A US shale-gas boom
Hydrofracturing is more than sixty years old, but during the last four years, it has taken off in the gas-rich Marcellus shale formations in the northeastern US. The idea of fracking is to drill horizontally for some distance within deep formations, apply hydraulic overpressure to open small fractures in close-by areas, prop them open with sand particles, and then release the hydraulic pressure so that trapped natural gas can escape and be produced. The pressurizing water and added chemicals (like guar gel, anti-corrosives, rheology enhancers) also come back out and must be treated. More details can be found in an AIChE webinar on the subject.
Emil Jacobs, VP of R&D for ExxonMobil Research and Engineering Company, contends, "The game-changing innovation that enabled the new era of natural gas in America was the combination of advancements in technology, such as hydraulic fracturing, horizontal drilling, Multi-Zone Stimulation, and others. This breakthrough combination enabled us to extract natural gas trapped in low-permeability rock safely and economically. Shale gas production scarcely existed 10 years ago and it now supports more than a million American jobs and generates billions of dollars in revenues and taxes - at a time when our economy really needs it."
International energy implications
These approaches and impacts are being watched around the world. The opportunities occur worldwide, as shown in a powerful graphic in Power magazine. Such "unconventional" natural-gas resources have become accessible around the world after a long period in which they seemed too expensive to recover. A lot of new resources, arriving surprisingly suddenly. Because gas demand hasn't increased as rapidly as supply, US prices for gas have dropped. The Financial Times reported (7/26/2012) that lower gas prices had reduced 2nd-quarter 2012 earnings for gas producers Royal Dutch Shell and ExxonMobil. However, revenue and earnings remain sound, and consumers are happy to have cheap, clean natural gas.
At the same time, there is caution and outright opposition, mainly because of the potential for adverse environmental impacts. For example, neither use nor research on fracking is presently acceptable in France. At the same time, Herv? Toulhoat, Deputy Scientific Director at IFP Energies Nouvelles, is "struck by the large amounts of unconventional gas and oil discovered" and links this to possible occurrences of natural hydrogen. He acknowledges that economic pressures in Europe may well drive continued re-examination of the ban on fracking approaches. .
Impacts on US chemical manufacturing
The organic-chemical business is also happy to put this resource to good use. Suddenly the US olefins business is shifting to make these workhorse chemicals from ethane, propane, and natural-gas liquids rather than naphtha, returning to the long-time ideal feedstocks used in the US. At the same time, heavier naphtha byproducts are reduced, affecting those markets. In a speech before his colleagues in the National Academy of Engineering last week, Bill Banholzer, Executive VP and Chief Technology Officer at Dow Chemical, said, "We have all seen monitors showing the rhythm of a beating heart on TV, and we know that when the line goes flat, it is a bad thing. The chemical industry experienced a flat line of sorts when natural-gas supplies dwindled, reducing our access to preferred natural-gas-liquid feeds and driving up prices. Exports dwindled, and all reports were that no new chemical plants would ever be built in the U.S."
Shale gas has changed all that. As Bill put it, "Abundant natural-gas supplies invigorate many parts of the economy, but potentially nowhere more significantly than in the chemical industry. We serve as a great multiplier of the value that abundant gas brings. We create jobs and materials used throughout the economy, amplifying the benefit of the low-cost gas reserves." Bill marveled, "Given the long time frames involved in energy, it is truly remarkable the impact shale gas has had. The ability of the US to export again will be a source of jobs and prosperity." Emil Jacobs' thoughts closely echoed Bill's: "The increased natural gas supply is reinvigorating America's petrochemical industry, which will help us develop advanced plastics and high-value consumer goods. U.S. ethane production has risen by 25 percent over the last five years, providing a feedstock cost advantage that has led to a rise in US exports as well as incremental investment in ethane cracking."
New opportunities, new challenges
Emil summed up his views by saying, "These are very exciting times that should drive us to consider how we are developing the next generation of chemical engineers with the necessary expertise to contribute to these advances and take advantage of these opportunities." These changes present both new opportunities and new challenges. In next week's post, I'll comment about the effect on the worldwide energy picture, the environment, and development of sustainable energy resources.