Thursday, February 28, 2013

REPOST: Texas study points to a longer natural gas boom

This NPR article talks about a study by a University of Texas professor pointing to a longer natural gas boom in the US.

There are few things in life more joyful than discovering a giant oil or natural gas field in Texas. You're suddenly rich beyond your wildest dreams. When the scope and size of the natural gas reservoir in the Barnett Shale in North Texas first became apparent, there were predictions that the find would last 100 years.

Well, that was over the top. But University of Texas geology professor Scott Tinker, who designed and authored a new study of the Barnett Shale, says there's still a lot of gas down there, even after a decade of drilling.

"Turns out, what we learned is that there's a lot of good rock left to drill," Tinker says. "And there's quite a bit of natural gas to be produced in the better areas of the reservoir."

Tinker and his team, who examined more than 15,000 gas wells drilled over the last 10 years, found the Barnett Shale is currently producing an astonishing 2 trillion cubic feet of natural gas every year. Tinker doesn't believe this rate will increase, but he believes the reservoir will last another 25 years.

"It probably is reaching its plateau of production, which is about 10 percent of U.S. demand," Tinker says. "So in that total production, where you've produced around 13 trillion cubic feet so far ..., we still see another 25 or 30 more trillion cubic feet of gas throughout the life of that field."

Some Wells Still Coming Up Dry

With the amazing leaps in imaging technology these days, you wouldn't think thousands of wells drilled in the Barnett come up dry — like the oil wildcatters in the 1930s, '40s and '50s in East and West Texas.

But Tinker says you would be wrong.

"It is kind of like the old wildcatter days," he says. "These unconventional reservoirs are pretty new to the scene. And as the natural gas price was high not that long ago, it really pushed the edges of this field."

That means there are a lot of North Texas landowners driving around in brand new pickups because the energy companies leased their land — only to find out there's no gas underneath.

While concerns about environmental impact have grown as fracking and natural gas production have increased, this study focused on future production of shale-produced gas, rather than environmental concerns.

'The Shale Revolution Is Real'

"It's a very thorough and impressive study," says Scott Anderson, senior policy adviser for the Environmental Defense Fund who specializes in natural gas. Anderson says the study paves the way for increased production of electricity from a commodity that, in the past, has been seen as unreliable and volatile.

"This study does take a large step toward reassuring those people who are interested in banking on gas that the shale revolution is real," Anderson says, "and that it can be expected that large quantities of gas will persist for a long time, at fairly moderate prices."

In fact, shale production has been so vigorous nationally that the price of natural gas has dropped below $4 per million BTUs — generally considered the point at which many gas wells become profitable.

But with trillions of cubic feet of natural gas waiting to be extracted, prices aren't expected to rise unless the U.S. begins to export substantially.

Dr. Ali Ghalambor is the world's foremost expert on petroleum engineering. Visit this Facebook page for more information on the petroleum and the natural gas industry.

Tuesday, February 26, 2013

Clean energy sources: Why natural gas is better than solar or wind energy

The US consumes more and more gas every year, and with the looming shortage of petroleum, using natural gas is considered the next logical step in US energy consumption.

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But why not consider using solar or wind power instead of natural gas?

Although solar and wind power technologies are cleaner than natural gas, have virtually limitless reserves, and use minimal water resource, these technologies are still too cost-prohibitive for mainstream use. The energy from these technologies is not enough to justify the huge cost to harnest and apply them. Solar and wind farms also require huge tracts of land for efficient energy generation.

Solar and wind power technologies are the future, but they are not the next logical step—natural gas is.

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Natural gas is the cleanest of all the fossil fuels, producing a lot less carbon dioxide than others. It is seen by many environmentalists as an extremely important energy source that reduces pollution for a cleaner and healthier environment. More than 90 percent of natural gas that is consumed by Americans is produced in the US and Canada, decreasing the US’ reliance on other countries for oil. Natural gas supplies in the US are very abundant, with two-thirds of US states thought to hold natural gas reserves, according to National Geographic. Moreover, unlike solar and wind power, natural gas is reliable, even without sunlight or strong winds.

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The US is continuing to find more sources of natural gas, and improving the ways to get it out of the ground and into the system.
Dr. Ali Ghalambor is an authority on natural gas engineering, and has written books about the subject. This Twitter page links to more information about his work and the industry.

Monday, February 25, 2013

REPOST: 3M's new nanoparticle technology could make natural gas cars cheaper and more attractive

This Inhabitat article discusses 3M's nanoparticle technology that could make natural gas cars cheaper and more attractive to buyers.

Gas prices have increased at record levels this month, with prices climbing for 20 days in a row, and as gas prices rise, interest in more fuel efficient vehicles go up as well. Automakers have continued to focus on hybrids, electric vehicles and more efficient gasoline and diesel engines, but one fuel source has been largely ignored, natural gas. There are several reasons for this (read on to learn more), but the good news is that several companies, like 3M, are working on nanoparticle technology that could make natural gas cars more attractive. While as green transportation supporters, we think it’s important to point out that natural gas is a sort of temporary band-aid that should not distract us from the ultimate goal of getting truly sustainable electric cars on the road, we’re still excited to hear about 3M’s strides to advance this cleaner alternative to gasoline for the time being.

