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ZEGAZ Instruments

The Economic Implications of Gas Quality on Pipeline Operations

Table of contents:



Introduction & Background

The economics of the natural gas industry have undergone systematic changes, altering the conventional models significantly in the pipeline operation industry. This trend is popularly referred to either as 'inverting economics' or 'upside-down economics' and explains the changing face of the financial dynamics concerning gas processing, particularly concerning hydrocarbon and water dew point analysis.


Upside-Down Economics in Gas Processing

Processing natural gas has traditionally included treating the gas to meet quality standards before pipeline transportation. It consisted of a simple process to make sure that the gas complied with the requirements for safe and effective combustion and transportation.



However, recent market changes have altered this model. The increased availability of various gas sources, including unconventional sources such as biogas and shale gas, has resulted in variability in gas composition. This variability has an impact on hydrocarbon and water dew points, which are critical for maintaining gas quality and interchangeability in pipelines. The cost implications of processing and transporting this diverse gas mix have grown more complex, prompting economic decisions that prioritize operational efficiency and safety over traditional processing techniques.


Economic Factors Influencing Gas Processing Decisions

  1. Market Supply and Demand: The increase in assured levels of natural gas supplies from sources such as shale gas and imported LNG has made the market increasingly competitive and sensitive to price. This, in turn, forces operators to be cost-competitive by seeking to optimize processing costs and practice being just over the border of minimal processing to remain economic. The constant fluctuation in the price of NGLs (natural gas liquids) also influences processing economic considerations. When prices of NGLS are low, it encourages reduced processing leading to higher hydrocarbon dew points in the gas sold to pipelines.

  2. Quality Specifications and Interchangeability: Pipeline operators are charged with the responsibility of reaching strict quality specifications while at the same time being subjected to economic pressure to lower processing costs. This remains a continuous balance within the system that can only ensure safety and an economic process in pipelines. Other effects from gas quality variation are corrosion of equipment, hydrate formation, and inefficiencies in end-use applications.

  3. Technological: Advancements in gas processing and analysis technologies, including improvements in hydrocarbon and water dew point analyzers, allow better control and ensure gas quality. These technologies help operators make informed decisions on balancing cost and quality in gas processing.

  4. Regulatory Environment: Regulatory frameworks play a significant role in shaping the economics of gas processing. Compliance with regulatory standards for gas quality and safety mandates investment in processing infrastructure and technology, thereby impacting the overall cost structure.


Implications on Pipeline Operations and Safety

Economic decisions on the gas processing directly affect the operation of the pipelines and, consequently, safety. The followings can result from poor processing:



  • Hydrate Formation: Inadequate removal of water vapor can result in hydrate formation, which can cause pipeline blockages and pose safety risks.

  • Corrosion: Contaminants such as hydrogen sulfide can cause pipeline corrosion, leading to leaks and failures.

  • Operational Inefficiencies: Variability in gas quality can impair downstream equipment performance, reducing efficiency and raising maintenance costs.

  • Pigging Frequency: Reduced processing leads to higher hydrocarbon and water dew points. This results in a larger amount of liquid dropouts in the pipelines that require more frequent pigging operations.


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