FocusUtica Shale pushes US natgas supplies to 300 years

09 October 2012 22:47  [Source: ICIS news]

HOUSTON (ICIS)--The Utica Shale has increased US supplies of natural gas to where they could meet demand for the next 300 years, a professor said on Tuesday.

The Utica Shale contains a mean estimate of 38 trillion cubic feet (tcf) of technically recoverable natural gas, based on a range of 21-61 tcf, the US Geological Survey (USGS) said in its first assessment of the formation in the northeast US.

The Utica Shale also has a mean estimate of 940m bbl of unconventional oil resources, based on a range of 590m-1.39bn bbl, the USGS said. The shale has a mean estimate of 9m bbl of unconventional natural gas liquids (NGLs), based on a range of 4m-16m bbl.

Already, the advent of shale gas has lowered both energy and feedstock costs for the US, which relies mostly on ethane as a feedstock for its crackers.

Shale gas has given US crackers a cost advantage versus those in much of the world, which rely on oil-based naphtha.

The Utica Shale lies beneath the Marcellus Shale, which is the largest unconventional gas basin the USGS has assessed, with 84 tcf of natural gas. The Greater Green River Basin in southwestern Wyoming follows closely behind, the USGS said.

“This means [shale gas] will last longer than we originally thought - I would say 100 years at least, more likely 300 years,” said Michael Economides, a professor of chemical and bimolecular engineering at the University of Houston. “We are producing more than we need, and exports are going to happen.”

Economides predicted the US will begin massive exports of shale gas in two years, particularly to China, which has the resource but does not have the technology to develop it.

The American Chemistry Council (ACC) said shale gas is a game changer, and the growth in domestic shale gas production has had a positive effect of lowering prices and expanding supply.

“The USGS survey projects that the Utica can be a highly productive region,” ACC energy policy analyst Owen Kean said. “Production is already underway in the Utica, although it is very early in the game. More infrastructure is needed in the area before it can fully ramp up.”

Kean said there is an overlap of companies with leases in both the Marcellus and the Utica. However, there are Utica leaseholders that do not own leases in the Marcellus.

“For those companies, their timelines are driven by project economics and infrastructure,” Kean said. “If they can make money off their Utica assets they will do so (businesses need cash flow).”

In terms of alternative energy, low-cost natural gas could remove the rationale for developing solar, wind and other renewables since these are much more expensive, Economides said.

In addition, since the price ratio of oil to natural gas already stands at 6:1, the US can explore other uses of natural gas, such as in transportation, Economides said. Rising supplies of natural gas could lower the costs for the fuel, allowing it to displace gasoline for vehicles.

By: Tracy Dang
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