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Abstract Natural gas reserves potentially rivaling those of the North Slope have been recently identified in two, never before tested structures, in the Cook Inlet Basin, Alaska. The discovery is a culmination of years of local geological experience, and seismic analysis of existing data using the Energy Absorption Analysis technique (Mitchell, 1997). It is undoubtedly the largest hydrocarbon reservoir discovery in the Cook Inlet, Alaska. They have been named as the Kitchen Prospects. One structure, which has never been tested before, is estimated to hold recoverable reserves of at least 12.7 Trillion cubic feet of gas (Tcf), which is 1 and 1/2 times the ultimate recovery of the Cook Inlet Basin prior to this discovery (Sherwood, 2001). The total identified recoverable natural gas reserves are estimated to be over 27 Tcf, three times the ultimate gas reserves of the Cook Inlet Basin. Full field development, based on past experiences could exceed 3 billion cubic feet of gas per day (Bcf/d). Current natural gas production in the Cook Inlet is 215 Bcf/year, net (DOE/EIA, 2001). The limited natural gas market in the Cook Inlet area (local consumption, a fertilizer plant and a small LNG plant) would pose a severe problem in developing new large natural gas reserves. However, the recent national move towards natural gas as the premier fuel of the future the recent energy crisis in California and the West Coast become compelling reasons for the expansion of the existing LNG terminal, or for a new floating LNG, which could supply California with at least 500 MMCF/d. Other options include the substantial expansion of the Ammonia/Urea plant (another 145 MMCF/d) and supplying the city of Anchorage, and Southern Eastern Alaska in general, a political obstacle to the proposed, and more logical, natural gas pipeline from the North Slope under the Beaufort Sea and down the McKenzie Delta to the Canadian pipeline system and into the United States. Introduction Oil was discovered in the Cook Inlet Basin in 1957 at the Swanson River unit (onshore east of the Cook Inlet) and by 1964 the production was over 11 million barrels of oil per year (11 MMB/Year). Subsequent discoveries of the Granite Point Unit, the McArthur River Unit, Middle Ground Shoal Unit and the Trading Bay Unit, had brought the oil production in the Cook Inlet to an all time high of 89 MMB/Year in 1970, which coincidentally is only one year after the Prudhoe Bay discovery (Alaska Department of Nautral Resources, 2000). Gas was produced in the Cook Inlet in 1959, as a byproduct of oil production, but with an almost non-existent market, it was either re-injected or flared. The Phillips/Marathon Liquefied Natural Gas (LNG) plant and the Unocal Ammonia/Urea plant came on line in 1969, and gas production in the Cook Inlet increased from 41 Bcf/year, net which was the result of a total production of 99.8 Bcf of which 58.3 Bcf was re-injected, in 1968, to 145 Bcf/Year net, from a total production of 218.3 Bcf of which 73.2 Bcf was re-injected, in 1971 (Alaska Department of Nautral Resources, 2000). Although the net production remained around 214 Bcf/year for the last eight years, the total current gross production of 225 Bcf/year is significantly lower than the 311 Bcf that was produced in 1990 and 1994. The Kenai gas unit, first discovered in 1961, has produced over 2 trillion cubic feet (Tcf) of gas, or more than 1/3 of the net gas production from the Cook Inlet Basin (Alaska Department of Nautral Resources, 2000). The Phillips/Marathon LNG plant has an export permit through 2009, and the "official" (MMS) reported remaining reserves of 2.6 Tcf are expected to run out by 2011, given the current consumption rate and no additional new reserves (Sherwood, 2001).
