Managing natural gas extraction, distribution, and environmental concerns

Managing Natural Resources - Natural Gas

Natural gas is a non-renewable energy source. It is often found with oil. Natural gas makes up a significant proportion of the energy used by the United States. Effective management of this energy source is vital. Though the United States is a major producer of natural gas, it also must import to meet its needs. Management must cover not only extraction, processing and distribution within the United States, but it must also constructively interact with the demands of the rest of the world to secure natural gas imports. Economics, politics and environmental concerns must all be properly addressed to create an effective management system that everyone can live with.

Today, natural gas has become an important energy resource in the United States and around the world. Natural gas is principally composed of methane with smaller amounts of ethane, propane and other hydrocarbons (Castaneda, 2001; National Petroleum Council, 2007) the exact mixture of gases varies from place to place. Processing procedures work to strip out the secondary gases from the raw natural gas, while leaving methane for commercial purposes.

Natural gas is considered a relatively clean form of fossil fuel. It burns much cleaner than oil, gasoline or coal. Natural gas emits far lower levels of sulfur, carbon, nitrogen and far less ash than the other common forms of fossil fuel. It is, however an emitter of carbon dioxide, a known greenhouse gas (Berinstein, 2001). The carbon dioxide emissions are a concern as people become more aware and concerned about the greenhouse effect and other global warming issues.

Natural gas has been known to humanity for millennia. Thousands of years ago, people would find natural gas seeps that had made it to the surface and had been ignited by lightning. People then didn't understand the processes behind these eerily burning places and became convinced they were supernatural or of divine origin. Sometimes they built temples over these "divine" flame locations. The Chinese were the first to put the natural gas to work. Around 2,500 years ago, they used bamboo to pipe gas from shallow pockets to the coast where the gas was ignited under large pans of sea water to recover the salt (NEED, 2007).

In the U.S. The first natural gas well was dug in Fredonia, New York in the early 1800s. Gas became popular in larger cities during the 1800's for lighting. Wealthy people even had gas lighting in their homes (NEED, 2007). With the advent of electricity, natural gas was repositioned for heating and cooking. Broad acceptance of gas was handicapped by a lack of a good delivery system. At that time, there wasn't a way to pump large volumes of gas very far. Gas needed to be used very close to where it was pumped out of the ground. For the most part, gas was not considered to be very useful.

The broad scale use of gas did not really take off until after World War II with the establishment of large scale pipeline systems across the United States (Natural Gas.org, 2008). Natural gas was soon available across the entire country. Its' popularity as an energy source soon rose..

Because it is principally a fossil fuel, natural gas has a limited supply. Since this is the case, the question then becomes one of managing natural gas resources to extend their usefulness for as long as possible. Long-term management of natural gas will require sensible and thoughtful accommodation of a wide variety of needs and concerns. Management will require ever more advanced technologies and techniques for extraction, processing and delivery of the gas. It will also demand broad scale collaboration of many different people and nations to make it work effectively for everyone.

Economic Importance

Natural gas is the second most commonly used form of energy in the United States. Natural gas fulfills 23% of the nations energy needs (Berinstein, 2001). Not surprisingly it is used in a wide variety of ways. Industry uses it principally for heat and as a component in a variety of products. These products include fertilizer, photographic film, detergent, insect repellent and nylon. Residential use is primarily in heating. Nearly 60% of homes use natural gas for heating. Natural gas is also becoming popular for generating electricity. It has become the third largest generator of energy in the United States (NEED, 2007). The low cost and comparative cleanliness of gas as compared to coal interests a great many people interested in converting to a cleaner energy source for electricity (Fjell, 2003).

Natural gas is also beginning to be used for transportation purposes. Though personal cars running on natural gas are available, the majority of vehicles running on natural gas are found in commercial and municipal fleets. The comparatively low price of natural gas as compared to diesel or gasoline results in large savings for fleet managers.

Future uses for natural gas principally revolve around power generation, either for personal transportation or electricity. Natural gas is being considered as an excellent source of fuel for fuel cells. Fuel cells produce power by means of chemical reactions rather than by internal combustion. The chemical reaction used in fuel cells has been shown to be far more efficient that any produced by internal combustion (Natural Gas.org, 2008).

Management of Natural Gas

Managing natural gas resources in both the United States and around the world will be a challenge in coming years. Until 1980, the United States was self-sufficient in natural gas. Since then, demand has climbed and the U.S. now imports natural gas. The United States is still a major producer of natural gas. Demand has simply outstripped the available supply (National Petroleum Council, 2007). Prices have not yet increased to the point where they will make more difficult to reach deposits cost effective to retrieve.