The first reason and probably the main reason why car buyers do not demand more natural gas powered models is because of the lack of infrastructure. There are only 1,000 natural gas fueling stations across the U.S. and some states don’t even have one. Can you imagine taking a trip across the country in a natural gas car with so few stations in existence? Another issue is that even though natural gas costs less than gasoline, the tanks that are needed to store the fuel are not cheap. The expensive tanks translate to natural gas powered cars costing more than an equivalent gasoline powered model. For example the Honda Civic Natural Gas, the only natural gas powered car available to the public, starts at $26,155, while a comparably equipped, gasoline-powered Civic EX starts around $20k. Although it will take some time to increase the number of natural gas fueling stations, there are some efforts to find ways to reduce the cost of the tanks that are used to store it, which would reduce the overall cost of a natural gas vehicle.

As we mentioned before, 3M is reportedly working on a new product that it claims will allow natural gas to be stored at higher pressures in lighter and cheaper tanks. Natural gas is stored at a pressure of 3,500 pounds, but by using a new material, 3M claims that it can allow storage at higher pressures in more lightweight tanks. Natural gas tanks use carbon composites, which are carbon fibers woven into a cloth-like mat, interspersed with an epoxy to hold them together. 3M’s new method is to put nanoparticles into the epoxy, which will increase the stiffness and strength of the composites. 3M is also lining the inside of the tank with impermeable plastic, which should allow the tank technology to eventually find other uses.

3M has an agreement with Chesapeake Energy, a natural gas company, which will pay $10 million for the technology once the Environmental Protection Agency approves the new product. 3M hopes that better onboard storage, thanks to the use of its new technology will improve the acceptance of natural gas vehicles.

Dr. Ali Ghalambor is one of the world's foremost experts in petroleum engineering. This Facebook page contains more information about his books and articles on petroleum engineering.

Sunday, February 24, 2013

Natural gas transmission: Safely providing natural gas to consumers

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Natural gas storage facilities are connected by huge interstate or intrastate transmission pipelines, which move high volumes of gas at very high pressures over great distances. These huge pipes deliver natural gas to smaller delivery points, also called “city gates,” which are managed by local distribution companies around the country. Local distribution companies then transport the natural gas to their respective cities and residential districts through an extensive network of small-diameter pipelines, which, according to the US Department of Transportation PHMSA, is over 2.6 million miles long.

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Industrial facilities, commercial establishments, and electric generation facilities typically get their natural gas supplies from interstate or intrastate pipelines, while local consumers usually get theirs from a local distribution company, which maintains the highest safety standards. They have sophisticated equipment built for pipeline leak detection, they provide natural gas safety training and education programs, and they employ highly trained technicians who are available around the clock in case of emergencies. In addition, local distribution companies also add mercaptan, a harmless chemical that smells like rotten egg, to natural gas to make natural gas leaks easy to detect because natural gas, on its own, is odorless and colorless.

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Natural gas is continuing to become a popular alternative energy source because it is safe, cheap, and easy to distribute. Dr. Ali Ghalambor and Boyun Guo’s book The Natural Gas Engineering Handbook expounds more on this topic, and is a great resource for petroleum engineers and engineering students alike.

Those interested in learning more about the natural gas industry can visit this Dr. Ali Ghalambor Facebook page.

Thursday, February 21, 2013

REPOST: Linn energy to buy berry petroleum for $2.5 billion

This Deal Book article discusses the deal between Linn Energy and Berry Petroleum, which involves a $2.5 billion buy-in.

Deal-making in the oil patch continued on Thursday, as Linn Energy agreed to buy the Berry Petroleum Company for about $2.5 billion, expanding its presence in oil-rich shale formations.

Under the terms of the deal, an affiliate of Linn, LinnCo L.L.C., will issue 1.25 million new common shares for each Berry share. That amounts to $46.24 a share, a premium of roughly 20 percent to Berry’s closing price on Wednesday.

LinnCo will then transfer Berry’s assets to Linn in exchange for additional ownership units in its sibling, which is structured as a master limited partnership. Including the assumption of debt, the deal is valued at $4.3 billion.

By purchasing Berry, Linn will significantly bolster its oil production and increase its holdings in California and the Permian Basin in western Texas. The company estimates that its newest acquisition will increase its proven reserves by 34 percent and its production capabilities by 30 percent. And Berry’s reserves are estimated to be about 75 percent oil and liquids, considered to be significantly more valuable than natural gas, given current prices.

Linn cited the growth promised by the deal in announcing an increase in its quarterly distributions to unit holders, to 77 cents a unit from 72.5 cents.

“Berry’s assets are an excellent fit for Linn, and we believe this transaction generates significant accretion to our distributable cash flow per unit,” Mark E. Ellis, Linn’s chief executive, said in a statement. “We have great respect for what the Berry management team has accomplished and consider the Berry employees to be an important part of this transaction.”

To help defray the tax consequences LinnCo will take on in the deal, Linn will pay its affiliate $6 million a year through 2015.

LinnCo was advised by Citigroup, while a conflicts committee of its board was advised by Evercore Partners and the law firm Locke Lord. A conflicts committee of Linn’s board was advised by Greenhill & Company and Akin Gump Strauss Hauer & Feld.

