New report doubts estimates of U.S. natural gas production

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May 20, 2011

New report doubts estimates of U.S. natural gas production

(The Los Angeles Times) - The United States does not have a decades-long supply of inexpensive, locally sourced natural gas, according to a new report commissioned by the Post Carbon Institute, a nonprofit think tank that examines issues related to the economy, energy and the environment.

The report, "Will Natural Gas Fuel America in the 21st Century?", challenges the commonly cited projection that domestic natural gas can meet U.S. demand for more than 100 years. "The question is what would it take in order to do that?" said study author David Hughes, a geoscientist.

The report estimates there is only a 12-year supply of easily accessible, domestic natural gas. He said the number of producing gas wells almost doubled from 1990 to 2010, but the productivity of each well has declined nearly 50% over the same period. According to Hughes, growing U.S. natural gas production would require at least 30,000 wells per year, and "there's likely to be major impacts environmentally that go along with that supply grid."

Duke Energy CEO warns of overreliance on shale gas

(Bloomberg) - Duke Energy Chief Executive Officer James E. Rogers said the U.S. should be careful about depending on natural gas for energy even as his company seeks to expand its portfolio of the fossil fuel.

The historic price volatility of natural gas, questions about accessible reserves, and the possible environmental implications of shale gas drilling all raise concerns, Rogers told reporters May 19 after a speech in Washington.

"If shale gas turns out to be a mirage," and the U.S. has switched too much electricity production to gas-fueled power plants, the country will need to import liquefied natural gas, or LNG, he said. "Guess what the price of LNG is tied to? World oil prices."

W.Va. residents protest gas wells near water supply intake

(The Associated Press) - About 100 people angry over proposed natural gas wells along the Monongahela River and near Morgantown's drinking water treatment plant contend state regulators aren't up to the job of properly overseeing the industry and preventing air and water contamination.

The gathering May 18 in front of the county courthouse was the first significant protest in West Virginia over the rapidly growing exploration of the Marcellus Shale field. The protest was prompted by the recent discovery that Charleston-based Northeast Natural Energy plans to sink wells in the Morgantown Industrial Park, about 1,500 feet from a drinking water intake.

Protesters were angry they had no input before the permit was approved, and they questioned the Department of Environmental Protection's ability to regulate effectively. Department Secretary Randy Huffman said his agency is working with Northeast and the Morgantown Utility Board on more stringent requirements to address residents' concerns. "There's a good chance we'll be modifying the permit," he said.

Protestors support Pennsylvania tax on natural gas production

(The Altoona Mirror, PA) - Makeshift Marcellus Shale toll booths and, at some locations, mock bake sales were set up in protest near several western Pennsylvania natural gas well sites May 19. Health care union workers and environmental activists organized the events in support of a state tax on natural gas production.

"We need a fair severance tax on this industry to protect the environment and ensure these companies are paying their share," said Steve Hvozdovich, who said he is associated with the Pennsylvania Clean Water Action group. He was among dozens of protesters who set up shop in Tarentum, McDonald, Washington County and Elder Township to rally for support of a state tax on natural gas production.

Signs like Sharon Pope's summed it up - "I paid my fair share, now it's your turn" - just down the hill from a proposed Marcellus drilling site. She was among a dozen or so next to a cardboard tollbooth, occupied by children pretending to ask for revenue that isn't coming into the state while drillers set up shop.

Forest Service proposes fracking ban in Virginia woodland

(Roanoke Times, VA) - A new blueprint for managing the George Washington National Forest would restrict horizontal drilling for natural gas deposits that lie beneath much of the 1.1 million acres of Virginia woodland.

The proposed plan, released May 18 by the U.S. Forest Service, would ban horizontal drilling on the public lands. Horizontal drilling is often used in hydraulic fracturing to break open compacted shale rock and release natural gas.

Although some level of fracking is involved in traditional vertical drilling, the proposed ban would prohibit the extensive fracking that accompanies horizontal drilling, said Ken Landgraf, a planning staff officer for the Forest Service. Earlier this year, the Southern Environmental Law Center listed the George Washington as one of the 10 most endangered places in the Southeast because of its proximity to the Marcellus Shale formation.

Shell approves floating LNG ship for Australia project

(Wall Street Journal) - Shell May 20 approved construction of a giant ship to produce and chill natural gas for export, allowing it to unlock gas deposits stranded hundreds of miles from land. Shell's final investment approval for its $10 billion to $12 billion Prelude floating LNG development marks approval of the first such vessel in the world.

Six times the weight of the world's biggest aircraft carrier and 1,600 feet long, Prelude will float off the northwestern coast of Australia. Conventional tankers would carry the LNG from the production and storage vessel to customers by 2017, said Malcolm Brinded, executive director of upstream international at Shell. He said he hopes Shell will have approved construction of "several" more before Prelude LNG becomes operational.

Prelude will be capable of producing an average 500 million cubic feet of gas per day, plus additional volumes of condensate and liquefied petroleum gas. South Korea's Samsung Heavy Industries and France's Technip will build the ship.

Japanese company wins environmental OK for Australia LNG plant

(Platts) - The government of Australia's Northern Territory has given its environmental approval for Japanese upstream company Inpex's plans to develop the Ichthys LNG project, which is expected to go to a final investment decision before the end of this year.

The proposal will now be forwarded to the Australian federal government for approval, expected in June. The Ichthys field lies in Timor Sea, about 120 miles off northwestern Australia, and is owned 76% by Inpex and 24% by French major Total. The field holds 12.8 trillion cubic feet of gas and 527 million barrels of condensate.

Gas from Ichthys will be piped 500 miles to the liquefaction plant in Darwin. The plant would produce more than 1 billion cubic feet of gas a day and 100,000 barrels a day of condensate, with first output expected in late 2016.

Shell CEO says shale gas could be converted into liquid fuels

(Bloomberg) - Shell said a $19 billion investment in Qatar may prove that abundant natural gas coaxed from shale rocks across the United States could be converted into diesel and jet fuel.

Shell, which is completing the world's largest gas-to-liquids plant in Qatar, could use the technology on a smaller scale in the U.S. if capital costs can be reduced, said Marvin Odum, head of Shell in the Americas. Shell's Pearl GTL plant in Qatar will start production this year and make enough diesel to fuel 160,000 cars a day when it reaches full output. It will also make kerosene and base oils.

"It's an important thing for the U.S. that they found this huge shale gas resource" to reduce dependence on oil imports, said Hannes Loacker, an analyst with Raiffeisen Bank AG in Vienna.

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