DOE Awards More than $22M to 20 Oil, Gas Research Projects

The Department of Energy's Office of Fossil Energy announced plans last week to partially fund 20 oil and gas research and development projects with a total contribution reaching more than $22 million.

The DOE selected six new projects to upgrade low-quality gas, convert gas to liquids and tap difficult formations. Funding for those projects will total about $7.7 million. Four of those projects focus on advanced concepts for processing natural gas -- either removing pollutant-forming impurities or developing ways to create or transport liquid fuels that can be made from natural gas. The other two projects will develop high-tech tools that gas producers can use in the future to locate and extract gas from reservoirs that are too geologically complex or expensive to produce with today's technology.

A recent study by the Gas Technology Institute (GTI) estimated that one-third of all U.S. natural gas reserves are below the quality standard necessary for most commercial uses. GTI found that of the nation's 148 Tcf of gas, nearly 61 Tcf is low-quality gas. The study also estimates that of the 1,690 Tcf of undiscovered gas in the country, 496 Tcf could be substandard.

In addition some supplies are trapped in remote regions far away from pipelines. Other resources often go undetected in isolated sections of a reservoir and are frequently abandoned.

"With America's demand for natural gas likely to expand by as much as 60% over the next 20 years, tomorrow's gas producers will need new, more effective ways to upgrade substandard gas and to tap gas currently beyond their reach because of geologic or geographic obstacles.

To tackle the need for improved gas upgrading technology, the Energy Department selected Membrane Technology & Research Inc., Menlo Park, CA. The company will focus on ways to reduce nitrogen impurities in substandard gas. Field tests in high-nitrogen Butcher Energy gas field in Jackson County, OH, will be conducted for one year during which the economics and technical capabilities of the membrane modules will be assessed. The system is to reduce the nitrogen content from the Butcher Energy field, which contains 20-25 percent nitrogen, to less than 4 percent, and deliver it to a nearby pipeline. The project cost is $1.548 million and DOE will contribute $648,813.

The Gas Technology Institute in Des Plaines, IL, will develop, demonstrate and evaluate a gas/liquid absorber composed of membrane modules that upgrade substandard natural gas to pipeline regulations. Chevron will host a gas-treatment plant, Kvaerner Process Systems will build the test unit and W.L. Gore & Associates will provide the membranes. GTI will operate and collect data for the lab and field tests and, with Kvaerner, will evaluate the absorber s economics. The project cost is $1.9 million and the DOE award is $858,420.

The other two natural gas processing projects will deal with gas-to-liquids technology. The projects could improve prospects for tapping the vast natural gas resources in Alaska's far North Slope. Currently this gas is not marketed because of the lack of gas pipelines. Converting the gas into liquid form would offer a way to ship it to market via the Trans-Alaska oil pipeline.

TDA Research Inc. of Wheat Ridge, CO, will develop a more efficient, lower-cost method of reforming natural gas, i.e., chemically breaking apart the gas molecule typically in the presence of steam to create hydrogen and carbon monoxide. Hydrogen and carbon monoxide can be further converted into liquid fuels, such as methanol, and into high-value chemicals. The project cost is $153,514 with a DOE award of $99,989.

The University of Alaska at Fairbanks will study how to best transport gas converted into a liquid through the existing Trans Alaska Pipeline System (TAPS). The university's project is expected to cost $799,749. It will get $604,733 from DOE.

DOE noted that another area of need is tapping geologically complex and difficult to produce formations. With the nation's demand for natural gas steadily increasing, the easiest-to-produce reservoirs in the United States are rapidly being tapped. To help develop the tools that will be needed for more complex reservoirs, the department has selected Novatek Engineering of Provo, UT, which proposes to develop a high-speed method of transmitting data from the bottom of a wellbore to operators on the surface through the drill string - i.e., the drill pipe and casing. The objective is to achieve data rates that approach or exceed computer modem speeds. Project cost is $1.293 million and the DOE award is $600,000.

Paulsson Geophysical Services, Inc. in LaHabra, CA, hopes to resolve one of the primary impediments to obtaining high resolution, 3-D images of deep and complex gas reservoirs -- namely the lack of acquisition technology needed to record the large volumes of seismic data needed to do 3-D imaging. The company will focus on developing an advanced seismic receiver that can handle the high volumes of data. Project cost is $2 million with a DOE award of $1 million.

The DOE also selected two projects to help boost gas flow from low-permeability formations. The National Petroleum Council recently estimated that production from low-permeability wells will need to double by 2015 to meet growing demand for natural gas. Several studies by the U.S. Geological Survey also estimate that low-permeability reservoirs contain several thousand Tcf of gas, enough to meet total U.S. demand for at least 30 years even if only one third of it can be recovered.

However, much of the low-permeability natural gas resource is found in reservoirs deeper than 15,000 feet, DOE said. Most of these wells are marginally productive because they do not have an extensive, interconnected network of natural fractures, which can serve as conduits through which natural gas can flow to producing wells. Also, drillers have encountered large amounts of water in some low-permeability resources where water production would not be expected to be an issue. High-water production forces natural gas companies to think twice about developing certain areas and may cause the industry to abandon significant gas reserves.

Innovative Discovery Technologies, Inc. of Laramie, WY, has been selected to develop a 3-D model that will give gas producers valuable information on where gas "sweet spots" are located. It proposes to develop a basin-wide, 3-dimensional model that gives detailed information about the reservoir before drilling begins. The model maps a well's water and gas content, porosity and its likelihood of producing gas by identifying its "sweet spots," high-production areas. It also locates pressure boundaries and characterizes them. As a result, gas companies can avoid excessive water production by designing optimum drilling and completion programs. IDT proposes to demonstrate this technology in the Wind River Basin in Central Wyoming.

The University of Texas at Austin will focus on improving the performance and lower the cost of hydraulic fracturing -- where water is injected under high pressure to open fractures in dense sandstone rocks to free trapped gas. The university, in a partnership with Anadarko Petroleum, will create a model using laboratory tests, improved fracture simulations, and implementation and analysis for the Bossier play (field) southeast of Dallas. The two research projects are estimated to cost $5 million.

The DOE also announced plans to add 12 new oil research projects in three categories to its ongoing petroleum research program. The projects were selected in the first round of a broad-ranging solicitation issued last December by the Office of Fossil Energy. Another round of project winners will be announced later this year. The projects are in the areas of reservoir efficiency processes, critical upstream advanced diagnostics and imaging technologies and environmental compliance issues.

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