The Fossil Fuels: Natural Gas and Coal

1. The Fossil Fuels:Natural Gas and Coal Lecture #5 HNRT 228 Spring 2013 Energy and the Environment

2. iClicker Question • What is a typical drill depth for an oil well? • A Several hundred feet • B 1000 feet • C Several thousand feet • D All of the above • E Only A and B above

3. iClicker Question • Which of the following is (are) used to confirm the presence of oil in a well? • A Core samples • B Well logging • C Drill stem testing • D All of the above • E Only A and B above

4. iClicker Question • What is the name of the suspension used to keep fractures in rock open and allow oil to flow? • A crackant • B fracture suspension • C flowant • D fracturant • E proppant

5. iClicker Question • The process by which components in a chemical mixture are separated according to their different boiling points, is called • A Distillationism • B Fractionation • C Fractioning • D Fractional distillation • E Fractional fractionating

6. iClicker Question • Which of the following are not petroleum derived products? • A gasoline • B kerosene • C jet fuel • D plastics • E None of the above

7. Oil Exploration Summary • Oil is trapped in rare geological structures • Most of the oil in the world comes from a few large wells • About one in ten exploratory drillings strike oil

8. Overview of Natural Gas Supply of recoverable natural gas available at affordable costs has greatly increased over past 10 years Industry’s ability to produce natural gas from shales has gone from almost 0 to > 20% of U.S. needs in just 10 years Natural gas demand is at 22-23 Tcf/year in the U.S. (historic highs). Increased availability of gas will allow demand to continue to grow over next several years

9. 1999 View of Natural Gas Supply • N. American natural gas reserves found each year were replacing produced gas, but… • Industry needed to drill more and more wells just to hold reserves constant while demand for production was increasing • Production from the Gulf of Mexico had peaked and was in decline • The petroleum industry was starting to have success in producing gas from shale

10. U.S. Reserve Base – Trends Before and After Shale Gas Production Significant increase in gas reserves and production from shales starts in 1999 Source: EIA

11. U.S. Natural Gas Production +3.7%/yr -1.9%/yr +1.1%/yr U.S. natural gas production is at its highest level ever in 2008 Source: EIA

12. Offshore Gulf of Mexico in Steep Decline Production is down by almost 50% from 2001-07 Source: EIA

13. Enter Barnett Shale • Barnett Shale • Geological formation located in the Bend Arch-Fort Worth Basin of Texas • Consists of sedimentary rocks of Mississippian age (354–323 million years ago) • Formation underlies the city of Fort Worth and underlies 5,000 square miles (13,000 km2) and at least 17 counties of Texas

14. Barnett Shale– Daily Production (TX RR Commission Areas 5 + 9 only) -8% -4% Percentage of U.S. natural gas demand supplied by Barnett Shale only - 0% While supply from offshore GoM has fallen by >6 bcf / day, Barnett Shale production has grown by > 4 bcf/d Source: TX RR Commission

15. What Has Changed to Allow us to Produce This Gas? • Techniques to allow horizontal wells to be drilled efficiently have greatly improved • In 4Q ’06, Barnett wells drilled in 25 days for $161/ft; • In 2Q ‘08, Barnett wells drilled in 19 days for $131/ft • This is 24% faster and 19% cheaper Source: Simmons

16. Frac’d (Fracturing) Wells Barnett shale is very hard, and it was virtually impossible to produce gas in commercial quantities from this formation until recent improvements were made in hydraulic fracturing technology and horizontal drilling, and there was an upturn in the natural gas price.

