANALYSIS

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4. THE ON-GOING PROJECTS IN BRAZIL

4.1 CNG Projects The first CNG project in Brazil was held in 2001 in the State of Rio Grande do Sul (in the

south of the country) and was designed to provide 5.000 m3/day to an industry located 40 km away from the pipeline. A new pipeline was to be built in three years. After that, the CNG infrastructure was moved to serve a new small market a little bit further.

Figure 4 – CNG Project in Rio Grande do Sul By the same time, many other projects were developed by LDCs in the northeast of the

country, to supply CNG to cities in the interior of the states, specifically for Natural Gas filling stations. One shall remember Brazil has the second biggest fleet of Natural Gas Vehicles (NGV) in the world. Those projects were developed in the following states: Paraíba, Alagoas, Pernambuco, Ceará, Espírito Santo e Rio Grande do Norte. The average volume of natural gas supplied was 5.000 m3/day (each project).

Figure 5 – CNG Projects in the Northeast of Brazil After the implementation of those first CNG projects, some others were developed close to

the biggest markets of Brazil (Rio de Janeiro and São Paulo). The target segment markets are: industries, gas filling stations and residences.

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Verwijderd: ¶

Verwijderd: EXPERIMENTAL

Verwijderd:

Verwijderd: for the early supply of natural gas to Manaus was named as Experimental NGV Project of Urucu Natural Gas, given its characteristics as a field test for the converted vehicles. Also, it is a temporary operation, as it is supposed to operate only untill regular supply is not provided by the ... [39]

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Figure 6 – CNG Projects in Rio de Janeiro and São Paulo Two specific CNG projects have special characteristics due to the strategic importance. The

two of them are designed to supply important cities, prior to the future construction of long pipelines. The first project started supplying Teresina (capital of the state of Piauí) in February 2004.

The compression station is 600 km away and the economics is based on the profits to be obtained afterwards, with CNG infrastructure relocation.

The second one started supplying Manaus, a city located in the tropical forest (capital of

Amazonas state), in July 2005. Here, a combined transportation process is employed, using barges and trucks. In the future, those trucks will be used to supply CNG to be used in small thermoelectric plants close to the city of Manaus.

Figure 7 – CNG Projects in Amazonas and Piauí

4.2 The LNG Project - GEMINI At present, the GEMINI project is not only the first but the only LNG project on-going in

Brazil. It was designed to provide 380.000 m3/day of natural gas to the central region of the country, starting in 2006. The market to be supplied comprises three states (Goiás, Paraná, São Paulo) and the city of Brasília (the capital of Brazil). The average distance of LNG transportation will be 600 km. The whole chain showed in Figure 3 is employed, since no LNG is available in Brazil. It is a joint venture project with two partners: Petrobras and a big private company specialized in gas trading and logistics.

The GEMINI project has two types of customers: three LDCs and some other industries,

comprising long-term and temporary supply (where pipeline is supposed to be built in three years).

URUCU –

URUCU –

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Verwijderd: The main objectives of the project¶Verwijderd: ¶

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Figure 8 – LNG Project - GEMINI

4.3 New Special CNG Projects Considering the lack of redundancy in brazilian pipeline network, it is not easy to proceed

maintenance and assess pipeline integrity without interrupting the delivery to certain markets. Since CNG market has increased in Brazil and more CNG equipments are becoming available, a new special CNG project is being evaluated to provide natural gas to some specific markets during interruption of pipeline delivery. The first state to be supplied is Sergipe, located in the northeast of Brazil.

5. CONCLUSIONS This paper presented some concepts related to CNG and Small LNG projects. Physical and

economic aspects were addressed, when the differences between each type of solution were stressed. After that, two different business approaches to develop new markets in Brazil were explained, based on previous experience of the author in the brazilian natural gas market.

Many different CNG projects were presented, showing how they really contributed to develop

new markets and expanded the borders of natural gas supply. Some of those projects were based on long-term supply and others were part of a structured plan to progressively achieve further markets.

