Education

IPAA: Impact of the American Natural Gas Resurgence

Wednesday, January 29th, 2014

 

WASHINGTON, D.C.—  In our previous article, we focused on how the rising trend for domestic production, especially for oil, was benefiting the U.S. economy with increased jobs, and at the same time improving the country’s trade balance, its geopolitical standing, and its economic impact on world energy markets. Our focus now shifts to the parallel stimulus from the dramatic revival of American natural gas production.

As noted in the prior article, U.S. natural gas production reached an all-time high in 2011, and then surpassed that in 2012 at 25.3 trillion cubic feet, its seventh annual increase in a row. Marketed production for January-October 2013 (latest available) is maintaining, if not exceeding 2012’s level. In addition to dry natural gas produced from natural gas wells, these production figures include natural gas produced as a by-product from oil wells, known as “associated gas.” It also reflects the production from “wet” natural gas wells, the economics of which are strongly influenced by the potential value of extracted natural gas liquids (NGLs) in addition to the natural gas itself.

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Oil and Natural Gas “Reserves” – Definitions Matter

Tuesday, April 17th, 2012

WASHINGTON, DC— When determining energy policy, many politicians, pundits, and policymakers discuss the amount of America’s oil and natural gas “reserves” without fully appreciating how broad a range of possible meanings is covered by the term “reserves.” True, the various definitions all refer to oil and natural gas resources in the ground—but which to include—only what’s recoverable or all that’s in place? Discovered or projections of the yet undiscovered? With how much certainty? With what technology and at what price? The ambiguities leave oil and natural gas “reserves” vulnerable as a political bull’s eye. Different definitions and comparisons can be used depending on how rosy or bleak one wants the outlook to appear. We’d like to clear up just a little of the confusion, do a rough sketch of some of the basics, and explore how recent advances in technology have changed the meaning of “reserves.”

Plethora of Definitions

There are different purposes behind the effort to define reserves. They range from near-term, high certainty, conservative estimates of what can be produced by an individual company that can be used as the basis for project planning and financing, all the way to blue-sky, long-horizon, inferred projections for a whole region or country of resources that may exist regardless of the current state of technology or economics.

Thus, many entities have their own definition of “reserves”—the U.S. Geological Survey, American Association of Petroleum Geologists, Society of Petroleum Engineers, the Society of Petroleum Evaluation Engineers, the World Petroleum Congress, not to mention the Securities and Exchange Commission, the Internal Revenue Service, and the United Nations Framework Classification. Geologists and petroleum engineers have various highly developed systems of categories and terminology, and have spent considerable effort coming up with definitions that can be applied repeatedly and consistently. However, to keep our analysis brief (and since we are neither engineers nor accountants), we’ll limit ourselves to distinguishing between “proved reserves” and “technically recoverable reserves.”

Proved Reserves

An example of proved reserves is the Securities and Exchange Commission (SEC) definition, effective in 2010, since public companies are required to provide reserves data in their 10-K reports.

“Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations.”

One key term is “reasonable certainty,” which is generally taken as 90% probability. It implies estimates are only for areas with solid data from existing wells and production history from which highly certain and reasonably precise estimates can be made. The term “economically producible…under existing economic conditions, operating methods, and government regulations” excludes any projection of future technology improvements, and implies that producing this resource must be economic with current market prices and other economic conditions.

In other words, “proved reserves” is an extremely conservative definition.  It has little downside risk and potentially a great deal of upside potential. With a bent towards precision and high certainty, it can exclude large amounts of oil and natural gas that are likely to exist but can be estimated less accurately and with less stringent requirements for certainty. In fact, “reserves growth,” a common industry phrase, is almost a foregone conclusion even in the “proved reserves” category, as existing producing areas undergo infill drilling, reservoir assessment, re-completions, work-overs, re-fractures, and refinements in development strategies.

Technically Recoverable Reserves

By contrast, the term “technically recoverable” is much more expansive. According to the U.S. Geological Survey, “Technically recoverable resources” are “resources in accumulations producible using current recovery technology but without reference to economic profitability.” This differs from “proved reserves” in many ways. It is less restrictive than the 90 percent probability point, often including a range of estimates with a corresponding range of probabilities; it includes estimates of yet-to-be-discovered oil and gas; and includes oil and gas that may not be producible with current prices and other economic conditions. Thus, it can be a much larger figure than “proved reserves.”

Technology Expands Estimates

A key point about “technically recoverable reserves” is that those estimates change as technology changes— sometimes changing in a major way, when, for example, horizontal drilling is combined with hydraulic fracturing.

This has been clearly illustrated as many shale gas and shale oil plays have become viable thanks to new technologies. For example, in 1995, the USGS estimated that the Bakken formation, discovered in the 1950s, held only 0.15 billion barrels of technically recoverable oil. In just under twenty years, in 2008, thanks to advances in tight oil technologies, it updated this to 3 to 4.3 billion barrels! The situation has changed rapidly enough that the USGS is working on yet another assessment (out of cycle) expected in late 2013. Meanwhile, other industry experts have put the figure for the Bakken much higher, closer to 20-24 billion barrels with total original “oil in place” (total volume present in a reservoir) nearing 1 trillion barrels.

