Posts Tagged ‘electricity generation’

Natural gas captured from organic shale formations is not new to the oil and gas industry; shale gas has been produced since the early 1800s (DOE, 2009).  Most shale gas formations have historically been deemed economically impractical to drill due to the available technology and relative abundance of domestic conventional natural gas sources.  However, recent technological advances in horizontal drilling and hydraulic fracturing along with increasing demand for natural gas and recent price trends for natural gas, have allowed previously inaccessible reserves to become technologically feasible and economically efficient to recover (DOE, 2009).

The Annual Energy Outlook for 2009, recently released by the United States’ Energy Information Administration, projects an increase of 0.5% total primary energy consumption annually through 2030 (EIA, 2009).  The majority of this demand increase will come from the residential sector’s demand for additional electricity (EIA, 2009).  Currently, coal-fired electricity generation dominates the electricity generation sector at approximately 49% of total U.S. domestic generation capacity (EIA, 2009).  However, due to emerging concerns and public policy developments regarding greenhouse gases and renewable portfolio standards for a sustainable energy supply, lower carbon energy sources needed for electricity generation are expected to gain marketplace demand (EIA, 2009).  Unfortunately, conversion from a fossil fuel-dependent energy economy to a low-carbon energy economy will take time and significant capital investment for infrastructure development (DOE, 2009).  A recent Wall Street Journal article cites Carl Pope, executive director of the Sierra Club as viewing natural gas as a “bridge fuel” from carbon-intensive fossil fuels, such as coal and petroleum, to cleaner future fuel sources (Casselman, 2009).

In order to meet the expected increased demand for natural gas without increasing dependence on foreign imports, development of domestic unconventional natural gas sources will need to grow rapidly.  Production from unconventional natural gas sources, namely organic shales, tight sand formations, and coal-bed methane, currently account for approximately 50% of the total domestic natural gas production (DOE, 2009), this total production from unconventional resources was estimated at 8.9 trillion cubic feet (Tcf) per year in 2007 (ALL, 2008c).  Of the 8.9 Tcf of unconventional natural gas produced in the United States in 2007, 1.2 Tcf was from shale formations; however, shale gas production is expected to grow to 4.2 Tcf by 2030, accounting for an estimated 18% of the total U.S. gas production in 2030.  Unconventional sources combined are predicted to grow to nearly 56% of total U.S. domestic natural gas production (EIA, 2009).  To date, four evolving shale gas plays (Haynesville, Marcellus, Fayetteville and Woodford) are estimated to have over 550 Tcf of total recoverable gas resources, these formatiosn are expected to be capable of providing sustainable production of 2-4 Tcf of natural gas annually for decades (DOE, 2009).  Of these four, the Haynesville Shale and Marcellus Shale may have the most significant additions to domestic reserves of natural gas in recent decades.

Copyright: GoMarcellusshale.com

Cleaner than coal and cheaper than oil, a 90-year supply is under our feet, experts say.

By MARK WILLIAMSAP Energy Writer

An unlikely source of energy has emerged to meet international demands that the United States do more to fight global warming: It’s cleaner than coal, cheaper than oil and a 90-year supply is under our feet.

It’s natural gas, the same fossil fuel that was in such short supply a decade ago that it was deemed unreliable. It’s now being uncovered at such a rapid pace that its price is near a seven-year low.

Long used to heat half the nation’s homes, it’s becoming the fuel of choice when building new power plants. Someday, it may win wider acceptance as a replacement for gasoline in our cars and trucks.

Natural gas’ abundance and low price come as governments around the world debate how to curtail carbon dioxide and other pollution that contribute to global warming. The likely outcome is a tax on companies that spew excessive greenhouse gases. Utilities and other companies see natural gas as a way to lower emissions — and their costs. Yet politicians aren’t stumping for it.

In June, President Barack Obama lumped natural gas with oil and coal as energy sources the nation must move away from. He touts alternative sources — solar, wind and biofuels derived from corn and other plants. In Congress, the energy debate has focused on finding cleaner coal and saving thousands of mining jobs from West Virginia to Wyoming.

Utilities in the U.S. aren’t waiting for Washington to jump on the gas bandwagon. Looming climate legislation has altered the calculus that they use to determine the cheapest way to deliver power. Coal may still be cheaper, but natural gas emits half as much carbon when burned to generate the same amount electricity.

Today, about 27 percent of the nation’s carbon dioxide emissions come from coal-fired power plants, which generate 44 percent of the electricity used in the U.S. Just under 25 percent of power comes from burning natural gas, more than double its share a decade ago but still with room to grow.

But the fuel has to be plentiful and its price stable — and that has not always been the case with natural gas. In the 1990s, factories that wanted to burn gas instead of coal had to install equipment that did both because the gas supply was uncertain and wild price swings were common. In some states, because of feared shortages, homebuilders were told new gas hookups were banned.

It’s a different story today. Energy experts believe that the huge volume of supply now will ease price swings and supply worries.

Gas now trades on futures markets for about $5.50 per 1,000 cubic feet. While that’s up from a recent low of $2.41 in September as the recession reduced demand and storage caverns filled to overflowing, it’s less than half what it was in the summer of 2008 when oil prices surged close to $150 a barrel.

Oil and gas prices trends have since diverged, due to the recession and the growing realization of just how much gas has been discovered in the last three years. That’s thanks to the introduction of horizontal drilling technology that has unlocked stunning amounts of gas in what were before off-limits shale formations. Estimates of total gas reserves have jumped 58 percent from 2004 to 2008, giving the U.S. a 90-year supply at the current usage rate of about 23 trillion cubic feet of year.

