Evaluating strategies for monetizing natural gas liquids from processing plants – Liquid fuels versus petrochemicals

Abstract

The processing of natural gas resources is a critical step for monetizing them. Its evaluation should deal with the volatility of prices of raw gas and natural gas liquids, the processing technology and the composition of the raw gas. This study combines different approaches – process engineering, probabilistic discounted cash flow (DCF), and market failure analysis – to evaluate the technical aspects, financial results and market barriers of natural gas processing. Two productive strategies are compared: fuels or petrochemicals. Brazil is used as a case study, since the country experienced a ramping production of associated rich gas from pre-salt basins and lacks the required gas processing capacity. Findings indicate that the processing plant designed with turboexpander was able to produce the required scale for the fuel and the petrochemical markets. The Petrochemical Strategy reached a higher average net present value (US$ 2448 millions) compared to the Fuel Strategy (US$ 2006 millions) in a 30-years DCF analysis, at a higher standard deviation, however. This highlights the importance of performing the stochastic NPV to deal with price volatilities. The Petrochemical Strategy is also challenged by market failures found in Brazil, while the Fuel Strategy has social and infrastructure advantages in a stablished domestic market.