AAAS Science, Issue June 27th

SCIENCE: Special Issue: Volume 344 no. 6191 pp. 1464-1467

From an Introduction by David Malakoff, SCIENCE, June 27, 2014

702—PERCENT INCREASE IN U.S. SHALE GAS PRODUCTION SINCE 2007

40—PERCENT SHALE GAS SHARE OF TOTAL U.S. PRODUCTION

47—PERCENT INCREASE IN U.S. ELECTRICITY GENERATED USING NATURAL GAS SINCE 2005

15,000,000—LITERS OF WATER AND CHEMICALS PUMPED INTO A TYPICAL FRACKING WELL

Nearly 70 years ago, a small group of engineers and geologists gathered at a dusty gas drilling site in southwestern Kansas to try an experiment. They pumped nearly 4000 liters of gelled gasoline and sand some 700 meters down a borehole into a thick bed of limestone, in hopes that the pressurized gunk would fracture the rock and release more natural gas. The “hydraulic fracturing” test failed. But success ultimately followed: Today, fracking, as it is known, is revolutionizing the energy industry, enabling firms to extract natural gas from a source once considered unpromising—vast deposits of shale, which is too dense for gas to flow freely (Science, 25 June 2010, p. 1624). By penetrating the shale with boreholes that bend horizontally, and then pumping in millions of liters of fluids and sand under high pressure, drillers can force open minute cracks that release valuable streams of gas.

Extensive shale gas deposits—or “plays” as they are known in the industry—are found around the world (see map). So far, however, the shale gas boom is largely confined to the United States, where over the past decade companies have drilled thousands of fracking wells into once obscure geological formations, including the Marcellus Shale in Pennsylvania, the Barnett in Texas, and the Haynesville in Louisiana. (In other shale plays, such as the Bakken in North Dakota, fracking is primarily used to produce oil.)

The resulting surge in natural gas is remaking U.S. energy markets—and causing economic ripple effects globally. Shale gas has made the United States the world’s leading natural gas producer and now accounts for about 40% of U.S. production, up from less than 2% in 2001. The share is projected to grow to 53% by 2040, and natural gas prices have tumbled as abundance grows (see graphs). That’s helped accelerate a shift away from coal to natural gas for generating electricity and prompted energy-intensive manufacturing firms to shift production from overseas factories to the United States, creating hundreds of thousands of jobs. The United States is also boosting natural gas exports to other nations—reversing its traditional role as an energy importer.

The shale gas shake-up has been accompanied by plenty of controversy—and new research—as the stories in this special section illustrate. Scientists are debating fracking’s impact on water quality (see p. 1468) and whether the shale gas boom will help or hurt efforts to curb climate change (see p. 1472). They are also exploring potential links to human-caused earthquakes (Science, 23 March 2012, p. 1436), air pollution, and habitat fragmentation.

Basic researchers are also sizing up this new resource. They are searching for life deep in shale deposits (p. 1470) and potentially transformative ways to convert the methane in natural gas into liquid fuels and other chemicals (p. 1474). Some are examining the origins of shale gas, trying to determine whether it is primarily the product of methane-producing microbes or thermal breakdown of organic matter (see p. 1500). And analysts continue to debate just how much shale gas is really out there—and how quickly the current boom could turn bust.

For the moment, any downturn seems distant. Canada, which already gets 15% of its natural gas from shale, is ramping up production. China, Europe, and Russia are eyeing their essentially untapped shale deposits. Public opposition to fracking is growing in some nations, however, and drilling technologies that have performed well in the United States may not work well overseas, where the shale can have very different properties. One thing is clear: The shale gas revolution is still in its infancy, with plenty of growing pains ahead.

Further reading

R. D. Vidic, S. L. Brantley, J. M. Vandenbossche, D. Yoxtheimer, J. D. Abad, Impact of shale gas development on regional water quality. Science 340, 1235009 (2013).

W. L. Ellsworth. Injection-induced earthquakes. Science 341, 1225942 (2013).

R. J. Conrado, R. Gonzalez, Envisioning the bioconversion of methane to liquid fuels. Science 343, 621–623 (2014).

A. R. Brandt et al., Methane leaks from North American natural gas systems. Science 343, 733–735 (2014).

B. G. Hashiguchi et al., Main-group compounds selectively oxidize mixtures of methane, ethane, and propane to alcohol esters. Science 343, 1232–1237 (2014).

X. Guo et al., Direct, nonoxidative conversion of methane to ethylene, aromatics, and hydrogen. Science 344, 616–619 (2014).

D. A. Stolper et al., Formation temperatures of thermogenic and biogenic methane. Science 344, 1500–1503 (2014).

Marcellus ethane increasingly important in Canada

From an Article by Stephanie Novak, Pittsburgh Business Times, March 14, 2014

Ethane was initially viewed as a problem for Marcellus gas, making it too rich to pass through normal pipelines, said Pace Markowitz, director of communications at Nova chemicals, with offices in Pittsburgh.

Nova announced in December of last year it would begin converting Marcellus ethane into ethylene or polyethylene for petrochemical use. The company plans to complete the upgrades to facilities early next quarter, Markowitz said. When facilities are complete, pipeline capacity will accommodate 50,000 barrels of ethane per day, NOVA said. The plastics company said it would consume 37,000 barrels of the product at their Sarnia, Ontario petrochemical facility.