The only LNG project under development in Brazil – the GEMINI – was explained and it was

shown that it will provide gas to many different customers, on a long-term basis or not. Finally, it can be concluded that it has been feasible to use CNG and LNG to develop new

markets in Brazil, especially because the present extent of the pipeline network.

URUCU – PORTO

LIQUEFACTION PLANT


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Verwijderd: ¶<#>DESIGN OF THE LOGISTICS¶General configuration¶Access to the Urucu Production Area is only possible by air or through the winding and narrow Urucu River. At the location named Porto Evandro, on the Urucu River banks, Petrobras has long established docking facilities for the river barges serving the production area with the supplies and equipments not suitable for air transportation. Therefore, the natural choice to transport CNG from Urucu to Manaus was the use of river barges. ¶¶An initially considered option would involve specially adapted barges for CNG transportation, with high-pressure containers assembled directly on the barge deck. It would provide a large storage capacity resulting on lower operational costs to supply a given CNG volume. On the other hand, the construction costs for such barges would represent a too high initial investment, specially considering the temporary characteristics of the project – once the gas pipeline starts operations it would be quite difficult to find any commercial application for the barges. Furthermore, none of sparsely located injection wells from which the natural gas would be collected is close enough to Porto Evandro as to allow for

Verwijderd: ¶

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REFERENCES

1. “CenterPoint´s Portable Utility Set To Capitalize On Pipeline Integrity”, Pipeline & Gas Journal, April 2005. 2. Poli, L. F. E. D , Brasil, N. P., Cheroto, S. et al., (2005) “Market Developmenet Analysis for the Brazilian Gas Distribution Case: CNG Anticipating Pipeline Network Gas Supply”. In: Preprints CD-ROM of the 18th World Petroleum Congress, Block 3 Forum 13 Poster, Johannesburg, September 2005.

LIST OF FIGURES Figure 1 – Transportation Pipeline Network in Brazil Figure 2 – The CNG Project Figure 3 – The LNG Project Figure 4 – CNG Project in Rio Grande do Sul Figure 5 – CNG Projects in the Northeast of Brazil Figure 6 – CNG Projects in Rio de Janeiro and São Paulo Figure 7 – CNG Projects in Amazonas and Piauí Figure 8 – LNG Project – GEMINI


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(Brazilië)

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Verwijderd: ¶

Verwijderd: Hatch, M.J. and Schultz, M. (2003), ``Bringing the corporation into corporate branding’’,European Journal of Marketing, Vol. 371 No. 7/8,pp. 1041-64.

Pagina 2: [1] Verwijderd Marcos de Xerez 24-1-2006 17:11:00

MONETIZING PETROBRAS URUCU FIELD NATURAL GAS RESERVES - CNG AS A MARKET AND TECHNOLOGICAL DEVELOPMENT TOOL IN THE AMAZON

Pagina 2: [2] Met opmaak Jorge 30-1-2006 18:36:00

Portugees (Brazilië)

Pagina 2: [3] Met opmaak Petrobras 31-1-2006 11:51:00

Inspringing: Eerste regel: 1,5 cm



Pagina 2: [5] Verwijderd Jorge 30-1-2006 18:38:00

MONETIZING THE NATURAL GAS (NG) RESERVES OF PETROBR AS IN THE URUCU FIELD REPRESENTED A SERIES OF CHALLENGES OF D IVERSIFIED

NATURES. FROM THE TECHNICAL AND ENVIRONMENTAL REST RICTIONS TO THE CONSTRUCTION OF A GAS PIPELINE IN THE MIDDLE OF THE AMAZON

JUNGLE, TO THE BUSINESS AND ECONOMIC CONSTRAINTS TO BE OVERCOME IN ORDER TO MAKE THE WHOLE VENTURE FINANCI ALLY

FEASIBLE. BUT BESIDES THESE ASPECTS THERE STILL WAS AN ADDITIONAL DIFFICULTY: THE COMPOSITION OF THE NATUR AL GAS FROM

URUCU PRESENTS A HIGH LEVEL OF NITROGEN AND A LOW L EVEL OF METHANE. SEVERAL STUDIES WERE PERFORMED IN ORDER TO DETERMINE

