Apr
29
The Good News in Natural Gas
April 29, 2009 | 4 Comments
There is a lot of natural gas out there in the ground and stored away in methane hydrates. Today we’ll look into the land based new production skills that are releasing a lot of natural gas that used to be uneconomic as it is locked into rock that is so low in porosity that it can’t get out.
To solve the problem oil and gas service businesses have invented a rock fracturing technique for deep below the surface. Called fracing for short, the technique quite simply uses raw power to force water, sand and specialized chemical solvents, binders and lubricants into the wells so they open and fill cracks that can allow the natural gas to flow out.
When optimally successful all the fracturing processes have cracks opened and connected to fractures from the next nearby process. In some wells that can get to thousands of meters of opened rock formation. Some oil field guys talk of ‘farming the field.” Times have changed.
In some cases fractures can be done in one well bore as many as 17 times. Modern techniques are used in wells drilled first vertically to the gas rich rock then the well bore tilts over to horizontal. That allow the bore hole to intersect the rock for great distances rather than punch through one lone hole through the rock.
But it’s expensive, drilling starts in the millions per well and runs to close to $10 million expected in the not distant future. Then the fracture work starts which also runs into the millions per well.
But the payoff can be just as good as costs are high. Some wells are producing over 7.5 million cubic feet of gas per day in the first year making the economics attractive if not stunning as last fall in 2008’s pricing. Even after the first year’s flush, such wells can produce 2 million cubic feet per day for years. The next time gas prices take off, the wells will ring like happy old time cash registers.
So how big is one of these projects? In Canada’s British Columbia fields as much as 4.5 million pounds of sand can go down the hole. The water used to move the pressure is powered with some 45,000-horse power of high-pressure pumps. In these fields its common to drill from one drilling site as many as ten wells. That means you need a pretty good road to get there. And getting there takes time as a fraccing can take a week, or 2 ½ months over ten well bores.
In Canada the weather plays a role. A lot of water is involved that must be brought in and moved to each new project. Canada being a cold place, global warming noticeably absent, makes for freezing problems.
To watchers of the oil and gas business the “rig count” or the number or oil drilling rigs working is closely watched each week. But fraccing has multiplied the amount of recovery per well drilled and the rigs that drill horizontally are but a small portion of the total rigs in use. Simple straight down rigs, looking for oil in the U.S. are running primarily based on the cash flows of existing wells and with oil so far down in price, not every rig can be supported to operate.
Last week saw natural gas fall to a six year low. This in an economy that is in recession. But natural gas use hasn’t fallen so dramatically as oil, rather the big home heating market was normal, fertilizer use near a high, electrical generation steady with a consumption fall off in industrial use alone.
We owe an affordable heating season to the oil and gas community for moving on the price signal. It does give considerable credence to the Pickens Plan to move electrical generation to wind and alternatives and use transportable compressible natural gas for transport.
That said, the old barometer of the rig count in North America might be obsolete soon. What’s at issue is the recession and the limits to build more service equipment to do the fraccing work that is piling up. One fracture job can need 20 pumping trucks for a week on a single well bore fracture job. More are needed.
Among with methane hydrates and new biomass sources natural gas has a bright future. There is an existing infrastructure for moving gas; a huge installed base of users and it’s the least contentious fossil carbon fuel. Its pretty good stuff, and the cost to use it isn’t threatened by anyone but the U.S. Congress with its Cap and Trade suicide pact.
There are careers here that will last for decades. Of all the fossil carbon sources natural gas is the least risky for U.S. production of fuels. Oil and particularly coal are in danger with grave consequences in store for consumers as the hysteria over global warming from CO2 continues to drive politics, muckraking and profiteering by its promoters. Even if Congress abandons the common welfare for the perceptions and subversions of special interests, natural gas will be the least affected.
Its good news to temper the bad news from Washington D.C. Ingenuity from the U.S. and Canadian petroleum business is buying time for new technology to come of age and sets a low price for competition assuring that the new technology is real, competitive and sustainable. For all the hate pointed to petroleum, the petroleum market does over long periods serve us well. Very well, indeed.
It will be some time before alternatives can set the low price leadership. There isn’t much that government can do to manipulate that other than to drive natural gas prices higher. In the long view that’s a dreadful error in judgment – delaying or making the race to the lowest cost, equaling to the highest profit supplier unfair, or distorted harms everyone with a gas meter. The effects can last decades.
It’s clear in Europe, where dependency on a major supplier has driven gas to incredible highs. One might think that the North American market would be smarter. It is – left alone. That’s the bad news, its not being left alone, which leavens the lowest price seen in six years with concern for the future not the fuel, but the government.
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The video really shows the scope and scale of a fracing project. It’s amazing that this kind of investment pays off.
The other aspect of this proces that is interesting is the potential application of fracing to deep geotermal development. Once the technology required to drill holes to 10 kilometers has been developed the heat absorbtion region needs to be expanded. This looks like it would be an effective method for doing that.
Hi, interesting post. I have been thinking about this issue, so thanks for writing. I’ll definitely be subscribing to your blog.
It’s really a nice and helpful piece of information. I’m glad that you shared this helpful info with us. Please keep us informed like this. Thanks for sharing.