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SustainableShaleOilandGas
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DEDICATION
To Campastimes,theIndianInstituteofTechnologyMadrasmagazine, sadlynowdefunct,whereIcutmybabyteethinwriting54yearsago.
Energyisthelifebloodoftheeconomy andnaturalgasisagame changerinthatitmayprovidethatbloodtooureconomyforyearsto come.Unconventionalnaturalgas,ontheotherhand,couldproveto betooenvironmentallychallengingtomakeitalongertermsolution toourenergyneeds.Whichfuturewepursue,intheend,willdepend ontheissuesexploredinthisbook.
TimProfeta
PREFACE
Thelastsentenceofthisbookreads, “Thatwhichcannotbemeasured, cannotberegulatedorotherwisecontrolledorexploited.” Thisembodiestheessentialmotivationforthebook.Toputthatinperspective, Iquotethelastlinesfromapreviousbookofmine:
Low-costenergyisatidethatliftsallboatsofeconomicgrowth.Shalegasis apowerfulsuchtide.Ithasburstuponussounexpectedlythatwehave becomerattledbytheflotsamitcarriedwithit.Thisauthorconcludesthat theflotsamismanageable,allowingustoenjoythebenefitsofthetide.
Byflotsam,Imeanttheenvironmentalbaggage.AlthoughIstillsubscribetothisconclusion,Ihaveincreasinglycometobelievethatcurrent measurementtechniquesareinadequateforthespecialcircumstances surroundingthisresource,whichnowimportantlyincludesoil,inadditiontothegasmentionedinthequote.
WhenIwasapproachedaboutabookinthisspace,Ivieweditas anopportunitytodrawattentiontothedeficitinavailablemeasurementcapabilityanddosomethingtoaddressit.Iwasintheenviable positionofadvisingtwoexcitingdevelopmentsthatwererighton point.Oneisashoebox-sizemassspectrometerwiththeresolutionofa laboratorymachine,thusenablingdetectionandspeciationofallmannerofmolecules,nottheleastofwhicharevolatileorganicchemicals (VOCs).VOCsarenotcurrentlyregulatedatwellsiteperimeters.In fact,onlyrecently,in2016,hastherebeenpromulgationofbenzene regulationonrefineryperimeters.Theportablemassspectrometer couldwellbeacaseofbettermeasurementemboldeninglegislation,as wellasvoluntarycompliance.
TheseconddevelopmentistheuseofsubsurfaceDNAsequencing tocharacterizeoilandgasreservoirsthroughstudiesofmicrobial populations.Thisisexpectedtoimproverecoveryeconomics,thus addressinganotherlegofthesustainabilitystool.Myco-author,Rob Knight,aworldauthorityonmicrobiomesinhumansanddeveloper ofmanyofthekeydataanalyticaltechniques,wasvitalfordoingjusticetothatpartofthebook.
Fugitivemethaneemissionsfromoilandgasoperationsarebeing scrutinized,andtheissueissomewhatcontroversial.TheEnvironmental DefenseFundhastakenaleadinfundingthequantificationoftheproblem.ItandtheUSAdvancedResearchProjectsAgency Energy (ARPA-E)oftheUSDepartmentofEnergyhavefundedinnovation toimprovedetectionmethods.Boththequantificationandthedevelopmentsaredescribedinsomedetail.
Inthefaceofafuturewithlowoilprices,sustainabilityimportantly includesmeasurestodrivedownthecostperbarrelproduced. Althoughthepricetoplaycertainlyincludesenvironmentalcompliance,resiliencytoseveredropsintheworldpriceisrequired.Theanalyticalmethodsinsupportofimprovingrecoveryeconomicscomprise aninterestingblendofchemistry,geochemistry,andbiochemistry. Nevertheless,thereisnosuggestionofacomprehensiverecipeforsuccess.Thisismerelyanattempttofillthetoolboxofthefolkslooking toaddressthisobjective.
