Freezing Yankees in the Dark: "Natural gas bills are going up, and not just because it's cold" .... Well, sorta.

Had to laugh at this report from American Public Radio's Marketplace which I heard on the way home tonight:  Natural gas bills are going up, and not just because it's cold

The reason for that crazy 2,000 percent jump is that even though there is lots of natural gas, there isn't the infrastructure to move it quickly enough when demand spikes.

"Because the pipeline capacity to get it into the Northeast isn't that large," Borenstein says. "Likewise, that can happen in the Midwest."

But even with improved pipeline capacity, natural gas prices are still susceptible to price spikes.

"The reality is natural gas is expensive to store," says Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations. And when large quantities of fuel can't be stored, it's difficult to smooth out prices over a long period of time.

You can listen to the report here.

Hidden in that "not just because it's cold" part of the headline is the the reason that there has been a demand spike. Which is: Demand spiked because it's cold. Duh.

And then, when demand spikes, the Northeast lacks pipeline capacity and storage capacity to handle the increased demand. Why? Because while "there is lots of natural gas" - it is not, apparently, in Yankeeland.

It also seems to lack alternatives since the use of coal has had the kibosh put on it. The switch from coal has cause industry to switch to natural gas (or in the case of some industries like gun manufacturers to move south*). That switch also increases local demand for a good that needs to be imported through an limited supply pipe. From place like Texas, Oklahoma, and other fly-over country.

Lacking alternatives . . . well, you can freeze or pay.

It seems to me that logically you could write a similar story about how there is a spike in the price for water in Arizona and it's not just because it's hot there but because there's no infrastructure to move water from the Great Lakes where there is lots of water to the desert. Trust me, if the price gets high enough, there will be pipelines for water built.

On the other hand, I guess up North they don't need to have expensive air conditioning in the spring and summer like we in the South and Southwest do, so they've got that going for them.

Come to think of it, though, I don't remember ever hearing or reading an article about how "air conditioning bills are going up, and not just because it's hot" written about the South. If you find one, let me know . . .

May I suggest to our Northern friends more nuclear power plants for electric heat?

Or perhaps using those expensive LNG terminals? Make it worth LNG shipper's efforts to ship in gas by letting those prices rise.




*And, yes, those moves occur for other reasons, too.

Will Governmental Agencies Seek to Regulate Environmentally Incorrect Nature as "Pakistan quake island off Gwadar 'emits flammable gas'?"

Environmentally insensitive plate tectonics is polluting the atmosphere as it shakes the planet, doing more damage than -say - a couple of herds of cows . . . as is unreported by BBC News in its report Pakistan quake island off Gwadar 'emits flammable gas':

RashRashid Tabrez, the director-general of the Karachi-based National Institute of Oceanography, says the energy released by the seismic movements of these fault-lines activates inflammable gases in the seabed.

"The seabed near the Makran coast has vast deposits of gas hydrates, or frozen gas having a large methane content," he explained.

"These deposits lay compressed under a sediment bed that is 300m-800m thick."

"When the plates along the fault-lines move, they create heat and the expanding gas blasts through the fissures in the earth's crust, propelling the entire sea floor to the surface." Tabrez, the director-general of the Karachi-based National Institute of Oceanography, says the energy released by the seismic movements of these fault-lines activates inflammable gases in the seabed.

Plate tectonics? In case you live in world you think is unrelated to geology. Image above is from NASA here,

Horizontal velocities, mostly due to motion of the Earth's tectonic plates, are represented on the map by lines extending from each site.

And about "gas hydrates" here:

As natural gas from shale becomes a global energy "game changer," oil and gas researchers are working to develop new technologies to produce natural gas from methane hydrate deposits. This research is important because methane hydrate deposits are believed to be a larger hydrocarbon resource than all of the world's oil, natural gas and coal resources combined. If these deposits can be efficiently and economically developed, methane hydrate could become the next energy game changer.

Enormous amounts of methane hydrate have been found beneath Arctic permafrost, beneath Antarctic ice and in sedimentary deposits along continental margins worldwide. In some parts of the world they are much closer to high-population areas than any natural gas field. These nearby deposits might allow countries that currently import natural gas to become self-sufficient. The current challenge is to inventory this resource and find safe, economical ways to develop it.

I am waiting for environmentalists to condemn "Nature" or "Geology" or declare that this is somehow "man caused."

In any event, there is some concern that if a large amount of methane gas hydrate was release all at once there will be serious consequences.

