Natural Gas Supply/Demand - Challenges and Opportunities

Size: px

Start display at page:

Download "Natural Gas Supply/Demand - Challenges and Opportunities"

Jeffery Ferguson
3 years ago
Views:

1 Natural Gas Supply/Demand: Challenges and Opportunities for the States Governors Energy Advisors Policy Institute Arlington, VA April 4, 2011 Ron Edelstein Director, Regulatory and Government Relations

2 GTI: Addressing Key Energy Industry Issues Across the Value Chain SUPPLY DELIVERY END USE > Expanding > Ensuring a safe and the supply of reliable energy affordable energy delivery infrastructure > Promoting the efficient use of energy resources Reducing carbon emissions to the environment 2

reliable energy affordable energy delivery infrastructure > Promoting

3 U.S. Shale Gas Plays 3

4 Breakthrough GRI/GTI s Collaborative Unconventional Gas Research Program (1978~2001) > CBM from 0 to13% of U.S. supply in 20 yrs > Tight Sands now 25% of U.S. gas supply > Gas Shales now >10% and growing. Geochemical Analysis Amherst & U Mass Formation Evaluation Restech Geologic Studies BEG TX Technology Integration & Transfer GTI Reservoir Engineering Texas A&M Fracture Modeling and Diagnostics Pinnacle & Texas A&M Field Data Acquisition, Environmental Studies, Coordination and Integration - GTI Best Practice Analysis West Virginia University 4

Geochemical Analysis Amherst & U Mass Formation Evaluation Restech Geologic Studies BEG TX Technology Integration & Transfer GTI

5 U.S. Technically Recoverable Gas Resource Base Tf Tcf Tcf 5

6 Abundant Gas Makes Possible Wealth, Investment and Jobs ,000 jobs created To date landowners have received $1.7 billion $400 million in state and local tax receipts (expected to double this yr) By ,000 jobs projected Marcellus Shale report from economists and industry experts at Penn State University 6

7 billion $400 million in state and local tax receipts (expected to double this

7 So why all the excitement? Centuries worth of domestic supply Energy security and independence Reduces climate risk Hundreds of thousands of new jobs Hundreds of $ billions in annual economic impact and tax revenue Investment attraction and retention Enables renewable energy Clean, affordable, home grown, abundant energy More stable prices Energy Efficiency 7

Hundreds of thousands of new jobs Hundreds of $ billions in annual economic impact and tax

8 Summary of Challenges & Opportunities Attributes Challenges Opportunities > Domestically abundant > Generally Shallow & Onshore > Lower Exploration Risk > Large in Size > Low Permeability/Low Production Rates > Geologically Complex > Resources Widely Dispersed > Optimization of Well Spacing > Carbon Friendly > Access/Surface Impact > Water Requirements and Treatment Understanding to reduce risk Efficiency to keep costs down Innovation to maximize production and minimize environmental footprint 8

Widely Dispersed > Optimization of Well Spacing > Carbon Friendly > Access/Surface Impact > Water Requirements and Treatment

9 Hydraulic Fracturing Hydraulic Fracturing Fluid In Flow Back Fluid Out Surface Fresh Water Aquifer Fresh Water Aquifer Fresh Water Aquifer ~ 300 ft Fresh Water Surface Casing and Cement to Surface Protects t all Fresh Water Aquifers Brackish Water Geologic Formations ~ 6000 ft Hydraulic Fracture Gas Zone Production Casing Cemented Across All Formations Required to Control Flow of Fluids in Wellbore Region 9

Protects t all Fresh Water Aquifers Brackish Water Geologic Formations ~ 6000 ft Hydraulic Fracture

10 Hydraulic Fracturing Timeline Average Job Size (Gallons Fluid d) 400,000 Treatments MHF s Treatments 800,000 Treatments + 1,000,000 Wells Hydraulically Fracture Treated First Treatment 1947 Hugoton SPE Papers 801, 22392, 36166, IOGCC, Halliburton 10

1,000,000 Wells Hydraulically Fracture Treated First Treatment

11 11

12 Water Requirements > Water requirements average approx 3 5 million gallons per well in the Barnett and Marcellus. > About 89% is applied to hydraulic fracturing, a critical step for stimulating natural gas production. > Four million gallons of water is 1.8 inches of rain over 80 acres. > Pennsylvania receives about 40 inches of rain annually. Source: Barnett Shale Water Conservation and Management Committee Ray Walker, Range Resources 12

> Four million gallons of water is 1.8 inches of rain over 80 acres.

13 Wastewater Management What is the distinction between flow-back and produced water? What comes out: > Mainly water > Total dissolved solids (TDS) > A mixture of carbonates, chlorides, sulfates, nitrates, sodium and other minerals. > Oils and greases > NORMs Source: GTI Characterization study 13

What comes out: > Mainly water > Total dissolved solids (TDS) > A mixture

14 Summary of Results > Flowback water characteristics are consistent with ranges observed with conventional produced water > Low suspended solids and Total Organic Content (TOC) > Man-made chemicals of concern are at non-detect levels. > BTEX and PAHs are at trace levels. > Oils and greases are at non-problem levels, but some control may be needed > Soluble organics are highly biodegradable > Heavy metals are lower than in municipal sludge 14

non-detect levels. > BTEX and PAHs are at trace levels.

