Oil and Gas Research Eyeing Future, Bridging Gaps

November 2015, Vol. 242, No. 11

Richard Nemec, Contributing Editor

In the gridlock of first-quarter 2015 earnings conference calls last spring, Doug Suttles, CEO at Alberta-based Encana Corp., talked bullishly about the Canadian energy company’s production growth prospects.

This while in the midst of reporting a $1.7 billion loss for the quarter tied to a $1.2 billion impairment charge brought on by last year’s global oil price crash and another $500 million of red ink coming from a foreign exchange loss. Regardless, Suttles couldn’t have been more upbeat when he talked to analysts in mid-May.

The reason for his optimism emanated from Encana’s scaled-down portfolio emphasizing two U.S. shale plays (Permian and Eagle Ford) and two in Canada (Montney and Duvernay), and the company’s ability to apply continuing technology advances to increase its drilling efficiency and cost-savings even in a low-price environment.

“I think the biggest single driver is innovation, doing things smarter and better,” Suttles told the conference call, adding that even if there is a big increase in prices and oilfield production activity, the savings from innovations will stick. They’re good at $100 or $50 oil, he said.

If there is a theme to current research and development efforts across the oil and natural gas sector, it is that unconventional is today’s conventional, along with growing regulatory and economic focus on safety and environmental concerns. The R&D playbook has shrunk while its plays get more complex, not unlike Encana’s current operating playbook.

Now that the shale revolution is in full bloom, perhaps not enough of the industry or general public appreciate the years, millions of dollars and the public-private sector sweat equity that helped make it a reality. The late George Mitchell and his fellow pioneers on hydraulic fracturing had a lot of help from both government and private sources, veteran researchers at places like Illinois-based Gas Technology Institute (GTI) will explain to anyone wanting to take the time to listen.

But that hard-fought, long-time coming success has spurred even more R&D today, which forms the basis of the innovations and efficiency gains that are being achieved on a regular basis in all of the major shale plays. Efforts to cut fracking’s water use, apply LNG to fracking jobs and perfect the reinjection of carbon dioxide are just some of the examples industry researchers are examining to make tapping unconventional resources even more routine and productive in the years ahead.

And away from well sites there is plenty of action in areas such as developing new natural gas compression technologies for transmission pipelines, or perfecting the emerging new technologies for monitoring and testing those pipelines without interrupting the flow of gas. These projects are being done by and for industry collaboratives and individual companies. The Southwest Research Institute (SwRI), for example, has a group of projects ongoing related to evaluating various leak-detection technologies for both liquid and gas pipelines, underwater and underground, said Chris Buckingham, a SwRI manager based at its headquarters in San Antonio.

Much of the focus comes from the recent history of both the energy industry and the nation’s political landscape. Obama administration initiatives to significantly cap and cutback methane emissions from all parts of the fossil fuel chain can be attached to many of the major focal areas of the Pipeline Research Council International’s (PRCI) lineup of $10 million of annual R&D projects. PRCI President Cliff Johnson previewed a “methane emissions roadmap” the research council was expecting to shortly.

“There is a lot of misinformation out there on all sides,” Johnson said. “We’re trying to figure out what is the best way to survey and understand what is going on.”

PRCI and many of the other R&D organizations that were contacted by P&GJ for this article are really in the business of giving the energy sector new tools. And they have potential to have operational, environmental and economic impacts. When they hit a home run, all three can be achieved.

In general, innovation has come from the operators on the ground, backed by ongoing projects in the labs and through field tests. Amidst the U.S. pipeline system, including compressor stations and other equipment, Columbus, OH-based Battelle Memorial Institute assists operators, service providers and vendors in assessing significant problems that may arise.

“We come in and do a full soup-to-nuts deep dive into their operations to determine the sources of their problems, such as operational testing, material sampling or material testing. Then we make recommendations for improvements and mitigation steps while designing guidelines to avoid the problems from happening again,” said Rod Osborne, Ph.D., manager, Energy Business, for Battelle.

With industry and company backing, organizations like Battelle also look at more arcane issues and questions, such as a current application of “computational fluid dynamics” (CFD) in seeking a better understanding of minute (nano-pore scale) shale gas flows. To do this, two Battelle researchers in Columbus, Srikanta Mishra and Michael Swickrath, have teamed with a Texas A&M University researcher, Akhil Datta-Gupta, to use CFD modeling in image analysis using reservoir simulators.

The driver for the project, the researchers explain, is the fact that shale gas pore structure has what they called “a wide distribution of pore sizes and shapes,” including micro- and nano-pores. If more effective permeability measures of shale are developed, it will have important benefits for simulation-driven performance predictions, fracture design and enhanced oil recovery (EOR) applications, the three researchers explain in their abstract, CFD Modeling of Nano Pore Scale Gas Flow in Shales.

Industry focus understandably is on getting products, processes and tools into the commercial realm, therefore organizations such as GTI, Battelle and PRCI leave basic research for the universities and specialized think tanks, or to some degree government operations, such as the Department of Energy (DOE) and its affiliated laboratories. There is in the energy R&D sector a focus on helping projects overcome what researchers commonly call the “valley of death,” the abyss into which many efforts plunge, trying to get from pre-commercial to commercialization.

“If you were to define GTI it would be as an applied research organization,” said Ron Snedic, the institute’s vice president for corporate development. “We’re taking things from the lab into the marketplace, shepherding it from the valley of death where it works in the lab but people aren’t buying it, and making it into a universal product. We really focus on getting projects through the valley.”

