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Abstract

The global energy marketplace is undergoing a predictable transition from coal in the 19th century, to oil in the 20th century, to natural gas and other non-fossil fuels in the 21st century. Oil as a percentage of total global energy “peaked” in 1979, and thus the 20th century will undoubtedly be remembered as the golden age of oil. The expansion of natural gas and other lower and non-carbon forms of energy in the 21st century has far-reaching implications and brings with it a number of favorable outcomes.

  • Natural gas is abundant and is found in more regions than oil; this illustrates energy diversity and security of supply.

  • With substantial growth expected in worldwide LNG in the coming decades, natural gas will have a global delivery infrastructure that will help stabilize energy prices, benefiting the macro-economies of most nations.

  • A global natural gas infrastructure will help make the transition to alternatives smoother.

  • Increased use of natural gas—to replace coal in power generation and oil in transportation—would help reduce atmospheric emissions.

A subtle but important corollary to the long-term trend toward natural gas shows an ever greater percentage of natural gas production coming from unconventional resources. One need only look to the United States, where coal-bed methane, shale gas and tight gas now represent over 50% of annual production (a benchmark achieved several years earlier than the Tinker forecast published in a 2004 Oil and Gas Investor article), and estimated unconventional natural gas resources have more than tripled the conventional gas resource base. As in the United States, a significant portion of the world’s remaining natural gas resource is probably unconventional—tight gas, coal-bed gas, shale gas representing technologically proven unconventional resources; and methane hydrates, ultra deep (15,000 to 30,000 ft), and brine gas resources as possible future unconventional components. The bulk of the global unconventional natural gas has not yet been developed, and it represents an enormous untapped resource.

Global Resource Base

There is abundant natural gas to feed an international liquefied natural gas (LNG) market. USGS estimates indicate global natural gas resources totaling more than 13,000 Tcf. A recent global estimate of unconventional gas resources, excluding hydrates, is more than 32,000 Tcf (SPE paper 68755). Global approximations of methane hydrates range from 30,000 to 300,000 Tcf, and although commercial development has not yet been achieved, some believe that economic hydrate production is possible within several decades. Of course, converting resources to reserves is a function of price, technology, and access. If the current world demand of nearly 100 Tcf per year escalates at an aggressive 2% per year, the combined conventional and unconventional global natural gas resource base, excluding hydrates and assuming 50% resource-to-reserve conversion, could satisfy well over 100 years of global demand.

Thus, the natural gas resource base is not the primary issue, but instead production and deliverability are the key challenges. To bring natural gas from source to market will require new and upgraded shipping and pipeline infrastructure. Even with aggressive terminal development, LNG will merely supplement, not displace, domestic natural gas production. As such, LNG would strengthen the market by creating a natural gas industry with global reach, increase stability and supply confidence, reduce security concerns based on limited sources, and perhaps allow natural gas to become a base-load fuel for power generation in the U.S.

Demand Drivers

Of the three major energy demand sectors in the U.S.—transportation, heating, and electricity—electricity is growing the fastest. Natural gas is a vital future electricity generation fuel in the U.S. because coal and nuclear, the only other dispatchable fuels available to satisfy large-scale electricity demand today, face major political resistance in the U.S (unlike in several other developed and developing nations where coal and/or nuclear are growing). Alternative sources of energy for electricity generation include wind, solar, hydroelectric, geothermal, waves, tides, and even biomass. These sources are outstanding in certain regions where proper conditions exist and technology continues to advance to make them more affordable and more temporally reliable.

In addition to fueling electricity generation, natural gas serves as a major source of heating fuel. Natural gas also has the ability to serve as a transportation fuel—compressed natural gas (CNG) and liquefied petroleum gas (LPG) in small vehicles and buses and perhaps even LNG in long-haul trucks. As such, natural gas is one of the few fuels that crosses all three major sectors of demand.

Alternative energy sources are critical energy supplements, and continued development is needed. Wind, solar and biomass combined with hydroelectric, geothermal, nuclear, and significant advances in energy efficiency and energy conservation could, by 2030, satisfy 20% of global energy needs. That leaves 80% of energy demand still to be met by fossil fuels. There are simply no affordable, available, reliable and, in the case of natural gas, cleaner substitutes today for fossil fuels.

Research and Technology

Research and technology advances can impact both supply and demand, either by allowing more natural gas to be discovered and produced (effectively increasing the size of the recoverable reserve base), or improving energy efficiency (effectively slowing the rate of demand growth). Both will be needed over the long term.

To-date, technological improvements have relied largely on private-sector investment. Future research and technology investments must include a greater role by governments in private-federal-university partnerships, emphasizing on technologies that can enable more cost-effective development of unconventional reservoirs, as well as conventional natural gas in deep water and frontier areas. The Research Partnership to Secure Energy for America (RPSEA) in the United States represents one such partnership.

