Latest Risk to Alaska Gas Pipeline: More Gas

WSJ via Rig Zone ^ | Feb 1, 2010 | Ben Casselman

[thackney]

The discovery of huge new natural-gas fields across the contiguous U.S. is threatening Alaska's plans for a pipeline to export gas to the lower 48 states.

Two rival consortiums, each backed by major energy companies, are competing to build the pipeline, designed to carry gas from Alaska's North Slope to continental markets.

But even as the project is poised to get off the ground after decades of discussion, its viability is being called into question as energy companies have found huge new supplies of natural gas locked in dense rocks known as shale in places such as Texas, Louisiana and Pennsylvania.

Those supplies are glutting the market and driving down prices, leading many experts to question whether a pipeline from Alaska is needed or could turn a profit for its backers.

Still, on Friday, one of the two contenders, backed by energy giant Exxon Mobil Corp. and pipeline company TransCanada, formally asked federal regulators for permission to begin accepting bids from gas producers for space on the pipeline, which would carry as much as 4.5 billion cubic feet of gas a day.

"This filing is an important milestone for the project and Alaska," said Tony Palmer, TransCanada's vice president in charge of the project. Mr. Palmer said he believed there is "no lack of demand" for the gas in the contiguous U.S.

The rival project, a joint venture of oil and gas producers BP PLC and ConocoPhillips, plans this spring to announce details of its own plans and begin its own bidding process. The project would stretch as much as 2,000 miles from Alaska and would cost an estimated $30 billion.

Mr. Palmer said TransCanada is considering two versions of the project, one of which would pipe gas through Canada and cost up to $41 billion...

[spintreebob]

Clearly supply is not the problem.

What is the problem? Regulation!

The Federal and State EPA require unnecessary expenses in the many thousands per vehicle to build a natural gas vehicle, or to convert to one.

By definition, energy independence requires the replacement of imported gasoline with natural gas to power vehicles.
It burns cleaner and causes less pollution and CO2.

By importing less we would ease our Balance-of-Trade deficit, which would strengthen our position in global trade.

By being cheaper than gasoline, it would leave more money in consumers pockets to spend elsewhere and thus grow the economy.

However, it would weaken the power of chicken little to convince us that the sky is falling.

[decimon]

That ‘century’s worth of gas’ mantra bugs me as it’s based on current consumption. I expect consumption to rise. Am I wrong?

[sitetest]

Dear thackney,

A pleasant fantasy would be to convert a significant percentage of our vehicle fleet to use natural gas, I guess as CNG, as that seems a reasonably-safe way to do things. What makes this a fantasy is that it would take a herculean effort to build enough CNG stations to make regular folks want to buy such vehicles, and it would also take a substantial increase in the infrastructure to take the gas from where it's drilled to where folks can buy it.

But a more basic question is, how much gas do we have? I don't have much of a handle on that. Do you have some idea of how much gas folks believe is underground that can be tapped in the United States? How that compares in oil? At what rate we could theoretically tap it (so that we could understand theoretically how much oil we might displace on a daily basis)?

I appreciate any data and insights you might provide.

Thanks,

sitetest

[thackney]

I expect Natural Gas consumption to rise, both in the US and in the World. But it will probably be more longer term.

If investments in production and supply infrastructure are delayed, there is a risk in the medium term of tightening markets when demand recovers. While liquefaction capacity will see an unprecedented growth of 50% between 2009 and 2013, there will be a dearth of new capacity in the period after 2013 unless new projects are approved in 2009-10. The world’s largest producer, Russia, faces considerable challenges, both technical and financial, already leading to project delays.

IEA calls oil and natural gas outlook very uncertain as economic crisis hits markets: Oil prices may be rebounding; Gas demand dips for first time in 50 years
http://www.iea.org/press/pressdetail.asp?PRESS_REL_ID=285

[decimon]

Thanks.

Oil prices may be rebounding; Gas demand dips for first time in 50 years

And that gets to economics. More plentiful gas = cheaper gas = consumption rise = new equilibrium and yatta yatta.

[dennisw]

The game plan is to convert fleets to natural gas and offer incentives to do so. Such as USPS and UPS and FedEx vehicles. Gov’t fleets too. You build from there

[thackney]

What makes this a fantasy is that it would take a herculean effort to build enough CNG stations to make regular folks want to buy such vehicles

I think first will be a relatively large number of people who install their own home refill kits to run overnight from their existing Natural Gas residential distribution.

This should create enough demand to have commercial interest in a more significant number of filling stations for CNG. Some might be surprised at how many already exist.

Natural Gas Fueling Station Locations
http://www.afdc.energy.gov/afdc/fuels/natural_gas_locations.html

The existing Natural Gas Transmission and Distribution Pipeline Network is already large.

