Oman Gas Plans LPG, NGL Extraction Projects

Source: 11/3/2013, Location: Middle East

Oman Gas Company (OGC) is preparing to make a strategic shift from its traditional focus on gas transportation to petrochemicals processing and other value-adding initiatives, according to the state-owned entity’s chief executive officer.

Yousuf bin Mohammed al Ojaili (pictured) said the gas pipeline operator is seriously looking at, among other things, projects designed to extract liquefied petroleum gas (LPG) and natural gas liquids (NGLs) from the domestic pipeline network that it currently owns and operates.

Addressing delegates at a major infrastructure forum held in the city last week, Al Ojaili said: “OGC is moving from providing gas infrastructure, which of course we will continue to upgrade, into gas value chain projects as well. We have a couple of projects of a strategic nature, among them the LPG and NGL extraction projects, and the Muscat City Gas Project (see Observer edition dated October 30, 2013).

The idea is to extract LPG and NGL from the pipeline and establish more petrochemical industries from these derivatives.” The ventures, according to the CEO, are part of a portfolio of projects that potentially attract several billions of dollars in capital investment. “All this could involve an investment of $3-3.5 billion worth of projects to be managed either by OGC for OGC itself, or by OGC for the government, or even by OGC for a company like (oil refiner) Orpic.

The focus will be on extracting derivatives like NGL and LPG, not only because you can sell them at a very high price internationally, but also in view of the potential to utilise them and create more industrial development in Oman.” Of the many ventures being looked by OGC, the most significant is the LPG extraction scheme.

At the heart of this initiative is a plan to extract LPG and condensates from the Salalah gas pipeline network in southern Oman. The objective is to maximise revenues to the government by extracting commercially valuable ingredients from natural gas before it reaches consumers downstream.

LPG (comprising propane and butane) is primarily used as a cooking fuel, as well as an industrial heating fuel. But based on its chemical compositions, LPG can be a useful raw material for the chemical industry and is widely applied in the production of various chemical products, say experts.

Through chemical processing, LPG can be converted ethylene, propylene, butylene, butadiene, and so on, which in turn can used in the production of synthetic plastics, fibres and rubber, as well in the manufacture of pharmaceuticals, dye stuff, and so on.

As a first step in the realisation of this project, OGC commissioned Spanish international oil and gas engineering firm, TECNA, to undertake the conceptual engineering design of facilities for the extraction of LPG and condensates from OGC’s Salalah Gas System comprising of 24-inch and 32-inch gas pipeline infrastructure which transports gas from central Oman to Salalah.

“In the first stage of LPG extraction, we’re looking at a project down in Salalah that produces 700-800 tons of butane, propane and condensate per day from the gas system. We will take this LPG out of the gas pipeline and give methane back to the consumers in the Salalah Free Zone.

The processing of this LPG will give rise to more petrochemical industries,” Al Ojaili said, adding that similar extraction plants are envisaged at other locations along OGC’s pipeline route. Likewise, plans are also afoot for a Natural Gas Liquids (NGL) extraction plant at Fahud, the chief executive officer said. “This is in the feasibility stage. We would like to recover the LPG and condensate (C2+ component basically) and then send these liquids to the Plastics Project which will be built by Orpic in Sohar.

This project belongs to Orpic, but OGC will execute the extraction plant at Fahud. We hope to commence the front-end engineering design (FEED) for the extraction plant next year.” Orpic, which owns and operates the country’s two refineries at Mina al Fahal and Sohar, as well as the integrated polypropylene and aromatics plants at Sohar, is developing a massive petrochemicals scheme dubbed ‘Liwa Plastics Project’ with an investment of around $3.6 billion. NGLs extracted from OGC’s Fahud plant are proposed to be transferred by pipeline for further processing at the Liwa Plastics complex.

For more information about related Opportunities and Key Players visit Oman Oil and Gas Projects

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