On the other hand, the earth could get hit by a really big meteor or something. If it's not one damn thing it another as far as doomsday scenarios go. Or, as the poet put it:

Fire and Ice
By Robert Frost
Some say the world will end in fire,
Some say in ice.
From what I’ve tasted of desire
I hold with those who favor fire.
But if it had to perish twice,
I think I know enough of hate
To say that for destruction ice
Is also great
And would suffice.

Mining Methane Hydrate and What It Means

First, the "Methane Hydrate" scary story:

(University of Göttingen, GZG. Abt. Kristallographie).
Source: United States Geological Survey.

As greenhouse gas, methane is more powerful than carbon dioxide, but there is a much more important difference between these two gases. Carbon dioxide emissions are something that we create and that we can control, at least in principle. If we stop burning fossil fuels, then we stop generating CO2. But, with methane, it is another matter. We have no direct control on the huge amounts of methane buried in ice in the permafrost and at the bottom of oceans in the form of "hydrates" or "clathrates."

Methane hydrates are a true climate bomb that could go off by itself as the result of a relatively small trigger in the form of a global warming. Sufficient warming would cause the decomposition of some hydrates to release methane to the atmosphere. This methane would create more warming and that would generate more decomposition of the hydrates. The process would go on by itself at increasing rates until the reservoirs run out of methane. That means pumping in the atmosphere truly a lot of methane. There are different estimates of the amount stored in hydrates, but it is surely large - most likely larger than the total amount of carbon present today in the atmosphere as CO2. The effects of the rapid release of so much methane would be devastating: an abrupt climate change that could bring a true planetary catastrophe. It is a scenario aptly called the "clathrate gun" and the target is us.

Source

Second, a quick look at issues in trying to exploit methane hydrate as a fuel source in The Risky Business of Mining Methane Hydrate:

The potential rewards of releasing methane from gas hydrate fields must be balanced with the risks. **** Let's start first with challenges facing mining companies and their workers. Most methane hydrate deposits are located in seafloor sediments. That means drilling rigs must be able to reach down through more than 1,600 feet (500 meters) of water and then, because hydrates are generally located far underground, another several thousand feet before they can begin extraction. Hydrates also tend to form along the lower margins of continental slopes, where the seabed falls away from the relatively shallow shelf toward the abyss. The roughly sloping seafloor makes it difficult to run pipeline.

Even if you can situate a rig safely, methane hydrate is unstable once it's removed from the high pressures and low temperatures of the deep sea. Methane begins to escape even as it's being transported to the surface. Unless there's a way to prevent this leakage of natural gas, extraction won't be efficient. It will be a bit like hauling up well water using a pail riddled with holes.

Believe it or not, this leakage may be the least of the worries. Many geologists suspect that gas hydrates play an important role in stabilizing the seafloor. Drilling in these oceanic deposits could destabilize the seabed, causing vast swaths of sediment to slide for miles down the continental slope.

On the other hand, developing methane hydrate mining might ease some of those worries of a catastrophic release if done safely and it does offer a fuel source. As set out in Mining "Ice That Burns":

Trapped in molecular cages resembling ice, at the bottom of the ocean and in terrestrial permafrost all over the world, is a supply of natural gas that, by conservative estimates, is equivalent to twice the amount of energy contained in all other fossil fuels remaining in the earth’s crust. The question has been whether or not this enormous reserve of energy, known as methane hydrates, existed in nature in a form that was worth pursuing, and whether or not the technology existed to harvest it.
***
While no one believes that all of the world’s methane hydrates will be recoverable, the scale of global reserves has been described by the U.S. Department of Energy as “staggering.” They occur anywhere that water, methane, low temperatures, and high pressure co-occur–in other words, in the 23 percent of the world’s land area covered by permafrost and at the bottom of the ocean, particularly the continental shelf.
***
The United States is not the only country with plans to attempt long-term production tests of methane hydrates. Japan is spending by far the most money on methane hydrate research; it provided most of the funding for the Mallik tests, which were sponsored by the Japan Oil, Gas and Metals National Corporation and by Natural Resources Canada, with field operations by Aurora College/Aurora Research Institute and support from Inuvialuit Oilfield Services.

According to the Center for Hydrate Research’s Koh, Japan is investing heavily in attempts to harvest deep-sea hydrate reserves discovered off the southern coast of Japan in the Nankai Trough.

“The Japanese are planning commercial production from the Nankai Trough by 2017,” says Koh. If they succeed, Japan will tap the first domestic fossil-fuel reserves the country has ever known.

