Natural Gas an Inside Propective 2-19-14
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Transcript of Natural Gas an Inside Propective 2-19-14
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THANK YOU
Carnegie Mellon UniversityFebruary 19, 2014
Natural Gas An Inside Perspective
Courtesy: IPS Engineering EPC
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THANK YOU
James M. Bright, P.E.Senior Engineer
• BS in Civil EngineeringWest Virginia University
• Life long connection with the natural gas industry
• Career experience includes:– Facility planning and design– Hydraulic flow modeling– Structural analysis and design– Surveying– Construction inspection– Project management
“Effective communication is the key to excellence in Engineering”
Courtesy: IPS Engineering EPC
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THANK YOU
IPS Engineering EPC
• A preferred provider of value-added, safety first Engineering, Procurement, and Construction services for the hydrocarbon industry.
• Privately owned and based in Tulsa, OK
• Formed in June 2009.
• Venture capitol provided by the PLH Group
• 2013 annual revenues totaled $89 million
• Proud member of the Marcellus Shale Coalition
Courtesy: IPS Engineering EPC
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Clean, Abundant, and Versatile
Natural Gas - Premier fuel for our century
• Electricity generation, heating, domestic use
• Combined heat and power applications (COGEN)
• Light and heavy duty transportation fuel
• Feedstock for industries (NGL)
• Exports (LNG)
Courtesy: IPS Engineering EPC
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Environmental Impact
Methane + 2 Oxygen = 2 (Water) + Carbon Dioxide
CH4 + 2 (O2) = 2 ( H2O ) + CO2
Natural Gas – 97% to 99% methane
• Methane (C1) - The simplest, cleanest hydrocarbon
• Has the least carbon footprint of any fossil fuel
Courtesy: IPS Engineering EPC
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THANK YOUShale Gas 101
Courtesy: IPS Engineering EPC
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Shale Gas – A Global Energy Opportunity
North America1,931 trillion cubic feet
South America1,300 trillion cubic feet
Africa1,100 trillion cubic feet
Europe700 trillion cubic feet
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Shale Gas Revolution Across the U.S.
Source: Energy Information Administration
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The Marcellus Shale: An Introduction
Marcellus Shale outcrop along State Route 174, south of Slate Hill Rd in Marcellus, NY
What is the Marcellus Shale?
- Geological formation formed by the accumulation of sediment on a sea floor about 400 million years ago.
- Pressure and heat, over geologic time, have produced an organic-rich, black shale.
- Begins in the Catskill Mountains, stretches west toward Marcellus, NY, and then southwest across PA, WV, and OH.
Why is it Important?
- Success of other shale plays has allowed companies to transfer horizontal drilling and technology to other areas.
- Proximity to high-demand markets along the East Coast make it an attractive target for energy development.
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Marcellus Shale Geographic Footprint
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The Utica Shale: Companion to Marcellus
• Lies below the Marcellus
• Bigger, deeper, and denser shale
• One of the newest U.S. unconventional energy sources
• Rich in natural gas liquids (NGL)
• Particularly accessible in OH
• Success in the Marcellus has led to success in the Utica
• Devonian Shale is yet another Northeastern play
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PA Well Count
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OH Well Count
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WV Well Count
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LegendMarcellus Shale Formation
Wet Gas Region
“Wet” and “Dry” Gas Regions
Sources: Pace Global; Equitable Resources, MarkWest, Atlas Energy, Range Resources, and Caiman Energy.
Wet Gas1200+ Btu per Mcf
Dry Gas<1200 Btu per Mcf
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THANK YOUThe Economics of Shale Gas
Courtesy: IPS Engineering EPC
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“Decoupling” of Oil and Gas Prices
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Natural Gas Industry Segments
Exploration and Production
• Gas Field Exploration
• Well Drilling and Hydraulic Fracturing
• Gas Production and Liquids Recovery
Gathering andProcessing
• Gas Collection Systems
• Gas Processing - Separation
- Dehydration - Fractionation ( NGL)
• Compression
Transportation andDistribution
• Gas Conditioning
• Transmission Pipelines
• Measurement and Regulation
• Odorization
• Distribution Pipelines
UPSTREAM MIDSTREAM DOWNSTREAM
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Upstream Segment
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Steps in Drilling
Horizontal Drilling on a Well Pad
• More efficient production, smaller footprint.
