SBC. October 2014. Factbook Natural Gas Factbook. SBC Energy Institute
- 83% of natural gas comes from conventional reservoirs: 2.9 trillion cubic meters
- 13% of reservoirs account for 70% of global reserves
- The number of discoveries of giant fields has fallen since 1972
- 17% comes from unconventional resources: .6 tcm and 43% of that (2.6 tcm) was produced in the US. In 2013, shale gas accounted for 39% of total natural gas output in the US
- At 3.5 trillion cubic meters (tcm) world-wide production in 2013, reserves will last from Rystad’s 2014 estimate 60.4 tcm for 17 years, or 58 years if OPEC’s estimate of 200 tcm reserves is correct. Page 24
- Technically recoverable resources (the volume of natural gas recoverable with current exploration and production technology and no regard to cost) are 855 tcm and would last 244 years @ 3.5 tcm/year (if we can get them).
- Conventional reservoirs tend to require less technology to be developed and to yield higher recovery rates. However, reservoirs located in deep water or Arctic environments, and those containing a high level of sour gas may also be very challenging to develop.
We are counting on shale gas, but we’re drilling the best “sweet” spots, and even so, it declines rapidly:
Due to the properties of the source rock, shale-gas wells usually exhibit early production peaks and then enter rapid decline – typically 50% over 3 years. In addition, shale-gas plays concentrations of recoverable generally have lower resources – typically around 0.04-0.6 bcm/km2, compared with an average of 2 bcm/km2 in the case of conventional resources. Consequently, shale-gas production requires more wells.
|Conventional||Tight Gas||Shale Gas||Coalbed Methane|
|Proved reserves (tcm)||60.4||78.0||4.9||0.98|
|USA reserves (tcm)||3.2||10.4||0.8|
|Technically recoverable resources (tcm)||519.0||2.3||210.0||48.0|
|Current Production bcm/y||2831.0||215.0||266.0||71.0|
|USA Production bcm/y||211.8||133.2||242.3||52.8|
|Cost of production per Mbtu||$0.2 – 9 (a)||$3 – 9 (b)||$2-10 ©||$3-8 (d)|
|Recovery Factor %||60-80||30-50||8-30||50-85|
(a) Source: IEA (2013), “World Energy Outlook 2013”; Rystad databases (accessed May 2014); BP (2013), “BP Statistical World Energy Review 2013”
(b) Rystad databases (accessed May 2014); IEA (2013), “Resources-to-Reserves 2013”; Schlumberger (2011), “Basic Petroleum Geochemistry for Source Rock Evaluation”
(c) Schlumberger (2011), “Shale Gas: A Global Resource”; Schlumberger (2006), “Producing Gas from Its Source”; Rystad databases (accessed May 2014); IEA (2013), “Resources-to-Reserves 2013”
(d) Schlumberger (2009), “Coalbed Methane: Clean Energy for the World”; Rystad databases (accessed May 2014); IEA (2013), “World Energy Outlook”
The slide below is especially scary because it shows that USA conventional reserves are only 26%:
And the United States is producing its reserves at a very rapid rate:
Proved reserves are based on figures from the Organization of the Petroleum Exporting Countries (OPEC) and Rystad (P90 for the latter). They correspond to those quantities of natural gas which, by analysis of geological and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under current economic conditions, operating methods, and government regulations.
Like CO2, methane is a potent greenhouse gas (GHG). However, it has a higher global warming potential (GWP) than CO2. According to the IPCC, methane GWP would be 28 to 84 times higher than CO2 GWP over 100-year and 20-year horizons, respectively.
While abundant, the largest conventional gas resources are concentrated in a small number of countries. In the 2000s, it was thought that Russia, Iran and Qatar owned more than 70% of known conventional gas resources, but recent discoveries of conventional reservoirs in East Africa and the Mediterranean Sea have opened up new gas frontiers, reducing the concentration of natural gas reserves.
According to OPEC, natural gas production was led by North America, Russia, and the Middle East; of this, 83% came from conventional reservoirs.