A Popular Mechanics "demystification" of "Fire Ice" here, which looks at the "scary story" above:

But what if the earth released the gas as a result of heating up? Not only energy companies but also scientists studying climate change have a major interest in methane hydrates. Methane is a greenhouse gas, a far more powerful one than carbon dioxide, and some scientists fear the warming of the earth could destabilize hydrates to the point that they release methane into the atmosphere, further worsening global warming. Ideas such as the clathrate gun hypothesis suggest that methane hydrate dissociation is linked to prehistoric global warming.

However, according to a Nature Education paper published by the USGS, only about 5 percent of the world's methane hydrate deposits would spontaneously release the gas, even if global temperatures continue rising over the next millennium. In addition, bacteria in the nearby soil can consume and oxidize the methane so that only a minute fraction (as low as 10 percent of the dissociated methane) ever reaches the atmosphere.

So, now, you have the background to understand this report, Methane hydrate flow established off Japan:

Japan Oil, Gas and Metals National Corp. (Jogmec), Tokyo, said it has produced methane from methane hydrates during tests of a well drilled in about 1,000 m of water offshore the Atsumi and Shima peninsulas of Japan.

The well, operated by Japan Petroleum Exploration Co., produced methane by depressurization of hydrates in a layer 270-330 m below the seabed.

Jogmec said it was the first offshore test of methane hydrate flow ever conducted.

Jogmec's summary of its activities here.

Baby steps to diminishing the importance of Mid-East energy and easing some issues over sea lanes.

Energy: A Way to Mine Methane Hydrates for Natural Gas?

Interesting research into potential new source of natural gas reported at Field [trial] to safely extract steady flow of natural gas from methane hydrates successful:

U.S. Energy Secretary Steven Chu announced today the completion of a successful, unprecedented test of technology in the North Slope of Alaska that was able to safely extract a steady flow of natural gas from methane hydrates – a vast, entirely untapped resource that holds enormous potential for U.S. economic and energy security. Building upon this initial, small-scale test, the Department is launching a new research effort to conduct a long-term production test in the Arctic as well as research to test additional technologies that could be used to locate, characterize and safely extract methane hydrates on a larger scale in the U.S. Gulf Coast.

So, what the heck are "methane hydrates?" See here:

Methane hydrate is a cage-like lattice of ice inside of which are trapped molecules of methane, the chief constituent of natural gas. If methane hydrate is either warmed or depressurized, it will revert back to water and natural gas. When brought to the earth's surface, one cubic meter of gas hydrate releases 164 cubic meters of natural gas. Hydrate deposits may be several hundred meters thick and generally occur in two types of settings: under Arctic permafrost, and beneath the ocean floor. Methane that forms hydrate can be both biogenic, created by biological activity in sediments, and thermogenic, created by geological processes deeper within the earth.

One concern stirred by any long-term warming in the Arctic is that deposits of methane hydrates might warm enough to naturally release methane - which, according to some theories, might contribute to global warming because methane is a "greenhouse" gas. Being able to tap into such methane hydrates and mine them for their natural gas would provide another, potentially huge, source of natural gas. Natural gas is, of course, considered a "clean" fuel. So, using the gas trapped in the methane hydrates might work to preclude the "methane hydrate" disaster some have predicted:

Paleoclimatologists now believe that large scale, natural methane hydrate releases have been partly but significantly responsible for short-cycle global warming and global cooling cycles in the past. The recent discoveries in the Arctic, in fact, are thought to suggest that methane releases have contributed to the global warming that has occurred since the last ice age 15,000 years ago. [2]

The problem is that these methane releases have a strong positive feedback loop. As they increase the warming of the atmosphere that warming in turn increases methane release which in turn increases warming which in turn releases more...... You get the picture. Acceleration of global warming through this positive feedback loop, by increased methane concentration in the atmosphere, far more than CO2 concentrations, represents, to paleoclimatologists, a far greater risk of pushing us into the Venus effect, runaway global warming.

Additional research has been conducted in the Gulf of Mexico:

On May 6, 2009, the U.S. Department of Energy (DOE) National Energy Technology Laboratory (NETL)in collaboration with the U.S. Geological Survey (USGS), the U.S. Minerals Management Service, an industry research consortium led by Chevron, and others completed a landmark gas hydrate drilling expedition. The objective of the 21-day expedition was to confirm that gas hydrate can and does occur at high saturations within reservoir-quality sands in the Gulf of Mexico. This objective was fully met, with highly saturated hydrate-bearing sands discovered in at least in two of three sites drilled.

Gas hydrate is a unique substance comprised of natural gas (almost exclusively methane) in combination with water. Gas hydrate is thought to exist in great abundance in nature and has the potential to be a significant new energy source to meet future energy needs. However, prior to this expedition, there was little documentation that gas hydrate occurred in resource-quality accumulations in the marine environment.

Running out of energy, are we? Seems like we are not.

Just learning to develop the resources better.

DOE press release on Arctic work here. All images from DOE.

Offshore East Africa: Deep Water Natural Gas Bonanza

Offshore reports the trend of continued success in locating gas in the deep waters off East Africa: Mozambique, Tanzania emerging as prolific deepwater gas plays. How big? Anadarko's Chairman says:

“This could be one of the most important natural gas fields discovered in the last ten years,with significant long-term benefits for Mozambique.”

Benefits? From the Offshore report:

Mozambique's government was anxious for work on the project to start, he said, both for the incoming tax revenue in the longer term and for the near-term impact on jobs creation in the area. At peak, he forecast that construction of the initial LNG plant would involve 7,000 workers, with more employment opportunities for the second train.

***

Following meetings with local villagers, fishermen and farmers, Anadarko has filed an application for land to build the onshore reception and process facilities. The port of Ofungi is the chosen site for the LNG plant. "The nearby city of Palma only just received electric power for the first time last year, so there is potential for this project to change the area significantly," Vardeman observed. "Also, an aircraft landing strip will be built of sufficient size to land a 747 at least." At the coastal location, materials offloading and LNG loading facilities will be constructed. The proposed beach front site is large enough to accommodate LNG carriers turning, he said, although when the tide goes out a large area of flat sand appears.

Assuming the final investment decision is taken toward the end of 2013, first gas could flow in 2018. But this is a very competitive market, Vardeman noted, "and we must convince buyers that this will be a reliable source of LNG. Also, this will be our first LNG plant, so they need to count on us to be there a long time." On the other hand, Vardeman explained, having Bharat Petroleum, Videocon, and Mitsui as partners was helpful for marketing the Area 1 gas to India and Japan. "It's an optimal location, close to India, and the distance to Japan is the same as to Europe," Vardeman said.

Oh, those horrible oil and gas companies, applying their technology in such a way as to benefit the poor of Africa.

LNG for Japan and Europe.

Another blow to the former gas monopolists in Russia.

Too bad the world is running out of energy . . . not.

Of course, there are those Somali pirates to deal with.



All illustrations credit Anadarko.

Another Large U.S. Natural Gas Discovery?

Geology.com asks, "Utica Shale - The Natural Gas Giant Below the Marcellus?":

The Utica Shale is a rock unit located a few thousand feet below the Marcellus Shale. It also has the potential to become an enormous natural gas resource. The Utica Shale is thicker than the Marcellus, it is more geographically extensive and it has already proven its ability to support commercial production.

It is impossible to say at this time how large the Utica Shale resource might be because it has not been thoroughly evaluated and little public information is available about its organic content, the thickness of organic-rich intervals and how it will respond to horizontal drilling and hydraulic fracturing. However, the results of early testing indicate that the Utica Shale will be a very significant resource.

Where is the Utica Shale?

The potential source rock portion of the Utica Shale is extensive. In the United States it underlies portions of Kentucky, Maryland, New York, Ohio, Pennsylvania, Tennessee, West Virginia and Virginia. It is also present beneath parts of Lake Ontario, Lake Erie and part of Ontario, Canada. ***

On the map above, I added a red box to the outline of the Utica play, with a blue arrow pointing to what I believe to be the line showing the estimated range. There's a nice map at the Geology.com link.

I think we are a lot more "energy independent" than most people believe.

Geology and Engineering: Natural Gas Shales

Nice set up of the current boom in U.S. natural gas shales from Geology.com in which a great deal of information is set out in a mostly pictorial format with links to key points of interest. Below is a partial screen shot:

Italy and Malta Tussle Over Eastern Mediterranean Energy Search

As you may recall, Israel has a big offshore natural gas find in the Eastern Mediterranean as set out here, which has created a row with its neighbor, Lebanon (some suggest Iran's hand is involved in this). In addition, drilling off Cyprus has Turkey doing its own "exploration" under armed naval escort. Tension is up, ugly words are spoken. Billions of dollars are at stake.

See Saturn 5's coverage at Bosphorus Naval News here and the links therein for more on the Turkey and Cyprus issue.

