What's new in production

	Vol. 231 No. 3
PRAMOD KULKARNI, CONTRIBUTING EDITOR

Beyond unconventional: Unlocking the gas potential of hydrates

Be careful what you wish for, voices of experience tell us. In July 2008, when the benchmark Henry Hub gas price was $13/MMBtu, the producers fervently wished they could get their hands on more gas. Since then, demand has dropped due to a worldwide recession, just as new supplies are increasing. While we currently have an oversupply, most energy economists predict that worldwide gas demand will continue to increase once the recession eases and the economies of China, India and Latin America renew their expansion. In this context, it is appropriate that the stage is being set for the next natural gas frontier—gas production from methane hydrates.

The next frontier. While hydrates strike fear in the hearts of operators concerned with deepwater flow assurance, they are a vast potential source of energy. According to the US Geological Survey (USGS), there is twice as much carbon bound in gas hydrates as there is to be found in all known fossil fuels on Earth. Methane hydrates, often in layers several hundred feet thick, occur in Arctic permafrost regions (below 1,200 ft) and ocean floor sediments (below 500 ft).

When hydrate is depressurized, it reverts back to water and methane gas. During combustion, methane releases less carbon dioxide per unit of energy than other gases do, so methane-based consumption will have a smaller carbon footprint. As such, methane hydrates have an advocate in the Obama administration’s Department of Energy (DOE). The agency released a report in late January that projects a favorable outlook on methane hydrate production beyond 2025. Canada, Japan, New Zealand, India and South Korea also have programs underway to perform methane hydrate resource assessments and investigate potential production scenarios.

Resource assessment. The DOE has partially funded several joint industry projects (JIPs) to assess methane hydrate accumulations, drill wells into the hydrates and test production techniques. In 2001, a joint scientific endeavor by the DOE with Anadarko and Maurer Engineering recovered hydrate cores from 1,400 ft deep on Alaska’s North Slope and conducted a small production test using a heated coil suspended in the production tubing. In 2008, the Minerals Management Service (MMS) used the industry database of 2D and 3D seismic surveys and well data for a preliminary methane hydrate resource assessment in the Gulf of Mexico. MMS calculates the total volume of in-place methane to range from about 11,000 Tcf to 34,000 Tcf. The USGS has estimated the total undiscovered technically recoverable methane for Alaska’s North Slope at 25.2–157.8 Tcf. These estimates are, of course, speculative in the absence of sustained production.

India’s Natural Gas Hydrates Program has cored and drilled 39 holes at 21 sites and has recovered 2,850 m of core for analysis. A second expedition is proposed for later in 2010 to drill and log the most promising prospects. New Zealand’s Gas Hydrates Steering Group is developing a strategy for that country’s methane hydrate resources, and it plans to establish a demonstration site at a sweet spot off the eastern coast of the North Island.

Production concepts. While methane hydrate represents an unusual energy source, many of the proposed production methods are extensions of conventional techniques that are familiar to oil and gas producers. The three primary production concepts are depressurization, thermal stimulation and chemical stimulation. All three of these techniques are designed to change the hydrate stability in situ to release free gas and associated hydrate-bound pore water. The depressurization technique reduces fluid pressure in the porous rocks that are in contact with the methane hydrate reservoir. During thermal stimulation, the temperature in the reservoir is increased above the pressure-temperature threshold. This would be similar to in situ combustion that is used to stimulate production from tar sands.

A hydrate research site has been established on Canada’s Mackenzie Delta by a consortium of the Geological Survey of Canada, Japan National Oil Corp. (JNOC) and the USGS since 2002. In March 2008, the team successfully demonstrated that depressurization could produce methane gas. Subsequently, the team performed thermal stimulation to produce up to 1.5 Mcfd.

In 2001, a JIP managed by BP Alaska established the Mount Elbert research site on Alaska’s Milne Slope. The team performed a small-scale in situ formation test in 2008. A decision by BP to move to the production testing phase is anticipated by the end of March 2010.

A novel approach to methane extraction involves injecting carbon dioxide to take advantage of the greater chemical affinity for CO₂ over methane (CH₄) in the hydrate structure (see World Oil, May 2009, p. 21). Consequently, the CO2 molecules are locked into the hydrates and the CH₄ molecules are released. This molecular exchange process sustains the mechanical stability of the methane-bearing formation while facilitating CO₂ sequestration. ConocoPhillips and the University of Bergen have been conducting research since 2003 and have patented their molecular exchange process. The DOE has selected ConocoPhillips to conduct the first field trial of this process on Alaska’s North Slope during first-quarter 2011. The field trial will demonstrate whether the laboratory-proven exchange mechanism works in the field with minimal sand and water production, and whether it achieves sufficient molecular exchange efficiency.

Commercial production by 2025? While research and development efforts under the various methane production scenarios are expected to yield practical results by 2025, commercial production of methane hydrates depends on the supply/demand equation prevailing at that time. Under the right economic circumstances, methane hydrates could eventually represent the new conventional means of gas production.