THE NECESSARY MODIFICATIONS ON THE EQUIPMENTS OF THE MAIN CONSUMERS FOR THE

Pagina 2: [6] Met opmaak Marcos de Xerez 24-1-2006 17:15:00

Kop 2, Centreren


Urucu natural gas – a PETROBRAS refinery in Manaus and power generation plants in the area, which are typically diesel fuelled. Nevertheless, the appeal for the use of a potentially cleaner fuel in a region so much concerned with environmental issues represents an additional incentive to overcome those barriers.

IN THAT SENSE, THE USE OF NATURAL GAS FOR NGV (NATU RAL GAS VEHICLES) IS ALSO A VERY SIGNIFICANT MARKET SEGMENT , DESPITE THE

MUCH LOWER VOLUME LEVELS IT REPRESENTS WHEN COMPARE D TO POWER GENERATION. THE MAIN ASPECT HERE ARE THE LOWE R

ENVIRONMENTAL IMPACT COMPARED


TO GASOLINE OR DIESEL POWERED VEHICLES AND THE COST SAVINGS IT MIGHT PROVIDE FOR END CONSUMERS. THE NATURAL GAS SE RVICE

STATION LOW PRICE USUALLY PRACTICED IN BRAZIL MAKES IT A VERY APPEALING FUEL OPTION, WITH COST ADVANTAGE


MOSTLY FOR THOSE CONSUMERS WITH A RELATIVELY HIGH D AILY MILEAGE


IT IS SPECIALLY TRUE (AND COST ADVANTAGEOUS) FOR


TAXI DRIVERS, EITHER INDIVIDUALS OR COMPANIES.


IT IS COMMON THAT LOCAL GOVERNMENTS EXHIBIT SIGNIFI CANT POLITICAL INTEREST ON MAKING SUCH AN ENVIRONMENT


-friendly and inexpensive fuel available for their communities.

IN BRAZIL, THE USE OF NATURAL GAS TO POWER VEHICLES (NGV) IS BASED MAINLY ON THE


CONVERSION OF ORIGINALLY GASOLINE POWERED VEHICLES BY THE USE OF


CONVERSION KITS. NATURAL GAS IS POTENTIALLY A MORE ENVIRONMENT-FRIENDLY FUEL BUT UNLESS THE CONVERSION KIT IS CONVENIENTLY ADJUSTED, A CONVERTED NGV CAN PRESENT EVEN

HIGHER EMISSION LEVELS THAN THE ORIGINAL. IN ORDER TO ESTABLISH THE APPROPRIATE SET OF TUNING


PARAMETERS FOR A NGV


CONVERSION KIT IT IS NECESSARY TO PERFORM A SERIES OF EMISSION TESTS. THOSE TESTS ARE PERFORMED ON CERTIFIED CHASSIS

DYNAMOMETER EMISSION LABORATORIES


AND UNDER CONTROLLED CONDITIONS


ACCORDING TO FTP-75 DRIVING CYCLE


AND THE EMISSION RESULT (CO AND NOX) OF THE CONVER TED NGV SHOULD BE EQUAL OR LOWER THAN THE


ORIGINAL. THIS PROCEDURE IS


BY BRAZILIAN EMISSION LEGISLATION


AS A SATISFACTORY PROOF OF THE COMPLIANCE OF CONVER SION KITS TO THE BRAZILIAN EMISSION


legislation.

