U.S. natural gas production in 2016 was the second-highest level recorded, down slightly from 2015, which has the highest-recorded production level. Production increases since 2005 have mainly been the result of horizontal drilling and hydraulic fracturing techniques, notably in shale, sandstone, carbonate, and other tight geologic formations. Natural gas is produced from onshore and offshore natural gas and oil wells and from coal beds. In 2016, U.S. dry natural gas production was equal to about 97% of U.S. natural gas consumption.
Five states accounted for about 65% of total U.S. dry natural gas production in 2016: – Texas_24%
Source: U.S. Energy Information Administration, Annual Energy Outlook 2016 Reference case, September 2016
What is shale?
Shale is a fine-grained sedimentary rock that forms when silt and clay-size mineral particles are compacted, and it is easily broken into thin, parallel layers. Black shale contains organic material that can generate oil and natural gas, which is trapped within the rock’s pores.
Where are shale gas resources found?
Shale natural gas resources are found in shale formations that contain significant accumulations of natural gas and/or oil. The Barnett Shale in Texas has been producing natural gas for more than a decade. Information gained from developing the Barnett Shale provided the initial technology template for developing other shale plays in the United States. Another important shale natural gas play is the Marcellus Shale in the eastern United States. While the Barnett and Marcellus formations are well-known shale natural gas plays in the United States, more than 30 U.S. states have shale formations.
Source: Adapted from United States Geological Survey factsheet 0113-01 (public domain)
Shale gas and tight gas
The oil and natural gas industry generally distinguishes between two categories of low-permeability formations that produce natural gas:
– Shale natural gas
– Tight natural gas
Shale natural gas
Large-scale natural gas production from shale began around 2000, when shale gas production became a commercial reality in the Barnett Shale located in north-central Texas. The production of Barnett Shale natural gas was pioneered by the Mitchell Energy and Development Corporation. During the 1980s and 1990s, Mitchell Energy experimented with alternative methods of hydraulically fracturing the Barnett Shale. By 2000, the company had developed a hydraulic fracturing technique that produced commercial volumes of shale gas. As the commercial success of the Barnett Shale became apparent, other companies started drilling wells in this formation so that by 2005, the Barnett Shale was producing almost half a trillion cubic feet (Tcf) of natural gas per year. As natural gas producers gained confidence in their abilities to profitably produce natural gas in the Barnett Shale, with confirmation provided by well results in the Fayetteville Shale in northern Arkansas, producers started developing other shale formations_including the Haynesville in eastern Texas and north Louisiana, the Woodford in Oklahoma, the Eagle Ford in southern Texas, and the Marcellus and Utica shales in northern Appalachia.
Tight natural gas
The identification of tight natural gas as a separate production category began with the passage of the Natural Gas Policy Act of 1978 (NGPA), which established tight natural gas as a separate wellhead natural gas pricing category that could obtain unregulated market-determined prices. The tight natural gas category was designed to give producers an incentive to produce high-cost natural gas resources when U.S. natural gas resources were believed to be increasingly scarce.
As a result of the NGPA tight natural gas price incentive, these resources have been in production since the early 1980s, primarily from low-permeability sandstones and carbonate formations, with a small production volume coming from eastern Devonian shale. With the full deregulation of wellhead natural gas prices and the repeal of the associated Federal Energy Regulatory Commission (FERC) regulations, tight natural gas no longer had a specifically defined meaning, but generically still refers to natural gas produced from low-permeability sandstone and carbonate reservoirs.
Notable tight natural gas formations include, but are not confined to
– Clinton, Medina, and Tuscarora formations in Appalachia
– Berea sandstone in Michigan
– Bossier, Cotton Valley, Olmos, Vicksburg, and Wilcox Lobo along the Gulf Coast
– Granite Wash and Atoka formations in the Midcontinent
– Canyon formation in the Permian Basin
– Mesaverde and Niobrara formations in multiple Rocky Mountain basins
The United States has abundant shale gas resources
The United States has access to significant shale natural gas resources. In the U.S. Crude Oil and Natural Gas Proved Reserves (December 2016), the U.S. Energy Information Administration estimated that the United States has about 200 trillion cubic feet of proved shale gas resources. In the World Shale Resource Assessments report (September 2015), the U.S. is estimated to have nearly 623 trillion cubic feet of additional unproved technically recoverable shale gas resources.
Offshore natural gas production
Although most of the natural gas and oil wells in the United States are on land, some wells are drilled into the ocean floor in waters off the coast of the United States. Most of U.S. offshore natural gas production occurs in federal waters in the Gulf of Mexico, the source of about 4% of U.S. dry natural gas production in 2016.
Coalbed methane and supplemental gaseous fuels
The United States obtains methane from coal beds. In 2016, U.S. coalbed methane production was equal to about 4% of total U.S. natural gas consumption.
Supplemental gaseous fuels include blast furnace gas, refinery gas, biomass gas, propane-air mixtures, and synthetic natural gas (natural gas made from petroleum hydrocarbons or from coal). These supplemental supplies were equal to about 0.2% of U.S. natural gas consumption in 2015. The largest source of synthetic natural gas is the Great Plains Synfuels Plant in Beulah, North Dakota, where coal is converted to pipeline-quality natural gas.
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