There are a number of forces in the United States and world wide which determine when or if certain natural gas deposits are put into production. One such force is political. In the United States, several state and federal government agencies control drilling for natural gas. They can determine where drilling is done, or if it is done at all. The congress has passed a number of laws over the years controlling price and safety conditions covering all phases of natural gas recovery, processing and distribution (UCSUSA, 2005). Internationally the picture becomes even more complex. Government instability and ethnic strife can have a devastating effect on the management of natural gas resources (National Petroleum Council, 2007).

Another factor in managing natural gas is the growing concern with the environment (UCSUSA, 2005). There are areas in the United States that have been legislated as off-limits for drilling due to the sensitive environmental nature of the areas. These include areas of the Gulf of Mexico, coastal California and parts of Alaska (National Petroleum Council, 2007). The poor environmental record for the extraction of fossil fuels in the past has fostered a distrust of energy companies. The companies claim they can now drill with very minimal disturbance in sensitive areas. Past environmental disasters leave most people unconvinced of their claims.

The third factor in managing natural gas is technical. Advancing technology has allowed energy companies to drill more quickly and efficiently (National Petroleum Council, 2007) in ever more difficult conditions with fewer and fewer errors. Transportation and storage have also advanced so that leaks and other issues that have plagued fossil fuels have been greatly minimized. Tanker ships are now double hulled in many cases. Storage facilities are now set up to recapture leaked gases. Continuing research is driven by the need to increase efficiency and to substitute newer cleaner technologies for older dirtier ones. Research is going on worldwide (Meggs, 2003).

One interesting development from of Russia is the development of mini LNG plants. These plants are designed to service small, remote areas that are often well off the standard delivery routes. These plants are designed to be reliable, easy to operate and quick to bring into operation (Gollubov & Katorgin, 2008).

The Russians claim they safe and economical to run (Zhuk, 2008). Such plants would be very useful in meeting the natural gas needs for small communities around the world, including the United States.

Norway has created what may well become the model for extracting, processing and transporting natural gas in a manner that sound economically, politically and environmentally. The Norwegian Continental Shelf sites have been a test bed for new technologies that by all accounts has vastly exceeded the expectations of all concerned (Fjell, 2003). Over the past thirty years, these drilling sites have been the center for amazing advances. Operations on the NCS have topped forecast production and yet managed to steadily reduce the costs of development and operations at these facilities.

This enviable record has been accomplished while operating under the strictest environmental code in gas and oil production. These codes were formulated by the Norwegian parliament in 1971. Among the requirement set out in these codes are: appropriate care must be shown to existing industrial and environmental interests, flaring of natural gas is not acceptable practice under normal operations, and respect must be shown for special social and political needs (Fjell, 2003). These regulations required much ingenuity by the oil industry operating on the Norwegian Continental shelf. The result has been that the oil and gas operations of the NCS have lower pollutant emissions than is produced by nearly any other producing nation in the world.

A pivotal tool for accomplishing the high environmental standards present on the Norwegian Continental Shelf is the Environmental Impact Factor (EIF). The EIF was developed in cooperation between the Norwegian Pollution control authority (SFT) and the originally state-owned oil company Statoil. The EIF is a computer model which is used to quantify the potential environmental risk. It is used for identifying the best environment for establishing a new project. The EIF has proven to be so effective that the Norwegian authorities now require all operators to use it in their yearly environmental impact reports (Fjell, 2003).

These sites were test beds for new drilling technology and procedures. Drilling requires the use of slurry containing oil, water, clay, and minerals to lubricate the bit and to cool it. This slurry used to be simply dumped onto the sea bed along with the oil-based drill cuttings produced during operation. Current procedure dilutes this waste and injects back into the ground. Technological improvements have allowed the capture of carbon dioxide emissions produced during operations and injecting them into the ground. The formation that is being used for the storage of this waste is now receiving about one million tons of carbon dioxide per year. The geologic structure is monitored constantly and has shown no sign of failure. This formation is so large that it could continue to be used for waste storage for the next 600 years (Fjell, 2003).

Norway began drilling in the North Sea under a set of very strict environmental guidelines. In the past thirty years, the processes created to meet those standards have resulted in an outstanding record of safety for both the working crews and the environment they work in. All ships hauling oil and gas from these fields are now double hulled. Ships that carry natural gas are fitted with advanced equipment for recapturing escaped gas and putting it back into storage (Fjell, 2003).

Energy is now produced onshore instead of on the rigs, reducing the carbon load on the area that would otherwise have been produced by the rigs in their normal operation. Part of the success of this program is due to the Norwegian oil companies instilling a corporate culture that emphasizes efficiency of operation, worker safety and protection of the environment. They have been highly successful in instilling pride in a job done correctly and safely with a close eye on protecting the environment. The companies are now attempting to transplant this corporate culture to their other operations elsewhere in the world (Fjell, 2003).

The Norwegians are now preparing to enter the Barents Sea to drill for oil and natural gas. The Barents is an environmentally sensitive area. It is an area that has been little touched by humans until now and boasts a wide variety of marine life. It has become the center of a rich fishery. It also contains Shtockman gas reserve, the largest offshore gas source in the world (Dahle & Camus, 2007). It is important that this biologically and economically rich area be protected. Somehow, the fishery, petroleum and environmental facets all had to be brought into a sustainable balance.

