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Natural Gas: Continually Running Into New Obstacles

By Gail Tverberg | Wed, 05 January 2011 14:41 | 4

Natural gas would like to be bridge fuel as we deal with oil shortages, but it keeps running into obstacles.

A big obstacle is the fact that the price is now too low, relative to what it costs to extract the natural gas. Arthur Berman has shown based on his detailed analysis of drilling data that shale gas seems to need a much higher price than today’s $4 per thousand cubic feet to be profitable. I have shown something similar, looking at aggregate drilling costs. However, if the prices go up enough to be profitable for producers, natural gas will not look like nearly as good a “deal” for the homeowner.

But today I would like to talk about two new setbacks:

1) An EPA ruling against Range Resources regarding the contamination of two wells in Texas’ Barnett Shale.
2) An EPA analysis that says escaping greenhouse gases are more of a problem than previously assumed, particularly for well completions and hydraulic fracturing after completion.
The latter analysis is only an interim report, but adds further fuel to the debate about how “green” natural gas is. Indicated green house gas emissions based seem to be as high as coal emissions, although this is not explicitly stated in the report. There are no doubt steps that can be taken to reduce these emissions, but if the report is correct, without change, the indication is that natural gas is not very “green”.

EPA ruling against Range Resources

Tuesday afternoon, the EPA ruled that Range Resources has contaminated two drinking wells in the Barnett Shale area in Texas. The wells were contaminated with both natural gas and the carcinogen benzene. Hydrofracturing was used near the wells, but according to the Wall Street Journal, it is not known whether it was the hydrofracturing itself that caused the contamination. The EPA reported that there is a risk to the homes of explosion or fire.

Range Resources has been ordered to take steps to protect homeowners. They have also been ordered to investigate the problem.

Hydrofracturing has been controversial, but this is the first time that the EPA has issued a finding of this type. Without such a ruling, it is easy to say that such events are highly unlikely. But a single, well-publicized counter-example is a problem, almost like an oil spill. Once that it is clear that contamination can happen, it is likely to be much more difficult to get approvals to drill, for example, in the Marcellus shale. The chance of aquifer contamination is just too high.

Added note: I talked to Arthur Berman about this, and he pointed out a couple of things that make it very unlikely that this is really the result of contamination from natural gas. For one thing, benzene is a by product of liquid petroleum, not natural gas. The area where the contamination was found was a source of oil, before natural gas was found there. There are other issues as well about the geology of the area. So it seems likely that when this is fully investigated, it will be found to have nothing to do with natural gas fracking. We probably should not jump to conclusions.

Interim EPA analysis regarding natural gas emissions

There has been considerable discussion over the past year about the possibility of natural gas leakage being greater than previously estimated. Chris Vernon talked a little about the issue of Natural Gas perhaps not being so green back in June. He indicated that based on a 1997 EPA analysis, the leak rate was 1.4% ± 0.5%. The original analysis by EPA/GRI claiming low natural gas emissions (on which most recent analyses are based) was released back in 1996.

Now, the EPA has released an undated document called Background Technical Support Document – Petroleum and Natural Gas Industry. The document is listed on this EPA website, last updated November 30. It is not a full analysis; instead, it is more of an interim report. It says:

The EPA/GRI study used the best available data and somewhat restricted knowledge of industry practices at the time to provide estimates of emissions from each source in the various segments of the natural gas industry. In addition, this study was conducted at a time when CH4 emissions were not a significant concern in the discussion about GHG emissions. Over the years, new data and increased knowledge of industry operations and practices have highlighted the fact that emissions estimates from the EPA/GRI study are outdated and potentially understated for some emissions sources. (Emphasis added.)

This sound s a lot like the 1996 study was wrong.

This analysis has some very different numbers, particularly for unconventional gas completions and workovers:

Emissions Factors
EPA comparison of prior and updated emissions factors

If one looks further in the “Background Technical Support Document,” one finds that the emission factor for Unconventional Well Completions is 9,175 thousand cubic feet per completion, and the emission factor for workovers involving hydraulic refracturing is assumed to be the same.

