Natural gas prices range from $1.49 to $2.59 in Colorado, Wyoming and Utah.  This is far less than gasoline.

Honda builds a Civic Compressed Natural Gas (CNG) sedan and has been selling a few of these natural gas vehicles in select markets for years.

At $4.00 gasoline the natural gas equivalent is running $2.50 in the higher priced markets.  That was back in May of 2011 when Mark Koebrich at Denver’s 9NEWS interviewed David Padgett, a Honda CNG owner.

Padgett said, “It’s costing me one-third of the cost of commuting with gasoline as it does to commute with natural gas. I wouldn’t drive anything else. If I was buying gasoline, it would have cost me over $30 to fill up this car. The actual cost of the natural gas was about $12, and if I do it in my garage, it’s going to be about $4.”

Another lure is you can install a natural gas hook-up at home in the garage from your utility gas line. You pull the hose from the wall and refuel at home for a fraction of the commercial station price. It’s almost that simple.

Padgett concludes, “You’ll burn natural gas when you can, and if you need to back it up with gasoline, it’s there for you as well. Same engine – no difference.”

Ford Super Duty Available with Compressed Natural Gas Fueling

The catch is one needs two fuel tanks.  Not something you add on at home.  But the manufacturers are catching on.  Ford’s CNG trucks have been available since 2009. Dual-fuel sedans are expected to follow in the 2013 model year. GM is offering two pickup models and a dual-fuel Ram Heavy Duty truck production model of the Dodge Ram has a load-bearing compressed natural gas tank immediately behind the cab with the normal gas tank in the usual place.

That’s the US Big Three Automakers plus Honda.  OK – two cars builders and three pickup truck makers is a major start.

But the big opportunity is application to large trucks.  Trucks have the room and the capacity to carry two fuel loads.  Various plans are popping up to line the interstate system with CNG filling stations. For diesels adding CNG injection is more complex, but the fuel cost savings would quickly recover the investment when a truck is traveling over one hundred thousand miles a year.

Once a part or combination of the plans gets underway the rest of use could seriously look for natural gas duel fuel vehicles.  With some careful planning a home served with natural gas may justify the piping and compressing for home filing.

Many pundits believe CNG technology will catch on over the next few years, just as hybrids are beginning to now. Toyota Motor Sales more than doubled hybrid sales in April (compared to last year), on the heels of over 50,000 hybrids of all makes selling in March.

There is less doubt about the supply of natural gas than the gasoline and diesel supply and assuming the government stays out of the way that should last for years, perhaps decades. If the methane hydrates supply of natural gas can be tapped cheaply the supply would last tens of centuries.

The flex fuel option has been a smart choice for years, hybrids the cost conscious choice more recently and CNG looks to be the next big thing.

On the other hand, pretty soon ‘dual fuel’ might be redundant – just make CNG cars and call it done could come pretty quickly with a price advantage driving the switch.

As Al Fin pointed out yesterday natural gas is priced to a barrel of oil equivalent at about $10-$11 per the estimable Geoffrey Styles view, something less than 10% of the cost of oil.  For North Americans adding a viable and hopefully low cost means to make use of gas hydrates could be giant boost to low cost fuel sources and a massive kick to the economy.

For experts the methane hydrates resource is the largest reserve of hydrocarbons in the planetary crust. So far humanity has not devised a process to economically harvest this immense energy wealth. Today’s DOE announcement may point the way to a new era in abundant energy to build out a bigger and better world economy.

By injecting a mixture of carbon dioxide and nitrogen into a methane hydrate formation (pdf link) on Alaska’s North Slope, the DOE partnering with ConocoPhillips and Japan Oil, Gas and Metals National Corp was able to produce a steady flow of natural gas in the first field test of the new method. The test was done from mid-February to about mid-April this year.

Methane Hydrate Test Site Map of US DOE, CononcoPhillips and JOGMNC Process Test. Click image for more info.

The department said it would likely be years before production of methane hydrates becomes economically viable. Secretary Chu said in his statement,  “While this is just the beginning, this research could potentially yield significant new supplies of natural gas.”

Methane hydrates are cold ice crystal-like structures that contain methane the chemical of natural gas. The hydrates are located under the Arctic permafrost and in ocean sediments along the continental shelf and widely spread worldwide.

Methane Hydrate Resources per Der Spiegel. Click image for the largest view.

