Vapor Recovery Economics: A Flat Coke And A Smile
September 18, 2015

By Jason Spiess for Bakken Breakout

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There are some who argue that in the world of economics, the world is flat. The wired world has made claims our collective consciousness is becoming flat. There was even a time when some argued the actual physical world was flat. Today, this writer is suggesting the easiest way to understand crude oil is to know flat Coke.

Pop and culture metaphors aside, times and technologies change, ideas evolve and perceptions personify. When given the assignment of understanding vapor recovery systems, quickly I longed to be spoken to like an 8-year-old. This is a very complex industry filled with passion, money, science and oversight.


When trying to explain how vapor recovery is relevant in oil and gas, I found it is best to grab an ice cold Coca Cola. Next, think about the gas can in the garage or shed, the one you use to fill up the lawnmower.

That consumer-refined gasoline has been extracted from the ground, devaporized, transported and refined numerous times, yet, still has the potential to combust if exposed to flame. It isn't the liquid starting on fire; it's the vapor coming off the liquid inside the lawnmower's gas can.

Jim Semerad, manager of permitting and compliance at North Dakota Department of Health, believes understanding there are still some vapors being released from a gas can is a good basic illustration of vapor release. He pointed out that even after multiple refining processes, there is still some vapor to be aware of.

"Essentially you have vapor recovery at every stage after it's out of the ground," Semerad said. "You have it at the oil well where the majority of the gas and oil is separated. The oil, the liquid part, will be transferred to a crude oil storage tank."

"On the other side is the gas. Again, it gets separated at the oil well and then goes to compressor stations and pipelines which ultimately push it to a gas plant," Semerad said. "At the gas plant, it's purified or processed into natural gas that can be burned in our homes, furnaces and water heaters."

"We of course benefit from those vapors in a sense that if you capture and process them, you have methane of natural gas, which is a valuable fuel and from an air pollution perspective, a relatively clean fuel compared to some of the dirtier fuels like solids," Semerad said. "Solid fuels tend to be dirtier than natural gas."

Now, crack open that can of Coca Cola. The can is now filled with bubbles and hydrocarbons escaping once pressurized containment. The same concept is true with oil and gas. Once depressurized out of the earth, you have live oil that needs to be transported to market. In order to transport the oil, gas and vapors need to be removed, essentially turning the oil into flat Coke.

"The flat Coke comparison is a very good analogy," Semerad said. "In fact, even flat Coke would still have small amounts of carbonation in it."

So, therein lies the challenge for oil and gas, and supporting industries. Technology levels have reached a point where vapor recovery advancements are proving to be economical and environmentally safe. However, property owners concerns and public perception, add to infrastructure and recovery delays. Unfortunately, these delays result in additional flaring and waste of a resource.

Time and regulations seem to be the main obstacles with vapor recovery systems. Technologies are advancing so rapidly that they impact certain areas of oversight and regulation. When regulation occurs, investment hesitates and future planning can be restructured and redirected.

The technology of vapor recovery units (VRUs), which capture vapors and convert gases, is adding additional income streams to producers. According to Jeff Voorhis, corporate engineer, HY-BON/EDI, new revenues are being generated while minimizing regulatory and liability exposure.

"We've been in business for over 65 years and were the first company to coin the term vapor recovery," Voorhis said. "It's now time to get your house in order and capture every BTU you can and put it into a pipeline. Because every BTU put into the atmosphere is waste, it's non product output."

According to Voorhis, many producers are making money off vapor recovery because at the end of the day, gas is gas.

"It's gas, it's hydrocarbons, so there's a market," Voorhis said. "If you're generating more than 15-20 mcf and have a gas line close to put the gas into, it's profitable to put a VRU on. You're wasting money if you're not doing that."

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The vapor recovery unit example Voorhis presented at the 2015 Williston Basin Petroleum Conference used an algebraic formula involving a $100,000 unit, VOC emissions and BTUs to demonstrate a nine-month return on the $100K investment. However, Voorhis has seen cases where the cost of the unit has been returned in two months.

"We are talking about tens of thousands and millions of dollars of paybacks being totally lost," Voorhis said. "This is not an environmental decision, it's an economic decision."

Like Semerad, Voorhis pointed out the environmental advantages of not venting gases into the atmosphere, but reiterated the economic perspective and benefits.

When asked about the flat Coke comparison, Voorhis said flat Coke is a good analogy to understand how oil and gas works. Especially when extracting it out of the ground.

"You're essentially popping open a can and going from 50 PSI to atmospheric pressure. You're popping that can and allowing it to bubble in that storage tank," Voorhis said. "If you dump that Coke on the ground, it fizzes and goes away. That's what is happening in oil and gas, it's fizzing in storage tanks." Voorhis added many times you're going from high pressure to low pressure for flash to occur, often 400 to atmosphere.

"Oil burns because it's producing so much gas. It's live oil and what we want is flat oil, like flat Coke," Voorhis said. "Oil that's basically ready to go to the refinery, that isn't full of live gas. So we pull as much of that gas off before it's loaded for distribution."

"The last thing you want is to see is these things venting, so for gas that cannot be recovered, flaring or burning the vapors as a form of pollution control is a good thing," Semerad said. "The efficiency of combustors is very high, in the 98-plus range. And that's a good thing."

Semerad believes the public thinks of flaring as only a negative.

"It's a complicated issue on how to someway, somehow collect that gas and get it to our water heaters and furnaces," Semerad said. "You need pipelines, and landowners to allow the pipelines to cross their property. Then the pipeline company needs to be a good steward, needs to work with the landowner. It's a very complex process and any kind of weak link in that chain can present a problem making the solution very difficult at times."

"From a conservation standpoint, the most preferable method would be to collect vapors and process them. On the other hand, when they can't be used, what our ND Health office does is ensure they are combusted via a flare or combustor."

In an economic flat world filled with flat lining revenues, the concept of profiting on flat Coke appears more and more viable. Then again, with all the opportunity in vapor recovery in today's shale plays, perhaps we should be popping open champagne as our carbonated comparison.