Latham & Watkins served as legal counsel to both Linn and LinnCo. Berry was advised by Credit Suisse and the law firm Wachtell, Lipton, Rosen & Katz.

Dr. Ali Ghalambor is a renowned expert in petroleum engineering. This site contains more information about him and other industry-related articles.

Computerized fluid flow forecast: The rise of reservoir simulation

A subfield of petroleum engineering, reservoir engineering has been growing alongside technological advancement. With the rapid changes in field development over the past few years, there has been a growing need for information on computer-aided engineering practice, and among these, there continues to be a dearth in information regarding the specialized practice of reservoir simulation.

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Reservoir simulation is a specialized area of occupation in the reservoir engineering turf which works on computer models to predict the fluid dynamics in a system. It usually deals with the flow of water, air, and oil as they pass through porous material.

The importance of reservoir simulation lies in its model’s ability to help in important field-related and corporate processes. For one, these computerized models are central to the development of new oil and gas fields. They can also be used in established fields which are production forecast-dependent and help in coming up with important investment decisions.

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This importance of reservoir simulation has become directly proportional to its growth as a science. To cater to the practice’s growing need for literature, some field experts have penned books which may serve as an authoritative text for engineers in the conduct of reservoir simulation. In this regard, industry pundits Boyun Guo, Kai Sun, and Ali Ghalambor concerted efforts to author Well Productivity Handbook, a book which provides up-to-date information on the creation of oil and gas production wells with simple and complex trajectories.

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Dr. Ali Ghalambor is an internationally renowned petroleum engineer, both in the practice setting and in the academe. This Facebook page provides more updates on oil and gas production and frac packing.

Wednesday, February 20, 2013

REPOST: Pipeline Explosion Rattles Natural Gas Industry

Could the Sissonville pipeline explosion affect the natural gas industry? This Forbes article provides details: 

On December 11, 2012, Sue Bonham stood at the epicenter of her home in Sissonville, WV and thought that the earth would swallow her. Projectiles were flying while her household items were sizzling and melting — after a natural gas delivery pipeline had burst and shaken the whole neighborhood there.

“I thought my home and I would explode at any moment,” the elderly woman said, as she explained that horrifying day to a U.S. Senate panel and to federal government regulators in Charleston, WV on Monday. “I was suffocating and thought I’d be burned alive.” Altogether, four homes were incinerated but no one died.

The increased concerns over pipeline safety are occurring alongside the boom in shale gas, which is touted as this country’s energy savior — giving the United States at least a century’s worth of newfound natural gas. But if shale gas that is embedded in rocks and found a mile beneath the ground is to reach its promise, it would need an expanded infrastructure in place.

At present, 2.5 million miles of existing natural gas pipelines exist in the United States, according to the National Transportation Safety Board. Half of that was installed prior to 1970, meaning that the standards by which they have been built are not as strict as the more recently constructed lines. With the share of natural gas used to fuel power plants expected to keep rising, gas producers are saying that between 29,000 and 62,000 miles of new pipeline is needed over the next 25 years.

How can policymakers reconcile the need for safety with that of trying to accommodate an expected surge in shale gas? The age of the underground lines is less important than whether they are getting adequately maintained, says Deborah Hersman, chair of the safety board, at the hearing. Current law requires that pipelines be inspected every seven years, although those located near population centers necessitate more frequent oversight.

“If it is adequately maintained and inspected, age is not an issue,” she said at the U.S. Senate’s Commerce Committee hearing that is chaired by Senator Jay Rockefeller, D-WV. In the case of the pipeline eruption in Sissonville, Hersman said that it was an older line that had “corroded,” or which had lost 70 percent of the wall’s thickness. The line is owned by NiSource Gas Transmission and is operated by its subsidiary Columbia Gas Transmission. The explosion in West Virginia comes about two years after one in Northern California. There, a pipeline owned by PG&E Corp. erupted, killing nine people and destroying 38 homes. In that situation, the National Transportation Safety Board assigned much of the blame on the utility, saying that it had no methods in place to detect structural weaknesses in its pipeline. It also said that the PG&E did not have shut-off valves that would have limited the explosion’s severity.

Altogether, the risk of pipeline accidents has been steadily declining, says the Pipeline and Hazardous Materials Safety Administration. Despite the increased use of energy, incidents involving death or major injury have fallen by about 10 percent every three years. The risks of hazardous liquid pipeline spills that do lots of ecological damage have also dropped by 5 percent a year.

The hazardous materials agency has 135 inspectors, says Administrator Cynthia Quarterman. “We require them — the pipeline operators — to respond ‘promptly,’” she says, recognizing that that Columbia Gas has been sharply criticized for the 60 minutes it had taken to turn off the gas during the Sissonville pipeline accident.

“When operators have an alert in a control room, they should alert the authorities and immediately move to shutting it down,” especially if the line is losing pressure, Quarterman told the committee. If the gas pressure is reduced, it is a clear sign that leakage is occurring.

To that end, a government watchdog group is recommending the use of automatic shut-off valves, as opposed to those that must be manually attended. Susan Fleming, who authored a report by the General Accountability Office, told the U.S. Senate panel that such automation could have shut off the Sissonville line within minutes. She adds, however, that the cost of those devices can be high and that they may turn off gas in the event of a false alarm.