In developing these figures, the EPA indicates that it included as unconventional natural gas only shale gas and coal methane wells. It does not include tight gas wells, and because of this, is said to be an understatement.

One question that the interim analysis does not have good information on is whether natural gas emissions during unconventional natural gas completions and workovers are flared rather than vented.  EPA’s analysis assumes that they are vented, except in Wyoming, where regulations require that emissions be flared or captured. This assumption would seem to work in the direction of overstating emissions. It seems as though that at least some producers would be flaring emissions or capturing them. Furthermore, it seems that those who are not currently doing so could make a change fairly easily, if new regulations were put in place.

The EPA shows this summary of its indications, including the high emissions from new unconventional gas wells:

Natural Gas and Petroleum Industries

David Lewis at the Energy Collective calculates based on Table 2 data that natural gas emissions based on this analysis average 3.25% natural gas production. At this level, the green house gas impact of natural gas would be similar to that of coal.

Clearly more work needs to be done, to firm up precisely what the current level of natural gas emissions is. But if there is a chance that unconventional wells are venting large amounts of natural gas when hydraulic fracturing is used, regulations need to be put into place to prevent this from taking place. Table 1 would suggest that even conventional well completions could significantly reduce natural gas emissions.

The current analysis suggests that the EPA is producing some of the high global warming gas indications that other researchers have found. This is another setback that the natural gas industry is likely to need to deal with. It may be that changed rules can eliminate much of the problem, but without further analysis, one doesn’t know.

By. Gail Tverberg

Gail Tverberg is a writer and speaker about energy issues. She is especially known for her work with financial issues associated with peak oil. Prior to getting involved with energy issues, Ms. Tverberg worked as an actuarial consultant. This work involved performing insurance-related analyses and forecasts. Her personal blog is ourfiniteworld.com. She is also an editor of The Oil Drum.

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  • Anonymous on January 05 2011 said:
    figure out how ch4 went from 21 times worse than equivalent co2 as a greenhouse gas to whatever their outrageous number is now, i believe they just about trebled it very recently, like within the last 4 years or so, and you'll have a better idea of how these so called researchers have arrived at the "high indications."just how does the effectiveness of something that should be easily quantifiable change so dramatically, one wonders. also, one suspects they're overplaying the volumes escaping.suffice to say that the science behind this so called study is flimsy at best. fact is we don't even really know how much naturally occurring ch4 escapes.the epa looks at this angle as just another another political football to kick around. so what if it isn't a real problem they can just change their model to make it fit their agenda.
  • Anonymous on January 05 2011 said:
    The Obama regime is in "ENERGY STARVATION" mode. Obama's EPA is working overtime to shut down all reliable forms of energy. Political peak oil (energy). Not as good as genuine peak oil, but it will do if that's all you've got.
  • Anonymous on January 05 2011 said:
    I find these people with no real money on the table speculating on the profit margin of shale gas plays quite funny. Gail, are you aware that there are multi-billion dollar investments being made in shale gas? Golly, I wonder if the Shell/Exxon/etc ran the profit margin numbers before writing a 9 figure check?Suffice it to say, the wholesale prices of oil and gas are now providing a cost savings factor of around 3. So the price of gas could double, the price of oil could remain flat, and homeowners/industrial consumers would still be swapping oil for gas.Re: greenhouse gas - right now, the EPA is completely toothless to regulate around GHG. If they actually clamp down on GHG, the Obama administration can kick their re-election hopes goodbye, so I doubt they will do much other than pose and strut while shale drillers ran thousands of drill bits.
  • Anonymous on January 06 2011 said:
    I live in the Barnett Shale and what Berman says is simply not true. Benzene is in the gas stream here and I can name several people whose water wells have tested positive for benzene after fracking. Benzene is one of the toxins found in the air testing even in the dry gas areas of the shale.

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