Gerald Holder, dean of the engineering program at University of Pittsburgh, who has worked with the DOE’s National Energy Technology Laboratory on the hydrate issue, said before the announcement he had been skeptical about what researchers would be able to accomplish.

He said the main problem until now was finding a way to extract natural gas from solid hydrates without adding a whole lot of steps that made the process too expensive, which makes the success of this new test significant.

“It makes the possibility of recovering methane from hydrates much more likely. It’s a long way off, but this could have huge impact on availability of natural gas,” said Holder.

While everyone is suggesting that methane hydrate production is some time in the future, we might note that a partner is from Japan, a country that has been buying via imports virtually all its energy and fuel inputs.  A glance at the map of potential reserves shows that Japan may well pour on the intellectual and financial power to get results much quicker than many expect.

On the other hand, for North Americans natural gas is ratcheting down to dirt cheap, with more resources with the new horizontal drilling and reserve fracturing available on land and significant amounts of natural gas at sea in already developed areas.

For everyone the matter of coming up with the CO2 for the injection is going to be a significant issue.  First just gathering it remains a significant problem.  Making it from – natural gas – is the preferred method today.  That raises the question if the CO2 injected is lost to sequestration or is it recycled for reuse, or what proportion is being lost or recycled?  CO2 is very useful and it may become a valuable resource in its own right very soon.

Abundance makes a lot of things that weren’t viable at a price possible at lower costs.  Abundant fission or cold fusion could make electrolysis viable freeing hydrogen for adding to coal for both liquid fuels and CO2 sources.  Scaling could make such concepts usual and common thinking very quickly.

For now though the DOE and partner’s news is very gratifying.  It must be giving the futurists at OPEC an OMG moment, again.  Things are going to be changing.

Lets hope the DOE and the partners spill some more info soon so we can have a better look.

The area off east Africa has yielded a series of huge discoveries over the past couple of years.  Simon Ashby-Rudd, an oil investment banker at Standard Bank in the UK puts it this way, “With gas exploration you have to find an elephant field to make it worthwhile. They (oil exploration firms) didn’t just find one elephant – they found a herd of them.”

Mozambique and Tanzania, which until recently did not even feature on the world energy map, have become some of the gas industry’s hottest real estate.

East Africa Political Map

The earlier players are Cove Energy, a small Africa-focused oil and gas explorer with an 8.5 per cent stake in a big gas field in Mozambique, Anadarko Petroleum and Eni of Italy. Their two fields combined could contain up to 60 trillion cubic feet (tcf) of recoverable resources of gas – nearly as much as Kuwait’s entire reserves.

The speculation is that should be enough to turn Mozambique into a key exporter of liquefied natural gas, or LNG, to China and India.

The region is still barely explored. Much more gas should turn up.  The exploration group Afren says less than 500 wells have been drilled in all of east Africa, compared with some 20,000 in the north and nearly 15,000 in the west of the continent.  Those areas are still turning out new reserves.

Claudio Descalzi, chief operating officer of Eni’s exploration and production division said its field discovery was “one of the most important we’ve had in our history, in terms of the quality of the reservoir, its dimensions and the markets it’s close to. It’s transformational for us.”

All this could be an economic transformation for Mozambique and Tanzania.  The U.S. firm Anadarko is proposing a massive liquid natural gas plant in Mozambique estimated to cost about $25-billion (U.S.) – more than twice the country’s gross domestic product. The World Bank ranks Mozambique 204 out of 215 nations in terms of per capita income.  That brings the question up about governance and if the wealth will affect everyone there fairly. It could turn one of the world’s poorest nations into one of the richest.

However, and this is a big one just to start – this is pirate territory. The Somali pirates already harass Statoil who has naval patrols guarding its drilling operations.   African waters can be treacherous, Statoil has lockdown facilities on all its rigs and support vessels to keep staff safe in the event of a pirate attack, while a small flotilla of boats, operated by security contractors and Tanzanian navy personnel, guard the drilling site.

Now Eni, Anadarko and little Cove are firmly anchored in Mozambique.  Statoil has a big find.  Shell, Petrobras and Exxon Mobil are now setting up shop in Tanzania.  Usually in these situations the leading little firms sell out for big payoffs to the majors who have the expertise, engineering staff and capital to get giant discoveries to market.

Liquefaction of natural gas doesn’t come cheap.  It’s a multibillion dollar exercise for each facility and billions more to find and pipe in the gas as well as load it out for shipping.

Anadarko, one of the best dealmakers in the oil business has already announced it is looking to sell some of its stake in the Mozambique field.  Little Cove simply put itself up for sale in January.

