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EIA Extols Unconventional Gas Role in Market

EIA Extols Unconventional Gas Role in Market

Unconventional gas resources --- coalbed methane, tight gas sands and gas shale --- could contribute as much as one quarter or more to the 30 Tcf demand market that the natural gas industry expects to materialize over the next two decades, according to a new paper released last week by the Energy Information Administration (EIA).

The Department of Energy (DOE) agency projects that annual unconventional gas supplies will account for about 28% of total U.S. gas production by 2020, reaching 7.5 Tcf/year. This compares to a production level for unconventional resources of 4.5 Tcf in 1998.

The projections hinge on the assumption that progress will continue in the development and refinement of recovery technologies for unconventional resources, whose production in the past has been hampered by high finding and drilling costs.

Brisk technology advancements could result in 25 Tcf more of unconventional supplies being added to the U.S. supply base between 1998 and 2020 compared to the amount that would be produced if technology progress was sluggish, as well as a drop (by 78 cents) in the wellhead price for gas, according to the EIA paper, entitled "Impact of Unconventional Gas Technology in the Annual Energy Outlook 2000."

Continued progress in drilling and completion technologies will by far have the "greatest projected impact" in the years ahead, with the EIA projecting that such technologies alone will boost the aggregate unconventional gas production by 11.4 Tcf between 1998 and 2020 and reduce average wellhead prices by 33 cents.

Most of the benefits of technological advancements will be seen in the Rocky Mountain region for tight sands and coalbed methane, and in the Northeast for gas shale, the EIA paper predicted. Production from tight sands in the Rocky Mountains could reach a total of 43.1 Tcf by 2020 if the technology environment is favorable, compared to a total of 31.7 Tcf under a scenario in which little or no advancements are achieved, the DOE agency noted. The second largest tight sands producing region will be the Gulf Coast, which the EIA projects could achieve an aggregate production output of 21.6 Tcf by 2020 if the technology climate is right.

The agency also expects the Rocky Mountain region to dominate coalbed-methane production, reaching a cumulative 25.1 Tcf over the next two decades if advancements in recovery technologies continue. This compares to a total of about 19.4 Tcf under a no-progress scenario. The Northeast Appalachia region will be the hands-down leader in production of gas from shale, with aggregate production targeted at about 11 Tcf between 1998 and 2020 if recovery technology continues to flourish.

Proved reserves of unconventional gas in the United States --- reserves that are recoverable with reasonable certainty --- tend to be on the low side, but the resource potential of certain regions, especially the Rocky Mountains, is believed to be vast.

Proved reserves of tight sands and coalbed methane are highest in the Rocky Mountain region, while proved reserves of gas shale dominate the Northeast, according to the EIA. Approximately 51% (16.2 Tcf) of tight sands and 77% (8.1 Tcf) of coalbed methane proved reserves are situated in the Rocky Mountains, and 93% (3.4 Tcf) of gas shale proved reserves are located in the Northeast, it said.

Undeveloped resources - which are unproved resource volumes that could yet be added to proved reserves - of unconventional gas are most bountiful in the Rocky Mountain region. In the Rockies, the agency estimated the potential for undeveloped tight sand gas at 191 Tcf, and coalbed methane at 42 Tcf. In the Northeast region, undeveloped gas shale resources were pegged at 45 Tcf.

An even greater amount of unconventional gas resources, about 120 Tcf, has been categorized by the U.S. Geological Survey (USGS) as hypothetical resources. "Because insufficient information exists concerning these plays, producers have less ability to explore for or develop them within an expedient time frame," the EIA said, but it expects the development to pick up as the USGS conducts basin assessments to help producers locate productive plays.

The agency also said it expects to see accelerated development of emerging unconventional gas plays in basins such as Power River in Wyoming, Piceance, Raton and Wind River.

Susan Parker

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