Hardly a new hydrocarbon region with the first well drilled in 1921, the Permian Basin of Texas and New Mexico, has a production history of well over 30 billion barrels of oil since then. Yet technological advances have significantly altered assessments of its technically recoverable reserves. In 2007, USGS assessments for the region included for the first time “continuous resources,” a term which includes shale gas and shale oil plays. Without these added assessments, the Permian estimates of undiscovered technically recoverable resources would have been limited to the conventional plays, put at 5.2 tcf of natural gas and just under 1 billion barrels of liquids by the USGS. But the addition of “continuous resources” added another 35.4 tcf of gas and 1.3 billion barrels of liquids, putting the total estimate of undiscovered technically recoverable amounts at 41 tcf of gas and 2.3 billion barrels of liquids. Original crude oil in place is estimated at 95.4 billion barrels, with 33.7 billion barrels of that produced or in discovered, recoverable reserves.

Overall, the assessment of U.S. technically recoverable reserves of both oil and natural gas have grown markedly over the past decade, as the chart shows.

International Apples and Oranges

Before one compares U.S. “reserves” with other producing countries around the world, it’s important to know what is being compared. For example, some countries for political reasons may focus on more expansive definitions of “reserves” or even on “oil in place”— not all of which is commercially recoverable. Some countries may withhold detailed technical data, which makes independent assessment of reserves difficult. Knowing how and when to apply definitions to emerging technologies can also lead to differences. For example, Canada’s oil sands’ reserve estimates have been subject to different interpretations by various analysts, ranging from dozens of billions of barrels to well over a hundred billion barrels. Thus, comparing U.S. “proved reserves,” one of the most conservative definitions in use, with these broadly-defined figures distorts the comparison.

Caution: Future May Be Brighter Than Appears

From the beginning days of the industry, continued innovation has led to new, expanding assessments of “technically recoverable” oil and natural gas. Edwin Drake’s first well in 1859 astounded onlookers with production of all of 10 barrels per day as oil from surface seeps was quickly surpassed by the volumes of oil producible by simple drilling. From those early days onward, improvements in technology, geologic understanding, and operational experience have progressed as the industry moved to deeper prospects, differing geologies, and more challenging environments offshore. Independents have often been at the vanguard of technological innovations that have made these milestones possible—using ever evolving engineering, information processing, and innovative operational practices.

For shale oil and shale gas and other tight, low-permeability plays, the industry is only at the beginning of the technology story, with much room left to grow in recovery factors and depletion curves. Thus the final outcome is unknown—but may be brighter than experts could have ever projected in the past. The turnaround in U.S. oil and gas production, with independents at the helm, is concrete evidence of the growing commercial resource base of American oil and natural gas—and great encouragement for America’s energy future.

To review our past analyses and our latest data, please visit the Resources section at:   www.oilindependents.org.

 

All information for this article provided by IPAA – Declaration of Independents, 1201 15th Street, NW, Suite 300, Washington, DC 20005

Phone:  (202) 857-4722    Website:  www.ipaa.org

MICHIGAN NATURAL RESOURCES TRUST FUND CELEBRATES 35TH ANNIVERSARY

Friday, November 18th, 2011

What do a boardwalk in an Alger County township park, a marsh in St. Clair County, a beach restoration in the city of Frankfort and a state park on the Detroit River have in common?

All were at least partially paid for by Michigan’s Natural Resources Trust Fund.

Established in 1976 (albeit, with a different name) the Michigan Natural Resources Trust Fund (MNRTF) this year celebrates 35 years of strategically acquiring property and improving recreational facilities for the benefit and enjoyment of Michigan’s residents and visitors.

The MNRTF was established, following a spirited debate, after oil was discovered in the Pigeon River Country State Forest in the northeastern Lower Peninsula, a pristine wilderness that serves as the home range of Michigan’s elk herd. At the time of the discovery, some people believed that Pigeon River Country was too important a resource to jeopardize by allowing energy development. Others thought the oil was too valuable an asset to sit underground unutilized.

The MNRTF was the result of the compromise agreed upon by both sides: it allowed the development of energy resources, but dedicated the revenues and royalties derived from mineral development to the acquisition of additional land to compensate the public for the disruption energy development caused.

And it embodied an important principle for the management of Michigan’s non-renewable natural resources: The resources belonged to all generations of Michigan residents – not just those who were around when the minerals were exploited. So instead of just funneling the money into the general fund, as had long been the practice, the Kammer Recreational Land Acquisition Fund (named for then Sen. Kerry Kammer, Oakland County) was established.

By 1978, the Trust Fund, which was set up with a $100 million cap to generate interest, was funding the acquisition of public land, not just for ownership by the state of Michigan, but for other governmental bodies as well: cities, townships, counties. The Trust Fund was so successful that it became a target for legislators who sought to use some of the money it brought in to solve Michigan’s other financial problems. By 1983, more than $100 million had been diverted to other purposes.