Raw natural gas collected at the wellhead needs to be processed to meet pipeline quality standards, to ensure safe and clean operations, and to extract valuable natural gas liquids (NGLs). As of 2013, there are close to 2, 000 gas-processing plants operating worldwide, with a global capacity of around 7.6 billion cubic meter (bcm) per day.
About 21% and 10% of all produced natural gas is now traded internationally via, respectively, pipelines and LNG. As a rule of thumb, the longer the shipping distance, the more economically attractive LNG tends to become compared with pipelines. Growth in the LNG trade has been made possible by the expansion of LNG infrastructure: there are now 29 countries with import facilities and 19 with export facilities, trading 237 million tons per annum (Mtpa) of LNG. With new export and regasification facilities under construction, the expansion is expected to continue. Meanwhile, floating liquefaction and regasification concepts have garnered attention as a way of reducing development time, increasing flexibility and lowering capital costs. The first floating storage and regasification units (FSRU) have been commissioned. Four floating liquefaction (FLNG) projects have achieved a final investment decision. Nevertheless, many gas fields are too small or remote to justify pipelines or LNG investment. In order to tap these resources, known as stranded gas, two alternative technologies are being considered: compressed natural gas (CNG) and gas-to-liquids (GTL).
The buildings segment still accounts for 22% of direct natural gas demand and this share is expected to remain stable in the next few decades. Thermal applications are dominant: space heating, water heating and cooking account for 54%, 22% and 11% of natural gas demand in the buildings sector, respectively. The use of natural gas in buildings varies significantly, depending on climate, urbanization patterns, or building design and insulation.
In industry, natural gas is used as a heat source, but also as a chemical feedstock. Direct natural gas consumption represents around 18% of final energy consumption in industry. The chemicals and petrochemicals sectors are by far the most important consumers (accounting for 44% of total industry demand for gas). This is because natural gas is largely used as a source of heat in refineries and as feedstock for producing ammonia and methanol. Other than for chemicals, the bulk of industrial gas demand comes from small-scale industrial consumers using natural gas in small-to medium-scale boilers to generate heat. Any switch from coal to gas in the industrial sector is likely to be relatively limited and subject to the development of carbon pricing.
Conventional gas refers to resources accumulated in a reservoir in which buoyant forces keep hydrocarbons in place below a sealing cap rock. Reservoir and fluid characteristics typically permit natural gas to flow readily into a wellbore. The term unconventional reservoirs, in which gas might throughout a reservoir at the basin scale, and in which buoyant forces are insufficient to expel gas from the reservoir, meaning that intervention is required. Conventional gas reservoirs can either be isolated (non-associated) or associated with oil. Associated gas can be in form of a gas cap (free gas) or it can exist in solution within the oil (solution gas). Natural gas was long considered an unwanted byproduct of oil and was only considered as a commercial prospect when deposits were located close to markets or gas infrastructure.
Coalbed methane is generated during the formation of coal and is contained to varying degrees within all coal microstructure. Because of coal’s porous nature and its many natural cracks and fissures, coal can store more gas than a conventional reservoir of similar volume. However, production from CBM wells can be difficult because of the low permeability of most coal seams. As a result, technologies such as directional drilling and hydraulic fracturing are used to open access to larger areas, enhancing well productivity. Finally, CBM production is often associated with extensive production of water. Water must be removed in order to reduce pressure within the reservoir, making lifting and surface separation more complex and costly. CBM production is advanced in the U.S., Canada and Australia.
Pipelines are the backbone of gas transportation, with a global network of 1. 4 million kilometers
Globally, more than 89% of natural gas is transported along a 1.4 million km pipeline grid. One-third of this network are lines transporting large pressure, large-diameter (6’’-48’’) pipelines. The other two-thirds comprise thinner pipelines at production sites, called gathering lines, and the medium- and low-pressure distribution grids that supply end-customers. Pressure is required to maintain the gas flow. As a result, compression stations are located every 80-160 kilometers along the transport grid. Each station contains one or several compressor units (up to 16). These are classified by their horsepower (up to 50,000-80,000) and gas capacity (up to 90 Mcm/d). Compressors can use a motor (reciprocating) or a turbine (known as centrifugal). Gas-filtering, but also cooling and heating facilities are often included in the station to maintain gas temperature. Gas transport pipelines are usually made of carbon steel and protected against corrosion by external coating and cathodic protection systems.
