Experts push unconventional gas for future markets

Sam Fletcher
Senior Writer

HOUSTON, Dec. 29 -- With markets facing both rising costs and escalating demand for natural gas, today's unconventional gas resources "cannot remain unconventional," said Raymond C. Pilcher, president of Raven Ridge Resources Inc., Grand Junction, Colo., at a recent 2-day energy conference in Denver.

"On a worldwide basis, the use of natural gas is either increasing at a high rate or there is a desire to increase it at a high rate. Even when you look at countries that are highly dependent on coal—as an example, China—there is also a desire to develop clean-burning fuel, not only from the standpoint of developing coal resources in using clean-coal technology but also using as much gas as possible," said Pilcher at the Dec. 13 opening session of that meeting on unconventional gas resources, sponsored by Strategic Research Institute, New York.

Pilcher noted the evolution in the US from the previous permitting of "mostly coal-fired" electric power plants to "mostly gas-fired because it would be easier to comply with some of the environmental constraints." But then, he said, "What all of us had wished for in the gas business started to happen, which was that the price of gas began to rise. That has now impacted what is going to happen in terms of the type of electric power generation that is going to be put in place over the next several years in this country."

Natural gas prices have retreated in recent weeks, but industry analysts see prices escalating over the long term with the growing demand for energy in the US and around the world.

As a result, said Pilcher, "We see that what we consider now to be unconventional gas resources cannot remain unconventional. The very things that we consider to be on the fringes [of commercial production] today will probably be mainstream in the future."

He said, "What's not generally known is that, if you look at the natural gas resources and reserves in the US, about one-third of those resources are substandard gas; in other words, they are contaminated with nitrogen or CO2 [carbon dioxide]. And when you look at the amount of gas that is now being contributed by coalbed methane [CBM], it's a very significant portion, and only a few years ago, it was considered to be unconventional."

Five steps
Pilcher sees "at least five components" to the full development of unconventional gas resources. "First, of course, is market development," he said. But that is not a major concern in the US, since it has a ready market "for all of the gas we can produce foreseeably." Other components include:

-- Economic development. "That means being able to develop these resources in some manner that's consistent with the economics of the day," said Pilcher, "something that is gong to be successfully sold on the market."

-- Socio-economic development. "In this country, we don't think so much about this, but when you look at other countries, it's a very important thing. Here we have a ready-made group of experts and companies who are able to [meet] the challenge of creating and utilizing the technology to develop these resources," Pilcher said.

-- Technological development, which "takes place in many ways, in universities and other types of institutions, and within the unfortunately dwindling company-run R&D programs," he said.

-- Physical development. "That's actually getting out there in the field and drilling the holes, making wells into wells, and producing that gas, and being able to take all of the gas and use it in a way that is commiserate with the economics of the day," said Pilcher.

US production of CBM grew to 1.6 tcf in 2003 from 150 bcf in 1989 in what Pilcher described as "a meteoric rise in the development of these resources." That was possible, he said, "because we already had [natural gas market] infrastructure in place—we had pipelines; we had homes and businesses that were using natural gas." So developing CBM for this market required "no leap of faith or technological advance." However, he said, "When you look at this in other countries, this is a very large first jump because those markets just don't exist."

Pilcher acknowledged, "One of the things that spurred CBM development in the late 1970s and up through the early 1990s was, in fact, the Section 29 [US] tax credit. It had a very large impact. At the point that the tax credit peaked, we were looking at almost twice the sale price of natural gas, so if someone had that tax credit they had quite a benefit."

Moreover, he said, "It really was the Gas Research Institute that took the lead" in the socio-economic development of CBM through its research and development programs, "with a lot of contributions also from the US Department of Energy," as well as corporate leaders "like Amoco [Corp.] and Meridian [Resource Corp., Houston]." He said, "There was a very strong institutional backing to those early projects."