Then in 1984, the voters of Michigan approved a constitutional amendment that created the MNRTF, increased the cap to $200 million and protected the fund from raids. In addition, it allowed for up to one-third of the revenue to be used to purchase land for environment protection and recreation and the development of recreation facilities. But there was also a provision that allowed the diversion of $20 million annually to the state’s economic development fund – something that many believed was not in the spirit of the fund’s original intent.

So a decade later, the question was brought before the voters once again. The public overwhelmingly approved Proposal P, which removed the diversion provision, raised the cap to $400 million and created the State Parks Endowment Fund, which receives $10 million annually for the maintenance and capital improvement of state parks.

But the public wasn’t finished improving the MNRTF. In 2002, the voters raised the cap to $500 million, which was reached earlier this year, and where it remains today. Since the cap has been reached, oil and gas revenues now go to the Parks Endowment Fund to pay for a portion of the numerous, much-needed infrastructure repairs at Michigan’s state parks and recreation areas.

Since its inception, the Trust Fund has granted more than $900 million to local units of governments and the Department of Natural Resources to acquire land and develop recreational facilities. Roughly 80 percent of those grants has been spent on land acquisition, the rest on recreational project development. The spending has been split almost 50-50 between projects nominated by local governmental bodies and DNR initiatives.

“The Natural Resources Trust Fund has, without question, improved the lives of Michigan’s citizens,” said Steve DeBrabander, who oversees the DNR’s Grants Management section. “I believe you would be hard pressed to find a Michigan citizen who has not enjoyed a park or trail that was acquired or developed by this fund.”

Projects funded range from small (restroom improvements at a local park, for instance) to grand, such as the purchase of development rights of Kamehameha Schools lands – $16 million spent on a conservation easement that allows timbering and public access to nearly a quarter-million acres of Upper Peninsula land spread across several counties.

Projects have been funded in every county of the state, from launch ramps on local lakes to expansions of state wildlife areas.

The Trust Fund is overseen by a five-member board, which includes the DNR director or a member of the Natural Resources Commission and four state residents appointed by the governor to four-year terms.

The Grants Management section of the DNR administers the fund. It accepts and scores applications for grants and passes them along to the MNRTF board for its consideration. Specific criteria,ranging from the resource protection and recreational opportunities a project affords to where the project is located (urban area recreational opportunities get a priority) to the availability of matching funds for a particular project, help guide the review process. The board makes recommendations for funding to the Legislature, which approves all expenditures.

Currently, the board is chaired by Bob Garner of Cadillac, who, interestingly enough, was a legislative aide in the 1970s (to Sen. Kerry Kammer) and attended the first meeting to develop the Trust Fund.

Playground equipment at Keith J. Charters Traverse City State Park was purchased with Natural Resources Trust Fund money.

“None of us from back then can even believe how wildly successful the Trust Fund has been,” Garner said. “We’re just in awe of it. Think about this: The Trust Fund has provided more money for land acquisition than the federal duck stamp program and that’s been around since 1937.”

Periodically, the board identifies priorities. Current priorities include trails and greenways, wildlife corridors and deer wintering yards, and projects in urban areas.

Development grants range from $15,000 to $300,000. There is no limit to acquisition grants.

DNR Director Rodney Stokes said he believes the MNRTF program is “one of the most important pieces of natural resources legislation of the last 35 years.

“Citizens all over the state, as well as our many visitors, have benefited from this amazing program.”

To learn more about the Natural Resources Trust Fund, visit www.michigan.gov/dnr-grants.

 

Miller Energy Supports Hydraulic Fracturing In Michigan

Wednesday, May 4th, 2011

Miller Energy  believes that Hydraulic fracturing is a safe, proven and essential process used in recovering natural gas and oil from reserves found deep below the earth and often in tight rock.   The Michigan Oil & Gas Producers Education Foundation has developed a fact sheet that is very informative regarding the process here in Michigan. Please click on this link for information on, “Hydraulic Fracturing in Michigan”.

Information provided by:  Michigan Oil & Gas Producers Education Foundation, 124 West Allegan St., Suite 1610, Lansing, MI  48933

IPAA Education Program Called Best in the Nation

Tuesday, September 7th, 2010

 Dear IPAA Members and Colleagues:

Thoughout the nation, students are returning to school – and, once again, IPAA’s Education Center is gearing up for another busy year at our petroleum technology academies by expanding curriculum development, research field trips, guest speaker career series, student competitions and more.

But our work doesn’t just happen during the school year. This past summer, IPAA’s Educational Center organized the first IPAA Student Externship Training Program, called, “The best program of its kind in the nation,” by Superintendent Dr. Terry Grier of the Houston Independent School District (HISD).