Theentirebookhasasolutionsflavor,inthebeliefthatregulations aremorelikelytobeadheredtoifcost-effectivealternativesexist. Voluntarycompliancewillalsobeencouraged.Processmeanstomonetizethegasthatwouldotherwisebeflaredisanexampleofasolution thatisnotasimplesubstitutionofbetterperformingequipment.In general,thebookisintendedtobetechnicalbutapproachable. VikramRao
newrecentdepthsdowntoUS$25perbarrel.TheOrganizationofthe PetroleumExportingCountries(OPEC)’sresponsewastomaintain productionandnotpropupthepricewithproductioncuts.Awidely reportedmotivationofatleastSaudiArabia,amemberofOPEC,was todriveouthighercostshaleoilproducers.Shaleoilproductioncertainlyhaddroppedbyearly2016,butresiliencycreptin.Production costswereslashedinpartwithcostreductionbytheservicecompanies butmostlythroughefficiencyinnovation.Animportantcomponentof thisgameofchickenisarealisticappraisalofhowlowthe profitablebreakevencostofshaleoilcango.Thetimeframeisafactor aswell,asdescribedlater.
What,then,aretheprospectsforshaleoilproducerssurvivingthe Saudigambit?Wetreatthenaturalgasissueseparately.Themarkets aredifferent,andtheonlymaterialeffectofoilpriceisonliquefied naturalgas(LNG)pricing;thisisdiscussedlater.ThesurvivalofUS shaleoilisdependentonthreefactors.Themainfactoristheabilityto produceitprofitablyatdepressedoilprices.Thesecondistheability toovercomeenvironmentalhurdles,becausedoingsomayrepresent thepricetoplay.Lastly,shaleoilproduction,unlikeconventionaloil recovery,literallyoccursinthebackyardsofcitizenswhoarenotused tothisactivity.Thesethreefactorsadduptothestandarddefinitionof sustainability:Withoutprofit,thereisnoenterprise,butitcannotbeat theexpenseofeithertheenvironmentorthewellbeingofthecitizens inthelocalityoftheindustry.
Asaconsequenceoftheforegoing,thisbooksquarelyaddressesall threeelementsofsustainableproduction.Thishydrocarbonsourceis newand,consequently,nowhereclosetooptimizedwithregardtoeconomicsofproduction.Forexample,onlyapproximately5%oftheoil inplaceintheaverageplayisbeingproduced.Thepercentageforconventionaloil,bycontrast,isinthemid-thirties.Modestgainsinthe 5%figurewillhaveasignificantimpactonprofitability.However, thesegainsrequirecapabilitiesnotcurrentlyinthetoolboxofpractitioners.Duringtheperiod2013to2015,theindustryfocusedon improvingefficiencyinlogisticsanddrillingpractices.Itisnowcommonformultiplewellstobeplacedonpads.Thefollowingbox describesthisphenomenon,whichhasbenefitstotheenvironmentin additiontotheeconomicsofdrilling.
deliverycontractsforLNGarepeggedtothepriceofoil.Thus,in 2015,thepricedroppedinconcertwiththedropinoilprices,and thefuturepriceremainsuncertain.ThepriceinAsiawasupto US$19perMMBTUinearly2014;inearly2016itwasclosetoUS$9. AllofthisstillleavestheUnitedStateswithaconsiderableadvantageinthemanufactureofchemicalssourcedfromnaturalgas. Consequently,USpriceswilllikelyfirmovertime.Thesignificance isthatinnovationincostreductionmaynotbeascriticalforgasas itisforoil.Demandcreationismoreimportant.Thechallengesare similar,andtheoilsidemayhavedonethegasindustryafavor.For oil,itisamatterofinnovateorperish.Gasproductionwillbea beneficiary.Ontheenvironmentalside,theissuesaresimilarbut possiblyslightlymoreacuteforgasbecausegasismoremobilethan oil.Thegainstobemadeusingmethodsinthisbookandelsewhere willcertainlyapply.
