Three Questions: Shale Oil and Gas on the Cusp?

How does natural gas development impact the manufacturing chain? For insight into natural gas processing, Automation World talked to petroleum engineer Charlotte Batson, an expert in shale oil and gas.

Charlotte Batson, principal, Batson and Company
Charlotte Batson, principal, Batson and Company

In 2012, manufacturing consumed 32 percent of all natural gas produced in the United States. Increased shale oil and natural gas development is having a ripple effect throughout manufacturing, with historic low prices and vast deposits in the U.S pushing industrial users to consider natural gas in a different light. New considerations include using liquefied natural gas as a long-range trucking fuel or, for producers, exporting natural gas to China.

For insight into natural gas processing, Automation World talked to Charlotte Batson, an expert in shale oil and gas from her work as a petroleum engineer and now the principal of Batson and Company, an energy-consulting firm based in Mississippi. You can listen to the extended version of this interview as a podcast.

AW: Job creation has been tied to shale oil and gas development, with a 2011 Pricewaterhouse Coopers report predicting that one million new jobs could be added by 2025. Where in the manufacturing chain do you see the impact of natural gas development?

CB: The range of facilities in manufacturing-type industries that would be impacted is huge.  It would include manufacturing of equipment for the well-head, chemical manufacturing, all sorts of instrumentation, computer high-tech equipment and highly machined metal pieces. It’s just a huge array of products and services that are needed to make all of this happen.

Certainly the downstream processing facilities are hugely important because they’re such job-creation engines. However, the array of types of jobs that will be created because of this actually varies a good bit and includes many upstream opportunities as well.

Another trend is the creation of many liquefication facilities, which turn natural gas into liquefied natural gas (LNG). The LNG process takes natural gas down to -260 F so that it can be distributed via long-range trucks. Also related to LNG is having those heavy-duty trucks run on LNG, because of its low cost. 

T. Boone Pickens Company, Chesapeake, Clean Energy and several others have partnered with some truck stops companies such as Pilot Flying J and Travel Center to add liquefied natural gas lanes into their existing product line in specifically targeted locations. Their aim is to add more refueling locations across the U.S. and Canada so long-distance trucks have another option besides straight diesel engines. 

Natural gas is also seen increasingly as a fuel for locomotives, tankers, and airlines, including jets and different aircrafts. So it’s just tremendously exciting what’s going on there. 

AW:  Can you give us an overview of what kind of natural gas is possible with shale gas, what are the different sub-types, such as wet and dry gas?

CB:  The market has gone through some fundamental shifts in the last couple of years and, since we began producing such incredible volumes of natural gas and oil, the price has collapsed. Wet gas is a type of gas that contains higher-order hydrocarbons or derivatives—ethane, propane, butane, pentane and some of the longer chain hydrocarbons—that go into plastics and polymers. Now, having those higher-order components will maintain the profitability of wells for a longer period, as long as the product price for those higher-order hydrocarbons is maintained as well.

Dry gas refers to a natural gas that is methane only, or primarily methane only. There was a collapse of ethane price last year (2012) and so the industry has kind of shifted development emphasis from dry gas to wet gas to oil, so the market prices for dry gas is very difficult this year.

AW:  The Energy Information Administration says oil and gas producers use at least 7.5 million liters of water per well–pumped in and "frac flow-back" back out. What new solutions or new technologies related to water usage are oil and gas producers looking at to make fracking more cost-effective and efficient? 

CB: Actually that’s one of the more exciting areas of the whole process: the number of technologies and new types of equipment, whether it’s stationary facilities or mobile pieces of equipment.

Definitely, the salts and low-level organics—hydrocarbons and other carbon-based molecules—can be processed by local wastewater treatment facilities, but it requires a ceramic membrane type of technology which may be out of the reach of many community's cost. However, it has been done successfully (read about Veiola’s ceramic membrane technology) and in fact is considered a benefit in those communities where the volumes of water processed allow the municipality to reduce their processing rates to consumers. 

And there are technologies that can take “frac flow-back” water and process it into pure into drinking water. One of the big players just getting into that is Battelle Engineering, who announced six or seven new facilities in the Ohio and Pennsylvania region to process Marcellus and Utica water.

[Editor’s note: The most common solution, at this point, is to inject the water down a disposal well that penetrates deeper than any drinking-water resources. More than 90 percent of the water used or produced in oil and gas operations is disposed of in this way, in more than 150,000 such wells.]

>> The Answer Is Right Underneath Us: John Berra looks at the opportunities provided by shale oil and gas processing.

>> Grant Gerke, ggerke@automationworld.com, is a Contributing Writer for Automation World.

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