The IPAA Student Externship Training program provides our future workforce a unique learning experience to better understand how geology, geophysics and engineering career paths fit into the energy industry. It also makes math, science and technology more meaningful and relevant through the hands-on engineering and geosciences curriculum they receive in our petroleum academies. IPAA is proud to sponsor this innovative high school student externship. We know it will serve as a powerful tool to stimulate the next generation of talented energy professionals who will drive this industry forward. (more…)

New Report on Natural Gas Makes a Strong Statement

Tuesday, July 20th, 2010

A recently released report on natural gas written by researchers at the Massachusetts Institute of Technology (MIT) says that “natural gas is the most economical way to achieve a target of reducing carbon dioxide emissions by 20 percent.” The report, titled “The Futre of Natural Gas,” offers several policy recommendations which mirror those advocated by the Natural Gas Council, an umbrella organization for several natural gas trade associations in Washington, DC.

The new study is a part of series produced by the MIT Energy Initiative. Other reports have covered coal, nuclear power, and geothermal energy.

“The Natural Gas Council is pleased that this new MIT report affirms the importance of national gas in reducing carbon emissions. The report recommends that policymakers create a ‘level playing field’ where all energy resources can compete with each other, and where natural gas is likely to gain significant market share given its attributes. With this in mind, we hope Congress will ultimately approve a Clean Electricity Standard that includes a role for high efficiency natural gas generation” said Don Santa, president of the Interstate Natural Gas Association of America. (more…)

Learning About Fossil Fuels

Friday, March 26th, 2010

Take some time to click through the following links to learn about America’s energy sources — Natural Gas, Oil and Coal

NATURAL GAS

We’ve all seen the blue flame on top of a gas stove or beneath a gas furnace. But where do we get the gas that fuels the flame?

An Energy Lesson

* Part 1: Fueling the Blue Flame

* Part 2: The History of Natural Gas

* Part 3: Getting Gas from the Ground…and the Sea

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Energizing America

Tuesday, January 26th, 2010

America is in a global struggle for energy security and many of us lack a full understanding of the oil and natural gas industry. API has assembled a primer to encourage a constructive public policy debate on meeting the growing energy needs of consumers and industry.

View the full primer to learn the facts behind energy policy.

Topics include:

  • Factors Affecting Price
  • Where the Money is Going
  • Carbon Mitigation
  • Refineries and Fuels
  • U.S. Energy Needs
  • Untapped Potential of Domestic Resources
  • The Global Energy Framework
  • Energy Policy

Petroleum Products

Tuesday, January 26th, 2010

For more than 100 years, consumers have relied upon oil and natural gas to enhance their quality of life. The cars we drive, the food we eat, the medicines we need – each product is touched in some way by America’s oil and natural gas industry. When we heat our homes, fills our gas tanks or reach for an aspirin, it’s the oil and natural gas industry that helps make it happen.

Currently, oil and natural gas fuel more than 97 percent of our nation’s vehicles, whether on land, sea, or in the air. Oil and natural gas are also key components in the vast majority of all manufactured goods. Whether it’s surgical equipment, fertilizers, phones, CDs, paints or fuels, the oil and natural gas industry supports our day-to-day safety, mobility, health and lifestyle.

Workplace, Agriculture and Commerce

In the workplace, in agriculture and in commerce, oil and natural gas keep us competitive and help create and protect American jobs. Petrochemical products are widely used in manufacturing for:

  • Computers
  • Fertilizers
  • Adhesives
  • Feedstocks
  • Heating and Cooling
  • Tools

Health and Safety

Our health and safety depend on products whose key components originate from petroleum:

  • Artificial hearts and pacemakers
  • Aspirin
  • Soft contact lenses
  • Bandages
  • Emergency and Surgical equipment
  • Antihistamines

Household Products

Oil and natural gas are processed to provide advanced fuels and the essential ingredients that make our homes comfortable, safe and enjoyable inside and out:

  • Plastics
  • Appliances
  • Hot Water
  • Roofing
  • Cleaning Supplies
  • Phones
  • Clothing

Outdoor, Indoor and Family Recreation

When America plays, the oil and natural gas industry gets them where they want to go and helps create the “toys” we enjoy for outdoor, indoor and family recreation, including:

  • Gas grills
  • Basketballs, Footballs and Sports Equipment
  • Life jackets
  • CDs and portable music players
  • Boats and Personal watercraft
  • Goggles and Sunglasses
  • Skis
  • Surfboards

Transportation

A key component of our quality of life is personal mobility—the freedom to travel where we want, when we want, and the availability of safe and reliable transportation. The oil and natural gas industry powers most of our vehicles including:

  • Cars, Trucks and Buses
  • Emergency Vehicles and Fire Trucks
  • Trains
  • Planes
  • Boats

About Natural Gas

Tuesday, January 26th, 2010

Natural gas, including unconventional shale gas resources, is vital to our nation’s energy future—fueling our economy, delivering heat and power to over 60 million U.S. homes, and providing our nation with a clean burning, domestic energy source.

It is essential to America’s manufacturers, not only to power their operations, but also as a feedstock for many of the daily products we use—clothing, carpets, sports equipment, pharmaceuticals and medical equipment, computers, and auto parts. It is also a primary feedstock for chemicals, plastics and fertilizers.