Wehavechosentofocusontechniquesthatenablebetterilluminationofthereservoir.Thisbookisnotintendedtobeacomprehensive treatiseonreducingthecosttoproduceabarrelofoil.Althoughthat iscertainlythemostappropriatemetric,wefocussimplyonnewand emerginganalyticaltechniquesthatenablethatobjective.Thetwo techniquesfeaturedrelyonrecentadvancesindataacquisitionand associateddataanalytics.Oneusessophisticatedelectronmicroscopy toestimatereservoirrockproperties.Theotherusesthemicrobiometo identifyrockwithgreaterproductionpotential.Thesecondisderived fromexistingdataanalyticsassociatedwiththehumanmicrobiome andonthefactthatDNAsequencingcostshaveplummetedbyfour ordersofmagnitudeinrecentyears.
Formationevaluationmethodsperfectedoverthelast80yearsor soarenowseenasapplicableprimarilytoconventionalreservoirs. Tofurtherconfoundmatters,thehighcostofformationfracturing leftlessroomforcostlyreservoirestimationoperationssuchas sophisticatedlogginginhorizontalwells.Theresultwastheaforementionedlowrecoveryrate.WhileoilpriceswerenorthofUS$100 perbarrel,therewasnotmuchincentivetoimproverecoveryfactors.Furthermore,wemostcertainlydonotimplythatthemethods describedhereinaretheonlymeansforimprovingreservoirunderstanding.Wehopethebookwillstimulatefurtherresearch.
ENVIRONMENTALCONSIDERATIONS
Thesefallroughlyintotwobuckets:waterandair.Eachwellcanconsumeupto6milliongallonsofwater.Thewaterismostlyfresh,so theindustrycompeteswithotherusers,whichisespeciallypernicious inrecentdroughtconditions.Onlyabout10to35%ofinjectedwater returnstothesurfaceasflowback.Thewaterleftbehindcanaffectreservoirperformance,butitisflowbackthathasthepotentialtocontaminatefreshwatersourcesandisthereforethebasisformuchofour discussion.Manyoftheanalyticaltechniquesforassessingcontaminationarenotnew,butsomearenotwidelyknownintheindustry. Theirapplicabilityisdiscussedindetail,especiallyinthegeochemical context.Forexample,intheeventofaquifercontaminationbymethane,onecanusethesetechniquestopredicttheageoftherockfrom whichtheoffendingfluidwasderived.Theycanalsodecipherwhether thesourcewasterrestrial.Thishasimplicationsforculpabilityand remedialaction.
Airemissionsfromshaleoilandgasoperationsrequiresignificant investigation.Analyticaltechniquescontinuetobeinadequate.For example,volatileorganicchemicalsarenotcurrentlymeasuredatthe perimeterofoperationsbecausedoingsoiseconomicallynotfeasible. Existingstudiesarelargelyphenomenologicalwithregardtohealth outcomesinproximalpopulations.Wedescribeanemergingtechnologywiththepotentialtoidentifyandquantifyairborneorganicmoleculespreciselyatamultiplicityoflocationsatrelativelylowcost.Also describedisthemeasurementofparticulatematter(PM10and PM2.5),whichisimplicatedinmorbidityandmortality.Oneofthe underlyingbeliefsoccasioningthisbookisthatcost-effectiveanalytical techniquescouldinformlegislationandpossiblyemboldenit.Inits June2015decision,theUSSupremeCourtgaveclearinstructionto theUSEnvironmentalProtectionAgencytotakeintoaccounttheeconomicsofenforcementpriortopromulgationofrules.
Fugitiveemissionsofmethanehavefacedintensescrutinysince 2011.Newanalyticalmethodshaveemergedandmorearebeing researchedtoidentifysourcesandquantities.Directreleasetothe atmosphereisincreasinglyuncommon,inpartduetothescrutiny. However,flaring(combustion)isthenormwhennoprofitableoutlet canbefoundforthegas.Thehighestvolumesofflaringareforgas associatedwithoilproductionandforwhichnoexportpipelinesexist.