In its development of CBM in the US, the natural gas industry has applied technology in ways it had not been applied before. Technology is still being adapted to CBM and other unconventional gas resources, said Pilcher.

"Even in CBM, we have not reached the full physical potential. If you look at what's going on in the San Juan basin today, there are wells that have been productive that are being reentered and new technology is being applied, and more gas is being produced. There's in-fill well drilling, and now there is a lot of work in basins where there was [previously] no suspicion of there being producible natural gas," he said.

EPA methane program
Meanwhile, the US Environmental Protection Agency is working on a voluntary program to recover methane from both active and abandoned coal mines in the US and several other countries, primarily through degasification of the coal itself and catalytic oxidation of ventilation air.

Coal mine methane emissions in the US totaled 5.5 billion cu m in 2000 and is expected to increase to 5.7 bcm in 2010, said Pamela Franklin, manager of EPA's coalbed methane outreach program climate protection partnerships division. Under the EPA program, she said, 1.1 bcm has been recovered from underground mine drainage systems and generally sold to pipelines. As a result, she said, "Many new abandoned mine projects have become operative in the past few years."

Under the new US-led methane-to-markets program announced in July, EPA is helping to create a framework to advance the recovery and use of methane worldwide as a valuable source of clean energy though technology transfer and identification of cost-effective opportunities for capturing methane emissions. Among the participating countries in addition to the US are Australia, China, India, Poland, Russia, South Africa, Ukraine, and the UK.

Contact Sam Fletcher at

Related Articles

PHMSA proposes pipeline accident notification regulations

07/02/2015 The US Pipeline and Hazardous Materials Safety Administration has proposed new federal oil and gas pipeline accident and notification regulations. ...

FourPoint Energy to acquire Anadarko basin assets from Chesapeake

07/02/2015 FourPoint Energy LLC, a privately owned Denver company, plans to acquire oil and gas assets from Chesapeake Energy Corp. subsidiaries Chesapeake Ex...

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

FWS issues Shell letter of authorization on Chukchi Sea lease

07/01/2015 The US Fish & Wildlife Service issued Shell Gulf of Mexico Inc. a letter of authorization (LOA) related to the potential disturbance of polar b...
White Papers

Definitive Guide to Cybersecurity for the Oil & Gas Industry

In the Oil and Gas industry, there is no single adversary and no single threat to the information tech...

UAS Integration for Infrastructure: More than Just Flying

Oil and gas companies recognize the benefits that the use of drones or unmanned aerial systems (UAS) c...

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by
Available Webcasts

Better Data, Better Analytics, Better Decisions

When Tue, Oct 27, 2015

The Oil & Gas industry has large amounts of data stored in multiple systems which are purpose built for certain tasks. However, good decisions require insights based upon the data in all of these systems. These systems in turn do not talk to each other. So the process of analyzing data, gaining insights, and making decisions is a slow one and often a flawed one. Good decisions require accurate analytics and accurate analytics require superior/sustainable data quality and governance. This webinar focuses on:

  • The importance of data quality and governance
  • How technological advances are making data quality and governance sustainable in order to get the accurate analytics to make solid decisions.

Please join us for this webcast sponsored by Seven Lakes Technologies and Noah Consulting.


Operating a Sustainable Oil & Gas Supply Chain in North America

When Tue, Oct 20, 2015

Short lead times and unpredictable conditions in the Oil & Gas industry can create costly challenges in supply chains. By implementing a LEAN culture of continuous improvement you can eliminate waste, increase productivity and gain end-to-end visibility leading to a sustainable and well-oiled supply chain.

Please join us for this webcast sponsored by Ryder System, Inc.


On Demand

Leveraging technology to improve safety & reliability

Tue, Sep 22, 2015

Attend this informative webinar to learn more about how to leverage technology to meet the new OSHA standards and protect your employees from the hazards of arc flash explosions.


The Resilient Oilfield in the Internet of Things World

Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected