What was once unconventional can become
commonplace. Remember when fixing a lunch in a microwave oven was
rare?
In the case of natural gas, the unconventional can
become as common as the ubiquitous microwave.
What it will take, according to Scott Tinker, director
of the Bureau of Economic Geology at the University of Texas at
Austin and the Texas state geologist, is a commitment by industry
and government to research.
"What is considered unconventional gas today will
be the conventional gas of tomorrow — we already have seen that
in the production curve," Tinker said.
"Coalbed methane, shale gas and tight gas were not
sources of natural gas just 15 to 20 years ago," he said, "but investment
in research (by the federal government and private entities) along
with incentives to explore for and produce these unconventional
resources made these reserves attractive — and consequently new
natural gas sources were brought into the mainstream.
"So, with the future rise in natural gas demand and
a greater portion of the natural gas production coming from unconventional
sources, it is imperative that we create new gas resources through
research, technology and incentives."
Tinker stressed the importance of research in meeting
America's future needs for natural gas in a paper at the recent
annual meeting in Houston, "Fractures, Salt, Seismic and Ice: Vital
Research Components of America's Natural Gas Energy Future."
"There are huge sources of natural gas available
in North America, but increasingly those reserves will be from unconventional
sources like coalbed methane, tight gas, shale gas, deep gas below
15,000 feet, deepwater Gulf of Mexico gas and methane hydrates,"
Tinker said in a post-convention EXPLORER interview.
"Tight gas, shale gas and coalbed methane now account
for approximately 20 percent of U.S. consumption. Combine these
existing unconventional sources with deepwater, subsalt, deep gas,
brine gas and gas hydrates, and by 2020 more than 50 percent of
U.S. gas consumption will come from unconventional natural gas sources."
Growth Patterns
Tinker pointed out that throughout the past century
natural gas was found in association with oil but commonly not explored
for as an independent source of energy.
"But during the 21st century the United States will
lead the world in transitioning away from coal and oil into methane
and hydrogen," he added. "The environmental and efficiency benefits
of natural gas and renewable energy sources like nuclear make them
attractive, and the number of new natural gas powered electrical
generation plants is evidence of the growth cycle we will see in
the coming years."
Natural gas provides economic stability compared
with oil or coal, he continued.
"Currently, we only import about 15 percent of our
natural gas needs versus 57 percent of our oil in the United States,
and most of those natural gas imports come from Canada — a stable,
friendly ally close to home," he said.
"Along with economic stability comes a national security
component to the energy supply that makes natural gas and other
renewable energy sources very attractive."
In addition to this growth in demand, resource availability
points to a future fueled by natural gas, according to Tinker. Potential
future oil reserves are on the decline in the United States, but
undiscovered natural gas reserves are still enormous.
However, these new natural gas sources won't come
without a price, he said — namely, "a tremendous amount of research
to understand how to characterize, quantify and safely drill for
and produce those resources.
"And it will take a very different research model
than has been historically used to bring new unconventional resources
on production," he added, "because the industry has undergone some
fundamental changes."
Tangible Benefits
For the most part large, private research laboratories
maintained by major oil companies are a distant memory, and those
research facilities that do exist within companies are focused more
on international targets or research that can pay out in the short-term,
he said.
Consequently, the federal government will have to
take the lead in future research efforts.
"This new research model will have to have a greater
federal component focused on developing research and technology
for resources that the private sector is not currently exploring
for, such as unconventional natural gas," Tinker said.
That may seem like a simple concept, but there is
resistance from both camps that must be overcome.
"Traditionally the petroleum industry has preferred
minimal government involvement in its business, and that sentiment
remains in some sectors today," he said. "Conversely, federal officials
need to recognize the game has changed for the private sector and
get away from the attitude of 'corporate welfare.'
"Research undertaken by the federal government would
fill a void that is not being addressed by private companies," he
said. "Also, the nation will reap a return on this investment through
additional capital and royalties paid on those resources."
Plus, there's an energy and environmental benefit
for the country.
"We will add resources that would not otherwise be
attainable and burn cleaner fuel," he said. "Those are true tangible
payoffs that impact the average American citizen."
Needed: More Infrastructure
Tinker said the infrastructure is in place for the
federal government to invest in research and support technology
development — but the infrastructure necessary for the country
to move toward a natural gas future is not.
There are pipeline and deliverability issues that
must be addressed, he said. For example, the deliverability problems
experienced in California last year could impact the country on
a broader scale and natural gas imports must be explored. It will
take government involvement to solve these issues.
"We are importing on the order of billions of cubic
feet of gas a year, as LNG, and trillions of cubic feet through
pipelines — that's a whole order of magnitude of difference," he
said. "The technology is available to expand imports through liquefied
natural gas, but it will take a significant ramp up for the private
sector to risk investing in LNG.
Tinker said that, based on various reports, gas prices
have to be at about $3.50 to $4 per thousand cubic feet — and more
importantly, stable — before the LNG investment will be made.
"So, some combination of federal incentives and an
investment in research and technology in partnership with the private
sector must be part of making LNG a vital element in our energy
future," he said.
The same is true for unconventional natural gas sources.
Tinker said technology will have to be developed in partnership
between the private and public sector to tap resources like gas
below 15,000 feet, where reservoirs get hot and overpressured, or
frozen gas in the Gulf of Mexico or the Arctic.
This is not just an issue for the United States,
either. Japan, for example, is banking on methane hydrates, which
is a tremendous potential resource for that country.
"In recent years Japan has said it hopes to be an
energy exporter in the next three decades because of the nation's
gas hydrates potential," Tinker said, "and they are investing in
that potential."
These investments in natural gas don't mean the role
of oil or coal will diminish as part of the American energy landscape.
Tinker said there is a three- to five-decade transition in which
current levels of oil and coal consumption will remain steady. However,
the substantial growth in energy demand will have to be filled —
and that's where natural gas and renewable resources come in.
"We have to invest in that growth reality," he said.
"I am a huge believer in conservation, as well, and I think we can
do a much better job of conserving our energy resources.
"However, even when you factor in successful conservation
issues there is still a large growth demand that has to be met,"
he said.
"When you look at the production curves for shale
gas, coalbed methane and tight sands gas and how those resources
were created, we could be having this conversation 20 years from
now and be discussing the same type of production curve growth for
methane hydrates, deep gas and sub salt reserves — resources that
don't exist today," Tinker said.
"Proper investment from — a federal-private sector
partnership — can make that future a reality."