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- North America > United States > Texas > Anadarko Basin (0.99)
- North America > United States > Oklahoma > Anadarko Basin (0.99)
- North America > United States > Kansas > Anadarko Basin (0.99)
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Natural Gas: The Excruciating Transition
Oligney, R.E. (University of Houston) | Economides, M.J. (University of Houston)
Abstract Natural gas has gone through an unprecedented roller coaster in 2000 and 2001 which among other things included the collapse of Enron, one of the biggest players in the field. Prices rocketed from $2 to over $10 and then declined to below $3 per Mscf. Yet, fluctuations notwithstanding, the "new" natural gas price is $3.00 to $3.50, both floor and ceiling. The floor, calculated by us, is set by full-cycle costs, which include potential reserves, discovery rates, proved reserves, the activation index by region and well decline rates. The price ceiling is set by liquid natural gas (LNG) imports and Arctic gas. Both require the $3.00 to $3.50 price range. The problem with a calculated average national equilibrium price of, for example, $3.25 gas is that it is made up of $1 to $10 fluctuations. Even when demand forces natural gas prices to the high levels that were observed in 2001, reservoir physics of the mature United States environment precludes a quick response. Thus, spikes of $10 gas cannot generate new domestic supply. In a number of our previous writings, we have suggested that the trend toward natural gas as the premium fuel in the near future is not reversible. The key and the excruciating problem is the transition. We examine in this paper a number of potential sources of natural gas, their limitations and potential. We also present a number of issues, which involve both national policy and rational business decision-making, to take the nation through the transition. Managing the transition to natural gas is critical to the well-being of the nation and, considering the position of the United States on energy markets, the rest of the world. We finally show in this paper a stark example of the enormous impact of energy supply interruptions on the employment history of the United States, a situation, which may be the harbinger of major future economic hardships if the transition to natural gas is not managed properly. Introduction At a time that energy has rightly been pushed to the fore in America, many politicians and media folks have decided to focus the nation's attention on idyllic 50-year (maybe) solutions, skipping over the excruciating transition all together. This is clearly irresponsible. Even worse is the frequent mention by environmental and social ideologues who point to wind or solar or even unnamed alternatives as solutions to our pressing national energy needs. Conservation, which has in many ways become a code word to rally the presumably pragmatist folks, often falls in the same category. We think that our ideas on natural gas are disruptive and revolutionary enough, for sure appropriate to address the immediate and 20- to 50-year energy needs of the country. This is the third in an annual series of papers on what we have called the natural gas revolution. It has become increasingly difficult to write an earth-shuttering article on the topic. Announcing a revolution is easy. Having to explain the details once your audience has accepted the notion or even joined the revolution can be a bit more tedious. Nevertheless, there are important, even crucial, details to be explored. Background Our original article, titled, Natural Gas: The Revolution is Coming, demonstrated an undeniable secular trend in the world toward natural gas, starting first with the United States, then the rest of the G7 countries (Canada, France, Germany, Italy, Japan and the United Kingdom), and then indeed the rest of the world. At that time, the list of countries "going gas" was already very long, including major pronouncements and real activities in Venezuela, Colombia, Brazil, Peru, Mexico, Saudi Arabia, China, Cyprus and Bangladesh. Today the list is even longer. Venezuela, with the second largest natural gas reserves in the Western Hemisphere, had just made a grand pronounce-ment that it would develop a natural gas industry and reserves using its domestic market as an impetus.
- South America (1.00)
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- North America > United States > Texas > Reagan County (0.24)
- Government > Regional Government > North America Government > United States Government (1.00)
- Energy > Oil & Gas > Upstream (1.00)
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- North America > United States > Texas > Permian Basin > Yeso Formation (0.99)
- North America > United States > Texas > Permian Basin > Yates Formation (0.99)
- North America > United States > Texas > Permian Basin > Wolfcamp Formation (0.99)
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Abstract A country's wealth is closely related to its energy consumption. For example, the United States, the richest nation, with a per capita income of about $34,000 is also one of the highest consumers of energy with an annual per capita consumption of about 355 million British thermal units (MMBTU). Energy consumption is the most discernible national characteristic that separates rich from poor countries. The correlation between per capita energy consumption and per capita income among all nations is clear. However, the energy use in other developed countries is also a function of their geography, the makeup of those countries and even the cultural preferences of their citizens. Throughout the last two centuries, energy consumption in the creation of wealth and the form of primary energy sources, have not been constant. The process has been dynamic and technology has played a considerable role in the changing of the status of many countries, most notably Japan. Efficiencies developed elsewhere are adopted by other countries and lead to an increase in