PETROBRAS HAD ALREADY PERFORMED


TESTS FOR A COUPLE OF CONVERSION KITS USING THE NA TURAL GAS PRODUCED IN URUCU. THE EMISSION RESULTS OBTAINED IN DICATED

THAT, AS LONG AS THE


PROPER PARAMETER VALUES WERE USED, THE


NGV CONVERSION KITS WOULD COMPLY WITH THE ESTABLISH ED EMISSION


. BASED ON THESE RESULTS, AGÊNCIA NACIONAL DO PETRÓ LEO, GÁS NATURAL E BIOCOMBUSTÍVEIS - ANP, THE BRAZILIAN REGU LATORY

AUTHORITY FOR OIL, NATURAL


IOFUELS, AGREED TO ISSUED A THIRTY MONTH


AUTHORIZATION FOR THE EXPERIMENTAL USE OF THE NATU RAL GAS FROM


Urucu for a restricted NGV fleet in Manaus. The objective of such authorization was to allow for additional emission field tests to be performed before a final clearance of the Urucu natural gas would be granted for use on NGV.

UNDER NORMAL CONDITIONS, THE MARKET AGENTS WOULD US UALLY ACCEPT THE NECESSARY INVEST


MENT COSTS TO TEST AND CERTIFY THEIR CONVERSION KIT PRODUCTS. THE GREEN FIELD NGV MARKET OF THE AMAZON, HOWEVER, WOULD NOT

CATCH THEIR INTEREST, SPECIALLY CONSIDERING THAT TH E URUCU-MANAUS NATURAL GAS PIPELINE START-UP WAS SCHEDULED FOR ONLY

TWO YEARS AHEAD AND THE


still unresolved environmental issues related to the Urucu natural gas composition.

THE NECESSARY MARKET ORIENTED POLITICAL DECISION TO RESOLVE THAT TIE DOWN SITUATION WAS TAKEN BY PETROBRAS ALON G WITH THE

GOVERNMENT OF THE STATE OF AMAZON. BY MEANS OF A TECHNOLOGICAL AND INSTITUTIONAL COOPERATION AGREEME NT, A

PROJECT TO IMPLEMENT A UNIQUE COMPRESSED NATURAL GA S (


CNG) transportation logistic was carried on to supply the test fleet with the necessary natural gas, from the Urucu field to Manaus, long before the pipeline is completed.

THE URUCU PRODUCTION AREA IS LOCATED


EXTENDS OVER XXXX SQUARE KILOMETERS IN


The Urucu Production Area The Urucu Production Area is located in the Coari County, the middle of the Amazon jungle, distant some 650 km from Manaus, the capital of the Amazon State. It received its name after the Urucu River, one of the Solimões River affluents. Petrobras started its production activities in Urucu after the discovery of a significant reserve of oil and natural gas in 1986. Many challenges have been conquered to establish production activities in such a remote area since 1988 when the first commercial well started production. In 1998 the multi-product pipeline Urucu-Coari started operations, transferring the Production Area production to the port facilities in Coari in the Solimões River. By 2001 figures, local operations in the Urucu Production Area involved up to 900 people, working on a facilities complex composed of an airport, two river ports, 70 km of paved roads and 40 km more of non-paved roads, a pipeline network connecting more than 90 geographically disperse wells (among production, gas and water injection) to an industrial plant called Polo Arara, where oil and gas are processed. The required electric power is locally provided by a 16 Mw natural gas fired power plant, as does the 40 x 103 liters per day demand of diesel, supplied by a Diesel Processing Unit (DPU). The natural gas production is processed on a Natural Gas Processing Unit (NGPU) with production capacity of 1,100 ton per day of liquefied petroleum gas (LPG). The remaining 6 X 106 m3 per day natural gas production are re-injected in the reservoir by a set of three turbo-compressors.