Over the past few years, the combination of horizontal drilling and hydraulic fracturing have unlocked the promise of natural gas in tight rock formations—sandstone in the intermountain West and shale throughout the central and eastern U.S.—and have led to a natural gas boom in several areas of the country.

Improvements in technology and application of science have contributed to an 8 percent increase in U.S. natural gas production between 2007 and 2008, through development of tight shales and sandstones which, not all that long ago, were considered impractical or uneconomical to pursue.

Among the first targets was the Barnett shale deposit in northern Texas. As a result of horizontal drilling and hydraulic fracturing, the Barnett Shale now produces over 7 percent of America’s natural gas, enough to power 20 million homes per year. Operators are able to drill underneath Fort Worth from miles outside the city limits with directional drilling.

Success in the Barnett after years of drilling led to the application of lessons in technology and science that shortened the learning curve for development of emerging plays like the Fayetteville Shale in Arkansas, the Haynesville Shale in Louisiana and the Marcellus Shale in the northeastern United States. A recent EIA report noted that U.S. proven natural gas reserves rose 3 percent in 2008, and shale gas reserves rose an astonishing 51 percent over 2007.

New resources have helped to increase natural gas supplies and improve U.S. energy security. They have also encouraged discussions about America’s abundant natural gas as a clean, bridge fuel to the nation’s energy future.

Natural gas has many uses:

  • Meets 24 percent of U.S. energy requirements.
  • Heats 51 percent of U.S. households.
  • Cools homes and provides fuel for cooking.
  • Provides the energy source or raw material to make a wide range of products, such as plastics, steel, glass, synthetic fabrics, fertilizer, aspirin, automobiles and processed food.

Natural gas demand is growing:

  • Americans used 23.2 trillion cubic feet of it in 2008.
  • Natural gas supplies about 64.9 million residential customers and 5.5 million commercial and industrial customers in 2007.
  • It powers nearly 120,000 vehicles operating on American roads.

Supply:

  • At the end of 2008, U.S. natural gas reserves stood at 244.7 trillion cubic feet—the highest level in over 30 years.
  • The United States produced 20.6 trillion cubic feet (TCF) of natural gas in 2008—about 88 percent of U.S. consumption.
  • Most natural gas used in the United States comes from North America.

Home Energy Tips

Tuesday, January 26th, 2010

Here are a few steps you can take to make your home more energy efficient — thereby reducing your heating and cooling bills, and conserving resources at the same time.

Doors and windows

  • Check for leaks and drafts.
  • Add weather stripping as needed.Install curtains on your windows.

Insulation

  • Check to ensure that your home is properly insulated.
  • If your home already has some insulation, consider increasing the amount of insulation in the attic and adding insulation to floors over a basement or crawlspace.

Furnaces and water heaters

  • Replace inefficient furnaces and water heaters with new high-efficiency models.
  • If buying a new furnace, do not get one larger than you need.
  • Wrap the water heater in an insulating jacket.
  • Clean filters on forced-air furnaces.

Other tips

  • Install low-flow showerheads.
  • Install a thermostat that will automatically lower nighttime temperatures.
  • Use ceiling fans to circulate air in the house, keeping the air mixed.
  • Seal flues in unused fireplaces.
  • Visit the Department of Energy’s website at www.homeenergysaver.lbl.gov, and conduct an “energy audit” of your home to evaluate your heating system’s efficiency.

Safety at the Pump

Tuesday, January 26th, 2010

Gasoline pumps and stations are designed to allow people to safely pump their gas.

Consumers can take steps to minimize static electricity-related incidents and other potential fueling hazards by following these safety guidelines:

  • Turn off your vehicle engine. Put your vehicle in park and/or set the emergency brake. Disable or turn off any auxiliary sources of ignition such as a camper or trailer heater, cooking units, or pilot lights.
  • Do not smoke, light matches or lighters while refueling at the pump or when using gasoline anywhere else.
  • Use only the refueling latch provided on the gasoline dispenser nozzle. Never jam the refueling latch on the nozzle open.
  • Do not re-enter your vehicle during refueling. If you cannot avoid re-entering your vehicle, discharge any static build-up BEFORE reaching for the nozzle by touching something metal with a bare hand — such as the vehicle door — away from the nozzle.)
  • In the unlikely event a static-caused fire occurs when refueling, leave the nozzle in the fill pipe and back away from the vehicle. Notify the station attendant immediately.

Portable Containers

  • When dispensing gasoline into a container, use only an approved portable container and place it on the ground to avoid a possible static electricity ignition of fuel vapors. Containers should never be filled while inside a vehicle or its trunk, the bed of a pickup truck or the floor of a trailer.
  • When filling a portable container, manually control the nozzle valve throughout the filling process. Fill a portable container slowly to decrease the chance of static electricity buildup and minimize spilling or splattering. Keep the nozzle in contact with the rim of the container opening while refueling.
  • Fill the container no more than 95 percent full to allow for expansion.
  • Place cap tightly on the container after filling – do not use containers that do not seal properly.
  • Only store gasoline in approved containers as required by federal or state authorities. Never store gasoline in glass or any other unapproved container.
  • If gasoline spills on the container, make sure that it has evaporated before you place the container in your vehicle. Report spills to the attendant.
  • When transporting gasoline in a portable container make sure it is secured against tipping and sliding, and never leave it in direct sunlight or in the trunk of a car.

