Pakistan's Vast Shale Gas Deposits

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Pakistan's Vast Shale Gas Deposits

Reports of new gas reserves of 40 trillion cubic feet are specially welcome at this moment in Pakistan when it is facing a very serious and growing energy crisis. Even if the demand doubles from the current one trillion cubic feet a year to two trillion cubic feet a year, the estimated current gas reserves can last as long as 30 years or more.

Pakistan is particularly heavily dependent on natural gas for its energy needs. Demand for natural gas in Pakistan has increased by almost 10 percent annually from 2000-01 to 2007-08, reaching around 3,200m cubic feet per day (MMCFD) last year, against the total production of 3,774 MMCFD, according to Pakistani official sources. But, during 2008-2009, the demand for natural gas exceeded the available supply, with production of 4,528 MMCFD gas against demand for 4,731 MMCFD, indicating a shortfall of 203 MMCFD.

The gas supply-demand imbalance is expected to grow every year to cripple the economy by 2025, when shortage will be 11,092 MMCFD (Million standard cubic feet per day) against total 13,259 MMCFD production. The Hagler Bailly report added that Pakistan's gas shortage would get much worse in the next two decades if it did not bring on any alternative sources.

Shale gas offers an alternative source for energy-starved Pakistan. Rough estimates indicate the presence of at least 33 trillion cubic feet of unconventional gas reserves trapped in rocks, according to an ENI Pakistan report. Another report by Shahab Alam, technical director of Pakistan Petroleum Concessions, puts the estimate at 40 trillion cubic feet of tight gas reserves in the country. These unconventional gas reserves are in addition to the remaining conventional proven gas reserves of over 30 trillion cubic feet.

With the pioneering work done in the United States on deep drilling and hydraulic fracturing (fracking) to extract hydrocarbons from shale rock, it is now estimated that the US alone has over 1000 trillion cubic feet of recoverable unconventional gas, according to the Wall Street Journal. Unlike the bulk of world's conventional natural gas reserves that are found in Russia, Iran, Venezuela and Qatar, the shale gas reserves have been discovered in rock formations spread across many parts of the world, including China, North America, Western Europe, India and Pakistan. Many energy analysts argue that tapping these new hydrocarbon resources could be a game-changer in terms of global economics and geo-politics.

Increased production of gas from shale in the US has created a glut, pushing down gas prices from $13/BTU (million British thermal units) four years ago to just $4.23/BTU today, even as the price of oil has more than doubled. By contrast, the Iran pipeline gas formula links the gas price to oil prices. It means that Pakistan will have to pay $12.30/BTU at oil price of $100/barrel, and a whopping $20/BTU for gas if oil returns to its 2008 peak of $150/barrel.

To encourage investment in developing domestic shale gas, Pakistan has approved a new exploration policy with improved incentives as compared with its 2009 policy, a petroleum ministry official said recently. Pakistan Petroleum is now inviting fresh bids to auction licenses to explore and develop several blocks in Dera Ismail Khan (KPK), Badin (Sind), Naushero Firoz (Sind) and Jungshahi (Sind), according to Oil Voice.

Under the new policy, exploration companies will be offered 40-50% higher prices for the extracted gas compared with the $4.26/Btu price announced in Exploration and Production Policy 2009. Companies which succeed in recovering gas from tight fields within two years will get 50% hike over the 2009 price and if it takes more time they will get only a 40% hike on the 2009 price. As an added incentive, the leases for the fields will now be for 40 years instead of 30 in the 2009 policy, the official said.

Even with the higher prices for the tight gas offered to the exploration companies, it is estimated that Pakistan will have to pay a maximum of $6.50/Btu for the gas compared with $12.30/Btu for gas imports, according to a report by Platts.

Development of shale gas in Pakistan, or anywhere else, is not without risks, particularly risks to the environment. In the United States, there have been many reports of ground water contamination from chemicals used to fracture rocks, as well as high levels of methane in water wells. In the absence of tight regulations and close monitoring, such pollution of ground water could spell disaster for humans and agriculture.

Given Pakistan's heavy dependence on natural gas for energy and as feedstock for industries such as fertilizer, fiber and plastics, it's important to pursue shale gas fields development under reasonably tight environmental regulations to minimize risks to the ground water resources.

Haq's Musings: Pakistan's Vast Shale Gas Deposits

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i thought there were long term environmental problems with extracting oil from shale deposits

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Shale Oil’s Place in our Energy Future
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Written by Brian Westenhaus
Thursday, 15 July 2010 19:23

Chinese researchers have identified a catalyst called NiMoW, for the hydrotreating of the refined diesel distillate fraction from the Fushun shale oil deposit.