Inefficientburnersresultinreleaseofaromaticcompoundssuchas benzeneinadditiontocarbondioxide.Becauseharnessingofgasthat wouldotherwisebeflaredhasthepotentialtocreateeconomicvalue, somediscussionofrecentadvancesinthatspaceisincluded.Viable economicalternativesarepowerfulincentivesforcompliance.
Manyfactors somepredictable,othersnot feedintothisnew phenomenonofshalepetroleumwithitstechnological,economic,environmental,geopolitical,andsocialramifications.Theadvancesinanalyticalmethodsdescribedhereinarelikelytohaveimplicationswell beyondtheoilpatch.
ofproducedgaslosttotheatmosph erebeginstonegatetheinherent advantageofgas.Tosomedegree,thislimitingstatemaynotbe relevantbecauseitisknownfromanEDF-sponsoredstudythat conventionaltechnologyalone,ifimplemented,canmitigateavery highfractionoftheemissionsveryeconomically. 2 Innovative technologiesarebeingactivelysought,someofwhicharealludedto inChapter3.Collectively,therefore,onemaybeentitledtosome bullishnessonshaleoilandgasasan etpositivefortheenvironment comparedtothealternatives.
SOURCESOFMETHANELEAKAGE
Methanemayleakoutateverystageintheproductionanddelivery system. Fig.2.1 isasketchofthesystemfromthepointofproduction totheenduse.Notshown,butdiscussedlater,isnaturalseepageon landandintheocean,mostlymethanehydrates,whichareplentiful. AccordingtoaUSGeologicalSurveyestimate,thetotalpotentialgas fromthissourceisgreaterthanthatfromallfossilfuelproduction operationscombined.
Inthesimplestterms,thechainbeginsatthewellsites.Thesemay beindividualwellsor,asisbecomingincreasinglycommon,acluster ofwellsonwhatisknownasapad(seeChapter1).Thegasmaybe fromawelldesignedtoproducenaturalgasorfromanoilwellthat alsoproducessomegas.Thislastisknownasassociatedgas.Thegas issentawayfromtherigsiteongatheringlines.Thesearesmalldiameterpipelines,usuallywellunder10inchesindiameter,as opposedtointerstatepipelines,whichare36or40inchesindiameter. Althoughsmall,gatheringlineshaveaninstalledcostofmorethan US$1.5millionperinch-mile.Thus,eachmileofa5-inchlinecosts approximatelyUS$7.5million.Thishighcostisthereasonsomelines aredeferreduntillaterinthelifeofthesitewhenthereismorecertaintyoftheeconomicviabilityoftheprospect.
Gatheringlinesusuallyconnecttoaprocessingplant.Here,the largerliquidmoleculesareremovedasnaturalgasliquids,usually bychilling.Propane,butane,andnaturalgasolineareseparatedand sold.Someethaneisalsoremoved.Pipelinespecificationslimitthe thermalcontentofgasto1.1millionBritishthermalunits (MMBTU)perthousandcubicfeet(Mcf)ofnaturalgas.Ethane
typicallyhasanenergycontentof1.78MMBTUperMcfcompared toanominal1.0MMBTUformethane,soevenasmallpercentage ofethaneraisesthecalorificvalue.Sinceearly2014,ethanehasnot hadareadymarket,withpricessometimeslowerthanthatfor naturalgas.Thisisinpartbecause,unlikepropaneandbutane,it hasnoconsumeruse.Theonlyutilityisasarawmaterialforthe manufactureofethylene,andethylenecapacityintheUnitedStates islowcomparedtotheethanesupply.Furthermore,allbut3of the39ethanecrackersareontheGulfCoast,farfrommuchofthe ethaneproduction.Producerswillputasmuchethaneasallowable intothepipeline.