The government of Norway has responded to the challenge in a way that has never been done before anywhere in the world. They presented their integrated management plan on March 31, 2006. Their management plan for the area addresses the needs of the drillers and the interests of the other users of the area, such as fishermen. It also establishes the strictest environmental standards ever. The plan aims for the holistic ecosystem-based management of the Barents Sea. The plan is a bold and foresighted attempt to bring oil and gas extraction into a sustainable format. All activities are to be managed from a single unified context. If they are successful in developing the Barents Sea drilling sight in an environmental and economically sound manner, it would be an enormous step forward into a more enlightened management of energy resources.

One of the most ambitious goals of the management plan is the "zero discharge policy" created for the Norwegian part of the Barents Sea (Dahle & Camus, 2007). The companies operating on the Norwegian Continental Shelf have developed methodologies for instituting the previous "zero harmful discharges" regulations. Now they will be asked to step up to the much higher and more difficult goal of "zero discharges."

They will have to develop methodologies and technologies whereby all discharges are injected into ground or carried back to shore. They believe they are up to the challenge (Fjell, 2003).

Successful implementation of the highly ambitious goals of the Barents Sea plan lies with five main goals. The first goal is to develop a thorough knowledge of the Barents Sea function, structure and biology. This base level knowledge is critical for sound decision making at all levels. The second goal is the successful adaptation or development of risk assessment methodologies. The current set of tools and methods were developed for a different environment (Fjell, 2003) and may be found to not apply to the Barents Sea. A new set of tools would have to be developed to address the unique nature of Barents Sea. The third goal is to develop a thorough understanding of the effect contaminants on marine life in the area. The third goal feeds back into the second. It requires knowledge of what happens during and after an accident to sea life of the area in order to refine risk assessment tools. This will increase the effectiveness of those tools. The fourth goal is to develop a plan to monitor the biological health of the area. Tools will need to be developed and tested that monitor selected members of the Barents Sea ecosystem. These selected species will act as the proverbial "canary in the coal mine." The fifth goal is to establish a healthy collaboration with the Russians. The Russians control part of the area so good communication with them is critical (Dahle & Camus, 2007).

Holistic management of a complete ecosystem is a highly ambitious goal. It requires enormous effort in developing critical knowledge of the area and how to manage its biological health. It requires conscientious assessment and management of the human activities present in that area. It also requires constructive cooperation between all political entities involved in the use of that ecosystem. This is a tough model the Norwegians have created. It is also very doable. It will test the ingenuity of all involved. If successful it is a model that could be transported anywhere in the world, including the United States.

Conclusion

The necessity of effective management of natural gas is only going to become more and more critical in the future. Demand for natural gas is increasing world wide and will create stress on the current systems of recovery and distribution. Current reserves must be efficiently and effectively utilized. The technologies used for extraction, transport and use of natural gas must be made as clean and efficient as possible.

Efficiency must become a critical component in all energy usage. This can include much higher fuel economy in cars and trucks. Even vehicles that run on natural gas could stand to have their fuel economy increased.

Energy efficiency must also be expanded to include residential heating and commercial applications of natural gas usage (National Petroleum Council, 2007).

The political challenges will be enormous and will increase with time. The emerging economic giants of India and China are now shifting to natural gas as a cleaner part of their energy resources (Chandler & Gwin, 2004). This will put great pressure on the United States, Japan and other developed nations that are now importing natural gas.

The greater the competition for a resource, the higher the price will be (Energy Information Administration, 2008). Smooth political relations will become critical in maintaining the steady flow natural gas from producers to consumers.

Part of those politics will be ensuring that the local people enjoy the advantages brought by the fossil fuel wealth found in their countries. Concentrating all advantages in a small group of elite can and has had devastating results (Lubin, 2000). The chronic battles between local people and the central government in Nigeria over the distribution of oil wealth in that country is a well-known are a well-known case in point. Such a prolonged conflict is not only damaging to the country in which it occurs, it can result in a disruption of the flow of natural gas throughout the world.

The plan devised by the Norwegian government for the Barents Sea offers a solid blueprint for a way forward in managing natural gas in the future. It not only addresses economics and technology of oil and gas extraction, but also environmental and human elements as well. It will challenge the companies involved to be more creative and innovative than they have ever been before.

Success in the Barents Sea venture could be leveraged by people of vision, knowledge and skill to success world wide. In many places the very idea of an environmentally responsible petroleum company is considered absolutely laughable. The companies involved in the Barents Sea project could very well prove them wrong. As a result of their efforts, a better and more secure future could be in store for everyone. That would most certainly be worth all the hard work it will take to be a success.

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Managing Natural Gas Resources