wealth.Globalization of the economy will certainly aid this process in the future. Energy consumption and heightened demand worldwide may prove perhaps the most formidable international challenge of the twenty first century. It must be emphasized, though, that political events such as the September 11, 2001 terrorist attacks and associated implications may have considerable impact, affecting both the sources of energy and the type of energy. We have not attempted to predict these effects in this paper. As early as 2010, at current energy growth, chronic energy shortages are likely to emerge which may evolve into a serious energy crunch. The most logical way to prevent this situation is to transition rapidly to natural gas and, eventually, to hydrogen. In this paper, natural gas is viewed as the compelling next fuel of choice and as the necessary stepping-stone towards hydrogen. Also offered here are production, consumption and transition forecasts. Introduction The correlation is clear between the wealth and energy consumption of nations. In Figure 1, this point is shown clearly by comparing the per capita energy consumption and per capita income of the 15 largest economies (DOE/EIA, 2000, CIA, 2000). The United States, the richest nation in the group, has a per capita income of about $34,000 and is also one of the most intense users of energy with an annual per capita consumption of about 355 million British thermal units (MMBTU). When comparing Canada, a country of vast and thinly populated expanses, with the five largest European economies (Germany, France, UK, Italy, Spain) which consist of much smaller areas and highly concentrated and centralized urban centers, while all have relatively similar per capita incomes (e.g., $22,000) Canada has a very large per capita energy consumption (410 MMBTU), while the European countries have much smaller per capita energy consumptions (e.g., 160 MMBTU). China and India, the world's two most populous nations languish considerably behind with per capita incomes of $3800 and $1800 and per capita energy consumptions of 25 and 12.3 MMBTU, respectively. For China and India to catch up with the developed world, they will have to move up the curve.
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- North America > United States > Texas > Permian Basin > Yeso Formation (0.99)
- North America > United States > Texas > Permian Basin > Yates Formation (0.99)
- North America > United States > Texas > Permian Basin > Wolfcamp Formation (0.99)
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Abstract Beyond everybody's price forecasts—including ours, which, a year earlier, was considered at $6 to $7 the most outrageous in the industry—natural gas traded at over $10 per thousand standard cubic feet during the winter of 2000–2001. On a basis of British thermal units, or BTU value, this price was equivalent to more than $60-a-barrel oil. The emergence of natural gas as the premium fuel is a process that has been both transparent and compelling. It is an important stage in the de-carbonization of fuels; starting from wood, to coal, to oil, to natural gas, and eventually hydrogen. The transformation is a historical imperative, and it is our contention that irrespective of the price of natural gas, there is no going back to oil or coal for a wide range of energy needs. The problem is not the price; the problem is supply, and the potential for shortages. Looking beyond the very likely shortage scenarios, where is the extra natural gas going to come from, now slated to increase over the next decade from 23 trillion cubic feet to at least 30 trillion, and perhaps 33 trillion? There are four potential sources:Increases from existing producing areas in the United States, such as the Rocky Mountains. Massive deposits of Alaskan gas. Natural gas from the Gulf of Mexico at depths of 5,000 feet and more. There are copious amounts of gas in the area, but few companies have targeted geologic structures just for gas. Incoming gas in the form of liquefied natural gas, or LNG. With a massive influx of capital and an urgent relaxation of the government permit process, LNG may be one of the best options – in the short (three years) to intermediate future (ten years.). Introduction This paper is written against an extraordinary backdrop: a recent market price of $10 per thousand standard cubic feet (Mcf) for natural gas, never before seen in either nominal or real dollars at the Nymex, and over $60 per Mcf on the spot market in California. While the energy content of one Mcf of natural gas is about 1/6 of the energy content of a barrel of oil, it has traded traditionally around 1/8 of the price of oil. The price has also been quite stable without the wild gyrations in the price of oil. This winter's run-up in natural gas prices has reversed both of these trends. A spot price for natural gas of over $60 per Mcf is equivalent to oil at almost $400 per barrel! This situation has prompted many to suggest that the natural gas trends of the last few years may be reversed and, in fact, and the price increases may dampen the great enthusiasm that both society and the energy markets—from space heating to power generation to transportation—have shown for natural gas. We think not. The de-carbonization of fuels is a historical imperative, motivated not only by real or imagined environmental concerns, but also by compelling efficiencies and, especially, technological evolutions. This situation is similar to the passing of the steam engine era. There is no doubt that today's technology could build a steam engine far superior to those of the nineteenth century, but "once you go gasoline (or natural gas), there is no going back." We have addressed these issues in a recent paper. In that paper we also provide estimates of our forecast for future use of natural gas which we put at almost 33 Tcf by the year 2010, compared to 23 Tcf today. Other estimates are summarized in Fig. 1. In all cases the projected demand is extraordinary and it will put a very large burden on supplies.