If production rates continue as expected, Marcellus production will exceed that of Canada this year, according to the U.S. Energy Information Administration’s monthly drilling productivity report. Range Resources supplies Nova with a significant portion of its ethane. When ethane is converted for petrochemical use, much of it comes back to the United States as polyethylene, which many manufacturing companies use in plastics products throughout the country. Roughly 60 percent of ethylene is converted to polyethylene, said Markowitz, of Nova.

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Low ethane prices have persisted in the U.S. (See graph above)

From the Article by Ingrid Pan, Market Realist, March 17, 2014

Ethane prices have experienced a steep decline over the past few years, due to a flush supply from active drilling in the U.S. Ethane prices (as priced at the natural gas liquids hub of Mont Belvieu) were mostly above $1.00 per gallon in early 2008, before the financial crisis later in the year. During the period of depressed commodity prices in late 2008 and 2009, ethane prices were ~$0.40 to ~$0.60 per gallon, in correlation with most other natural gas liquids and crude oil.

After that, the price of ethane per gallon traded mostly within the range of $0.60 to $1.00 per gallon through 2010 and 2011, as other NGLs and crude also traded up. However, from 2012 through now, ethane prices have remained very low, on both absolute and relative bases. Over the past two years, ethane prices have remained mostly below $0.40 per gallon. Plus, where ethane historically traded at prices of around 30% to 50% of WTI crude (per barrel), in 2012, it began to average at 10% to 20% of WTI crude.

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Middle East petchem industry switching from ethane to heavier feedstocks

From an Article of ICIS News, March 11, 2014

LONDON (ICIS)–The Middle East petrochemicals industry is increasingly shifting from using ethane as a primary feedstock to heavier slates, according to the CEO of Petrochemical Industries Co., a subsidiary of Kuwait Petroleum Corp.

Asaad Ahmad Alsaad said heavier slates including condensate, butane and propane were being looked at more and more as feedstocks to prepare for a potential ethane shortage in coming years.

Alsaad – whose remarks will be explored at the World Refining Association’s (WRA’s) Abu Dhabi International Downstream Conference in May – also observed that the Middle Eastern petrochemicals industry was moving to full integration with refineries that would bring bigger balance sheets and new technology allowing for more feedstock flexibility.

Texas Refinery Photo

Petrochemical Industry Continues Expansion in Texas

Article by Rebecca Maitland, Houston Chronicle, September 13, 2013

As the energy industry reviews the rest of 2013 and into 2014, the consensus is growth and continual expansion, with the shale plays remaining the focus upstream, and midstream and downstream are slated to expand as well, due to the worldwide demand for energy. According to Tim Cutt, president, Petroleum & Potash, BHP Billiton, the energy industry will continue to grow, not only into 2014, but beyond.

“We always look at the long term, and we see a continued robust demand for the commodities we produce, including oil and gas, which we fully expect to remain strong globally. In the decades ahead, China and much of Asia, as well as Africa and Latin America will buy more consumer goods, and use more energy, as world population grows and nations industrialize,” Cutt said.

Right now, BHP Billiton sees shale as its growth engine as it builds upon its experience. “We are developing a manufacturing-like process that will boost drilling and completion performance, reduce costs, and accelerate the time from the spudding of the well to the sale of the product,” Cutt said.

Upstream will continue to grow, especially with LNG export terminals under construction or awaiting approval. But the midstream and downstream sectors will naturally grow along with it.

Phillips 66, a downstream energy company with leading businesses in midstream, chemicals, refining, and marketing and specialties, is embracing the U.S. energy renaissance – created through the rise in oil and gas production in North America, and is playing a key role in helping to revitalize the American manufacturing sector.

“We are making investments to increase the amount of lower-cost feedstocks reaching our refineries and chemical plants, much of it coming from here in the U.S. We also are making investments to build pipelines, terminals and rail loading and offloading facilities, as well as to expand chemicals processing capacity through our 50/50 joint venture, Chevron Phillips Chemical Company,” said Alissa K. Hicks, spokesperson, Phillips 66, Houston.

In midstream, Phillips 66 is pursuing development of a 100,000-barrel-per-day natural gas liquids fractionator adjacent to its Sweeny Refinery in Old Ocean. The project will help boost the local economy with more than 25 full-time jobs and hundreds of temporary construction jobs. If approved, construction is expected to begin in the first half of 2014 with startup expected by the second half of 2015.

“Phillips 66 is also evaluating a project to construct an LPG export terminal at the site of our existing Freeport Terminal. The project will potentially develop multiple parcels of land in Freeport and would create an estimated two dozen full-time jobs and hundreds of construction jobs. If approved, construction on the terminal is expected to begin in late 2014 with completion expected in mid to late 2016,” Hicks said.

In chemicals, CPChem plans to construct a world-scale ethane cracker at its Cedar Bayou plant in Baytown, and two polyethylene units in Old Ocean, near the Sweeny Facility. In total, the USGC Petrochemicals Project is expected to create approximately 400 long-term direct jobs and 10,000 engineering and construction jobs.

The entire project is estimated to cost approximately $6 billion. CPChem plans to seek final investment approval later in 2013. Pending final approval by CPChem’s board of directors, the company expects the project to be completed in 2017.

BHPB also has a number of openings throughout its operations. “We have many important positions open across the board, but experienced drilling and completion professionals are particularly challenging to attract in today’s highly competitive environment,” Cutt said.

For more information, visit www.bhpbilliton.com and www.phillips66.com.