High Natural Gas Prices Research Articles

The path to commercial hydrate gas production

During the course of the past two decades, enormous reserve potential has often been attributed to gas hydrates in marine sediments, yet the commercial development of gas hydrates is widely viewed as a possibility which is 20, 30, or more years away. As a result, the oil and gas industry has been slow to pursue this opportunity, and gas hydrate exploration and production research has been a low priority for most energy companies. This perspective is changing as a result of recent research by universities, government agencies, and international consortia. In particular, a better understanding of gas hydrate formation has developed along with geologic models for the concentration of gas hydrate in potential reservoirs. At the same time, emerging production technology should enable gas hydrate production in the near term, limited more by constraints on infrastructure than by production technology. Given projected higher natural gas prices, gas hydrates will likely emerge as a viable commercial resource in so...

Evaluating the coalbed methane potential of the Gething coals in NE British Columbia, Canada: An example from the Highhat area, Peace River coalfield

Abstract Lower Cretaceous coals from the Gething Formation in the Highhat area of NE British Columbia were analyzed for gas content as part of an exploration program. Samples of continuous wireline core and cuttings were processed. Vitrinite reflectance and dry ash-free volatile matter both indicate that the rank of the coal is low volatile bituminous. The coals are well cleated and contain shear fractures, as seen in the core description and in the FMI logs. Coal cuttings were screened to remove a very fine fraction (− 200 mesh) and then treated in heavy liquid (SG 1.75 g/cm 3 ) to remove inorganic lithologies. For the cores, total gas content ranges from 516.9 to 876.8 scf/t (16.1–27.4 cm 3 /g; adb) with a mean value of 671.1 scf/t (20.9 cm 3 /g) at 20.5% ash (adb). For the cuttings, all desorbed gas was assigned to the + 200 mesh/float 1.75 SG weight fraction. On this recalculated basis, total gas content for the processed cuttings ranges from 651.8 scf/t (20.4 cm 3 /g) to a high value of 2083.6 scf/t (65.1 cm 3 /g; adb). Weight yields after screening/floating are generally low. For samples yielding very low values ( 3 /g; adb) with a mean value of 760.4 scf/t (23.8 cm 3 /g) at 15.5% ash (adb). The desorbed gas is predominantly methane (98–99%; air-free and acid-free basis) and average carbon dioxide is about 6%. Methane is thermogenic based on isotopic analysis. Methane adsorption isotherm analysis at reservoir conditions shows that the Gething coals are at least 95% gas saturated. Using 1300 m as a depth cut-off and an average gas content of 672 scf/t (21 cm 3 /g), GIP (gas-in-place) in the Highhat prospect area is estimated to be 270 bcf (billion cubic feet). This translates to 24.5 bcf/section (a section is equal to a square mile or 640 acres) for the 11 sections of land in the vicinity of the corehole or to 3 bcf/m/mile 2 . The low absolute permeability of the coals (0.5 md) is the main limiting factor for producibility and commercial development of the resource. Even at today's high natural gas prices, these coals are not economically viable.

Can deployment of renewable energy put downward pressure on natural gas prices?

High and volatile natural gas prices have increasingly led to calls for investments in renewable energy. One line of argument is that deployment of these resources may lead to reductions in the demand for and price of natural gas. Many recent US-based modeling studies have demonstrated that this effect could provide significant consumer savings. In this article we evaluate these studies, and benchmark their findings against economic theory, other modeling results, and a limited empirical literature. We find that many uncertainties remain regarding the absolute magnitude of this effect, and that the reduction in natural gas prices may not represent an increase in aggregate economic wealth. Nonetheless, we conclude that many of the studies of the impact of renewable energy on natural gas prices appear to have represented this effect within reason, given current knowledge. These studies specifically suggest that a 1% reduction in US natural gas demand could lead to long-term average wellhead price reductions of 0.8–2%, and that each megawatt-hour of renewable energy may benefit natural gas consumers to the tune of at least $7.5–20.

Natural gas for generation: a solution or a problem?

Natural gas is an essential energy source that has many applications, including heating homes and businesses, powering industrial and agricultural production, and, most recently, generating a substantial amount of electricity needs. Thus, natural gas plays a vital role in achieving the nation's economic and environmental goals. The high price and high volatility of natural gas has been a great concern for those expecting to profit from gas-fired generation units in the competitive electricity markets. Among the reasons for the emergence of gas-fired generation capacity are the high efficiency and environmental friendliness of gas-fired units and presumed low gas prices. This paper discusses the advantages and disadvantages of using natural gas for generating electricity. The bottom line is that natural gas cannot be a long-term fuel choice for generating electricity. Fuel diversification and devotion should be a common understanding among industry, government, academics, and the general public.

