China vigorously promoting shale gas exploration, development ( 200 yr supply est)

peakoil.com ^ | March 5, 2012

[Ernest_at_the_Beach]

Shale gas exploration and exploitation in China is still at an early stage.

Natural gas accounted for 4% of China’s total energy consumption in 2010. The natural gas share of total world energy demand was nearly six times that, according to the BP Statistical Review of World Energy 2011.

In the first 5 months of 2011, Chinese crude oil import dependence reached 55.2%, according to the Ministry of Industry and Information Technology.

China’s shale gas resource is 100 trillion cu m, and the technically recoverable shale gas resource is 36 trillion cu m.¹

Shale gas in China

Here are key dates and activities in the progression of shale gas exploration and exploitation in China.²

Before 2004: Study foreign shale gas exploration technology.

From 2005 to 2007: Shale gas resource exploitation.

In 2008: Exploitation of the Upper Yangtze region and planning shale gas project.

In 2009: Evaluating shale gas resource potential and defining favorable exploration targets in key areas.

In 2010: Carrying out exploitation in the Sichuan, Chongqing, Guizhou, and Hubei shale gas areas; conducting shale gas resource exploitation in the Lower Yangtze Anhui, Zhejiang, and Jiangsu regions; and carrying out preliminary shale gas research in the northern region (north, northeast, and northwest China).

In 2011: Defining areas of probable shale gas reserves in China.

According to the preliminary evaluation in China, the shale gas resource is 21.5-45 billion cu m, mainly distributed in five regions: the south, northwest, north, northeast, and Qinghai-Tibet. The south and the northwest have the most favorable reservoir conditions and are the areas of main concentration (Fig. 1).2

[SouthTexas]

Not even half of what he said they needed, not good.

[thackney]

I wonder what the price of NG will do IF they ever get around to using it as a diesel substitute. Friend told me a while back that they needed 5.00 and haven’t been near that in a while.

There is two parts to making it competitive with diesel. The cost of the conversion and the cost of the natural gas. The $5 was probably reasonable when the natural gas was $4 per MMBTU. But when the price of Natural Gas fall significantly, that price break would fall.

The ratio between the price of Crude Oil versus Natural Gas has climbed greatly. I would expect we recently reached the point where it would be economic to make the conversion based upon some other reports. However, a major company is not going to invest billions into a conversion facility unless the have significant confidence in that price differential remaining for years.

I don't have that confidence myself. I think we will see the demand for Natural Gas climb significantly with greater demand in new uses.

A few years ago, Shell had the process economical enough to build a large gas-to-liquids facility in Qatar. They did build it producing kerosene and diesel like products. At that time they said the economics worked in a region where the local price of natural gas was very low due to much greater production versus demand. There they compete against the expensive process of creating LNG. I suspect their process is a similar or slightly greater expense, but the end result is a much higher value product.

[thackney]

diesel substitute. Friend told me a while back that they needed 5.00

To be clear, that means to me the price of diesel would have to be $5 per gallon for natural gas converted to diesel-like product to be economical.

The economics work either when diesel stays high priced, or when natural gas stays relatively low priced.

[thackney]

http://www.shell.com/home/content/aboutshell/our_strategy/major_projects_2/pearl/overview/

Pearl GTL will be the world’s largest source of gas-to-liquids (GTL) products, producing 140,000 barrels of GTL products each day. The plant will also produce 120,000 barrels of oil equivalent per day of natural gas liquids and ethane.

LOCATION: QATAR, RAS LAFFAN INDUSTRIAL CITY
Category: Integrated gas and gas-to-liquids project
Operator: Shell
Development cost: $18 billion-$19 billion
Peak Production: 320 kboe/d of gas resulting in:
- 140 kboe/d of gas-to-liquids products (2 trains)
- 120 kboe/d of natural gas liquids and ethane
Total production: 3 billion boe of natural gas over the life of the project

They have been operating a similar plant in Malaysia for over 15 years.

[thackney]

And for the details of the same project:

http://www.shell.com/home/content/innovation/meeting_demand/natural_gas/gtl/process/acc_gtl_processes.html#subtitle_1

Water and condensates are separated from the gas. Other components, such as sulphur, are also removed and cleaned. The gas is then cooled and the natural gas liquids are removed via distillation. The remaining pure natural gas (methane) flows to the gasification unit.

QUICK FACTS
- The extracted sulphur is used for other purposes, such as producing fertilisers, in asphalt and concrete.
- The natural gas liquids are piped to Ras Laffan port and sold as chemical feedstocks and LPG fuel for heating appliances and vehicles.

Making synthesis gas

In the gasifier at around 2,200-2,650°F (1,400-1,600°C) the methane and oxygen are converted into a mixture of hydrogen and carbon monoxide known as synthesis gas, or syngas.

QUICK FACTS
- The reaction produces heat, which is recovered to produce steam for power.

Making liquid waxy hydrocarbons

The synthesis gas enters one of 24 reactors. Each reactor holds a large number of tubes containing a Shell proprietary catalyst. The catalyst serves to speed up the chemical reaction in which the synthesis gas is converted into long-chained waxy hydrocarbons and water.

QUICK FACTS
-The catalyst consists of tiny granules, just millimetres long with microscopic holes, containing minute metal particles. The total surface area of the microscopic holes in the catalyst granules is more than eighteen times the surface area of Qatar.
- The synthesis process generates a lot of heat, which is also used to produce steam that in turn powers the GTL plant via steam turbines.
- All water in the GTL process is purified and reused in the utilities system of the plant to generate steam.
- Placed end-to-end the tubes would stretch from Qatar to Japan.

Making GTL (gas to liquids) products

The plant creates a range of products from natural gas that would otherwise be produced from oil.
Using another Shell proprietary catalyst, the long hydrocarbon molecules from the GTL reactor are contacted with hydrogen and cut (cracked) into a range of smaller molecules of different length and shape. Distillation separates out the products with different boiling points.

GTL PRODUCTS

GTL Naphtha is used as a chemical feedstock for plastics manufacture.

GTL Kerosene can be blended with conventional Jet Fuel (up to 50%) for use in aviation – known as GTL Jet Fuel – or used as a home heating fuel.

GTL Normal paraffins are used for making more cost-effective detergents.

GTL Gasoil is a diesel-type fuel that can be blended into the global diesel supply pool.

GTL Base oils are used to make high-quality lubricants.

[SouthTexas]

Thanks for all the info.

Remember many years back when talk of super-ports from CC to Houston prevailed. LNG was cussed an discussed extensively all to be shelved when the bottom fell out. It’s come up a couple of times since but always seems to just fade away. maybe now with the over abundance of NG from the shale.

Think we will have to declare war on the greenies before any of this can happen in this country, otherwise it will continue to stay overseas.

[thackney]

LNG was cussed an discussed extensively all to be shelved when the bottom fell out. It’s come up a couple of times since but always seems to just fade away. maybe now with the over abundance of NG from the shale.

Several of those new LNG import facilities are adding units to liquefy and have applied for export license.

http://www.lngworldnews.com/usa-two-lng-cargoes-re-exported-in-january/

http://www.ogj.com/articles/2012/02/sabine-pass-lng-export-project-takes-step.html

http://www.upstreamonline.com/live/article303763.ece

[SouthTexas]

And nothing this way, about right. LOL

Remember when it was all burned off at the wellhead, no market for it.

[thackney]

Remember when it was all burned off at the wellhead, no market for it.

Once the mineral right owners figured out they could charge royalties on that as well, most found a way to either bring it to a market or re-inject it.