Fleming went on to say that the industry does not collect valued information that could help government monitors. Proper metrics such as the amount of time it takes to identify a problem and to close a valve are essential. It’s about applying “lessons learned” to mitigate the fallout of future episodes.

As for the December 2012 event, NiSource says that it was able to isolate the incident and to secure the site while “working proactively with federal state officials to design and implement an Integrity Assurance plan that will ensure a safe return to service and the long-term integrity of the line.”

Columbia Transmission’s response team is on duty 24-hours a day, seven days a week, adds Jimmy Staton, chief executive of NiSource Gas Transmission Storage, before the committee. He says that Columbia’s engineering team will complete the repair work so that the line can be returned to service, albeit at a reduced pressure than before the accident — and with the approval of federal and state regulators.

Staton concluded his testimony by saying that his company is systematically replacing its aging infrastructure and expanding its ability to perform state-of-the-art maintenance and inspections without interrupting service. It will be investing $2 billion in this program over the next five years, he says.

The pipeline industry, generally, says that most of the accidents that occur do so outside the purview of the operator. It says that such factors as “excavation” account for most incident reports while 10 percent are the result of corrosion, construction or operation of the lines.

However, a 2011 pipeline safety law is intended to minimize all accidents. The measure lays the foundation to require the use of remote controlled and automatic shut-off valves on new pipelines. It also requires authorities to be notified before any excavation occurs. And, it mandates operators verify records and re-establish lines’ maximum operating pressures while also increasing penalties on operators that fail to meet such standards.

 “Natural gas transmission is relatively safe but that is like saying that flying is safe until your plane goes down,” Rockefeller told reporters before the hearing.

The pipeline accident in Sissonville, WV didn’t just shake the home of Sue Bonham. It also rattled the whole natural gas sector, which must work closely with federal and state monitors to secure the infrastructure and to give the public confidence. A failure to do so would have far-reaching implications for an industry that is considered America’s bridge to energy independence.  

Dr. Ali Ghalambor is an expert in the field of oil and gas. Visit this Facebook page for more about the industry.

Monday, February 18, 2013

Computing for hydrostatic pressure

Fluid statics plays a vital role in the practice of petroleum engineering. Oil, essentially a fluid, is still governed by the laws that generally affect fluids. Thus, even at the state of rest, petroleum engineers must be able to understand the principles that underlie its movement, or lack thereof. One of the most important concepts in fluid statics that all engineers must master is “hydrostatic pressure.”

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According to Gas Volume Requirements for Underbalanced Drilling: Deviated Holes by Ali Ghalambor, hydrostatic pressure is “the pressure of the weight of fluid.” In other words, it is the pressure exerted by a liquid at an equilibrium state due to gravitational force. Its value is considered to be directly proportional to the height of a liquid column of uniform density.

A liquid’s hydrostatic property remains variable because it is heavily influenced by two factors: local gravity and the liquid’s density. The interplay of these quantities results to a particular liquid’s hydrostatic pressure.

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In SI units, the hydrostatic pressure of a liquid column may be calculated as follows:

Height (in meters) x Density (in kg/m3) x Local Gravity (in m/s2) = Hydrostatic pressure (usually expressed in N/m2 or Pascal

Hydrostatic pressure, while hardly ever completely accurate, is a very expedient way to relate pressure to a height of liquid. Its practical uses in petroleum engineering include the “hydrostatic test,” a way to determine strengths and leaks in pressure vessels such as pipelines and fuel tanks.

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This Twitter account shares more about Ali Ghalambor and his work.

Wednesday, February 13, 2013

REPOST: California voters only have themselves to blame for soaring pump prices

This NBC News article reveals the reason why California gas prices soared high. 

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If Californians want to know who's to blame for sky-high gas prices, they need to look in the mirror.

Faced with a price spike over the past week that saw stations charging well over $5 a gallon, California drivers have been asking who's behind the recent surge. Sen. Dianne Feinstein, D-Calif., late Friday demanded that the Federal Trade Commission investigate the cause of the price spike.

“Paying hundreds of dollars to fill your tank every time you go to the pump is untenable,” she said in a statement that pointed to “malicious and manipulative trading activity” as a likely source of the surge. California's Gov. Jerry Brown on Sunday took steps to try to ease the shortage that has driven up pump prices.

Any investigation into the cause of the temporary price surge wouldn’t take long, say oil industry analysts.

For years, California's gasoline supply chain has been tighter than just about every state except Hawaii, leaving motorists vulnerable to even minor crimps in the supply chain. That, along with the second-highest gasoline tax in the country, is why it costs more to fill up in California than it does elsewhere in the U.S.

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 And the reasons are almost entirely the result of policies and regulations enacted at the behest of California's voters.

Unlike past nationwide gas price spikes, Golden State drivers can't blame their pain at the pump on crude oil prices -- which account for about two-thirds of the cost of a gallon of gasoline. After peaking in May at $105 a barrel, the domestic benchmark price has fallen to $92 as of last week.

