International Conference on Gas Hydrates (ICGH) (6th : 2008)


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  THE DEVELOPMENT PATH FOR HYDRATE NATURAL GAS   Arthur H. Johnson Hydrate Energy International 612 Petit Berdot Drive Kenner, Louisiana USA    ABSTRACT The question of when gas hydrate will become a commercially viable resource most concerns those nations with the most severe energy deficiencies.  With the vast potential attributed to gas hydrate as a new gas play, the interest is understandable. Yet the resource potential of gas hydrate has persistently remained just over the horizon.  Technical and economic hurdles have pushed back the timeline for development, yet considerable progress has been made in the past five years.  An important lesson learned is that an analysis of the factors that control the formation of high grade hydrate deposits must be carried out so that both exploration and recovery scenarios can be modeled and engineered.  Commercial hydrate development requires high concentrations of hydrate in porous, permeable reservoirs.  It is only from such deposits that gas may be recovered in commercial quantities. While it is unrealistic to consider the global potential of gas hydrate to be in the hundreds of thousands of tcfs, there is a strong potential in the hundreds of tcfs or thousands of tcfs.  Press releases from several National gas hydrate research programs have reported gas hydrate “discoveries”.  These are, in fact, hydrate shows that provide proof of the presence of hydrate where it may previously only have been predicted.  Except in a few isolated areas, valid resource assessments remain to be accomplished through the identification of suitable hosts for hydrate concentrations such as sandstone reservoirs.  A focused exploration effort based on geological and depositional characteristics is needed that addresses hydrate as part of a larger petroleum system.  Simply drilling in areas that have identifiable bottom simulating reflectors (BSRs) is unlikely to be a viable exploration tool.  It is very likely that with drilling on properly identified targets, commercial development could become a reality in less than a decade.  Keywords: gas hydrate, development, petroleum system  INTRODUCTION Drilling programs conducted by IODP and several national programs during the past seven years have yielded significant new information about hydrate occurrence in relation to regional petroleum systems. The new perspectives that have been gained through these programs have led to dedicated efforts in several countries that could lead to commercially viable production of natural gas from hydrate deposits within 10 years [1].  The pressure and temperature conditions for gas hydrate stability are common in Arctic and deep marine locations, but for a hydrate deposit to form there must also be a sufficient supply of Proceedings of the 6th International Conference on Gas Hydrates (ICGH 2008), Vancouver, British Columbia, CANADA, July 6-10, 2008. hydrate-forming gas. The gas may be carried into the hydrate stability zone as a dissolved component of fluid flow from deeper hydrocarbon sources, or may be produced from biological activity within the nearby sediments. Methane in marine sediment will react with sulfate derived from seawater to form sulfides and other products and, as a result, most marine sediments have a sulfate reduction zone that extends to some depth beneath the seafloor. Methane will be absent within this zone, and gas hydrate deposits will not form. Where the gas flux rate is low, the base of the sulfate reduction zone may be deeper than the base of the hydrate stability zone. Under these conditions no hydrate will be present. Conversely, where the gas flux rate is high, the sulfate reduction zone may only extend through the first few meters beneath the seafloor. It is therefore clear that an evaluation of natural gas sources and migration paths must be a critical component of a gas hydrate exploration program.  A third component, in addition to pressure/temperature conditions and gas flux, is required for a hydrate accumulation to have commercial potential: a reservoir with appropriate porosity and permeability. Drilling results throughout the world, including both marine and Arctic locations, have found the highest concentrations of gas hydrate in subsurface sands and gravels [2]. It is these deposits that should be the focus of serious efforts at commercializing gas hydrates. In shales and fine silts, gas hydrate is typically present in very low concentrations – dispersed throughout the host rock, in isolated nodules, or filling veins and fractures. Such low-grade hydrate deposits are unlikely to ever be commercially viable. In addition to the higher concentration in coarse- grained sediments, commercial production of gas from hydrate is most economically feasible from reservoirs with high permeability. Thus, exploration for commercial gas hydrate deposits must involve a concerted effort to identify reservoir-quality sands.  Commercial production of natural gas from hydrate will be the result of exploration programs that include the assessment of all three components (pressure/temperature, gas source and migration, and reservoir lithology). If any one of these components is missing, there will be no potential for economically viable development. It is worth noting that the petroleum industry has been utilizing a comparable approach to prospect assessment for conventional oil and gas exploration for many decades. For gas hydrate assessment, only the additional hydrate pressure/temperature considerations need to be added [3].  ECONOMIC CONSIDERATIONS Commercial production of natural gas from subsurface hydrate deposits is most attainable through the adaptation of existing petroleum industry technology. In addition, the same economic considerations that guide industry decisions for conventional oil and gas development will also apply to development of hydrate reservoirs. Industry decisions will be largely based on a determination of net present value (NPV) and investment will only be considered if a hydrate project can achieve a suitable rate of return (ROR). Among the most significant considerations that will guide development assessments are:  Capital Expense – The financial investment required for the drilling and completing of wells and for the construction of production facilities (such as pipelines and offshore platforms). In particular, the development of marine hydrate deposits are very severely impacted by the high drillings costs associated with deepwater drillships and semisubmersibles. Given that marine hydrate deposits are typically located within one kilometer of the seafloor, a new design of drilling rig may be needed to enable less expensive drilling.  