High Natural Gas Prices and the Updated Market for CHP

ABSTRACT Combined heat and power (CHP) has long been the most frequent application for distributed generation (DG) units. Indeed, the chemical, paper, and petroleum refining industries have converted their excess fuel stocks into power since the 1920s. Today, emerging technologies such as microturbines and fuel cells are increasingly being used for CHP. This is likely to remain the most important DG application for the next decade, with the existing installed distributed generation CHP base doubling by 2014. This article looks at both the United States historic DG installation record and suggests the likely size of the future distributed generation CHP market. Not only are market trends that influence the use of CHP identified, but by using a highly disaggregated and detailed model, their impacts on market potential are quantified. The article presents top-level insights into which CHP technologies and size ranges have been and will be the largest market segments for manufacturers, developers and fuel suppliers. The data has been calculated by region of the U.S. as well. These forecasts summarize the first DG CHP market assessment to consider the impact of higher gas prices. This information may assist policy making in the DG and CHP arenas, and could influence R&D efforts.

LOOSENING THE PURSE STRINGS

CHEMICAL FIRMS ARE ALLOWING themselves once again to believe that an economic recovery is underway. Predictions in late 2000, 2001, and again in 2002 that a turnaround was just around the corner did not fool the financial guys. They were dealing with realities that still plague the industry: excess capacity, slack demand, and—over the past year—high natural gas prices. But as signs gather that the economy is about to throw off its torpor, even the penny-pinchers are beginning to believe. A sampling of chemical firms' spending plans for 2004 shows that many are loosening the purse strings on investments in their own businesses. Mind you, that doesn't mean planners have thrown all caution to the wind: At this juncture, it looks like capital spending will recover strongly in 2004 compared with the past fewyears, but that R&D budgets will hardly budge. C&EN's annual survey of capital expenditures finds that ...

Chemical CEOs Protest Natural Gas Prices

Chief executives from the nation's 19 largest chemical companies have written President George W. Bush and congressional leaders, asking that the government curb high natural gas prices. The CEOs urge the government to adopt a national program to raise energy efficiency, reduce natural gas use for electricity, increase drilling, and expand tax relief for gas producers. The chemical industry has been hard hit by high gas prices because it uses gas as fuel and feedstock and is the U.S.'s leading gas consumer. The CEOs say today's high prices come when national gas inventories are at record highs—9% above the five-year average. The CEOs blame the government, charging that its environmental policies have spurred greater gas use for electricity generation. However, natural gas use by electric utilities over the past several years has been flat or declining, according to Energy Department figures, and its analysts note that even if gas prices ...

SENATE BACKS INTO ENERGY POLICY

WITH ITS 2003 ENERGY legislation hopelessly entangled in procedural delays related to controversial judicial nominations, on July 31 the Senate passed again the same energy bill it had passed in 2002. The suggestion to substitute last year's bill for this year's was made by Sen. Thomas A. Daschle (D-S.D.) and agreed to by Senate Majority Leader Bill Frist (R-Tenn.), who was under pressure to pass energy legislation before Congress' August recess. However, last year's bill, crafted by Democrats, is quite different from the energy measure passed by the Republican House (C&EN, April 21, page 10). That sets up the same situation as last year, when House-Senate conference committee negotiations collapsed because of disputes over production incentives and environmental protection. The American Chemistry Council (ACC), whose members are reeling from high natural gas prices, was looking for the Senate to pass new legislation that addressed a growing natural gas crisis. That ...

ANOTHER GAS CRISIS

CHEMICAL COMPANIES HAVE come out swinging in an effort to reduce record high natural gas prices. Used as a feedstock and an energy source, natural gas is a key commodity for the chemical industry C...

Fuel cell system economics: comparing the costs of generating power with stationary and motor vehicle PEM fuel cell systems

This investigation examines the economics of producing electricity from proton-exchange membrane (PEM) fuel cell systems under various conditions, including the possibility of using fuel cell vehicles (FCVs) to produce power when they are parked at office buildings and residences. The analysis shows that the economics of both stationary fuel cell and FCV-based power vary significantly with variations in key input variables such as the price of natural gas, electricity prices, fuel cell and reformer system costs, and fuel cell system durability levels. The “central case” results show that stationary PEM fuel cell systems can supply electricity for offices and homes in California at a net savings when fuel cell system costs reach about $6000 for a 5 kW home system ($1200/kW) and $175,000 for a 250 kW commercial system ($700/kW) and assuming somewhat favorable natural gas costs of $6/GJ at residences and $4/GJ at commercial buildings. Grid-connected FCVs in commercial settings can also potentially supply electricity at competitive rates, in some cases producing significant annual benefits. Particularly attractive is the combination of net metering along with time-of-use electricity rates that allow power to be supplied to the utility grid at the avoided cost of central power plant generation. FCV-based power at individual residences does not appear to be as attractive, at least where FCV power can only be used directly or banked with the utility for net metering and not sold in greater quantity, due to the low load levels at these locations that provide a poor match to automotive fuel cell operation, higher natural gas prices than are available at commercial settings, and other factors.