Oil prices have fallen because there’s plenty of crude to go around, thanks to a slowing global economy and new drilling technologies that have dramatically increased U.S. production. After two decades of decline, domestic oil output began rising in 2009 and is expected to continue to grow through 2014, according to the Department of Energy. Crude oil stocks are above the high end of the five-year average for this time of year.

The glut of domestic supply has helped drive down the price of oil based on the domestic benchmark price, known as West Texas Intermediate, compared will oil priced with the global Brent index. Until 2010, the two benchmarks tracked within a few dollars of each other. Today, U.S. refiners enjoy a $20 discount when they pay the domestic benchmark price.

But that discount doesn't get passed along to California drivers because supplies are so tight in the Golden State.

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 One reason is that state regulators insist refiners produce a specific blend of gas to meet tough state air quality standards. That means refiners and wholesalers can’t make up temporary shortages with gas that can be sold elsewhere in the U.S.

And while refiners in other states have gradually expanded output over the years to keep up with demand, no California politician would dream of campaigning on a platform of building new oil refineries. The result is that supplies in California have gradually tightened as refiners have been unable to win approval to expand production, said Tom Kloza, publisher of the Oil Price Information Service.

“Refiners and the California regulatory community have gotten along about as well as Nicki Minaj and Mariah Carey are getting along at the moment,” he said.

The price spike also comes as California refiners enter the final weeks before a state-regulated switchover to a different blend of fuel sold only in winter months, when lower temperatures create different conditions that alter the way combustion of gasoline contributes to air pollution.

Because few refiners want to be stuck with the cost of storing summer-blended fuel until spring, inventories this time of year are typically at seasonal lows. That creates even less of a cushion against supply shocks.

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 “We expect to see a reduction in supply, and we expect to see refiners do some of their maintenance because there is usually less demand this time of year,” said Jeffrey Spring, a spokesman for AAA of Southern California. “Sometimes it works, and sometimes it doesn't."

This year, things didn't work out well for California drivers.

The supply pipeline started to dry up after an Aug. 6 a fire shut down Chevron Corp's 245,000 barrel-per-day plant in Richmond, Calif. Then Exxon Mobil's 150,000 barrel-per-day Los Angeles-area refinery in Torrance, Calif., was hit with a power failure last week. An outage at a pipeline in the Central Valley made matters worse.

Those outages helped send wholesale prices soaring to levels that some dealers were unwilling to pay, producing spot outages that forced some stations to close.

On Monday, the statewide average price for a gallon of regular rose to an all-time high for the third straight week, hitting $4.668, according to AAA. That topped the previous record high of $4.6096 per gallon set in June 2008. As production from those refiners comes back on line, wholesale prices have fallen sharply. That means the temporary price spike should gradually unwind in the weeks ahead.

Prices should also start falling fall following an order from Gov. Brown on Sunday that state smog regulators allow winter-blend gasoline to be sold earlier than the usual Nov. 1 start date. The order means refiners can begin to tap stockpiles of winter fuel to ease the latest shortages.

This Dr. Ali Ghalambor Facebook page contains articles about the oil and gas sector around the world.

Tuesday, February 12, 2013

Removing impurities: Sweetening sour natural gas

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Some wells where natural gas is extracted contain significant amounts of sulfur, in the form of hydrogen sulfide. Hydrogen sulfide -laden natural gas, or sour gas, is dangerous because it is composed of harmful and often lethal compounds, and can sometimes also be corrosive. In addition, sulfur compounds extracted from natural gas streams can also be sold and marketed on its own.

Sulfur extraction from natural gas is also commonly known as “sweetening the gas.” The process that is used for this is very similar to that of glycol dehydration and NGL absorption, but instead of glycol and absorption oil, amine solutions are used. This is called the Girdler or amine process. In this process, the hydrogen sulfide-laden natural gas is run through a tower that contains the amine solution from top to bottom. The amine solution absorbs sulfur compounds from the sour natural gas, leaving it “sweetened.” Similarly to glycol dehydration and NGL extraction, the amine solution can also be reused.

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However, for sulfur to be sold, it has to be reduced to its base form. The hydrogen sulfide-laden amine solution is then run through something called the Claus process, which then extracts the base element sulfur from the hydrogen sulfide-laden solution using thermal and catalytic reactions.

Removing impurities and other substances from natural gas is the most important part in natural gas processing because it ensures that the natural gas used by families and homes across the US is clean, safe, and environmentally friendly. Natural gas engineering books, like Boyun Guo and Dr. Ali Ghalambor’s Natural Gas Engineering Handbook, expound on these important processes.

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Visit this Twitter page for more information about natural gas processing.

Monday, February 11, 2013

REPOST: U.S. to overtake Saudi Arabia as top oil producer

This article discusses the possibility of USA overtaking Saudi Arabia as the world’s top oil producer by the year 2017.

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The United States will overtake Saudi Arabia and Russia as the world's top oil producer by 2017, the West's energy agency said on Monday, predicting Washington will come very close to achieving a previously unthinkable energy self-sufficiency.

The forecasts by the International Energy Agency (IEA), which advises large industrialized nations on energy policy, were in sharp contrast to previous IEA reports, which saw Saudi Arabia remaining the top producer until 2035.

"Energy developments in the United States are profound and their effect will be felt well beyond North America - and the energy sector," the IEA said in its annual long-term report, giving one of the most optimistic forecasts for U.S. energy production growth to date.