The Urucu-Coari-Manaus gas pipeline The re-injection volumes are significant. Urucu natural gas reserves are presently estimated as capable of providing a production of up to 5.5 x 106 m3 per day, for the next 20 years. In order to properly monetize these reserves, Petrobras is currently carrying out a US$ 500.000 investment for the construction of the 660 km long Urucu-Coari-Manaus gas pipeline. Anchoring the project, two power plants presently consuming fuel oil shall be converted to use the natural gas supplied by the new pipeline and generate a total of some 480 Mw. Additionally, five more independent energy suppliers are expected to generate 60 Mw each on gas fired power plants. Furthermore, Petrobras Manaus Refinery REMAN will also consume 40,000 m3 per day, while scattered industrial clients will have 500.000 m3 per day available for their use. Preliminary construction tasks are already underway and operation start up is scheduled for 2007. As for any industry enterprise of such magnitude, and specially considering the issues related to the construction of a pipeline in the middle of a rain forest, there are several environmental, political and social compensations that are supposed to be covered by the enterprise participating companies. The Urucu-Coari-Manaus is no exception. Besides all the studies and analysis on the real and potential environment impacts of the construction, and the definition of appropriate actions to prevent or minimize them, there is a set of compensations related to social impacts to the population near the pipeline route and also economical impacts due to the introduction of a new energy option on local business. Presently, the natural gas service station low price still usually practiced in Brazil makes it a very appealing fuel option, with significant cost advantages, mostly for those consumers with a relatively high daily mileage like taxi drivers, either individuals or companies. It is common that local governments exhibit significant political interest on making such an environment-friendly and inexpensive fuel available for their communities. One of the compensations requested by local agencies in order to grant Petrobras with the necessary installation and operational authorizations was that a project to supply a limited vehicle fleet in Manaus with natural gas be implemented before the gas pipeline actually starts operations. The project would allow all the agents in the natural gas vehicle business chain (government agencies, service and equipment suppliers, etc) to develop the necessary processes and expertise to

fully support the future demands of an expanding market as soon as the regular supply through the gas pipeline initiates. The potential natural gas vehicle (NGV) market in Manaus is much less significant as a business for Petrobras than the power generation and industrial segments are. Nevertheless, natural gas is known to present significant environmental advantages when compared to gasoline and diesel powered vehicles. Considering that “corporate images are views of the organization developed by its stakeholders; the outside world’s overall impression of the company including the views of the customers, shareholders, the media, the general public and so on”, the appeal for the use of a potentially cleaner fuel in a region so much concerned with environmental issues might represent a marketing opportunity for Petrobras. The incentive and contribution to the development of a NGV market in the Amazon would reinforce Petrobras corporate brand image as a company committed to properly deal with environmental issues and to pursue ways of doing business in a sustainable way. However, another specific and difficult aspect had to dealt with: the special composition of the Urucu Field natural gas. Its low methane (68%) and high nitrogen (18%) contents do not comply with current Brazilian legislation for NGV and potentially represent a situation where environmental damages induced by its usage would be greater than the original fuel. Next section discusses the actions taken by Petrobras to overcome this situation.

COMPOSITION OF


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for the early supply of natural gas to Manaus was named as Experimental NGV Project of Urucu Natural Gas, given its characteristics as a field test for the converted vehicles. Also, it is a temporary operation, as it is supposed to operate only untill regular supply is not provided by the gas pipeline under construction.




Spatiëring tussen Aziatische en Latijnse tekst aanpassen, Spatiëring tussen Aziatische tekst en nummers aanpassen

















































Lettertype: Niet Vet, Portugees (Brazilië)






Lettertype: Niet Vet


Lettertype: Niet Vet




























The main objectives of the project Partícipes e outras entidades envolvidas Legal and regulatory aspects




DESIGN OF THE LOGISTICS

General configuration Access to the Urucu Production Area is only possible by air or through the winding and narrow Urucu River. At the location named Porto Evandro, on the Urucu River banks, Petrobras has long established docking facilities for the river barges serving the production area with the supplies and equipments not suitable for air transportation. Therefore, the natural choice to transport CNG from Urucu to Manaus was the use of river barges. An initially considered option would involve specially adapted barges for CNG transportation, with high-pressure containers assembled directly on the barge deck. It would provide a large storage capacity resulting on lower operational costs to supply a given CNG volume. On the other hand, the construction costs for such barges would represent a too high initial investment, specially considering the temporary characteristics of the project – once the gas pipeline starts operations it would be quite difficult to find any commercial application for the barges. Furthermore, none of sparsely located injection wells from which the natural gas would be collected is close enough to Porto Evandro as to allow for the construction of a temporary feed line for CNG containers aboard the barges. And the same situation is true on the other end of the river transportation phase – it would be necessary to build specific facilities to take the natural gas from the barges in the Manaus Port to the service station appointed to the project. It was therefore necessary to adopt a different solution, including road transportation. Several CNG distribution projects are already operational in Brazil. Most of them use CNG transportation trailers equipped with several high-pressure steel cylinders, which are pulled by trucks. The operational experience, along with established service and equipment suppliers are already available in the country for this kind of system. Given these conditions, the solution adopted for the project involves CNG transportation trailers, towed by trucks on the land legs and boarded on conventional river barges for the fluvial leg.