Research directions for unconventional resources are dictated by fundamental questions. For example:

  • Are there systematic controls on pore/fracture networks that can be described, classified and modeled?

  • What impacts do facies and depositional environment have on diagenesis, and what impact does diagenesis have on production?

  • Are there common source and charge characteristics across geographic basins?

  • Can we image rock/fluid variations seismically?

  • How do we “contact” the molecules? What are the optimum stimulation and recovery methods?

Such questions will lead to practical challenges, such as:

  • Determining whether low-quality reservoirs covering large areas are continuous and can be considered resource plays;

  • Finding the production “sweet spots;”

  • Developing technologies for hydraulic and other stimulation technologies and managing the vast water required; and

  • Addressing adverse environmental effects resulting from production from low-quality reserves —surface disturbance, compressor noise, water disposal, and the like.

Asking questions and identifying related challenges leads to a sense of the research and technology needs, and many of those start with the rocks. It’s important to be able to see and characterize very small pores and fractures in the rocks and to understand the diagenetic processes that formed them, resulting in a need for advanced structural diagenesis analysis, unconventional reservoir simulation, and forward modeling. Imaging these systems is also critical, and here R&D should focus on rock and fluid physics integrated with seismic and petrophysics. Finally, the correct completion technologies will need to be developed and applied, and advanced drilling and operations practices will need to be environmentally friendly.

BEG Research Contributions

The Bureau’s FRAC program (Laubach and others) is studying structural diagenesis and deliberately synthesizing rock mechanics and geochemistry in new and uncommon ways. This approach promises to address long-standing mechanical and geochemical problems in sedimentary basins at several scales. Additional Bureau-related research (Lander and Bonnell) involves comparing the processes of microstructural analysis of fractures to a mathematical model that has been developed to simulate hydrodynamics and fluid-mineral reactions in permeable media. The model shows time evolution of fracture-aperture degradation patterns from precipitation/dissolution reactions.

In terms of tight gas, BEG’s Deep Shelf consortium (Dutton, McDonnell, and others) has been examining reservoir quality in rocks more than 15,000 ft deep. Observations indicate that unconventional systems share common facies and depositional system characteristics with conventional reservoirs; thus diagenesis is largely responsible for the low permeability. Interestingly, as a first-order approximation, the facies having the highest permeability at deposition often retains the best reservoir quality at great depths. Porosity in tight sand systems is also a key issue, and advances in understanding and modeling of diagenesis are allowing patterns to be successfully predicted ahead of drilling.

In terms of shale gas, BEG researchers in the Mudrocks Systems consortium (Ruppel and others) observe a broad range of pore sizes, shapes and concentrations, including fractures. The larger pores are often associated with fossil fragments; smaller pores, some in the micro and even nanometer size, are often associated with carbon-rich areas (Loucks, Reed, and others). The morphology of the smaller pores suggests that they are secondary, which has implications for permeability, storage and response to hydraulic fracturing.

In January 2008, the Bureau’s Advanced Energy Consortium (AEC) opened its doors. The AEC is a multimillion dollar industry partnership managed by the Bureau that conducts pre-competitive research on the science and engineering of intelligent, mobile, subsurface micro- and nanosensors. One outcome of the collaborative effort could be the development of sensors, injected passively with frac fluids, to measure some aspect of the spatial, thermal, chemical and/or pressure environment. Ultimately this ability to contact and characterize the interwell pore space should lead to significantly enhanced recovery of oil and natural gas.

Also in terms of unconventional energy resources, Bob Hardage and Diana Sava, of the Bureau’s Exploration Geophysics Laboratory research team, have evaluated key rock-physics aspects of deep-water methane hydrate concentrations. Published estimates of potential resources in given areas vary widely. In part this is due to lack of understanding of how the hydrates are distributed within the near-seafloor sediments. Rock physics modeling by Sava and Hardage suggests a strong shear-wave velocity increase correlated with hydrate concentrations in thin layers containing disseminated load-bearing gas hydrates. Research results like these will be needed to focus future efforts to explore for and produce this decidedly unconventional energy resource.

Summary

Unconventional reservoirs are predominantly in “primary” production phase; similar to conventional oil and gas fields in the 1940’s and 1950’s. Only a small percentage of the total global in-place unconventional natural gas resource base has been produced. There remains much to learn about unconventional resource systems and further research and development is needed to address their interdisciplinary challenges. Federal and private- sector research funding is vital for training and developing the next generation of scientists and engineers. Substantial increases in unconventional production will continue as drilling technology and subsurface understanding advance. Natural gas is positioned to provide a key source of energy as alternative, non fossil energy sources are developed at commercial scale. That is good news for the global economy and environment.

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