"The recent rebound in U.S. oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity - with less expensive gas and electricity prices giving industry a competitive edge," it added.

The IEA said it saw a continued fall in U.S. oil imports with North America becoming a net oil exporter by around 2030 and the United States becoming almost self-sufficient in energy by 2035.

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"The United States, which currently imports around 20 percent of its total energy needs, becomes all but self-sufficient in net terms - a dramatic reversal of the trend seen in most other energy importing countries," it said.

IEA Chief Economist Fatih Birol told a news conference in London he believed the United States would overtake Russia as the biggest gas producer by a significant margin by 2015. By 2017, it would become the world's largest oil producer, he said.

The United States will rely more on natural gas than either oil or coal by 2035 as cheap domestic supply boosts demand among industry and power generators, the IEA said.

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Limited knowledge

Birol said he realized how optimistic the IEA forecasts were given that the shale oil boom was a relatively new phenomenon.

"Light, tight oil resources are poorly known ... If no new resources are discovered (after 2020) and plus, if the prices are not as high as today, then we may see Saudi Arabia coming back and being the first producer again," he said.

The IEA said it saw U.S. oil production rising to 10 million barrels per day (bpd) by 2015 and 11.1 million bpd in 2020 before slipping to 9.2 million bpd by 2035.

Saudi Arabian oil output would be 10.9 million bpd by 2015, the IEA said, 10.6 million bpd in 2020 but would rise to 12.3 million bpd by 2035.

That would see the world relying increasingly on OPEC after 2020 as, in addition to increases from Saudi Arabia, Iraq will account for 45 percent of the growth in global oil production to 2035 and become the second-largest exporter, overtaking Russia.

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OPEC's share of world oil production will rise to 48 percent from 42 percent now.

Russian oil output, which over the past decade has been steadily above Saudi Arabia, is predicted to stay flat at over 10 million bpd until 2020, when it will start to decline to reach just above 9 million bpd by 2035.

"Russia, which remains the largest individual energy exporter throughout the period, sees its revenues from oil, natural gas and coal exports rise from $380 billion in 2011 to $410 billion in 2035," the IEA said.

The U.S. oil boom would accelerate a switch in the direction of international oil trade, the IEA said, predicting that by 2035 almost 90 percent of oil from the Middle East would be drawn to Asia.

Energy demand grows by a third

The report assumes a huge expansion in the Chinese economy, which it saw overtaking the United States in purchasing power parity soon after 2015 and by 2020 using market exchange rates. Chinese real gross domestic product is expected to increase by 5.7 percent annually between 2011 and 2035.

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 A rise of 1.8 billion in the world's population to 8.6 billion would lead to a spike in global oil demand by more than a 10th to over 99 million bpd by 2035, keeping pressure on oil prices, the IEA said.

The agency's central "New Policies" scenario, which assumes a range of measures are taken to curb oil consumption in Europe, the United States, China and elsewhere, sees the average import cost of oil rise to just over $215 per barrel by 2035 in nominal terms, or $125 in 2011 terms.

If fewer steps are taken to promote renewable energy and curb carbon dioxide emissions, oil was likely to exceed $250 per barrel in nominal terms by 2035 and reach $145 in real terms -- almost level with the record highs seen four years ago.

The share of coal in primary energy demand will fall only slightly by 2035.

Fossil fuels in general will remain dominant in the global energy mix, supported by subsidies that, in 2011, jumped by almost 30 percent to $523 billion, due mainly to increases in the Middle East and North Africa.

Dr. Ali Ghalambor is the former director of the Society of Petroleum Engineers. His Facebook page has a lot of useful information about the oil and gas sector.

Natural gas basics: Methods of NGL separation

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Natural Gas Liquids or NGLs are commonly removed from natural gas streams not because they are impurities, but because they have a higher value if they are sold as separate products. The separation processes take place in processing plants, using different techniques, one of which is a bit similar to that used in removing water from natural gas streams.

There are two processes that are used to extract NGLs from natural gas: absorption and cryogenic expansion.

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Similar to how the absorption process uses glycol to remove water from the natural gas stream, the NGL absorption process uses a substance that absorbs NGLs from the gas stream. This substance, called absorption oil, is now a mixture of substances like propane, butane, pentane, etc. It is then heated, which allows for the separation and recovery of the NGLs. The cryogenic expansion processes are used to extract the lighter hydrocarbons like ethane and involves freezing the gas stream to condense ethane and other hydrocarbons while leaving methane in gaseous form.

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However, for these extracted NGLs to be useful, they have to be broken down into their base components. This is called fractionation. It works by using the different boiling points of the hydrocarbons to separate them from each other, starting from the lightest hydrocarbons to the heaviest.

For more information about natural gas processing, follow updates on Dr. Ali Ghalambor on this Twitter page.

Friday, February 8, 2013

REPOST: 5 states with the cheapest gas

Do you want to know where to get cheapest gas in the country? This article shares the states with the cheapest gas rates.

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Concerns about global economic weakness have pushed crude oil prices down in recent weeks. The decline was seen in gas prices, too. As of Dec. 6, national prices averaged $3.38 per gallon, down from $3.46 per gallon a month before. Some states have kept their prices significantly below the average nationwide price. Based on data from The American Automobile Association, 24/7 Wall St. reviewed the states with the lowest gas prices.