- North America > Canada (1.00)
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- Energy > Oil & Gas > Upstream (1.00)
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- Energy > Oil & Gas > Downstream (1.00)
- North America > United States > Texas > Sabinas - Rio Grande Basin > Lobo Field (0.99)
- North America > United States > Texas > Anadarko Basin (0.99)
- North America > United States > Oklahoma > Anadarko Basin (0.99)
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- Facilities Design, Construction and Operation > Natural Gas Conversion and Storage > Liquified natural gas (LNG) (1.00)
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- Management > Asset and Portfolio Management > Reserves replacement, booking and auditing (0.96)
Natural Gas: The Revolution Is Coming
Economides, M.J. (U. of Houston) | Oligney, R.E. (U. of Houston) | Demarchos, A.S. (MJE Consultants)
Summary Natural gas today accounts for approximately 22% of world energy demand. This figure is skewed because of the 26% gas market share in the U.S., the biggest consumer. In Europe, outside of the former Soviet Union, with a population of 1.5 times that of the U.S., gas accounts for 19% of the market. In terms of per-capita energy consumption, the average U.S. citizen consumes approximately 2.2 times more gas than a European. These ratios for both total usage and gas market share in the energy mix became much more lopsided for almost all countries. A move toward increasing gas use is now under way, from both demand and supply standpoints. For example, Brazil (the world's 10th largest economy with a current gas market share of 5%) has embarked on a very ambitious plan to increase gas use. Several gas-producing countries also announced ambitious plans for markedly increasing gas output: Qatar, Oman, Venezuela, and Saudi Arabia. Liquefied natural-gas (LNG) facilities are currently being built, and serious LNG tanker shortages are forecast for the next 3 to 4 years. The U.S. has made an emphatic move toward increased gas use. Already less than 5% of electric-power generation uses oil; natural gas will fuel well over 90% of new power generation built in the U.S. over the next decade. Gas-fired turbine manufacturing has a 3-year backlog. Once manufacturing catches up with demand, the transition to natural gas will cause substantial shortages for a considerable time. This will cover new peaks associated with summer electricity demands, not just the traditional peaks in winter heating. More crucial, we believe that environmental concerns, real or imagined, will push the emergence of fuel cells much faster than currently envisioned. Natural gas will be in the center of this transformation, resulting in a greatly expanded market share of gas in the world energy mix, increasing to 40 to 50% by 2020. We present a comprehensive analysis of the current state of natural-gas supply and demand. We provide the conventional forecasts and rationalize our forecasts, which are heavily influenced by electric deregulation, LNG conversion, and fuel cells. Introduction At the time of this writing, natural-gas consumption in the U.S. reached an estimated 23 Tcf/yr, close to the highest consumption rate of natural gas, which occurred during 1972-74. Fig. 1 presents the history of natural-gas consumption in the U.S. and the other G-7 countries (Canada, France, Germany, Italy, Japan, and the U.K.). Of significance is the dip in U.S. gas consumption after 1974, with the low point experienced in 1986 (˜16 Tcf) followed by a subsequent increase of annual consumption at a rather steep pace. The second important conclusion is that the annual rate of natural-gas consumption of the other G-7 countries is significantly below that of the U.S., suggesting a potentially much steeper future annual increase to catch up. Together, with a combined population 1.5 times that of the U.S., these countries consume only three-fourths as much natural gas (17 vs. 23 Tscf/yr). Russia, the world's eighth largest economy, consumes 15 Tcf/yr of natural gas, nearly as much as the consumption of Canada, Germany, the U.K., Italy, France, and Japan combined. Of all the nations in the world, only the U.S. and Canada have the pipeline network in place to take the natural gas from the well to the market. For all others to develop natural gas for both domestic consumption and export, several issues (e.g., regulatory and cultural) have to be resolved to attract the necessary financial and technical investments. Venezuela, with the second largest natural-gas reserves in the Western Hemisphere, has plans to develop its natural-gas industry reserves by using its domestic market as an impetus. The Amazon region, more specifically Peru and the Brazilian Federal States of Amazonas (Acre and Rondonia), has