17. What Has Changed to Allow us to Produce this Gas • Ability to drill longer laterals • Experimentation on Completion Methods: • Cemented/Uncemented liners • Staged Frac’ing • Simulfracs • Frac fluids and proppants

18. What Has Changed to Allow us to Produce This Gas? Ability to fracture shales and significantly increase production per well has dramatically improved • In 2005, the median initial production rate Barnett Shale wells in Johnson County, TX was 2.2 Bcf /day • In 2008, the median initial production rate for the Barnett wells in the same county was 7.0 Bcf/day Source: IHS

19. What Has Changed to Allow us to Produce This Gas? Combining drilling + production efficiencies: • One rig in 2005 could drill 9 wells at 2 bcf/well Versus • One rig in 2008 can drill 12 wells at 4.5 bcf/well In 2005, the rig added 18 bcf of reserves In 2008, the rig adds 54 bcf of reserves

20. Conventional Well vs. Shale Gas Well Production Curves

21. Basins Where Additional Gas Will Be Produced From Shales Marcellus Woodford Haynesville Barnett Estimated Gas In-Place in these Shales is ~ 2000 Tcf

22. Today’s Relative Share of Energy Market by Fuel Source: EIA – Annual Energy Outlook 2009

23. iClicker Question • Which shale basin stretches from West Virginia to New York? • A Haynesville • B Woodford • C Barnett • D Marcellus • E None of the above

24. U.S. Energy Demand by Fuel History Projections 120 - Renewables Biofuels 100 - Liquids 80 - Quadrillion Btu’s 60 - Natural Gas 40 - Nuclear 20 - Coal 0 - 1995 2005 2015 2030 1980 Source: EIA – Annual Energy Outlook 2009

25. Natural Gas Use by Sector in 2008 29% Electricity Generation 21% Residential Electricity generation from natural gas has grown at rate of 4%/year since 1990 14% Commercial 3% Transportation 33% Industrial Industrial usage of natural gas has fallen at rate of 2%/year since 1998 Source: EIA – Annual Energy Outlook 2009

26. Today’s Relative Share of Electricity Generation by Fuel Other Renewables 3% Hydro 6% Nuclear 20% Coal 49% Natural Gas 21% Oil 1% Source: EIA – Electric Power Monthly, April 2009

27. Natural Gas Supply thru 2030 History Projections 25 - Unconventional 20 - 15 - Conventional Alaska 10 - 5 - Net Imports 0 - 2005 2015 2025 1995 Source: EIA – Annual Energy Outlook 2009

28. History: U.S. Natural Gas – Production & Consumption Source: EIA

29. Supply vs. Demand thru 2015 Available supply: Assume 1.8% growth / year in production capacity (starting in 2010) and net imports at 3 Tcf/yr vs. 3.3-4.0 Tcf/yr seen since ‘01 Demand (dashed curve): Assume 4% growth in use of gas for electricity generation after 1 year, 3% reduction in overall demand for 2009

30. Natural Gas is Cleaner Relative Level of NOx Emissions 120 100 80 60 40 20 0 Gasoline Natural Gas Diesel Ethanol Blends Low Sulfur Diesel Bio Diesel Relative Level of Particulate Emissions 120 100 80 60 40 20 0 Source: South Coast Air Quality Management District 2007 Air Quality Management Plan Summit Panel

31. Natural Gas is a Low Carbon Fuel Natural Gas Oil 28% more Coal 43% more 0 50000 100000 150000 200000 Pounds of Carbon per Billion BTU Source: EIA, Natural Gas: Issues & Trends, 1998

32. iClicker Question • Which has lowest amount of nitrous oxide emissions? • A Diesel Fuel • B Gasoline Fuel • C Bio-diesel Fuel • D Ethanol-blend Gasoline • E Natural Gas

33. iClicker Question • Which has lowest amount of particulate emissions? • A Diesel Fuel • B Gasoline Fuel • C Bio-diesel Fuel • D Ethanol-blend Gasoline • E Natural Gas

34. iClicker Question • Which puts the lowest amount of carbon into the environment? • A Oil • B Coal • C Natural Gas

35. Overall Economics of fuels before any carbon tax $/KWh Source: SDI research + team analysis

36. Distribution of natural gas • Impractical to ship: must route by pipe • 1.3 million miles of pipe (250,000 miles of mains)