Pipeline costs vary significantly according to capacity, length and their physical environment, but are dominated by the costs of labor and materials.
Before liquefaction, natural gas must be cleaned to remove contaminants, which might freeze during liquefaction or corrode pipelines. Heavier hydrocarbons are also extracted to meet gas specifications.
Several liquefaction projects are in development in the U.S., but most are awaiting final investment decisions. Sabine Pass is the only project under construction as of 2014.
Australia is the third largest LNG exporter (22.2 mtpa, or 10% of world exports) after Qatar (77.2 mtpa) and Malaysia (24.7 mtpa) but ahead of Indonesia (17 mtpa). However, Australia, where 53% (63.8 mtpa) of the liquefaction capacity under construction worldwide is located, is expected to take over Qatar as the largest LNG exporter by 2020.
Natural gas prices: for distances up to 9,000 km, LNG tends to require more energy than pipelines, making it more exposed to price increases (i.e. the break-even point between pipeline and LNG may occur over a longer distance than when a pipelines system is used).
Many gas fields are too small or too remote to justify investment in pipelines or LNG facilities. In some environments, the use of pipelines is simply not practical. A possible alternative is compressed natural gas, which is already being used for local gas distribution onshore, but whose application offshore, although conceptually CNG’s main benefit is that it requires relatively little infrastructure, so capital requirements are low : compression is a common feature of most gas-production units and less costly than liquefaction; offloading requires simple buoys. However, CNG has a lower energy density than LNG (typically around one-third, depending on the pressure). As a result, investments in CNG carriers are greater and operating costs are also higher (notably fuel costs).
If the US ever needs to import LNG because shale gas gets too expensive to drill, there are very few regasification plants:
Natural gas plays an important role as a feedstock for producing ammonia, methanol and other hydrocarbon-based products (e.g. olefins, such as ethylene and propylene, using natural gas liquids2). Ammonia is one of the most extensively produced chemicals in the world, helping to create over 500 million tons of nitrogen fertilizer per year. Similarly, methanol is a widespread chemical product, with around 100 million tons used every year as anti-freeze, solvent or fuel. In recent decades, natural gas has become the primary feedstock in ammonia and methanol production. Low natural gas prices and progress in plant design encouraged its use, leading to gains in energy efficiency. Steam methane reforming represents around 77% of hydrogen produced as a basis for ammonia; 75% of methanol production comes from natural gas. In both cases, the remainder is mainly made up of coal
June 2014: The Middle East has 43.2% of the total natural gas deposits in the world (80.3 trillion cu/m) according to the BP Statistical Review of World Energy June 2014 report. Qatar has 24.7 trillion cu/m with Saudi Arabia next in line containing 8.2 trillion cu/m in the region. he International Energy Agency (IEA) has, however, stated that the demand for natural gas will exceed its production from Middle East countries by the year 2019.
25 Jan 2013. Rush to Natural Gas has Coal-fired utilities Seeing Red. Wall Street Journal.
Electricity from Natural Gas is now 30%, up 12% from 10 years ago (18%). From coal: now 37%, down 13% from 10 years ago (50%)
U.S. electricity in trillions of kWh (kilowatt hours):
- Coal 1.7 Trillion
- Natural Gas 1.0 Trillion
- Nuclear .79 Trillion
Some prefer coal power plants, where coal can be stockpiled. Gas is hard to store in bulk near power plants, making plants dependent on natural gas pipelines that simetimes have delivery issues.
Only 3 states buy gas under contracts longer than 3 years (OR, CO, OK).