Additional Safety Guidelines

  • Do not over-fill or top-off your vehicle tank, which can cause gasoline spillage.
  • Never allow children under licensed driving age to operate the pump.
  • Avoid prolonged breathing of gasoline vapors. Use gasoline only in open areas that get plenty of fresh air. Keep your face away from the nozzle or container opening.
  • Never siphon gasoline by mouth nor put gasoline in your mouth for any reason. Gasoline can be harmful or fatal if swallowed. If someone swallows gasoline, do not induce vomiting. Contact a doctor or and emergency medical service provider immediately.
  • Keep gasoline away from your eyes and skin; it may cause irritation. Remove gasoline-soaked clothing immediately.
  • Use gasoline as a motor fuel only. Never use gasoline to wash your hands or as a cleaning solvent.

Fuel Saving Tips

Tuesday, January 26th, 2010

These simple facts can help you save fuel and get more miles out of each tank of gas:

  • Have your car tuned regularly. An engine tune-up can improve car fuel economy by an average of 1 mile per gallon.
  • Keep your tires properly inflated. Underinflated tires can decrease fuel economy by up to 1 mile per gallon.
  • Slow down. The faster you drive, the more gasoline your car uses. Driving at 65 miles per hour rather than 55 miles per hour reduces fuel economy by about 2 miles per gallon.
  • Avoid jackrabbit starts. Abrupt starts require about twice as much gasoline as gradual starts.
  • Pace your driving. Unnecessary speedups, slowdowns and stops can decrease fuel economy by up to 2 miles per gallon. Stay alert and drive steadily, not erratically. Keep a reasonable, safe distance from the car ahead of you and anticipate traffic conditions.
  • Use your air conditioner only when needed. The use of air conditioning can reduce fuel economy by as much as 2 miles per gallon.
  • Avoid lengthy engine idling. Turn your engine off when you are delayed for more than a couple of minutes.
  • Plan your trips in advance. Combine short trips into one to do all your errands. Avoid traveling during rush hour if possible in order to avoid driving conditions that increase fuel consumption, such as idling periods or repeated starting and stopping. Also consider joining a carpool.

Oil and Natural Gas 101

Tuesday, January 26th, 2010

From the ground to the pump… or the playing field… or the medicine cabinet… each and every day Americans rely on the products created by oil and natural gas. And behind this vital product is an important story that needs to be told. Whether it’s:

  • Learning the value of oil and natural gas in fueling our way of life,
  • Recognizing that energy efficiency has its benefits,
  • But a rapidly growing world still needs greater supply; or
  • Developing a better understanding of how company performance contributes to the average American’s retirement portfolio;

We should all know the intangibles of this irreplaceable product.

In just one 24-hour period, the oil and natural gas industry delivers:

  • Enough energy to heat 80 million homes
  • 382 million gallons of gasoline to service stations, enabling 200 million drivers to get to work, take their kids to school, and take vacations– traveling 7.5 billion road miles every day
  • 67 million gallons to airport terminals, enabling 30,000 flights to travel around the world

Every day, the industry supports 9.2 million people directly and indirectly and contributes more than $1 trillion to the national economy, or 7.5 percent GDP.

DOE-Funded “Smart” Drilling Prototype on Track

Tuesday, December 29th, 2009

A Department of Energy-sponsored technology that allows natural gas and oil explorers to drill safer, more productive wells by using a high-speed, down-hole communications system has crossed a major milestone: A prototype is being successfully tested in a full-scale commercial well for the first time, putting it on the fast track to commercialization. (more…)

“Deep Trek” and Other Drilling R&D

Tuesday, December 29th, 2009

DOE's Deep Trek and Other Drilling R&D Programs Program Goal
The goal of DOE’s Deep Trek Program is to develop technologies that lower the cost and improve the efficiency of drilling and completing deep wells. New tools and technologies that help operators safely drill faster, deeper, cheaper, and cleaner will help ensure an adequate supply of clean-burning natural gas for the nation

“Deeper” and “smarter” will likely be the watchwords of America’s drilling industry in the coming years, especially as the nation’s natural gas producers try to keep up with growing demands for this clean-burning fuel.

Although more than 70 percent of the natural gas produced in the United States already comes from wells at 5,000 feet or deeper, only seven percent comes from formations below 15,000 feet. Yet, at these deeper depths, an estimated 125 trillion cubic feet of natural gas is thought to be trapped.

Tapping into this resource will be both technologically daunting and expensive. For wells deeper than 15,000 feet, as much as 50 percent of drilling costs can be spent in penetrating the last 10 percent of a well’s depth. The rock is typically hot, hard, abrasive, and under extreme pressure. Often, in deeper wells, it is not uncommon for the drill bit to slow to only two to four feet per hour at operating costs of tens of thousands of dollars a day for a land rig and millions of dollars a day for deep offshore formations. And it is exceedingly difficult to control the precise trajectory of a well when the drill bit is nearly three miles below the surface.