37. Natural Gas • Extracted as oil-drilling byproduct • was once burned off at well head as means of disposal • Mostly methane, some ethane, and a little propane, butane • 2 times cheaper than electricity per energy content, comparable gasoline per joule • this is recent: in 2004, it was 3.5 times cheaper than electricity, 3 times cheaper than gas • Well-suited to on-the-spot heat generation: water heaters, furnaces, stoves/ovens, clothes dryers • more efficient than using fossil-fuel-generated electricity

38. Summary of Natural Gas U.S. has a very large natural gas resource base remaining to be produced, and The petroleum industry has greatly improved its ability to produce gas from shales, so We believe supply capacity will be able to meet growing demand w/o significant cost increases unless government imposes onerous taxes and additional regulation.

39. How much do we use, and where do we get it? • In 2003, we used 21.8 Tcf (Tera-cubic feet, or 1012ft3); about 23 QBtu (23% of total) • Out of the 21.8 Tcf used, 88% was domestic • 11.8% from Canada • 0.08% from Algeria (shipped in liquefied form) • 0.03% from Mexico • Have used about 1,100 Tcf to date Q

40. How much do we have left? • Estimated recoverable amount: 871 Tcf • 40 years at current rate • Estimates like this do account for future discoveries • present proven reserves provide only 8 years’ worth

41. Recollecting Chemistry kJ per gram • All fossil fuels are essentially hydrocarbons, except coal, which is mostly just carbon • Natural Gas is composed of the lighter hydrocarbons (methane through pentane) • Gasoline is hexane (C6) through C12 • Lubricants are C16 and up 55 48 48 51 50 48 46 48 48 48

42. Hydrocarbon Reactions • Methane reaction: CH4 + 2O2 CO2 + 2H2O+ energy 1 g4 g2.75 g2.25 g55 kJ • Octane reaction: 2C8H18 + 25O2 16CO2 + 18H2O+ energy 1 g3.51 g3.09 g1.42 g48 kJ • For every pound of fuel you burn, you get about three times that in CO2 • one gallon of gasoline  ~22 pounds of CO2 • occupies about 5 cubic meters (1300 gallons) of space

43. iClicker Question • Which natural gas has the highest potential energy content per gram? • A Octane • B Heptane • C Butane • D Methane • E Hexane

44. Aside: Carbohydrate Reactions • Typical carbohydrate (sugar) has molecular structure like: [CH2O]N, where N is some integer • refer to this as “unit block”: C6H12O6 has N=6 • Carbohydrate reaction: [CH2O]N + NO2 NCO2 + NH2O + energy 1 g 1.07 g 1.47 g 0.6 g 17 kJ • Less energy than hydrocarbons because one oxygen already on board (half-reacted already) • For every pound of food you eat you exhale 1.5 lbs CO2

45. Coal • Coal is a nasty fuel that we seem to have a lot of • Primarily carbon, but some volatiles (CO, CH4) • Reaction is essentially C + O2 CO2 + energy • Energy content varies depending on quality of coal, ranging from 4–7 Cal/g • Highly undesirable because of large amounts of ash, sulphur dioxide, arsenic, and other pollutants • Also ugly to remove from the ground

46. Coal types and composition kJ/g Natural Graphite fixed carbon 34 ash Anthracite 29 Bituminous 35 Bituminous 31 sub- bituminous 27 Lignite 25 moisture content Peat 21 volatile matter Wood 20

47. Use of Coal • 88% of the coal used in the U.S. makes steam for electricity generation • 7.7% is used for industry and transportation • 3.5% used in steel production • 0.6% used for residential and commercial purposes • 0.1% used on Halloween for trick-or-treaters <chuckle>

48. Estimated Worldwide Coal Reserves *1st edition of book had U.S. at 1500 billion tons. What happened to all that coal? †1st edition of book had Russian coal at 4300 billion tons. Gross overestimates?

49. U.S. Coal Production History

50. iClicker Question • Which country has the most coal reserves? • A Russia • B China • C United States • D Australia • E Canada