15 Fracturing Fluid Components (995%f (99.5% fresh water, 05% 0.5% additives) Compound Purpose Common Applications Acids Help dissolve minerals Swimming pool cleaner Glutaraldehyde Eliminates bacteria in H2O Disinfectant Sodium Chloride Allows delayed breakdown of polymer gels Table Salt N, n Dimethyl hlformamide Prevents pipe corrosion Used in pharmaceuticals Borate Salts Maintains fluid viscosity Used in laundry detergents Polyacrylamide Minimizes friction Water treatment Petroleum Distillates Reduces friction Make up remover; candy Guar gum Thickens water to suspend Thickener used in cosmetics, sand baked goods Citric Acid Prevents precipitation Food additive Ref: 15

delayed breakdown of polymer gels Table Salt N, n Dimethyl hlformamide Prevents pipe corrosion Used in pharmaceuticals Borate Salts Maintains fluid viscosity Used in laundry

16 Fracturing Fluid Components ( ti (continued) Compound Purpose Common Applications Potassium Chloride Brine carrier fluid Low sodium table salt substitute Ammonium bisulfate Removes O2 from water to Cosmetics, water treatment prevent corrosion Sodium or Potassium Bicarbonate Proppant Maintains effectiveness of other components Allows fissures to remain open so gas can flow Washing soda Water filtration, play box sand Ethylene glycol Prevents scale deposits Automotive antifreeze Isopropanol Increases viscosity of fracture fluid Glass cleaner Ref: 16

$glycol Prevents scale deposits Automotive antifreeze Isopropanol Increases viscosity of fracture fluid Glass cleaner Ref: http://www.energyindepth.$

17 Water Disposal Options > Transportation intensive (1 million gallons requires over 200 truck loads) > Reinjection via Class II wells is under capacity > Surface discharge is under scrutiny Direct to receiving waters not allowed Indirect (through h publicly l owned treatment t t works) phase out > Water reuse can reduce water volumes requiring: Transportation Reinjection Surface discharge 17

Direct to receiving waters not allowed Indirect (through h publicly l owned treatment t t works)

18 Multiple Benefits Stemming from Water Reuse > Greatly reduced potential for environmental impact > Reduced ton-miles in water transportation > Decreased air emissions > Decreased carbon footprint > Lower truck traffic densities > Reduced road wear > Greater stakeholder acceptance 18

transportation > Decreased air emissions > Decreased carbon footprint

19 The Water/Gas Nexus The recent shale gas transformation of the U.S. natural gas industry has also focused attention on the water-energy nexus, although the water consumption for the production of shale gas appears to be lower (0.6 to 1.8 gal/mmbtu) than that for other fossil fuels (1 to 8 gal/mmbtu for coal mining i and washing, and 1 to 62 gal/mmbtu for U.S. onshore oil production). Ref: Water Consumption of Energy Resource Extraction, Processing, and Conversion, Energy Technology Innovation Policy Research Group, Harvard Kennedy School, October

20 RPSEA Research Program Integrated Approach to Beneficial Use Water Beneficial Regulations Stakeholders Handling Uses Techniques Municipal Habitat Restoration Irrigation Livestock Production Groundwater Recharge Industrial Utilization Aquaculture Chemicals Recovery New Uses Drought Relief State and Federal NPDES Permit Clean Water Act (CWA) Underground Injection Control (UIC) CWA Resource Conservation Recovery Act (RCRA) State and Industrial Specifications for Beneficial Use Water Quality Public Landowners BLM States Producers Local Government (e.g. municipal) Federal Agencies Indian Nations Ranchers and Farmers Trucking Pipelines Surface Discharge Reinjection Storage ReUse Water Quality Issues Oil and Grease Soluble Organics Hardness and Scale Formation Dissolved Solids Metals Inorganic Content Water Treatment Processes Ion Exchange Electrodialysis Reverse Osmosis Freeze Thaw Evaporation Artificial Wetlands Capacitive Desalinization High Efficiency Evaporation/ Condensation Land Application Microfiltration fl & Nanofiltration Biotreatment 20

Resource Conservation Recovery Act (RCRA) State and Industrial Specifications for Beneficial Use Water Quality Public Landowners BLM States Producers Local Government (e.g.

21 Future: Precision Wellbore Placement Fishbone Pattern Alternative to Long Horizontal Boreholes Currently Expensive Difficult to Accurately Locate Sweet Spots 21

22 Getting More From Each Drillsite it 22

23 Next Generation Technology Imperatives > Integrated Reservoir characterization predicting and optimizing production > Advanced well construction new well drilling, stimulation, and completion procedures linked to reservoir characterization with objective of reducing costs > Environment protection and land access produced water and waste management, reduced well footprint and noise, fewer wells > Technology transfer development and definition of best practices and optimization protocols for each basin > Personnel training g and development to develop capabilities in new technology Key elements of roadmap developed by GTI 23

24 Natural Gas End-Use Technology Opportunities >Lowest CO2 footprint of the fossil fuels Natural gas 117 lbs CO2/MMBtu Oil 160 lbs CO2/MMBtu Coal 206 lbs CO2/MMBtu >Technology Breakthroughs can make a difference Space/water heating Boilers/process heating CHP 24

25 Space/Water Heating Opportunities >GHP water heaters >Instantaneous t water heaters >Commercial packaged systems fully condensing heating systems >Systems considerations 25

26 Boilers/Process Heating >1/3 of industrial gas energy is in boilers >Process heating energy efficiency opportunities 26

27 CHP >Efficiencies up to 80% possible >Multiple industrial, commercial, and institutional opportunities 27

28 A Sustainable Energy Future gy g > Thank you 28

Marcellus Fast Facts

1 Marcellus Fast Facts Covers about 95,000 square miles in 6 states Occurs at depths of up to 9,000 feet Thickness of 250 feet or more Largest natural gas reservoir in North America (est. 500 TCF recoverable