These conditions test the limits of today’s drilling technology. In September 2003, the National Petroleum Council issued a report to the Secretary of Energy that recommended actions to improve natural gas supplies over the next 20 years. The major “technology needs” identified to exploit deep drilling include equipment and sensors able to withstand high temperatures and high pressures, expandable pipe to reduce weight, lightweight composite pipe materials, and micro-technologies to allow smaller diameter wells.

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The U.S. Department of Energy’s Office of Fossil Energy kicked off Deep Trek a year earlier in 2002 to help develop high-tech drilling tools that industry needs to tackle these deeper deposits. The goal is to develop a “smart” drilling system tough enough to withstand the extreme temperatures, pressures and corrosive conditions of deep reservoirs, yet economical enough to make the gas affordable to produce. The DOE awarded five Deep Trek research projects in September 2002, three in May 2003 and two more the following September with a total cost of nearly $18 million, almost $10 million of which is being contributed by research partners. These projects include advancing drilling performance, developing “smart” communication systems, instrumentation, novel drill bits and fluids, and novel pipe systems that are able to withstand the severe temperatures (over 400 degrees F) and pressures in deep horizons.

These “smart” drilling systems can report key measurements – temperature, pressure, fluid content, geology, etc. – as a well is drilled. Sophisticated electronic systems can identify potential trouble spots on a real-time basis, allowing operators to make adjustments without interruption or costly work stoppages.

Deep Trek builds on a solid track record of achievements in past drilling R&D partnerships between the federal government and private industry.

DOE’s Other Drilling Advancements

DOE’s past drilling advancements include the first system to transmit drill bit location by sending pressure pulses through drilling mud, which was developed by the Energy Department and Teleco, Inc. Today, this “mud pulse” measurement-while-drilling telemetry has become standard in the industry.

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More recently, the Office of Fossil Energy’s drilling program produced the next major advance in downhole telemetry. A new technology system sponsored by DOE called IntelliPipe turns an oil and gas drill pipe into a high-speed data transmission tool capable of sending data from the bottom of a well up to 200,000 times faster than mud pulse and other downhole telemetry technology in common use today. The system has proven remarkably reliable in extensive US and Canadian field trials. Potential benefits include decreased costs, improved safety, and reduced environmental impacts from drilling. Former Energy Secretary Spencer Abraham called the IntelliPipe “one of the most remarkable advances in drilling technology in the last 25 years.” The system was developed by Novatek Engineering, Provo, Utah, and Grant Prideco, Houston, Texas, a global leader in drill pipe technology, who formed a joint venture, IntelliServto market the revolutionary pipe. Grant Prideco’s announcement in February of the commercial launch of its IntelliServ Network and related Intellipipetechnology capped five years of research sponsored by DOE.

Revolutionary new drill bits are also one of the “success stories” of the Energy Department’s research program. The prime example is the polycrystalline diamond drill bit, now the industry standard for drilling into difficult formations. Prior to the early 1980s, drill bit manufacturers had been unable to adhere industrial-grade diamond cutters to the bit. Scientists at the Energy Department’s Sandia National Laboratories solved the problem by developing a “diffusion bonding” approach. More recently, Penn State University, working under an Office of Fossil Energy contract, developed a way to use microwaves to harden the tungsten carbide of deep drilling bits, resulting in a 30 percent increase in strength.

The drilling system of the future may also employ new advances in drill pipe materials as a result of the Energy Department’s research program. In mid 2004, the Department announced the development of a new “composite” drill pipe that is lighter, stronger and more flexible than steel, which could significantly alter the ability to drain substantially more oil and gas from rock than traditional vertical wells.

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The new carbon fiber drill pipe could be especially important in drilling horizontal wells that require the drill pipe to bend on a short radius. It could also play a key role in deep drilling where the weight of the drill pipe is an especially important factor. The carbon fiber drill pipe is likely to weigh less than half the weight of steel drill pipe, and the lighter the pipe, the less torque and drag is created, and the greater distance a well can be drilled both vertically and horizontally.

Methane Hydrate – The Gas Resource of the Future

Tuesday, December 29th, 2009

Development of alternative sources of natural gas, such as methane hydrate, can help to guard against potential supply interruptions or shortages and improve energy security.

Methane hydrate is a cage-like lattice of ice inside of which are trapped molecules of methane, the chief constituent of natural gas. If methane hydrate is either warmed or depressurized, it will revert back to water and natural gas. When brought to the earth’s surface, one cubic meter of gas hydrate releases 164 cubic meters of natural gas. Hydrate deposits may be several hundred meters thick and generally occur in two types of settings: under Arctic permafrost, and beneath the ocean floor. Methane that forms hydrate can be both biogenic, created by biological activity in sediments, and thermogenic, created by geological processes deeper within the earth.

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While global estimates vary considerably, the energy content of methane occurring in hydrate form is immense, possibly exceeding the combined energy content of all other known fossil fuels. However, future production volumes are speculative because methane production from hydrate has not been documented beyond small-scale field experiments.