The independent oil firms are not standing around, the pace of drilling is picking up. Morgan Stanley expects 23 wells to be drilled off Kenya, Tanzania and Mozambique this year, almost double the number in 2011.

Its enough to make the folks around the American Gulf of Mexico coast quite disappointed and piqued at the U.S. federal government for letting the business get away.

Still, this will be a blessing for crude oil prices over time.  There’s a lot more market penetration for compressed natural gas (CNG) in Asia than the U.S.  Every vehicle that’s built or converts to CNG fuel is one less using oil.

Now if the local folks can get the governance right and not start another messy war this could look very good for the world’s energy markets.

3M's Sampling of Pressure Vessels.

CNG has often been suggested to be a good replacement for gasoline.  It is; its simpler to get to proper emissions, burns clean, has workable octane, and it could be generally available without an entirely new infrastructure.  Natural gas is already piped to most every place but the rural areas of the U.S.  As a fuel substitute it would work pretty well.

On the other hand, while switching over isn’t totally simple, it isn’t something many would be advised to do in the home garage.  The equipment needed for metering and pressure regulation isn’t particularly expensive, but to get a tank with worthwhile capacity is an expensive barrier.

That’s where 3M and Chesapeake are jumping in – Chesapeake has the gas and 3M the technology.  Currently the fuel tank on a CNG vehicle is its most expensive single component.  The plan is the new CNG will reduce costs while increasing performance. Less expensive tanks will enable greater market adoption of CNG as an alternative automotive fuel source.

Chesapeake has pledged through Chesapeake NG Ventures Corporation (CNGV) an initial $10 million investment toward design and certification services, market development support and a commitment to use the new tanks for its corporate fleet conversion to CNG.  Chesapeake NG Ventures Corporation was established in 2011 to identify and invest in companies and technologies that will replace the use of gasoline and diesel derived primarily from foreign oil.

CNGV has committed expenditures of  $1 billion spread over the next 10 years to help fund various initiatives to increase demand for natural gas.  The big investments so far include $300 million in Clean Energy Fuels Corp. and privately held Sundrop Fuels, Inc.

On the technical side 3M has subcontracted with Hypercomp Engineering, Inc. of Utah for the design and certification of tanks. 3M will do the actual tank manufacturing and focus its capital on all future operations and production. 3M expects the tanks to be available for sale during the fourth quarter of 2012.

3M’s CNG tank solution is a combination of the company’s proprietary liner advancements, thermoplastic materials, barrier films and coatings, and damage-resistant films in an effort to transform the pressure vessel industry. Using nanoparticle-enhanced resin technology and 3M™ Matrix Resin for Pressure Vessels, 3M will create CNG tanks that are 10 to 20 percent lighter with 10 to 20 percent greater capacity, all at a lower cost than standard vessels.

Add to that the 3M technology is said to produce safer and more durable tanks than the common heavy welded steel models currently on the market. The tank innovation builds on 3M’s proven history of developing and introducing pioneering technologies to the market.

This may be a significant modality for transport fuel change.  George Buckley, Chairman, President and Chief Executive Officer of 3M said, “3M believes in the potential of natural gas, and this agreement illustrates our commitment to the industry. We are excited about this collaboration to speed the development and adoption of natural gas-powered vehicles.”  With a presales investment of $10 million that has to be a happy CEO.

So far there are only little areas of CNG market success.  But lots of places and some fleets have looked or started adopting conversions.  The incentives are strong – there’s more than a 100-year supply of natural gas in the U.S. and lots more is available to come on line.  Natural gas priced equivalent to a gasoline gallon comes in at only $1.00 to $2.00.

Basically it boils down to this: the fuel is plentiful, affordable and domestically produced.

Our thanks for this push on the opportunity goes to Aubrey K. McClendon, Chesapeake’s Chief Executive Officer who said, “This partnership brings together two leading companies from different sectors, both committed to advancing the natural gas transportation fuel market. We applaud 3M for recognizing the future of natural gas as a low-cost, cleaner alternative to gasoline, and for creating innovative tank technology that will make natural gas vehicles more affordable and accessible to fleets and individual consumers nationwide. Our country needs a solution to break the foreign stranglehold on our fuels market, and today’s announcement is another step to transition our nation away from costly imports.”