been constantly mentioned as the next place for development for massive natural-gas usage in the Western Hemisphere. The Asia Pacific region, with rapidly emerging and large economies, is likely to augment the already highly developed Japanese natural-gas activity. This includes increasing demand in indigenous gas supplies, imports and exports of LNG, and a transnational pipeline grid. The Natl. Petroleum Council (NPC) in its December 1999 report forecasts that annual natural-gas consumption in the U.S. is likely to increase to 29 Tcf by 2010 and that this increase will be "beyond" 31 Tcf by 2015. These figures represent 26 and 27% of the anticipated U.S. energy consumption, which is supposed to be 111 and 116 quadrillion Btu (quad), respectively. This 1999 report is a reassessment of NPC's 1992 report. It is noteworthy that even "the most robust scenario projected" in the 1992 report was exceeded by actual gas demand. Environmental regulations and restrictions imposed on facilities that burn fossil fuels were cited as some of the main reasons for this unexpected turn of events. While natural gas is also a fossil fuel, its environmental performance in terms of reduced emissions is far superior to that of oil and, especially, to that of coal. Environmentalism, frequently with an ideological hue and couched in difficult-to-combat imagery, has captured a sizeable portion of the national and international political debate and, unavoidably, the political agenda.
- North America > United States (1.00)
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- Asia > Middle East > Qatar (0.24)
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Natural Gas: The Revolution Is Coming
Economides, M.J. (University of Houston) | Oligney, R.E. (University of Houston)
Abstract Natural gas today accounts for about 22% of the world energy demand. This figure is skewed because of the 26% gas market share in the biggest consumer of them all, the United States. In Europe, outside of the former Soviet Union, with a population of 1.5 times that of the United States, gas accounts for 19% of the market. In terms of per capita energy consumption, the average U.S. citizen consumes about 2.2 times more gas than a European. These ratios both for total usage and gas market share in the energy mix became much more lopsided for almost all countries. A move toward increasing gas use is now under way, both from a demand and supply standpoint. For example, Brazil, the world's tenth largest economy with a current gas market share of 5%, has embarked into a very ambitious plan of increasing gas use. Several gas-producing countries have also announced very ambitious plans for markedly increased gas output. These include Qatar, Oman, Venezuela and, potentially the largest of them all, Saudi Arabia. Liquefied Natural Gas (LNG) facilities are currently being built, and LNG tankers are forecast to experience very serious shortages over the next three to four years. The United States has made an emphatic move toward increased gas use. Already less than 5% of electric power generation uses oil. Well over 90% of new power generation built in the United States over the next decade will be fueled by natural gas. Gas-fired turbine manufacturing is experiencing a three-year backlog. Once manufacturing catches up with demand, the transition to natural gas will cause substantial shortages for a considerable stretch of time—covering not just the traditional peaks in winter heating but also new peaks associated with summer electricity demands. More crucial, we believe that environmental concerns, real or imagined, will push the emergence of fuel cells much faster than currently envisioned. Natural gas will be in the center of this transformation, resulting in a greatly expanded market share of gas in the world energy mix, increasing to 40–50% by the year 2020. We present below a comprehensive analysis of the current state of natural gas supply and demand; we provide the conventional forecasts and rationalize our forecasts, which are heavily influenced by electric deregulation, LNG conversion and fuel cells. Introduction At the time of this writing, natural gas consumption in the United States has reached an estimated 23 trillion cubic feet (Tcf) per year. This is very near the highest consumption rate of natural gas, which was experienced in the 1972–1974 period. Figure 1 presents the history of natural gas consumption in the United States and the other G-7 countries (Canada, France, Germany, Italy, Japan and the United Kingdom).
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- North America > United States > Gulf of Mexico > Central GOM > East Gulf Coast Tertiary Basin > Main Pass > Block 19 > G-7 Well (0.89)
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