States impose gasoline taxes and fees, in addition to federal gasoline taxes. These taxes can vary significantly from state to state, affecting regional prices. It's not surprising then to find that the states with the lowest gas prices tend to have among the lowest fuel taxes. The states on this list are below the median in terms of taxes and fees.

States with refineries also tend to have lower prices because oil can be moved to local stations at much cheaper prices, which results in lower prices at the pump. Most of the states on this list have refineries located within its borders. Texas, which has among the cheapest gas in the country, has 26 refineries, more than any other state in the country. Louisiana has 18 refineries, the second most of any state.

Overall cost of living is generally low in the states with the lowest gas prices. Tennessee, which has the fourth-cheapest gas prices, has the lowest cost of living in the country. Oklahoma, which has the fifth-cheapest gas, has the second-lowest cost of living. Overall, all the states on this list are in the lower half in terms of cost of living.

But while cost of living is low, so is the amount of money state residents bring in. All of the states on the list had median household income in 2011 below the national median income of $50,502.

Based on AAA’s Daily Fuel Gauge Report, 24/7 Wall St. reviewed the states with the lowest gas prices as of Dec. 6. We also looked at gas prices from the same time last week, last month and last year, as well as peak prices this year, to monitor the recent activity of gas prices in different parts of the country. We also considered taxes and fees per gallon by state from the American Petroleum Institute, refineries and refining capacity by state from the U.S. Energy Information Administration, cost of living by state from the Council for Community and Economic Research and 2011 median household income from the U.S. Census Bureau.

These are the 5 states with the lowest gas prices.

1. Missouri

• Regular gas price per gallon: $3.11
• Tax per gallon: 17.3 cents (6th lowest)
• Number of operating refineries: 0

Missouri currently has the lowest gas prices in the country, at just $3.11 per gallon, the same as a month ago. However, the current price is up 9 cents a gallon from a year ago, when Missouri was also the cheapest place to fill up at the pump. Prices peaked at about $3.65 per gallon in early April, well below the roughly $3.90 per gallon across the country. In the state’s two largest metropolitan areas, St. Louis and Kansas City, gas prices are even lower, at just $3.09 a gallon.

2. Texas

• Regular gas price per gallon: $3.14
• Tax per gallon: 20.0 cents (tied-11th lowest)
• Number of operating refineries: 26

Gas prices in Texas have fallen significantly in recent weeks -- a gallon of gas cost $3.25 a month ago, with five states having lower gas prices at the time. Now, only gas in Missouri is cheaper. Gas prices in the state have only risen 4 cents a gallon in the past year, compared to the 10 cents a gallon increase across the U.S. Texas has 26 operating refineries, more than any other state in the country. Texas also levies a low 20 cents a gallon in taxes and fees, among the bottom-third of all states.

3. South Carolina

• Regular gas price per gallon: $3.15
• Tax per gallon: 16.8 cents (4th lowest)
• Number of operating refineries: 0

South Carolina residents benefit from some of the nation’s lowest state taxes on gas; residents pay just 16.8 cents per gallon. Gas prices in the state have diverged from the rest of the nation over the last month. While the current average price nationwide declined by 8 cents a gallon over the past month, South Carolina’s increased by 1 cent a gallon during that time. In the Charleston-North Charleston metro area, however, prices are down 11 cents from the month before.

4. Tennessee

• Regular gas price per gallon: $3.16
• Tax per gallon: 21.4 cents (15th lowest)
• Number of operating refineries:1

Gas prices in Tennessee have only risen 6 cents a gallon from the same time last year, boosting the state’s ranking from sixth-lowest to fourth-lowest. In the state’s two largest metropolitan areas, Memphis and Nashville, prices are even cheaper, at $3.10 and $3.15, respectively. Tennessee has the lowest cost of living among all states in the U.S. Included in that figure is the cost of transportation, where Tennessee also has the overall lowest cost.

5. Oklahoma

• Regular gas price per gallon: $3.16
• Tax per gallon: 17.0 cents (5th lowest)
• Number of operating refineries: 5

Oklahoma’s gas prices are the fifth-cheapest in the country, up from being fourth-cheapest last year, as gas prices have risen 7 cents a gallon since then. In the past year, prices peaked at just over $3.70 a gallon in September, although that was still lower than the $3.90 per gallon peak price across the U.S. Gas isn’t the only thing that is inexpensive in Oklahoma -- the state had the second-lowest cost of living in the U.S.

This Dr. Ali Ghalambor Facebook page contains everything you need to know about the oil and gas industry.

Thursday, February 7, 2013

Separating water from natural gas

One of the substances that have to be removed from the natural gas stream is water. Although most of the free-standing water included in the gas is removed at the wellhead during extraction, water vapor still exists in some form inside the gas stream. The removal of water vapor is more complicated and involves either absorption, where water is taken out by an absorbent, or adsorption, where water is condensed and collected.

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There are two major dehydration processes that are used in natural gas processing: glycol dehydration and solid-desiccant dehydration.