The only question is whether enough gas can be delivered at affordable enough prices for these trends to accelerate.

The world’s largest oil company, Exxon Mobil Corp., gave its answer last Monday when it announced a $30 billion deal to acquire XTO Energy Inc. The move will make it the country’s No. 1 producer of natural gas.

Exxon expects to be able to dramatically boost natural gas sales to electric utilities. In fact, CEO Rex Tillerson says that’s why the deal is such a smart investment.

Tillerson says he sees demand for natural gas growing 50 percent by 2030, much of it for electricity generation and running factories. Decisions being made by executives at power companies lend credence to that forecast.

Consider Progress Energy Inc., which scrapped a $2 billion plan this month to add scrubbers needed to reduce sulfur emissions at 4 older coal-fired power plants in North Carolina. Instead, it will phase out those plants and redirect a portion of those funds toward cleaner burning gas-fired plants.

Lloyd Yates, CEO of Progess Energy Carolina, says planners were 99 percent certain that retrofitting plants made sense when they began a review late last year. But then gas prices began falling and the recession prompted gas-turbine makers to slash prices just as global warming pressures intensified.

“Everyone saw it pretty quickly,” he says. Out went coal, in comes gas. “The environmental component of coal is where we see instability.”

Nevada power company NV Energy Inc. canceled plans for a $5 billion coal-fired plant early this year. That came after its homestate senator, Majority Leader Harry Reid, made it clear he would fight to block its approval, and executives’ fears mounted about the costs of meeting future environmental rules.

“It was obvious to us that Congress or the EPA or both were going to act to reduce carbon emissions,” said CEO Michael Yackira, whose utility already gets two-thirds of its electricity from gas-fired units. “Without understanding the economic ramifications, it would have been foolish for us to go forward.”

Even with an expected jump in demand from utilities, gas prices won’t rise much beyond $6.50 per 1,000 cubic feet for years to come, says Ken Medlock, an energy fellow at the James A. Baker III Institute for Public Policy at Rice University in Houston. That tracks an Energy Department estimate made last week.

Such forecasts are based in part on a belief that the recent spurt in gas discoveries may only be the start of a golden age for gas drillers — one that creates wealth that rivals the so-called Gusher Age of the early 20th century, when strikes in Texas created a new class of oil barons.

XTO, the company that Exxon is buying, was one of the pioneers in developing new drilling technologies that allow a single well to descend 9,000 feet and then bore horizontally through shale formations up to 1 1/2 miles away. Water, sand and chemical additives are pumped through these pipes to unlock trillions of cubic feet of natural gas that until recently had been judged unobtainable.

Even with the big increases in reserves they were logging, expansion plans by XTO and its rivals were limited by the debt they took on to finance these projects that can cost as much as $3 million apiece.

Under Exxon, which earned $45.2 billion last year, that barrier has been obliterated.

Copyright: Times Leader

College in Williamsport preparing workers

By Rory Sweeneyrsweeney@timesleader.com
Staff Writer

WILLIAMSPORT – Like many of his classmates, Mike Harris already has a job in electricity-generation lined up for when he graduates this spring.

The only problem is it will require the Dalton native to relocate to Illinois.

Soon enough, though, future students in these same welding classes at Pennsylvania College of Technology could be in a curriculum that funnels them into local jobs with natural gas drillers working in the Marcellus Shale region.

The Marcellus Shale Education & Training Center at the college is in its early infancy, only envisioned late last year and opened earlier this year, but plans are for it to expand quickly.

A collaboration with the Penn State Cooperative Extension, the center will identify the industry’s work force needs and respond with education tracks that train people for those jobs, said Jeffrey Lorson, an industrial technology specialist at the college who’s running the training center.

“With the escalation and the things with the Marcellus, there was clearly a need in the work force,” he said. “We knew we had a tremendous fit to support the industry.”

The jobs are certainly here, Harris said, and there aren’t enough local workers. “They can’t find anybody,” he said about drillers.

Lorson’s family has a motel in Bainbridge, N.Y., near Binghamton, and the place is constantly packed. “There’s guys coming from all over the place” to work for the drilling companies, he said.

He felt Penn College graduates would be “competitive” for jobs in the industry, which could feed off the college for workers in fields from welding to heavy machinery operation.

“The center has the potential to provide very meaningful training options for local residents,” said Stephen Rhoads, the president of the Pennsylvania Oil & Gas Association. Certain skills, such as building and maintaining infrastructure and inspecting gauges and other moveable parts, “are all skills that could very easily find a home up in Northeastern Pennsylvania,” he said.

“If the industry grows as we expect it to, there will be long-term career opportunities.”

While he plans to enjoy traveling while starting his career, Harris said he’s looking ahead to hometown job security.

“I feel very confident, and I’d love to stay in Northeastern Pennsylvania, but right now as things are starting to take off, I think it’s easier for me to leave and get some experience,” he said.

The center could also help students outline career paths, an idea Harris has already considered. He’s planning to become certified in visual inspections.

“It keeps me out in the field, but it’s managerial,” he said. “You’re in the middle, which is pretty much where I wouldn’t mind being.”

See more photos of the Pennsylvania College of Technology Marcellus Shale Education & Training Center at www.timesleader.com.

Copyright: Times Leader