The Source - Winter 2008 - (Page 21)

factors are manageable and that rates of return of greater than 15 percent should be realized at current gas prices. These models will need to be validated through appropriate flow testing. Ultimate recovery. Economic planning for the development of a hydrate field will have to include a determination of the number of wells needed for development and the volume of gas each ultimately will produce. Computer models indicate that recovery per well will be high, enhancing project economics, but validation is needed. The common theme of all of these factors is the need for extended industry-scale flow testing. The data obtained from the brief Canadian tests has proven to be extremely valuable in calibrating production models but has not demonstrated gas hydrate as a profitable energy resource. The Alaska gas hydrate program managed by BP, and largely funded by DOE, has identified suitable hydrate reservoirs and could begin the needed production testing within the next year. A successful test could be quickly followed with the use of the gas as a fuel for North Slope facilities, validating flow rates, assessing operating costs, and providing data about long-term well performance. The cost of such a test will be high, especially if a new gravel pad is required so that operations can continue year round. In the Gulf of Mexico the daily rate for a deepwater drilling unit capable of hydrate operations exceeds $300,000, and the cost of drilling and logging a single hydrate test (without flow testing) can be greater than $1 million. • for 2008, $40 million for FY 2009, and $50 million for FY 2010. Funding at the authorized level would allow for the extended production testing in the Arctic needed to answer the industry’s questions and validate the hydrate resource potential of the Gulf. If securing a vast new domestic gas resource is of value to APGA members, their support for a fully authorized federal gas hydrate program is critical. The USGS is an avid voice in support of gas hydrate research. Brenda Pierce, USGS Energy Resources Program coordinator, says, “Gas hydrates are potentially the most important future fossil energy resource and study of them now is needed to determine the availability, producibility, and cost of extracting natural gas from the solid hydrate phase. I also believe that hydrate research right now must be built on partnerships, so as to move the science forward.” Art Johnson works for Hydrate Energy International in Kenner, La. excellence from start to finish ngineering R Put the Experience of ENE to Work for You Today At ENE we look at things from an operator’s perspective. From design to completion we provide the experience, expertise and tools to deliver superior quality work to the oil and gas industries. The path forward – and a role for APGA From 2001 to 2005, the apportionment for the DOE program was between $9 million and $9.9 million, increasing to $11.8M in FY (fiscal year) 2006, $12 million in FY 2007, and $16 million in FY 2008. Funding at that level allowed the program to bring us to our current point but is insufficient to carry the program to a conclusion where industry will pursue gas hydrate as a business opportunity. The Energy Policy Act of 2005 authorized funding of $15 million for FY 2006, $20 million in FY 2007, $30 million Pipeline & Distribution Design System Planning O&M Program Development Automation and Control Systems Preliminary Design and Cost Estimates Project Planning and Management Pipeline Integrity Corrosion Control Systems Metallurgical Consulting Facility Audits and Consulting Services 7135 Janes Avenue • Woodridge, IL 60517 For more information please contact us at: 630.353.4000 www.enengineering.com THE SOURCE | WINTER 2008 , VOL. 1, ISSUE 2 21 http://www.enengineering.com

Table of Contents Feed for the Digital Edition of The Source - Winter 2008

The Source - Winter 2008 Contents First Person The Bridge to Renewable Energy Future Natural Gas: The Comfortable, Responsible Energy Solution Gas Hydrates: Poised for the Next Phase The Role of Natural Gas in a Carbon-Constrained World Natural Gas Prepays Taking the Leap to Natural Gas Vehicles The Pipeline Legislative Outlook Advertiser's Index Advertiser.com At Last

The Source - Winter 2008

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