Dimensioning of the logistic system Dimensioning of the transport system, and the resulting supply capacity, was mainly constrained by the size of the usually available barges in the region and by its maximum length as to allow for maneuverability while sailing through the Urucu River. Also, the Brazilian legislation imposes a maximum weight limit for trailers traveling on federal roads that, for CNG transport trailers, leads to the usual design of 5,000 m3 of CNG capacity trailers, which are the most readly available from local suppliers. Given these conditions, it was selected for the project a barge size of 800 ton displacement, which would carry up to 6 CNG transport trailers at a time, representing a total 30,000 m3 transport capacity. Table X shows the distances and the time required for each leg of a complete cycle from Manaus to Urucu and back, using the selected equipment.

Leg Distance

Time (days)

Notes

Manaus → Porto Evandro

911 7 River distance Up river

LUC-9 ↔ Porto Evandro

15 1 Including CNG loading

Porto Evandro → Manaus

911 6 River distance Down

Table X: Title of the table

Due to the power limitation of the booster compressor usually employed at service stations, the actual usable capacity of a 5,000 m3 trailer in reduced to some 4,500 m3 of CNG (this is a conservative assumption). Considering continuous cycles and the times presented on Table X, a transport system comprising 1 barge and 12 CNG transport trailers would deliver net 27,000 m3 of CNG every 2 weeks to Manaus. It would lead to a rather small test fleet – not more then 128 vehicles consuming up to 15 m3 per day. In order to increase the size of test fleet, but still keeping the 15 m3 of CNG per vehicle per day limitation, the number of equipments composing the system was increased to 3 barges and 18 CNG transport trailers. The resulting system would present a net delivery capacity of up to 27,000 m3 of CNG every week, enough supply up to 300 vehicles with 15 m3 per day. Figure X shows schematically the transport system adopted for the project.

Winter season contingency plan Any fluvial logistic system in the Amazon is subjected to the variations on the navigability conditions of the rivers in the region. The climate in the Amazon is typically equatorial presenting two distinct seasons: a rainy summer and a dry winter. The 2005 winter registered a record as the driest of last 30 years, bringing about serious environmental and social consequences. For situations not as severe as the one recently observed – the start up of the project had to be postponed – it has been anticipated an alternative solution to overcome a reduced navigability condition on the most critical part of the fluvial leg – the final 470 km from Coari to Porto Evandro along the Urucu River. From Manaus to Coari the barges sail the Solimões River where reduced navigability conditions still allow for large barges to cruise. From Manaus to Coari the barges sail the Solimões River where reduced navigability conditions still allow for large barges to cruise. In the event of the occurrence of a severe winter during the project time frame when the originally selected 800 ton barges would not be able to travel along the Urucu River, smaller barges of 400 – 500 ton, carrying up to 4 CNG trailers, would be applied to cover the leg between Coari and Porto Evandro. There would be a reduction on the supply rate to Manaus as the smaller barges, even being faster and more easily maneuvered, would have to perform more trips to and from Coari, and would be operating on restricted conditions. It is important to notice that, even under extreme conditions, like the 2005 winter season, when the transport system would have to halt operations, the final users would still be able to use theirs vehicles. NGVs using conversion kits are intrinsically dual fuel vehicles. In a supply cut situation, end users may keep on trafegar on gasoline until climate conditions return to normality.

INITIAL RESULTS


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