As of December 31, 2007, estimated proved reserves of "dry natural gas" (consumer-grade natural gas) in the United States were 237.7 trillion cubic feet (Tcf). The United States consumed 23.2 Tcf of natural gas in 2007.

As of January 1, 2007, EIA assumes that domestic natural gas undiscovered technically recoverable resources are approximately 1,536 trillion cubic feet.

http://tonto.eia.doe.gov/energyexplained/index.cfm?page=natural_gas_reserves

Shale formation which are newer to Natural Gas have a lot of potential. Technology continues to advance how much and how quickly this resouces can be produced.

In November 2008, the Interstate Natural Gas Association of America (INGAA) published “Availability, Economics and Production Potential of North American Unconventional Natural Gas Supplies,” a report that estimates natural gas resources in North America exceeding 2,300 trillion cubic feet (Tcf)—with shale gas resources alone accounting for over 500 Tcf of recoverable natural gas in the United States and Canada.

http://www.energytomorrow.org/Shale_Gas.aspx

Assesments for Natural Gas in specific areas not yet in production can be found: National Oil and Gas Assessment
http://energy.cr.usgs.gov/oilgas/noga/

Methane Hydrates is a huge US resource for Natural Gas and some production of this has already been proved in Alaska.

The amount of gas contained in the world's gas hydrate accumulations is enormous, estimates of in-place gas within natural gas hydrates range over three orders of magnitude from about 100,000 to 270,000,000 trillion cubic feet (TCF) of gas.

http://energy.usgs.gov/other/gashydrates/

[thackney]

Many of those already have existing CNG fleets and the continue to expand.

For example UPS:

Liquefied Natural Gas (LNG)
UPS was the first in the package delivery industry to introduce alternative fuel tractors into its fleet. The company currently operates 11 Liquefied Natural Gas (LNG) tractor-trailers within the company’s West Coast fleet. The tractor-trailers travel each day from California to Nevada. As a fuel, LNG is very dense, providing a large amount of energy for the amount of space it occupies. This makes LNG an excellent potential fuel for large trucks that need to travel a long distance before refueling.

Compressed Natural Gas (CNG)
UPS has one of the largest private fleets of CNG vehicles in the U.S., with more than 1,100 package delivery vehicles. UPS began extensively using CNG in 1989 to assess its benefits and viability as an alternative fuel. The results have been impressive: particulate emissions are 95 percent lower than with diesel engines; carbon monoxide emissions are 75 percent lower; and emissions of nitrogen oxides are 49 percent lower. In January 2010, UPS deployed an additional 245 CNG vehicles in the United States.

http://www.pressroom.ups.com/Fact+Sheets/Alternative+Fuels+Drive+UPS+to+Innovative+Solutions

[sitetest]

Dear thackney,

I hadn't thought of the idea that there are literally millions of natural gas “filling stations” - homes heated by natural gas! I guess that's cause we're all-electric, LOL.

I did a little googling and came up with similar numbers, and found a value to convert natural gas to oil equivalents. A little back-of-the-envelope calculating tells me that we could theoretically replace imported oil with what we think is underground, and have enough gas for the next 50 years. Factoring methane hydrates into the equation essentially takes the world into centuries or millennia of energy.

sitetest

[bestintxas]

“Factoring methane hydrates into the equation essentially takes the world into centuries or millennia of energy.”

That is a proposition that will take quite a bit of ingenuity.

Yes it is there but no it is not commercial, not even close to being recognized as to how it will become commercial.

When we get to that point of needing hydrates, all of us now will be long dead.

[Jabba the Nutt]

"Those supplies are glutting the market and driving down prices,..."

Ah, what happened to 'peak oil'?

[thackney]

Natural Gas, not oil.

And I do not consider today’s prices all that low, although relative to oil, they are lower than usual.

[thackney]

That is a proposition that will take quite a bit of ingenuity.

In progress already.

ANS hydrate test results promising
http://www.petroleumnews.com/pnads/16906500.shtml
November 11, 2007

Hydrate estimate set at 85 tcf
http://www.petroleumnews.com/pnads/69981521.shtml
October 26, 2008
USGS publishes assessment of technically recoverable North Slope gas hydrates

Field test of CO2-CH4 exchange planned
http://www.petroleumnews.com/pnads/315842975.shtml
October 04, 2009
ConocoPhillips has patented exchange technology developed in laboratory for producing methane hydrate without dissociating water

Picking the test site
http://www.petroleumnews.com/pnads/87647001.shtml
October 11, 2009
Researchers study potential areas for North Slope gas hydrate production test
...drilling from the Prudhoe Bay field L pad into some nearby stacked, hydrate-filled sands seems the most likely scenario for setting up the test environment...

[Jabba the Nutt]

What’s the difference? You drill for both.

[thackney]

But nobody is claiming Peak Natural Gas.

We also drill for water; that does not make them interchangeable.