Glycol dehydration makes use of the liquid desiccant dehydrators, the primary ingredient of which is glycol, which is strongly attracted to water. When glycol makes contact with the gas, it absorbs water out of the gas. As it does so, it becomes heavier than the gas and sinks, leaving the remaining gas free of water. It is an efficient process because the glycol solution has a higher boiling point than water and can just be heated to evaporate the water. It can then be reused over and over.

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Solid-desiccant dehydration is a dehydration process that involves two adsorption towers that are filled with solid desiccants. As the wet natural gas passes through these towers from top to bottom, the water from these gasses are adsorbed by the desiccants, leaving only dry gas exiting at the bottom.

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These processes may sound complicated, but in fact, they are not. Most of these processes are discussed in major textbooks about natural gas processing, such as Boyun Guo and Dr. Ali Ghalambor’s Natural Gas Engineering Handbook.

Visit Dr. Ali Ghalambor’s Facebook page for more information on natural gas processes and technologies.

Wednesday, February 6, 2013

REPOST: US oil production 'to jump by a quarter by 2014'

This BBC News article talks about the increase of US oil production in 2014 due to the discovery of vast reserves of shale oil.

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US oil production will jump by a quarter by 2014 to its highest level in 26 years, figures suggest.

This is mainly because of the discovery of vast reserves of shale oil.

The Energy Information Administration (EIA) in the US also forecast average global oil prices would fall from $112 a barrel in 2012 to $99 in 2014.

It said US oil imports would fall by a quarter between 2012 and 2014, because of rising domestic production and the discovery of shale gas.

US oil imports have been falling since 2005, when they stood at 12.5 million barrels a day. By 2014, they will have halved to six million barrels, the EIA said.

Domestic production, which stood at 6.4 million barrels last year, will rise to 7.9 million barrels next year, the highest level since 1988.

"US oil production is rising extraordinarily quickly, entirely because of the application of fracking, [which is] unleashing very significant new resources into the market," Seth Kleinman, global head of energy strategy at Citigroup, told the BBC.

Fracking is the process of blasting water at high pressure into shale rock to release oil or gas held within it. It has become widespread in the US and domestic gas prices have plummeted as a result.

Many have hailed shale gas as the saviour of the US energy market. In fact, the International Energy Agency (IEA) has said it expects the US to overtake Russia as the world's biggest gas producer by 2015 and to become "all but self-sufficient" in its energy needs by about 2035.

But critics of shale gas point to environmental concerns such as high water use and possible water contamination, the release of methane and, to a lesser extent, earth tremors caused by drilling.

The process has been banned in France, while the UK recently lifted a moratorium on drilling for shale gas.

Transformational shift

Shale gas also helps to explain the sharp drop in US oil imports forecast by the EIA in the next two years.

The move away from oil "is being driven by tighter fuel economy mandates and the transformational shift from oil to natural gas, which is extraordinarily cheap compared with oil", says Mr Kleinman.

But the US will continue to increase oil production for domestic use and to generate revenues from exports.

The US will overtake Saudi Arabia as the world's biggest oil producer "by around 2020", an International Energy Agency (IEA) report predicted at the end of last year.

In fact, global oil production will continue rise, thanks to the discovery of shale oil.

"Total oil production is about to rise," Fatih Birol, chief economist at the IEA, told the BBC.

"We estimate total oil production to reach about 100 million barrels a day, about 20 million higher than today.

"This growth comes from unconventional [shale] oil."

The discovery of shale oil means global oil production will not peak in the next 20 years, Mr Birol added.

The increase in oil production comes at a time when coal production is also rising sharply, largely to provide cheap energy to meet exploding demand in developing economies, particularly in Asia.

The increase in production of both coal and oil has raised concerns about meeting carbon dioxide emissions targets, designed to slow the rate of increase in global temperatures.

This Dr. Ali Ghalambor Facebook page contains various articles about the oil and gas sector.

Sunday, February 3, 2013

Natural gas processing: Removing oil and condensates

Natural gas that people use in their homes is different from recently extracted natural gas. Before people can use it for cooking and heating, it has to be processed first. The first step is the removal of oil and condensates.

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There are different processes and equipment used to separate oil (or condensates) from natural gas. In addition, raw natural gas from different regions can have different compositions and separation requirements. This is why in some cases the separation of oil and gas is only a simple matter, requiring only a conventional separator, which uses gravity to separate natural gas from heavier liquids like oil and hydrocarbon compensates, while sometimes it may require specialized equipment, such as the Low-Temperature Separator (LTX).

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The LTX utilizes pressure to lower the temperature of the wet natural gas and separate the oil and condensates. Its temperature lowered by a heat exchanger, the wet natural gas enters the separator and flows through a high-pressure liquid knockout and into a low-temperature separator via a choke mechanism that expands the gas as soon as it enters. After the liquid is removed, the now dry gas then flows back through the heat exchanger and is heated up by the incoming wet gas. These temperature changes cause oil, condensates, and water to be separated from the wet gas stream.

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Natural gas processing is a complicated process, but there are some excellent books out there that have a wealth of information about it, such as Arthur J. Kidnay Fundamentals of Natural Gas Processing and Dr. Ali Ghalambor and Boyun Guo’s Natural Gas Engineering Handbook.

Learn more about natural gas processing by following this Twitter page.