The U.S. R&D program is focused on the two major technical constraints to production: 1) the need to detect and quantify methane hydrate deposits prior to drilling, and 2) the demonstration of methane production from hydrate at commercial volumes. Recent and planned research and field trials should answer these two issues.

In recent field tests, researchers have demonstrated the capability to predict the location and concentration of methane hydrate deposits using reprocessed conventional 3-D seismic data, and new techniques, including multi-component seismic, are being tested. Modeling of small-volume production tests in the U.S. and Canadian Arctic suggest that commercial production is possible using depressurization and thermal stimulation from conventional wellbores. Large-scale production tests are planned in the Canadian Arctic in the winter of 2008 and in the U.S. Arctic in the following year.

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Demonstration of production from offshore deposits will lag behind Arctic studies by three to five years, because marine deposits are less well documented, and marine sampling and well tests are significantly more expensive.

Why We Need Methane From Hydrate

Natural gas is an important energy source for the U.S. economy, providing almost 23 percent of all energy used in our Nation’s diverse energy portfolio. A reliable and efficient energy source, natural gas is also the least carbon-intensive of the fossil fuels.

Historically, the United States has produced much of the natural gas it has consumed, with the balance imported from Canada through pipelines. According to EIA, total U.S. natural gas consumption is expected to increase from about 22 trillion cubic feet today to 26 trillion cubic feet in 2030- a projected jump of more than 18 percent.

Production of domestic conventional and unconventional natural gas cannot keep pace with demand growth. The development of new, cost-effective resources such as methane hydrate can play a major role in moderating price increases and ensuring adequate future supplies of natural gas for American consumers.

International Cooperation in Methane Hydrate R&D

In April and June 2008, the U.S. Department of Energy signed agreements for cooperative research efforts with representatives from three countries with gas hydrate research programs: India, Korea and Japan. Officials from DOE and the Indian government signed a Memorandum of Understanding for Cooperation in Methane Hydrate Research and Development in New Delhi on April 4. The agreement provides for exchange of information and personnel in the areas of exploration and quantification of natural gas hydrates, resource assessments, laboratory characterization, and production testing.
On April 18, Energy Secretary Samuel Bodman and South Korea Minister Lee Youn-ho signed a Statement of Intent to exchange information on gas hydrate topics and technologies. Korea is looking to gas hydrates as a future energy source and hopes to take part in U.S. pilot testing early next year.

On June 6, 2008, Secretary Bodman and Japanese Minister of Economy, Trade and Industry, Akira Amari signed a Statement of Intent for cooperation in methane hydrate research and development. Japan has an active methane hydrate R&D program that has resulted in the discovery of large offshore hydrate deposits and successful short-term production testing in the Canadian arctic.

DOE Primer on Shale Gas Development

Tuesday, December 29th, 2009

Addressing Water Issues Key to Increasing U.S. Shale Gas Production

DOE 04/2009 Washington, D.C. – The U.S. Department of Energy (DOE) announces the release of “Modern Shale Gas Development in the United States: A Primer.” The Primer provides regulators, policy makers, and the public with an objective source of information on the technology advances and challenges that accompany deep shale gas development.

Natural gas production from hydrocarbon rich deep shale formations, known as “shale gas,” is one of the most quickly expanding trends in onshore domestic oil and gas exploration. The lower 48 states have a wide distribution of these shales containing vast resources of natural gas. Led by rapid development in the Barnett Shale in Texas, current shale gas activity is also found in areas of Oklahoma, Arkansas, Louisiana, Michigan, Illinois, and the Appalachian Basin. Some of these areas have seen little or no oil and gas activity in the past and new shale gas development can bring change to the environmental and socio-economic landscape. With these changes have come questions about the nature of shale gas development, the potential environmental impacts, and the ability of the current regulatory structure to deal with this development.

DOE recognized the need for a report that presents credible, factual information to address these questions. The Primer describes the importance of shale gas in meeting the future energy needs of the United States. It provides an overview of modern shale gas development, as well as a summary of federal, state, and local regulations applicable to the natural gas production industry, and describes environmental considerations related to shale gas development.

Clean-burning natural gas will continue to play a vital role in meeting U.S. energy needs. And, U.S. natural gas supply is expected to come increasingly from domestic gas-filled shales. Key to the emergence of shale gas production has been the refinement of horizontal drilling and hydraulic fracturing technologies. These technologies enable industry to produce more natural gas from the shale formations economically and with less disturbance of surface environments.

Protecting and conserving water resources is an important aspect of producing shale gas, and this DOE-funded effort was championed by the Ground Water Protection Council, the national association of state ground water and underground injection agencies whose mission is to promote the protection and conservation of ground water for all beneficial uses. The Primer provides fact-based technical information for public education and informed regulation and policy decisions on the environmentally responsible development of the Nation’s shale gas resources.

- End of Techline

For more information, contact:

  • Mike Jacobs, FE Office of Communications, 202-586-0507