Existing Infrastructure – Pipelines, processing facilities, and platforms. The ability to leverage existing facilities will greatly improve the economics of commercial hydrate development. It is unlikely that investor-owned corporations will proceed with hydrate development in the near or mid-term in the absence of such facilities. This limits the involvement of such companies to areas with conventional oil and gas production such as the North Slope of Alaska, Siberia, or the Gulf of Mexico.  Transportation of produced gas to customers is a significant issue as many areas with high potential for hydrate development are in remote locations. Many of these areas could join the existing inventory of conventional “stranded” gas resources. A number of options have been considered for transporting gas from locations that lack pipeline infrastructure. These include gas-to-liquids (GTL) technology, compressed natural gas (CNG), and conversion to electricity.  Operating Expense – The capital required to keep wells on production. For wells producing natural gas from hydrate, this will not only include the conventional costs associated with processing and personnel, but will also involve expenses specific to production from hydrate-bearing reservoirs. These include the generation of heat needed to prevent hydrate from reforming in flowlines, compression of the expected low pressure gas streams to pipeline standards, and expenses related to heating and/or depressurization of hydrate in order to achieve dissociation. Disposal of produced water may be a significant added expense.  Flow Rate – The daily rate at which natural gas is produced from completed wells. Flow rates must be sufficient to recover invested capital and operating expenses, and yield an acceptable ROR. Flow rate will be determined by both the specific characteristics of a reservoir and the production method used. Depressurization would entail a lower operating expense, yet some degree of thermal stimulation may be required to yield adequate flow rates during the early stages of production [4].  Ultimate Recovery per Well – The total volume of natural gas produced over the life of a well. Completion technology will have to utilize sufficient reservoir modeling to ensure that the dissociation of hydrate in a reservoir does not lead to formation collapse. One of the commercial advantages of gas hydrate reservoirs is that models suggest an extremely long productive life for some reservoirs [5].  Safety – The petroleum industry is committed to safe operations. Development of potential hydrate resources will require an understanding of the effects of hydrate dissociation on the reservoir and overlying sediment so that production does not result in a hazard to facilities and personnel. The petroleum industry will not pursue a potentially unsafe development. The hydrate-bearing reservoirs that can meet these criteria are limited to those with sufficient porosity, permeability, hydrate content, and areal extent. Thus hydrate-bearing sands must be the focus of hydrate exploration programs. The large published figures for global hydrate volume are dominated by occurrences with low permeability (figure 1). Few of these occurrences could sustain adequate flow rates for an extended duration, and none could be expected to yield an ultimate recovery per well that would attain ROR that would be acceptable to industry.  Figure 1  Comparison of resource potential of gas hydrate (left) and other gas resources (right) estimated for the United States. The lithologies with the highest commercial hydrate potential are at the top of the pyramid, representing only a small portion of the total volume of gas hydrate that exists. (after Boswell and Collett, 2006 [6])  EXPLORATION STRATEGIES Global development of natural gas from hydrate will likely involve a series of individual reservoirs of 0.2-5.0 tcf. These will total perhaps hundreds of tcf or even thousands of tcf, but not the hundreds of thousands of tcf that have been repeated for the past twenty years.  Exploring for commercially viable gas hydrate prospects will require detailed basin analysis and stratigraphic modeling to determine areas with optimal risk for lithology and hydrocarbons. Conversely, an overreliance on bottom simulating reflectors (BSRs) may result in the drilling of fine-grained sediments and the recovery of large samples of gas hydrate that had filled veins and fractures. These “discoveries” are of academic interest, and are impressive to the general public, but will not lead to commercially sustainable production.  Throughout the world there are numerous sedimentary basins that have active hydrocarbon systems, have adjacent river systems supplying coarse-grained sediment, and include intervals with the pressure/temperature conditions for hydrate stability. Among these are the deltaic systems of the Russian, Canadian, and American Arctic, and depositional basins along the margins of every continent. Petroleum-rich sedimentary basins are characterized for conventional oil and gas development as having “sweet spots” where hydrocarbon accumulation is optimal, along with many “dry” locations. The same should be expected for commercially viable hydrate deposits.  Where present, a BSR may be used to calibrate the pressure/temperature conditions in a basin and may serve to define the base of the hydrate stability zone, but the assessment of BSRs should never be the primary tool for hydrate exploration [7]. The lack of obvious BSRs in some sedimentary basins has led some investigators to conclude that these locations have no hydrate resource potential. This conclusion is premature.  It is very likely that with drilling on properly identified targets, commercial development of natural gas from hydrate-bearing reservoirs could become a reality in less than a decade.  REFERENCES [1]  Johnson AH. The Role of Gas Hydrate in a Global Gas Market, Gulf Coast Assn. of Geological Societies Transactions. 55:373-381, 2006. [2]  Johnson AH, Max MD. The Path to Commercial Hydrate Gas Production, The Leading Edge 2006; 25(5):648-651. [3]  Johnson AH.  Gas Hydrates. In: Alternative Energy and Fuels Technology. Spring House, PA: The Catalyst Group, 2005. p. 113-124. [4]  Max MD, Johnson AH, Dillon WP. Economic Geology of Natural Gas Hydrate. Berlin, Dordrecht: Springer, 2006. [5]  Moridis GJ, Collett TS, Boswell R, Kurihara M, Reagan MT, Koh C, Sloan ED. Toward Production From Gas Hydrates: Current Status, Assessment of Resources, and Simulation-Based Evaluation of Technology and Potential. SPE 114163, SPE Unconventional Reservoirs Conference, Keystone, CO USA, p. 1-43. [6]  Boswell R, Collett TS. The Gas Hydrate Resource Pyramid. Fire In The Ice, NETL Methane Hydrates R&D Program Newsletter, Fall 2006. p. 5-7 [7]  Johnson AH, Smith MA. 2006, Gas Hydrate E&P: Dispelling the Myths. E&P, Hart Energy Publishing, September, 2006, p. 131-133.  


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