Friday, June 19, 2009

Natural Gas and how it shall effect those outside of Alaska, such as Well Owners.

I am not sure how everyone feels about the new natural gas pipeline, concerning TransCanada or Exxon, as many who read this know I do not like Exxon for many reasons.

I and my good friend Rev. Paul decided to do a joint blog concerning this. He gives a good idea of what South Central Alaska is going to be going up against here in the next few years. And the sad part is that it is true. He also mentions things that another friend, explains further down the blog.

But, I decided that I wanted to know more, as I mainly work in oil. So I decided to contact my friend Jim, who happens to own a small but very steady little oil and gas company in Texas. He gave me some insight in how this will not just effect Alaska, but will also affect those who own gas wells across the United States, how it may actually rob more then gas and how it may also be used… as Alaskans will be losing a resource. Jim, wasn’t happy about this merger anymore then I.

Upinak: Jim, I know you are a busy guy. But if you don’t mind answering a small question on the TransCanada/Exxon deal, I would appreciate it.

With this new deal, is it going to lower the price of Natural Gas around the lower 48 now?

I have quite a few people asking me as to what may be the outcome.


Jim: I always have time for the queen of the Great North!
There are a number of factors that are weighing down on the US natural gas market, with the Exxon/TransCanada deal being a fairly minor one.
Probably the number one thing is the rapidly approaching LNG issue. Exxon and a number of other internationals have invested many billions in the Persian Gulf natural gas LNG tanker infrastructure recently and Qatar will be shipping huge amounts of LNG later this year. Other projects are coming on line as well. There are huge gas fields in the Gulf, and very little of it has been marketed, until recently.
My friends who are in the gas business (oil and gas people don't get along - they are two entirely different mindsets) are very concerned. This is also reflected in the rapid decline of the drilling boom in the Newark Burnet Shale play in North Texas - the largest gas field in Texas, as well as the anemic state of the spot price of gas on the exchanges..
All this is wearing down the natural gas market and causing a lot of second-guessing. Moreover, Europe is looking for another gas source after the overreaching of the Russians last year. The LNG is expected to supply a quarter of their needs, minimizing the insecure Russian sources and the associated risks of relying on Putin for that critical fuel.
On the other hand, gas has a low profile as far as the Greenie-weenies are concerned (they are much more focused on coal and oil), and our need for it will only increase. But... the short-term pricing landscape for natural gas here in the States is not too good at the moment. The fear is palpable - which is not to say that it is entirely justified.


Upinak: Hey Jim,on this same subject. I was approached by someone today. With your knowledge... do you know what it would take (I am not familiar with tar sands) to use the PSI of the gas to scour the sticky sands, besides just baking them.I was taken back by this... but if you think about it, it makes sense why XOM is getting involved.

Jim: Uppy,

Here is a brief initial description of what would entail.The tar sands are basically just sand, silt and bitumen with some bound water.Bitumen is an old term that stands for any viscous hydrocarbon. The hydrocarbon in tar sands is very viscous, asphaltic (think of a road blacktop) and full of heavy hydrocarbons such as polycyclic aromatics - benzene rings all bound together and very long-chain double-bonded hydrocarbons. Basically, a mass of thick superviscous gunk that you can drive over with a truck - not very useful in its native state.So, they question is: how do we get it to flow? You've lived in Florida, so you know what happens to asphalt after a hot day - it loses some of its viscosity. How can we decrease the viscosity of this tar sand goo? Well, we have used three things" steam, pyrolysis (heating ) and chemical Chrsolvents. All of these require a lot of cost. A ton of standard-issue Athabascan tar sand can produce a rather paltry 20-25 gallons of less viscous black goo that used to be known, back in the Jimmy Carter days, as "syncrude". This goo can then be pumped into the normal refining processes that can fractionate it into useful hydrocarbons.This brings me to your question: can we use the gas within the tar sand to "scour" the sticky sands - a process that would be under the technique known as pyrolysis. The problem here is that there is basically no gas bound within the tar sands, so this gas would have to be pipelined in from somewhere else and then used as the feeder stock to "crack" the heavy hydrocarbon bonds of the gunk. That would be like crudely imitating the "cracking towers" of most refineries.Here is the problem - would it take more energy to free the hydrocarbons in the tar sands than it would be worth? Remember, there is only a half-barrel of prerefined "goo" in every ton of tar sands. There would be a lot of water needed in this process as well, the often toxic residues, which often contain sulfur and heavier metals such as vanadium, would need to be disposed of as well as the often trace radioactive bits of residue from the reducing environment that these sands were originally present in. Ans, of sourse, the still-gooey silt and sand infrastructure of these tar sands.Whether one uses straight pyrolysis or steam heated by the natural gas, there is a lot of additional costs (gas, water, disposal fees and a lot of required refining) as well as useful energy wasted to produce a minor amount of oil. Then there are the CO2 issues that would set off the Greenie-weenies.Compare this with the low "lift costs" of a local oil production, and the economics are not even comparable. Look up the sad history of Jimmy Carter's "syncrude" corporation, which is somewhat comparable. Google "Syncrude Corporation", I believe. It was a multibillion dollar boondoggle. The tar sands are a much better target, but the basic idea is the same - there is a huge amount of lost value and profits, as well as additional tremendous ecological problems produced, when we try to extract solid hydocarbons from matrix rocks, like tar sands or oil shales, to make into oil.I'll send you some more info later tonight and tomorrow.Thanks!


So, there are some “rumors” that have died BUT some interesting insight via Jim on what can happen and will probably be happening. Exxon bringing gas down from Alaska and helping to “cook” the oil sands in Alberta. I knew it had to be more then just Exxon willing to help. Exxon isn’t the type of company to do anything without an alternative, other then money. And talks of Petro-Canada and Suncor merger could be a problem as well.

I have quite a few friends who own land in Texas who have gas wells, in the Barnett Shale. Their checks went from 2500 a month down to 120.00. And I wish I was kidding as they actually showed the paperwork to me concerning their loss, the BTU’s, the PSI, and if they were going to “Frac” or fracture the formation to tap into more gas. Sometimes the gas is considered sour, so it is put on hold until it can be mixed with a sweet gas and then can be used. Barnett Shale is like this quite often. Either way, those people who let the companies drill for gas on their property are screwed as in some cases the gas companies are plug and abandoning these wells.

But Alaska Gas is very clean and rarely turns sour. So much so that small villages that have oil companies drill on their “land” happen to get the gas for heat in their homes, businesses and other places all over the slope. Interesting, isn’t it.

This also doesn’t help Alaskans with anything concerning a Bullet Line from Kenai (due to gas production dwindling) or the fast that a spur line is now on hold via the “Pipeline” talks. Alaskans in south central only have enough resources until 2015 even if used conservatively. This also makes me wonder about UIC, or what is known as Injection Wells. That is where they inject the Wells with the Natural Gas that comes back and cit circulates back into the formation and pool to scour the oil off the sands. Quite a few questions to be answered. There are regulations for natural gas, but will it matter now?

I know this was a long Blog entry. But I wanted to take the time to let everyone know this pipeline is good to a point… but this isn’t the only or best option.

Governor Palin knows this is a start, she did what she promised. But it makes me wonder how much Murkowski is now in the negotiations concerning this pipeline. And we all know he has a bone to pick with Alaskans for kicking him out of the Governors seat.

God Help us!

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