The numbers aren’t being touted yet for consumer comparisons.  It’s very likely that the cost per mile by CNG is going to be less.  If 3M gets its marketing act together there won’t be any gouging by shops to do conversions.  We may even have a brief holiday from fuel taxes until the Feds and States catch up.

The meaningful number is going to be access to fueling – for a while getting filled isn’t going to be convenient.  It’s not impossible now, but there will be to be quite a bit of organizing to get a to growing market that has ready access.

For many the biggest question is going to be how the old gas tank compares in range to the new CNG tank.  That’s a big if.  If 3M can cut the weight by 20% and increase the capacity by 20% one has to wonder how close that gets to the gasoline range.

The timing is good – the gasoline price forecast, albeit dubious, has gasoline headed past $4 a gallon.  That makes $1.50 very attractive indeed.

I think I’ll be signing up . . .

Petrobras, the Brazilian based petroleum firm is reported to have qualified and approved a new technology to convert natural gas to synthetic crude oil.  The Petrobras’ CENPES Research and Development Centre completed its trials of the CompactGTL unit prompting Nicholas Gay, chief executive of CompactGTL to say, “The [Petrobras] test program has produced some extremely positive results and has shown the plant can be robust, with the operational availability (the percent of time a unit would operate) expected of large scale commercial facilities. We can now progress our plans in conjunction with clients throughout the world to develop commercial scale modular gas to liquid plants.”

CompactGTL offers a modular GTL solution for a variety of natural gas to liquids conversion needs.  The modular design and the implicit lower investment cost suggest the vast resource of non-marketable natural gas could become sources of crude oil.  That allows a pressure free containment and no temperature input that could then bring the liquid and more energy dense syncrude resources to market.

CompactGTL technology features proprietary catalysts and reactor designs derived from plate and fin heat exchanger manufacturing techniques. Modular plant design, incorporating multiple reactors in parallel, provides a flexible, operable solution to accommodate gas feed variation and decline over the life of the oilfield.  The firm is suggesting reactors can be relocated.  No huge installation needs to be built.

At the heart of the process are two banks of modular reactor blocks. Using an advanced derivative of plate and fin heat exchanger technology, these reactors allow the precise control of heat and gas flow over proprietary metal-supported structured catalysts, located in a regular array of thousands of closely spaced channels.  It’s looking like a factory mass production plan instead of custom built installations.

The first stage CompactGTL reactor uses Steam Methane Reforming to convert natural gas into syngas, a mixture of carbon monoxide and hydrogen. The syngas is fed into the second reactor where it is converted via the Fischer-Tropsch (FT) process into synthetic crude oil, water and a ‘tail gas’ composed of hydrogen, carbon monoxide and light hydrocarbon gases.

At this first introductory point it looks as though the CompactGTL needs only the natural gas and water source as inputs with a start source for the heat.  As the graphic shows, the steam cycles and the FT reactor refuels the first reformer reactor.

A key engineering advantage is the close relationship between the two reactors providing efficient management of the overall system.  The two reactions are tuned to work together to maximize efficiency and minimize waste streams depending upon the specific application and location of the plant. The water produced in the Fischer-Tropsch reaction can be treated to remove impurities and recycled back into the steam reforming process.

CompactGTLs proprietary catalysts and the shared activities of the two reactors is planned to offer a self-contained plant operating a stable process that won’t need an oxygen supply.

Al Fin has pointed out that CompactGTL isn’t alone in the soon to explode market.  Mr. Fin also noted the Oxford Catalyst and the Velocys microchannel technology as candidates worthy of close watching. As those two firms reach milestones in their paths we’ll have a look.

To recap, natural gas is a wonderful fuel, but is doesn’t transport easily or cheaply over great distances.  Moving down pipelines with customers each few hundred feet works great.  Big resources can justify large investments in pipelines to get to a market.  But in much of the world and in remote or deep water locations the gas is just shut in, burned off for no use other than safety, or worst of all just vented into the atmosphere to the justified horror of the global warming folks.

Jeremy Coller, the investor behind the CompactGTL effort understands the impact a breakthrough on the investment needed to get natural gas to market said, “With this approval from Petrobras the company has passed a critical milestone, demonstrating its leadership in an area with the potential to be a game-changer for oil and gas exploration.”

Its looks like a game-changer, indeed.

Hydrates are a water ice and usually a natural gas compound that have been explored by researchers as a source of alternative fuel or storage medium for CO2.  The PNNL researchers note at first discovery the hydrogen storage value approaches the goal of a Department of Energy standard and could make hydrogen hydrates practical and affordable for storage.