• Conductor, surface casing protect well water source.
• Well is drilled vertically and horizontally as much as 6,000 feet.
• Wellbore is approximately 20 inches in diameter at its widest.
• 5 ac vs. 24 ac = 1 acre when done
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Hydraulic Fracturing
• Industrial process - properly cased well along with proper containment at the surface is critical
• Permits from state regulatory agencies required for water withdrawal.
• New technologies allow producers to recycle most water
• 30 State and federal agencies monitor hydraulic fracturing
Steps in Completion
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Environmental Protection
Well Casing
• Multiple layers of steel and cement ensure redundant protection
• Conductor and Surface casing extend through water table
• Cementing to surface for each layer provides stability, protection, and prevents cross flow of hydrocarbons
• 25 PA Code, Chapter 78 Oil and Gas Rules, contains strengthened standards
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Environmental Protection
Hydraulic Fracturing • Used for more than 65 years; Over
1 million wells in 27 states since 1947
• Well stimulation began in the 1860’s when nitroglycerin torpedoes were used
• 90 percent of oil and gas wells use HF technology today
• 99.5 percent water/sand mix
• 3 to 5 million gallons of water fractures the shale.
• Well casing protects water supply
• Revisions to 25 PA Code, Chapter 78 reflect the best practices in well casing
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Gallons per million BTU Range Mid-point
Deep shale natural gas 0.60 – 5.80 3
Nuclear 8 – 14 11
Conventional oil 8 – 20 14
Coal 13 – 32 23
Fuel ethanol from corn 2,510 – 29,100 15,800
Biodiesel from soy 14,000 – 75,000 44,500
Source: Ground Water Protection Council, U.S. Department of Energy
Environmental Protection
Less Reliance on Water Resources
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Site Restoration
The Well Site
• The property is contoured and landscaped as closely as possible to return to pre-drilling conditions.
• Property owners generally see:
‒ Short wellheads on a level pad
‒ Minimal equipment
‒ Two to three water storage tanks
‒ Measurement system to monitor gas production
Courtesy: Range Resources
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Midstream Segment
Courtesy: IPS Engineering EPC
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Focus on Midstream
• A Gathering Line - defined by PA state law as a pipeline used to transport natural gas from a production facility to a transmission line
• Gathering lines generally buried to a depth of 36” or more
• Location of pipeline negotiated by property owner and pipeline company
• Right of Way agreements – Legally binding documents– Pipeline operator has access to the right
of way for construction, operation, maintenance, and repairs
• A Right of Way may contain multiple pipelines and is typically 50-75 feet wide
• Subject to Pennsylvania PUC regulation
Source: MarkWest Energy Partners Courtesy: IPS Engineering EPC
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Gas Processing
Gas Separation, Dehydration, and Fractionation
• NE Marcellus gas is “dry” SW Marcellus and Utica gas is ‘wet”
• Gas processing turns production gas into “pipeline quality gas” for end users
• Filter / Separator removes dirt and free liquids
• Dehydration removes water entrained in the production stream ( <7 lbs/MMcf )
• Cryogenic processing separates NGL from production gas and lowers heating value (980 – 1100 BTU/cf)
• Fractionation separates NGL into heavier products (ethane, propane, butane)
Courtesy: IPS Engineering EPC
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Compression SystemsCompressor Stations
• State of the art sound attenuation
• Highest standards for welding, fabrication, and material
• 24/7 monitoring and control
• Automatic safety systems
• Annual inspections by regulating entities
Compressor Units• High tech integrated control systems
• Monitoring and control 24/7
• Made in the USA
• Operated and maintained by local workers
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Downstream Segment
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Focus on Downstream
Transmission Pipelines• Critical link between production and
consumers• Statistically, pipelines are the safest
transportation mode for natural gas and liquid hydrocarbons
Oil transport by truck results in 87 X more deaths and 35 X more fires / explosions than oil pipeline accidents
• Designed and built to industry standards
• HDD technology minimizes enviro. impact
• GIS technology allows for efficient layout and accurate tracking
• Interstate pipelines are subject to federal regulation and inspection: DOT PHMSA Source: Pipeline Association for Public Awareness
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Intra-state Pipelines
State Regulation of Pipeline Safety
• Just as with midstream pipelines, downstream transmission lines are subject to state regulation
– Pennsylvania PUC
– Pennsylvania Act 13 – Strengthens environmental and safety laws for oil and gas industry
– Pennsylvania Underground Utility Line Protection Law – The One Call System
• Third party damage is the greatest threat to pipeline safety
– “One Call” participation in PA is mandatory
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Gas Conditioning
Pipeline Quality Gas
• Gas Conditioning usually occurs at the compressor station discharge
• Removal of residual liquids by coalesors
- Glycol Alcohol used in the dehydration process
- Compressor lubricating oil
• Final polishing before transportation by downstream facilities
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Measurement and Regulation (M&R)
Accuracy is critical
• Measurement is the company cash register
• Gas quality and composition is recorded at “custody transfer” points by a chromatograph
• Regulation can be based on pressure or flow control
• Distribution piping is typically low pressure: 25 – 150 psig
Courtesy: Valtronics, Inc.