Shale oil has high levels of nitrogen, sulfur, and unsaturated hydrocarbons, limiting its potential use to supplant or replace crude oil. Coming up with economical cleaning systems would get shale oil more competitive.

There is a lot of shale oil out there. Using a the Fischer Assay, which yields a heating value, across the planet’s known reserves turns up numbers like 3.3 billion tons with 2.8 billion, more than 78% in the U.S. Most of that is in the Green River Formation out in Colorado. It’s a huge reserve. No other known reserve exceeds 20% of the Green River deposit and most come in under 10%. Not that those others are small, the Green River deposit very conservatively holds more than 200 years of U.S. needs at current use rates.
The first problem is that shale oil is actually kerosene. Kerogen is a mixture of organic chemical compounds with the soluble portion is known as bitumen, the stuff of the Canadian Oil Sands. Not all of the organic chemicals come up as bitumen. The problem is what’s missing – hydrogen. Kerogen is carbon rich, but hydrogen poor.

Extraction then is quite costly and energy intensive. Heat is needed to raise the viscosity and the heat would be applied to the rock that contains the kerogen. Lots of heat is needed. Then the kerogen needs refined and cleaned. Adding solvents or adding back hydrogen can improve the oil product results.

Some processing methods yield considerably more useful product than the Fischer Assay would indicate. The Tosco II method yields over 100% more oil, and the Hytort process yields between 300% to 400% more oil. There could be an enormous supply of petroleum products if the extraction, hydrogen enrichment and cleaning problems get solved. All it takes is ingenuity and money in a high enough crude oil price environment to get investment on board.

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The use of shale oil remains a puzzle. Like Canada’s Oil Sands, kerogen from oil shale could be either dug up or extracted in place as in “in situ” processes. Cheap hydrogen and low cost cleaning also need solutions. Petroleum isn’t in short supply, easy to extract, refine and clean petroleum is, though.

So when the Chinese paper appeared in the American Chemical Society journal Energy & Fuels a certain acclaim is due. From the abstract:

Because of high contents of nitrogen, sulfur, and unsaturated hydrocarbons in shale oil, its potential use as a substitute fuel is limited. In this paper, catalytic hydrotreating of the diesel fraction (200?360 °C) from Fushun shale oil was preliminarily investigated in a fixed-bed reactor. Hydrotreating experiments were carried out using various available commercial catalysts, including CoMo/Al2O3, NiW/Al2O3, and NiMoW/Al2O3, at different conditions of temperature, hydrogen pressure, liquid hourly space velocity (LHSV), and ratio of hydrogen/feedstock. The results showed that the NiMoW catalyst was most active for heteroatom removal, in comparison to other catalysts. Under relative mild conditions, it was possible to produce clean diesel from a Fushun shale oil distillate. The produced oil had low contents of sulfur, nitrogen, and alkene, reduced density, and increased cetane number, and it could be used as a more valuable fuel.

There’s a piece of the puzzle on the cleaning side. Just how clean or clean enough isn’t yet clear. China doesn’t give much care to CO² or other environmental matters. But the knowhow is now out on the catalyst discovery.

Numbers passed around have U.S. shale oil worthwhile at perhaps as low as $35 a barrel, a number that challenges the imagination. Canada’s Oil Sands gets into financial trouble as oil prices get close to $50 so its a sure bet that the kerogen to bitumen step is going push it higher. But the reserves in shale are getting closer to market. Big breaks in technology will only help.

But the hard price of crude oil isn’t there yet. Today’s mid $70’s is a function of OPEC limiting the market. Just what a barrel of oil is worth is something less than that. The conditions for billions of investment aren’t ripe yet.

The technology is closer. But the politics further. There is considerable doubt that the world’s largest reserve will ever get to market as politics stand in the way. The leftist politicians are betting technology and public opinion will get petroleum out of the energy market. Keep in mind, they bet with your life – if they lose you lose.

From the most hydrogen rich petroleum, natural gas, to lesser hydrogen rich crude oil, heavy crude oil, bitumen, kerogen all the way to hard anthracite coal there are stunning amounts of carbon-based fuels around. The biosphere is busily recycling carbon through plants attaching hydrogen back and releasing oxygen for us to breath.

The question for the thoughtful is, can the human species control itself such that the carbon cycle can keep up? The answer is an obvious, yes, with energy inputs from solar, geothermal and nuclear fission and fusion – a happy carbon cycle is possible supporting a large human population and the plants and animals of the world.

Oil shale could have a role, soon if the technology develops at a good pace and politics pays attention to its responsibilities instead of its idealisms.

By. Brian Westenhaus of NewEnergyandFuel.com