Using computer analysis of the ice and gas compound reveals key details of its structure and researchers have accurately quantified the molecular-scale interactions between the gases of either hydrogen or methane, also known as natural gas – and the water molecules that the form cages around them.

The research team’s results from the Department of Energy’s Pacific Northwest National Laboratory were published in Chemical Physics Letters online December 22, 2011.

While hydrogen is the most interesting use of hydrates, PNNL chemist Sotiris Xantheas the lead author said, the results could also provide insight into the process of replacing methane with carbon dioxide in the naturally abundant “water-based reservoirs.”

Here’s the marvel revealed in the research as put by Xantheas, “Current thinking is that you need large amounts of energy to push the methane out, which destroys the scaffold in the process. But the computer modeling shows that there is an alternative low energy pathway. All you need to do is break a single hydrogen bond between water molecules forming the cage – the methane comes out, and then the hydrate reseals itself.”  This revelation has major implications on natural gas recovery.

Previously Xantheas and the colleagues used computer algorithms and models to examine the water-based, ice-like scaffold that holds the gas. Water molecules form individual cages made with 20 or 24 molecules. Multiple cages join together in large lattices. But those scaffolds were empty in the earlier analysis.

To find out how fuels can be accommodated inside the water cages, Xantheas and colleague Soohaeng Yoo Willow built computer models of the cages with either hydrogen gas – in which two hydrogen atoms are bound together – or methane gas, a small molecule made with one carbon and four hydrogen atoms.

In the hydrogen hydrates, the idea that could potentially be used as materials for hydrogen fuel storage, a small hollow cage made from 20 water molecules could hold up to a maximum of five hydrogen molecules and a larger cage made from 24 water molecules could hold up to seven.

The maximum storage capacity equates to about 10 weight-percent, or the percentage of hydrogen by mass in the chunks of ice.

However packing hydrogen in that tight puts undue strain on the system.  But it nearly doubles the DOE’s goal for hydrogen storage above a 5.5 weight-percent.

Now the story gets intuitive, innovative and just clever.  Experimentally, hydrogen storage researchers typically measure much less storage capacities. The computer model showed them why: The hydrogen molecules tended to leak out of the cages, reducing the amount of hydrogen that could be stored.

The PNNL team found that adding a methane molecule to the larger cages in the pure hydrogen hydrate prevented the hydrogen gas from leaking out. The computer model showed the researchers that they could store the hydrogen at high pressure and practical temperatures, and release it by reducing the pressure, which melts it.

Understanding how the gas interacts and moves through the cages can help chemists or engineers store gas and remove it at will.

Willow and Xantheas’ computer simulations showed that hydrogen molecules could migrate through the cages by passing between the figurative bars of the water cages. However there’s a problem to work out, the cages also had gates: Sometimes a low-energy bond between two water molecules broke, causing a water molecule to swing open and let the hydrogen molecule drift out. The “gate” closed right after the molecule passed through to reform the lattice.

With methane hydrates, some fuel producers want to remove the gas safely to use it.  So, Willow and Xantheas tested how methane could migrate through the cages.

The water cages are only big enough to comfortably hold one methane molecule, so the chemists stuffed two methane molecules inside and watched what happened. Quickly, one of the water molecules forming the cage swung open like a gate, allowing one methane molecule to escape. The gate then slammed shut as the remaining molecule scooted into the middle of the cage.

Xantheas explains, “This process is important because it can happen with natural gas. It shows how methane can move in the natural world. We hope this analysis will help with the technical issues that need to be addressed with gas hydrate research and development.”

The team’s work is still all in the computer, but the insight should allow a broad spectrum of researchers a blueprint for experimentation and the beginning steps of processes and engineering.  The best news is the storage rate is very high and the temperatures are in an easy to access zone with common refrigeration and low energy requirements to do the warm up.  The engineering challenge to today is substantial, but some very good minds are going to light up with this news.

A Northwestern University (NU) research team is hot on porous crystals called metal-organic frameworks, with their nanoscopic pores and incredibly high surface areas that are excellent materials for natural gas storage.  Metal–organic frameworks (MOFs) are porous materials constructed from modular molecular building blocks, typically metal clusters and organic linkers. These can, in principle, be assembled to form an almost unlimited number of MOFs, yet materials reported to date represent only a tiny fraction of the possible combinations.

Metal Organic Framework Sample Images. Click image for more info..

Metal-organic frameworks come in millions of different possible structures, so where does research zero in?

A (NU) research team has developed a computational method that can save scientists and engineers valuable time in the discovery process. Their new computer algorithm automatically generates and tests hypothetical metal-organic frameworks (MOFs), rapidly zeroing in on the most promising structures. These MOFs then can be synthesized and tested in the lab.

Using their new method the researchers quickly identified more than 300 different MOFs that are predicted to be better than any known material for methane (natural gas) storage. The researchers then synthesized one of the promising materials and found it beat the U.S. Department of Energy (DOE) natural gas storage target by 10 percent.

In addition to gas storage and vehicles that could burn natural gas, MOFs may lead to better drug-delivery, chemical sensors, carbon capture materials and catalysts. MOF candidates for these applications could be analyzed efficiently using the Northwestern method.

Team leader Randall Q. Snurr, professor of chemical and biological engineering in the McCormick School of Engineering and Applied Science explains the import of the research saying, “When our understanding of materials synthesis approaches the point where we are able to make almost any material, the question arises: Which materials should we synthesize?  This paper presents a powerful method for answering this question for metal-organic frameworks, a new class of highly versatile materials.”

The team’s study paper is “Large-Scale Screening of Hypothetical Metal-Organic Frameworks and was published by the journal Nature Chemistry. It also will appear as the cover story in the February print issue of the journal.

Graduate student in Snurr’s lab and first author of the paper Christopher E. Wilmer developed the new algorithm.  Omar K. Farha, research associate professor of chemistry in the Weinberg College of Arts and Sciences, and Joseph T. Hupp, professor of chemistry, led the synthesis efforts.

Wilmer takes the explanation of how the research affects the development of metal-organic frameworks, “Currently, researchers choose to create new materials based on their imagining how the atomic structures might look,” Wilmer said. “The algorithm greatly accelerates this process by carrying out such ‘thought experiments’ on supercomputers.”

The NU team was able to determine which of the millions of possible MOFs from a given library of 102 chemical building block components were the most promising candidates for natural-gas storage. In just 72 hours, the researchers generated more than 137,000 hypothetical MOF structures. This number is much larger than the total number of MOFs reported to date by all researchers combined (approximately 10,000 MOFs). The Northwestern team then winnowed that number down to the 300 most promising candidates for high-pressure, room-temperature methane storage.

The new computer algorithm combines the chemical “intuition” that chemists use to imagine novel MOFs with sophisticated molecular simulations to evaluate MOFs for their efficacy in different applications. The researchers say the algorithm could help remove the bottleneck in the discovery process.

The other people on the team are Michael Leaf, Chang Yeon Lee and Brad G. Hauser, all from NU.

13 million vehicles on the road worldwide today run on natural gas, including many buses in the U.S.  The number is expected to increase sharply due to recent discoveries of natural gas reserves with lower prices than gasoline.  Converting a vehicle to the fuel isn’t a major matter, albeit complex and includes a drop in available total power, as natural gas is lower than gasoline in energy density. Comparatively speaking, it’s a very cheap fuel.

Gas production in Pennsylvania increased to about 2.8 billion cubic feet a day in July 2011, up from about 0.6 billion cubic feet in January 2010, according to the U.S. Energy Information Administration.  This is no small matter for the Northeast’s supply for the 2011-12 winter heating season and industrial production.

Locally about 218,000 Pennsylvanians worked in Marcellus Shale-related industries at year-end 2010, helping drive the state’s unemployment rate below the national average.  The oil and gas industry’s beating on about energy jobs they could provide is ringing very true now that nearly a quarter million jobs are suddenly at risk.

The case is John E. and Mary Josephine Butler v. Charles Powers Estate et al filed in the Superior Court of Pennsylvania.  The Butlers are relying on previous rulings that established ownership of oil or gas doesn’t change hands unless it’s specified in a deed. In opposition the Powers’ heirs argue that the deed gave them the right to other minerals such as coal — and that they own the gas trapped in the shale the same way they would own the gas trapped in a coal seam.

For over a century Pennsylvania has required landowners to consider oil and gas rights separate from the more general and common “mineral rights” when transferring ownership of resources beneath the surface of their property.

The Powers argue shale gas is different and should be considered part of the mineral rights because it is contained inside rock.  It’s going to be a very hard sell that any hydrocarbon isn’t lodged in “rock” so to speak.

The Butlers leased the property about two years ago with a coalition of neighbors to Talisman Energy of Calgary who believes the lease is valid.