High Natural Gas Prices in California, 2000–2001: Causes and Lessons

The market prices of natural gas delivered to California rose to unprecedented levels in late 2000 and remained well above levels elsewhere in the country until the summer of 2001 (Figure 1). In addition to the direct impact on natural gas consumers, the high natural gas prices were also a major cause of the high electricity costs suffered by California and other western states in the June 2000–June 2001 period. This paper describes the market and regulatory circumstances that led to such high prices over such an extended period. Lessons are drawn from this experience for other regions wishing to understand and avoid such problems in natural gas markets.

High Natural Gas Prices Cripple Some Chemical Producers

As if a cyclical trough, an economic crisis in Asia, and the high petroleum prices that have plagued the chemical industry in recent years were not enough, now the chemical industry has to worry about the weather. With unseasonably low temperatures in much of the U.S. this winter, natural gas prices have hit unprecedented highs. According to the Energy Information Administration, New York Mercantile Exchange futures contracts for January 2001 closed out in December 2000 at $9.98 per million Btu. That's more than four times the 1999 closing price of January 2000 futures. The high prices are exacting a toll on petrochemical producers that rely on natural gas as a primary feedstock. Ethane and propane have gone up accordingly, and that has had a dramatic impact on the cost to produce ethylene, according to Mark A. Eramo, an analyst with Houston-based Chemical Market Associates. Eramo says about 70% of ethylene ...

The Modern History of Energy Conservation: An Overview for Information Professionals

The current electricity crisis in California, along with high petroleum and natural gas prices everywhere, reminds us that energy conservation is a key to our survival as a civilization. This critical guide by the author of the Energy Efficiency Manual presents credible information sources on energy conservation.

A Natural Gas Transportation System for Wells With No Pipeline Connection

Summary Petroleum reservoirs containing marginal gas reserves Petroleum reservoirs containing marginal gas reserves located remote from gas transmission lines represent a serious challenge in gas resource management. Often the revenue from gas sales based on the estimated reserves in such fields will not justify the cost of pipeline construction and, as a result, many such wells are never produced commercially. This paper describes the patented process of transporting compressed natural gas (CNG) by truck as an alternative to pipeline construction. It can be used to transport gas to commercial markets until either the reserve estimates are amended upward, thus encouraging pipeline construction, or until the field is depleted. It pipeline construction, or until the field is depleted. It also can be used as an alternative to flaring gas during short-term well tests, or for tong-term production of associated gas in oil wells. Introduction With the advent of higher natural gas prices in recent years, it has become economically feasible to lay gathering and transmission pipelines to many of the smaller and more remote gas-producing wells and fields that traditionally have been deemed noncommercial because of their limited or unknown reserves. Those higher gas paces increase the total revenue expected from such paces increase the total revenue expected from such fields to a point commensurate with the risk of installing the pipeline system. Many other fields, however, are so small or remote or ill-defined that the value of the gas known to exist is insufficient to pay for the cost of installation and operation of the pipeline, thus those fields remain shut in. Numerous alternative schemes have been proposed for recovering and transporting the natural gas energy in these shut-in fields, but thus far only one has proved economically feasible in a wide range of operating conditions. That technique is the transportation of CNG at ambient temperature in high-pressure cylinders mounted on appropriate transport vehicles. This process, pioneered and patented by Texas Gas Transport Co. in pioneered and patented by Texas Gas Transport Co. in 1975, now is used by Pressure Transport Inc. as an exclusive licensee in the U.S. Approximately 15,000 loads of gas have been moved by these companies using the CNG transport process, and ongoing operations involve movement of about 1,000 loads per month. CNG transportation is a simple system applicable to either onshore truck and rail transportation or to offshore barge transportation, and it can accommodate a wide range of natural gas compositions. CNG transportation has relatively low sunk-capital costs but relatively high operating costs, which makes it especially competitive with pipelines in those specific circumstances where the high capital costs of pipelines should be amortized over a known reserve life that is only a short time period. Fundamental laws of physical science are the basis for the primary economic advantage of CNG transportation over other pipeline alternatives such as LNG. CNG transportation (at high pressure) minimizes the total change in the thermodynamic state of the natural gas (as characterized by the property entropy), and the costs of transportation are directly related to the cost of mechanical equipment required to perform such changes of state. JPT P. 2941

THE INCOME DISTRIBUTION EFFECTS OF A NATURAL GAS PRICE INCREASE

Deregulation of wellhead natural gas prices will affect individuals as consumers and resource owners. It is shown that higher natural gas prices will be roughly progressive with respect to household and general consumers. The effects on the distribution of resource earnings will be ambiguous because although the oil and gas industry is highly capital intensive, natural gas price deregulation will likely cause reduced spending on other capital‐intensive activities, including deep drilling for high cost gas, gas utility distribution, and exports. Overall, no clear case can be made that gas wellhead price deregulation will be regressive