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Odorization
Leak detection
• Odorization gives Natural Gas its distinctive smell
• Mercaptans are a family of sulfur containing hydrocarbons
• Methanethiol - CH4S
• 49 CFR Part 192.625 mandates odorization
• Prepares gas for distribution systems
Courtesy: IPS Engineering EPC
Courtesy: Valtronics, Inc.
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THANK YOUEconomic Impact
Courtesy: Ecobag
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Economic Impact for Our Region
Income to Local Landowners and Businesses
• More than 4,500 wells drilled from 2010 through 2012
• Investment of approximately $32.0 billion
• 2013 projection: $13.5 billion
- Leasing and bonuses- Exploration- Drilling and completion- Pipelines and processing- Royalties
Source: Survey of Marcellus Shale Coalition Board Member Companies
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Natural Gas Job Phase
Pre-drilling (Exploration)
• Geologic studies, permitting, water management, engineering/design, site preparation, environmental and safety compliance
Drilling (Extraction)
• Pipeline, compressor, well facilities construction, Hydraulic Fracturing & completions, water management, environmental and safety compliance
Production/Reclamatio
n
• Engineering, site reclamation, environmental and safety compliance
Delivery to Market (transport, storage,
marketing)
• NG Marketers, commodity traders, logistics, storage, accounting, risk management
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Diverse Job Opportunities
Professional Functions Identified in MSC SurveySource: MSC Membership Survey, May 2013
Fast Fact 400+ individuals within nearly 150 different occupations
needed to complete and produce gas from a Marcellus Shale well (MSETC, 2010)
30%
20%
13%11%
8%
4%4% 3%
2% 2% 1% 1%
Equipment Operations
Operations and Maintenance
Commercial
Engineering and Construction
Administration
Environmental Health & Safety
Land
Well Services
Other
Water Management
Geology
Purchasing
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Marcellus Shale Coalition
Courtesy: IPS Engineering EPC
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Benefits for All
• We are committed to being responsible members of the communities in which we work.
• We strive to attract and retain a talented and engaged local workforce.
• We conduct our business in a manner that will provide sustainable and broad-based economic, environmentally sensitive, and energy-security benefits for all.
Marcellus Shale Coalition Pennsylvania based trade association
Courtesy: IPS Engineering EPC
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Dialogue & Education
• Coalition meetings with legislative and executive officials:‒ PA Department of Environmental Protection‒ PA Department of Community and Economic Development‒ Members of U.S. Congress, PA General Assembly
• Public speaking engagements and presentations:‒ Chambers of Commerce‒ West Virginia University‒ Federal Reserve Bank‒ Sierra Club‒ Pennsylvania Environmental Council
• Outreach to:‒ Agriculture community‒ Organized labor‒ Small and mid-sized businesses‒ Sportsmen’s groups‒ Local government
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Research Collaborative
Industry
• Nationally recognized technical experts from trade associations
Academia • Leaders from university research centers
Public Sector
• Research institutions at state and federal agencies
National
• Research leaders such as RAND, Brookings, and funders of charitable foundations
ResearchCollaborativeResearch Collaborative
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THANK YOU !
J.M.Bright, P.E.