In the middle of all this is an 1881 deed for 244 acres in Pennsylvania’s Susquehanna County transferring “half the minerals and petroleum oils” under the land to Charles Powers.  The Butlers say they own all the gas because the deed transferring minerals to Powers’ heirs failed to specifically mention gas.

The key in this seems to be around the natural gas being a mineral or a petroleum product.  The Butler’s hope to keep gas in the petroleum definition and the Powers want the natural gas to be a mineral within a rock.

How this got this far is a question for Pennsylvanian property lawyers.

The Superior Court, the second-highest court in Pennsylvania ruled that current law doesn’t sufficiently address whether “Marcellus shale constitutes a mineral,” sending the question back to be hashed out by the lower court.

Meanwhile – oil and gas companies will face uncertainty about whether they’ve signed drilling leases with the right people – owners of oil and gas rights who signed leases with gas producers could find that they don’t own the gas after all – the oil and gas companies may need to check the title to thousands of oil and gas properties they’ve leased – lots of leases will have to be renegotiated.

Cases like these can take years to work their way through the court system.  Most worrisome for the long term is that Powers wins and sets off a revolution in oil and gas mineral rights.

If Pennsylvania is like most states in reporting legal proceedings the Bulters sued the Powers for all the money.

With the gas production at risk, the jobs at risk, more uncertainty in an already way overloaded economic uncertainty, a whole new set of expenses to clear up leases there’d be a lot of pressure on to get this resolved.

For a non-attorney looking at the reports is certainly seems to be a hot fight over a few words that say pretty clearly that half the mineral rights and petroleum’s oils would cover the Powers right to half the money.  If natural gas is one of the petroleum products and petroleum means oil the Powers are in.  Even if the revolution sets in and natural gas isn’t a petroleum product and is a mineral product the Powers still have half.  The court has to decide if the missing natural gas words are still inclusive from a document made in 1881.  Who would have thought that the nuisance of natural gas 1881 would be such a huge problem 130 years later.

Hopefully the folks in Pennsylvania will wake up and sort this out in short order. But don’t count on it.  There is a lot at stake there, right now.  That doesn’t mean the problem, which is a real one, will get the attention it deserves.

In 2007 Chemical engineers George Hirasaki and former graduate student Gaurav Bhatnagar at Rice University theorized that methane could be detected via transition zones 10 to 30 meters below the seafloor near continental shores.  At that level sulfate, a primary component of seawater and methane to react and consume each other.

What happens is as sulfate migrates deeper into the sediment below the seafloor, it decreases in concentration, as evidenced by measurements of the water (pore water) trapped between sediment particles from core samples. The depth at which the sulfate in the water gets completely consumed upon contact with methane rising from below is the sulfate-methane transition (SMT) zone.

In 2007 Bhatnagar argued in a paper the depth of this transition zone serves as a proxy for quantifying the amount of gas hydrates that lie beneath; the shallower the SMT, the more likely methane will be found in the form of hydrates in abundance at greater depth.

Sounds good. But . . .

The controversy that followed the publication of the original paper focused on sulfate consumption processes in shallow sediment and whether methane or organic carbon was responsible. Skeptics felt the basis of Bhatnagar’s model, which assumes methane is a dominant consumer of pore-water sulfate, was not typical at most sites. That sort of blew the idea as being truly representative.

Rice University chemical engineer George Hirasaki, left, and graduate student Sayantan Chatterjee. Click image for the largest view.

Sayantan Chatterjee, a fifth-year graduate student in Hirasaki’s lab, set out to prove the theory by bringing more chemical hitchhikers into the test matrix.  He added bicarbonate, calcium and carbon isotope profiles of bicarbonate and methane to the model.  Chatterjee says, “Those four additional components gave us a far more complete story.”  The paper was published this week by the Journal of Geophysical Research — Solid Earth

Hirasaki, who is Rice’s A.J. Hartsook Professor of Chemical and Biomolecular Engineering explains that including a host of additional reactions in their calculations on core samples, “can give a much stronger argument to say that methane flux from below is responsible for the SMT. The big picture gives more evidence of what’s happening, and it weighs toward the methane/sulfate reaction and not the particulate organic carbon.”

The Rice team sees two audiences for the research and the results that could be generated.  The first is the natural gas industry and its customers eyeing an energy resource. The second is the global warming crowd who see methane as the mother of all greenhouse gases.   That makes two diametrically opposed views eager to find out what’s down there.

