Getting Deep Gas Right Instead of Getting LNG Wrong
The US energy jones is about to start getting really nasty. The petroleum industry and the government, having totally misunderstood as recently as 2000 what was going to happen to the natural gas supply beginning now, are really panicked. Several dozen crash LNG projects are all on the fast track, being considered by good old FERC on a myopic case by case basis, and pretty soon a growing part of the natural gas 56 million American families use to cook their food and heat their residences will be brought in (at what threatens to be ungodly expense) from the same unstable regions that provide export oil. But unlike oil, where bidding up the price can resolve any short-term supply problems, natural gas dependency is fraught with danger. Miss a half dozen shipments through political action or terrorism or what have you in the early stages of a bad winter, and suddenly not just the region where those supplies were destined, but the system itself, has a big, big problem. And it's not the sort of problem you can buy your way out of, or send in troops to cure. True, there is already a small trade in LNG and it has worked out fairly well, but that doesn't mean much. LNG is not the sort of dependency a rational government would ever choose. Nor has the government set aside any natural gas in the equivalent of an emergency reserve the way it has done for oil, despite the more dire consequences.
The point is that there are alternatives. The first is to relieve some of the demand pressure on the system by getting as many electricity producers using gas year round off the system as soon as possible. This can be done by requiring all new and larger existing non-seasonal gas-fired turbines to demonstrate actual alternative fuel capability or other replacement capacity. The second is to try and figure out what, if anything, is happening to traditional proved reserves. On the books, at least, gas supply is a non-problem over the near term, made even more of a non-problem by prices persistently higher than $5 per mmbtu over the past several years. According to the formal reserve accounts filed by petroleum companies for years, there should have been plenty of conventional proved reserves to get the US through at least the start of the new millennium, so where are they? Who's playing games?
But the most import thing to do is use available non-conventional domestic supplies including those most people know nothing about. Of the non-conventional supplies, the most important is gas trapped in tight sands in Wyoming and other parts of the west. The importance of this resource for the future is already well understood, and sufficient efforts are being made to develop it.
This, however, is not the case with shallow-water deep gas (sometimes known as geopressurized methane; others call it deep shelf gas). This is gas, at least 55 Tcf worth in the federal offshore, drilled from platforms located at water depths of less than 600 feet, but only accessible by drilling to 15 thousand feet or more. The onshore amounts are not known but are also believed to be substantial. Drilling that deep is very expensive, and the same technology that guides drilling choices in conventional geologic structures doesn't apply in quite the same way since the methane is not trapped in rock but dissolved at great pressure in the brine, so the risks are far greater. Even so, there are lots of companies that either have deep shelf projects (Anadarko’s Hickory, El Paso’s ST 204, and Shell’s Alex Discoveries) or are just starting them (McMoRan’s “JB” Mountain and Mounds Point in South Marsh Island). This resource should be given top priority. Interior's Mineral Management Service already has special incentives, q.v., but more companies, including those fronting big LNG facilities, need to be involved. It should be possible to quickly boost production from this source and rely on it until the new pipeline from the north slope can be built.
And while at it, why aren't restrictions removed so someone can drill that humongous amount of conventional gas lying off the gulf coast of Florida? Once that has been done, then we can talk about the 600 Tcf of Canadian coal seam gas waiting to be developed, or the 100,000 Tcf of gas hydrates that could/might also be used. There are many alternatives that can staunch the threat posed by LNG and they need to be brought on line as the need develops.
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