September/October 2010

Keys to maximizing the profitability of unconventional gas operations

By Andrew Hird

Experts have speculated unconventional gas will be one of the key drivers of the global energy market during the next several decades. Unconventional gas, including coal bed methane (CBM), shale gas, and tight sands are becoming commercially viable; and in the future, we may also see methane hydrates and others. It is estimated unconventional gas has the potential to add more than 200% to global gas reserves.

These reserves have been quite well-known and documented for years now, so why are we starting to hear about them recently like they are the next new thing?

Researchers have said these natural gas reserves have now become economically viable alternatives for energy producers around the world. In the U.S., for example, domestic unconventional gas production is already over half of all gas production, and it is viewed as an attractive way to help achieve domestic energy independence.

The three biggest challenges are scale-up/cost, environmental risk, and safety. With the current historically low natural gas prices in the U.S., it is still considerably more expensive to extract, clean, and process unconventional gas than it is with conventional gas.

If the U.S.-based industry would embrace technology to address these issues, however, it would contribute significantly to realizing the full benefit of unconventional gas reserves.

Safe operations

Shale gas and CBM operations have traditionally started as smaller, highly distributed, often manually intensive operations, increasing the risk of personal injury, equipment damage, gas escape, and spillage of polluted water into sensitive areas.

During field scale-up and integration into the gas grid, appropriate safety technology and practices need to be implemented from well to production. Best practices from the broader oil and gas industry, including remotely monitored and controlled wells and equipment, should also be considered in shale gas and CBM operations, but to date have been slowly adopted.

Integrated safety and control solutions from well head through consolidation, compression, transport, and processing can certainly improve the environmental and safety performance of this growth industry without burdening it with additional costs.

Lower costs

The pressure to lower costs will continue. As fields grow from hundreds to potentially thousands of distributed wells, operators are looking for considerable scale-up efficiency. Increasing efficiency through automation is a major lever to enable the greatest amount of wells, compressors, and other assets to be operated and maintained with a fixed number of staff. As such, implementing appropriate network-enabled process control and safety systems can allow "remote monitoring and control" from centralized locations. Specialist skills can then be better deployed across multiple assets, and the risks to people and the environment is minimized due to the automated monitoring, controls, and safety devices.

Also, by moving toward reliability-centered maintenance, producers can implement solutions to monitor incidents such as corrosion of piping and wells and field equipment condition by exception. Sensor-based automation technology can then trigger maintenance actions far more effectively than manual rounds across great distances. This increases the life of the assets as well as reduces labor and material costs.

Environmental

Monitoring of flows in initial well construction and on-going production is critical to process performance, economics, and environmental performance. In small fields, it is possible for experienced operators to manage this. Currently proposed fields are too large for individual monitoring and control of water and gas components and pressures. Multi-phase measurement and automated control will become common place over the next few years to enable current and pending environmental regulatory compliance.

Navigating the intersection between safety and efficiency-with as small an environmental footprint as possible-is the key that unlocks the full potential of the unconventional gas industry. Integrated automation from field to gas production and storage can play a critical role in that navigation and help lessen the economic and environmental burden of unconventional gas production.

ABOUT THE AUTHOR

Andrew Hird, director of Marketing and Strategy at Honeywell Process Solutions, leads Honeywell's Global Marketing and Strategy across all industrial markets.