For now Chatterjee had the chance to discuss his results with his peers in July at the seventh International Conference on Gas Hydrates in Edinburgh, Scotland, where he presented a related paper that focused on the accumulation of hydrates in heterogeneous submarine sediment.  The conference paper was awarded a first prize at the prestigious Society of Petroleum Engineers’ Young Professionals meeting and placed second at the Gulf Coast Regional student paper competition.

The Rice group has embarked on an important job for the future.  Much to the relief of long range planners for natural gas usage it looks like the Rice technique is going to have a noteworthy effect on helping locate the easiest and least expensive methane hydrate deposits.  One suspects that the basic idea isn’t going to help out the global warming crowd all that much – not that they won’t try to twist it to their advantage.  The global warming worry depends on releasing methane from depths that when warmed will give up methane – not something the Rice team was targeting – they’re looking much deeper and for truly large deposits.

The Rice group’s work isn’t going to be a revolution, rather is a big step of evolution to getting sources spotted that can justify the research needed to learn how to extract the methane at minimal cost and the least amount of environmental disturbance.  Just narrowing down the possible sites to the most desirable is going to help.

Once the best prospects can be quantified the really developmental research can get under way. Its one thing to experiment – and quite another when there are known billions of dollars of profit for serving a market.

Marcellus Shale within the Appalachian Basin. Click image for the largest view.

Before looking into this, keep in mind we’re looking through the work of the USGS, a department of the federal government.  As others have noted elsewhere the reliability of these kinds of things isn’t very high, rather they serve as pretty good guides over time on the resource availability by quantity.  What’s to be seen in the report is there’s lots more geology data now, much more production experience, and a considerable extension of the infrastructure to deliver natural gas from the gas fields to consumers.

The latest USGS assessment is an estimate of continuous gas and natural gas liquid accumulations in the Middle Devonian Marcellus Shale of the Appalachian Basin. The estimate of undiscovered natural gas ranges from 43.0 trillion cubic feet, a 95% probability to 144.1 TCF, 5 percent probability.  The estimate of natural gas liquids such as propane or liquid petroleum gas, ranges from 1.6 billion barrels at 95% probability to 6.2 billion barrels at 5 percent probability.

The oil industry can be said to have been born in the Eastern U.S.  Drake’s famous well was drilled in western Pennsylvania and since the 1930s almost every well drilled through the Marcellus shale found noticeable quantities of natural gas. By 2004 engineers reflecting on the Marcellus shale concluded the formation was a potential reservoir rock, instead of just a regional source rock, meaning that the gas could be produced from it instead of just being a source for the gas.

Technological improvements, most notably horizontal drilling and hydraulic fracturing of the shale rocks resulted in commercially viable gas production and the rapid development of a major, new continuous natural gas and natural gas liquids boom in the Appalachian Basin, the oldest producing petroleum province in the U.S.

Keep in mind, there’s no conventional oil type petroleum resources assessed in the Marcellus Shale of the Appalachian Basin.

The USGS bases its new update in undiscovered, technically recoverable resource due to new geologic information and engineering data, with significant technological developments in producing unconventional resources in the last decade.

The USGS qualifies the assessed estimates for technically recoverable oil and gas resources meaning those quantities of oil and gas producible using currently available technology and industry practices.  No adjustment or projection is included regarding economic or accessibility considerations. So the estimates include resources beneath both onshore and offshore areas (such as under Lake Erie) and beneath areas where accessibility may be limited by policy and regulations imposed by land managers and regulatory agencies. That’s a fair warning to consumers and industry that they’re on their own for keeping reserves available in the face of opposition from both those well justified and those frivolous and emotionally driven.

The USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources of onshore lands and offshore state waters. In this assessment the USGS worked with the Pennsylvania Geological Survey, the West Virginia Geological and Economic Survey, the Ohio Geological Survey, and representatives from the oil and gas industry and academia to develop an improved geologic understanding of the Marcellus Shale. The USGS Marcellus Shale assessment was undertaken as part of a nationwide project assessing domestic petroleum basins using standardized methodology and protocol.  Applied nationwide the new technique should firm up realistic expectations.

The other side is those states; Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, Virginia, and West Virginia are going to see a new economic foundation built into their economies – a very welcome event – if they can keep political control and the exploration and development going.

There will be a lot of jobs, wealth and investment made in these states – if they can keep the anti energy lobbies from wrecking their future.  Keep it going and the next assessment may very likely increase the reserve estimate again.