Greece also is looking at issuing exploration permits in its offshore areas, and,
well, now, there are new sparring partners, as little Malta issues permits for offshore exploration and Italy jumps in claiming rights to some of the same undersea zones. See here:

Interest in Mediterranean exploration has fostered great hopes but has also led to increased tensions in the region. US independent Noble Energy's large gas discoveries offshore Israel, have shed light on the potential of offshore acreage in the region. Investors are now looking to Cyprus, while Lebanon is planning its first offshore licensing round in 2012. On October 6, Greece also announced that it will put three blocks in the Adriatic on offer for exploration in 2012. Previously, Greece's development minister, Kostis Hatzidakis, said that the government had plans to start exploration for oil in the Aegean Sea.

However, this has proved to be a poisoned chalice with regard to diplomatic ties in the region. Turkey's relationship with Israel has disintegrated and it has opposed Noble's drilling plans off Cyprus, as it has yet to formally agree its maritime borders with the island-state. It has also threatened to place military vessels in the Mediterranean Sea to impede what it considers to be provocative exploration. In addition, the long feud between Greece and Turkey over maritime borders could make the situation worse, particularly in terms of exploration in the Aegean. Lebanon and Israel have similarly yet to agree on a maritime border.

In the case of Italy, tensions with Malta have risen following the island's publication of a tender for oil exploration in the Ionian Sea - in areas claimed by Italy. Meanwhile, Malta is also in dispute with Libya over its southern maritime borders. Furthermore, environmental concerns over a possible oil spill in the Mediterranean's closed sea could also hamper upstream activity in the region.

With recent discoveries in the eastern Mediterranean and further ongoing exploration already taking place offshore Italy, Albania, Croatia, Montenegro (and possibly Greece in the near future), we believe that exploration on Italy's side of the Ionian Sea is likely to attract significant interest. Nevertheless, this raises political tensions and a great deal of diplomacy will be required if serious disputes are to be resolved or avoided.

Oh, Libya, too.

Nice turf war you got there, fellas.

There's an element of The Treasure of the Sierra Madre in all this. Mixed in with international threats, of course.

Greed kills.

The Eastern Mediterranean: Much Ado About Gas

So, Turkey has been shaking the war stick at Israel, making big noise over the Israeli blockade of Gaza that last year resulted in the stopping of Turkish ship and the violence that followed. In addition, Turkey is most unhappy with the discovery of large amounts of natural gas beneath the waters off Israel and Cyprus.

First, about the discovery:

The above map from Nobel Energy sets forth some discoveries made by that company, as described below:

Noble Energy has been operating in the Mediterranean Sea, offshore Israel, since 1998. We have a 47 percent interest in the Mari-B field, the first offshore natural gas production facility in Israel. Production from Mari-B began in 2004 and sales volumes have increased as Israel’s power demand and pipeline infrastructure have expanded tremendously. Significant new exploration discoveries at Tamar, Dalit, and Leviathan will help meet Israel's energy needs and drive new potential for natural gas in the future.

The Company has recently completed two additional development wells at Mari-B. Combined with additional compression work in 2011, these new wells will support near-term gas deliverability and serve as injection wells for storage in the future.

We have a 36 percent operated working interest at Tamar, with gross mean resources of 8.4 trillion cubic feet (Tcf) of natural gas. Tamar was the largest deepwater natural gas discovery in the world in 2009. Sanctioned by the Company in September 2010, initial expectations target commissioning first gas from Tamar at the end of 2012. Development drilling at Tamar is underway, and the Company is continuing discussion with a growing number of parties to deliver reliable and clean energy resources to customers.

Leviathan represents the largest exploration success in the Company's history, with gross mean resources of 16 Tcf of natural gas. We are actively studying multiple export options, including both LNG and pipeline scenarios. The Company anticipates returning to appraisal drilling at Leviathan in mid 2011. Supported by 3D seismic acquisitions in 2009 and 2010, Noble Energy has identified a number of additional prospects and leads on our significant acreage position offshore Israel and Cyprus, with plans to drill three to four exploration / appraisal wells in 2011.

This discovery has major implications for Israel and Cyprus. With specific reference to Cyprus, this piece notes:

For Cypriots who always had an Arab-envy, seeing their neighbors drawn in oil while they have to import every drop of it, has been frustrating if not intoxicating. Loren Steffy, the business columnist for the Houston Chronicle, reports: “Just as the Israeli discoveries may transform that country from an energy importer to an exporter, a similar find off the coast of Cyprus could turn the island nation into a major European energy hub”.
Terry Gerhart, the Vice President for international operations of Houston-based Noble Energy declares: “Cyprus could be on the verge of a natural gas revolution. Gas will strengthen the Cypriot economy for decades to come. Cyprus will become the Mediterranean’s energy hub”.

Well, maybe - both Cyprus and Israel are going to have some serious challenges - as noted her:

From Israel, there is good news and bad news.