Figure2.1Naturalgassupplychain.
Uponexitfromtheprocessingplant,thegasgoestoacompressionstationtoallowlong-distancetransport.Therearefour principaldestinations,asshownin Fig.2.1 .Factoriesusingnatural gasasafuel,suchassteelmills,andthosethatuseitasaraw material,suchasmethanol-orammonia-producingplants,gettheir supplydirectlyfromtheinterstateline.Powerplantsalsogetit directly.Athirddestinationisstoragefacilities,usuallyunderground,commonlytoppedupbeforethewintermonths.Finally, thereisthe “ citygate, ” fromwhichtherearemultipledestinations, includingindustry,homes,andlocalstorage.Insomecases,power plantsarealsofedfrombeyondthecitygate.
Thisdetaileddescriptionofthesupplychainisgivenbecausemost oftheelementsareassociatedwithfugitiveemissions,butwithdifferentmechanisms,and,moreimportantforthisbook,oftenwithdifferentmethodsofdetectionandquantitation.
PRODUCINGWELLS
Thewellpadhastwoclassesofmethaneleakage:equipment-related andasaconsequenceofthefluids-extractionprocess.Inthefirstcategoryarehatchesandcoversoffluid-filledcontainerswithinadequate sealing.Valvesandgasketsarealsoclassifiedinthiscategory. Thefracturingprocessinvolvesinjectionofhigh-pressurefluidtofracture therockandinduceartificialpermeabilityinthereservoir.Atsomepoint, fluidreturnstothesurface,andthisischaracterizedasflowback. Flowbackwaterwillbringwithitacertainquantityofnaturalgasfrom thereservoirrock.Themixtureissenttoaseparatortankwherethegas iseasilyremoved.Inmanyinstances,itiseitherusedonsitefor powergenerationaftersomeconditioningtreatmentorsentto thegatheringlineforexporttotheseparationplant.Earlyindevelopmentofthesite,gatheringlinesmaynothavebeenputinplace.In thiscase,theoperatorhastwochoices:releasetotheatmosphereor burninaflare.Themoreenvironmentallybenignoptionofflaringis increasinglybeingchosen.Quantificationofthisisongoinginthe EDF-sponsoredstudyattheUniversityofTexasatAustin.3
Thesecondcategoryofemissionsistheoperationknownasliquids unloading.Occasionally,theproductionfromagaswellisimpededby
Figure2.2UpdatedUSinventoryofmethaneemissionsfromlocaldistributionsystems. LambBK,EdburgSL, FerraraTW,HowardT,HarrisonMR,KolbCE,etal.DirectmeasurementsshowdecreasingmethaneemissionsfromnaturalgaslocaldistributionsystemsintheUnitedStates.EnvironSciTechnol2015;49 (8):5161 5169
METHANEHYDRATESANDTHEIRROLEINGLOBALWARMING
Methanehydratesareice-likemoleculescontainingmethane.Theyare ubiquitousandplentiful.AccordingtotheUSGeologicalSurvey,they arebyfarthemostplentifulhydrocarbonsourceintheworld.They arediscussedinthisbookbecausetheyareknowntoseepatratesthat havenotbeenproperlyquantified.Inpartbecausemanyofthedepositsareinmarineformations,theseepageisnoteasilydetectable.There isabeliefinmanycirclesthatglobalwarmingwillacceleratetheseepage.Thepossiblemechanismforthiswillbecomeevidentlater.
Methanehydratesarealsoknownasmethaneclathrates.Theseare verylargemolecules,notunlikethebuckyballformofC60,whosediscoverybySmalley,Curl,andKrotowasrecognizedwiththeNobelPrizein 1996andisthebasisformajoradvanceswithcarbonnanotubes.Thelatticecomprisingwater(ice)hasintersticesfilledwithmethanemolecules.