A 23-company collaborative managed by GTI, Operations Technology Development (OTD), over the last 12 years has placed over a dozen products in the marketplace covering pipe leaks, materials, repairs and rehabilitation, excavation/site restoration, pipeline integrity management/automation, operations infrastructure support, and environmental/renewables/gas quality solutions. Firms such as Mainline Control Systems, SENSIT Technologies, LocusView Solutions, Integrated Tool Solutions LLC and ULC Robotics have put products into the industry mainstream as a result of OTD-backed work by GTI.

“In recent years, OTD has not only helped to introduce several new products, but has also supported the establishment of information websites and guidelines,” said Charles Shafer, immediate past chairman of the OTD board in its most recent annual report. “Our technology is entering the marketplace, providing valuable services through companies including LocusView, which provides mapping and survey services to track and trace company assets.”

The focus of GTI’s subsidiary, LocusView, is indicative of today’s emphasis for using technology to capture real-time data in the field, link the asset information to GPS coordinates and upload that information into the company’s geographic information systems (GIS) through tablet computers and smart phones. These technologies and services will help companies comply with regulations and cost-effectively manage the enormous amount of data that they will be gathering and maintaining.

Battelle’s Osborne said a commercial operation spun off of the institute, Winner Water Services, is an example of the research organization putting up the funding to take its technology from the laboratory to the commercial stage. With help from DOE and Pennsylvania state funding, Winner Water developed a means of cleaning up hundreds of millions of gallons of polluted water called “acid mine drainage” (AMD) that exists in and springs out of abandoned coal mines daily and makes it available to shale oil and gas producers for use as fluid in fracking.

That’s another example of the research organization nurturing a product through the valley of death syndrome.

When asked for Battelle’s major focal points in 2015, Osborne lists four:

• High-pressure/high-temperature materials resistant to hydrogen sulfide (H2S) and solvents (polymers, lubricants), as well as advanced corrosion detection and mitigation technologies;

• Computational modeling of injections for hydraulic fracturing optimization and wastewater disposal to maximize storage capacity and minimize effects such as induced seismicity.

• Data analytics to help optimize exploration/production/operations for oil/gas companies.

• Analytical chemistry methods for hydrocarbon fingerprinting for environmental monitoring, as well as “metagenomics” (genetic material recovered directly from environmental samples) for biodiversity assessment.

The lists from GTI and others cover different areas, but those research organizations also want to respond to the operational and environmental demands embedded in the current energy landscape that has been shaped by the shale boom.

Much of the research involves refining existing processes and systems that are aiding the growth of the U.S. energy sector into a world leader. At PRCI, researchers are focused inside of energy-carrying pipelines to find better ways to enhance the reliability of those steel arteries feeding factories and homes.

At GTI, researchers are looking intently down the horizontal borehole at each stage of the hydraulic fracturing process, seeking to expand the productivity and efficiency of each of those stages. And among the varied projects at SwRI are attempts to refine the reinjection of carbon dioxide (CO2) in the oil and gas production fields as a third option in EOR operations and also in the long-sought search for a magic bullet for commercializing large-scale carbon capture.

“From a GTI perspective, in our upstream work, we’re predominantly focused on onshore, unconventional gas,” Snedic said. “Nearly everything that GTI does further tightens that boundary, focused on environmental impacts and productivity improvements.”

His example is a DOE-funded $7 million program with total funding of $10-20 million over two years, building out a hydrofracking test site. The purpose: substantially improve the production attained along each zone of a hydraulic fracturing job.

“What we are looking to accomplish with our partners is to find a way to optimize and maximize the production on all of the zones, which might mean treating each zone differently,” Snedic said.

Set to get underway later this year, he calls it a “very exciting project” in which GTI has entered its third phase. After designing it and completing a preliminary study, it is now entering the action phase, he said. It will be field-tested west of the Mississippi, perhaps in the Permian Basin.

The research institute also has formed a company, LocusView Solutions, to support the commercialization of advanced geospatial technologies in the gas industry. One of its applications is in tracing the electrofusion of plastic pipe, ever-more common in distribution pipeline systems around the nation.

“This is another area, broadly speaking, that is going to be a game-changer for the gas industry,” said Snedic, noting it gets at the recordkeeping conundrum for major utilities.

“How to gather and handle all of this data, how to manage it, and ultimately how to do something useful with it” is the challenge,” he said.

In contrast to GTI’s role, Snedic said basic research “is way, way out; most of the projects we do here are more practical in their application.” He noted that even the grants from DOE’s Advanced Research Project Agency for Energy (ARPA-E), which focuses on highly transformative solutions, have relatively short timelines associated with the work.

“There is a very intimate relationship between the industry and our researchers,” Snedic said. “The reason that OTD works is because the industry is very engaged with us identifying priorities and what their focus is, and then working with us in project groups. Our members are involved year-round.”

Johnson has a similar relationship with a smaller cadre of industry members at PRCI, engaging collaboratively within his organization and among the other industry research centers.

“We’ve seen a shift in the tools that are available to note characteristic changes from one pipeline segment to another,” he said. “We do see those tools coming to the fore, and if they become a reality, it will be a huge step out for the industry.”

Similarly, Johnson sees a lot of advancements in rights-of-way protection and monitoring so any threats can be picked up and addressed more quickly. This is ground-based, aerial-based and employs the use of satellites in some instances. (See related story.) The Federal Aviation Administration (FAA) in the past two years has begun to authorize the use of drones for monitoring various energy corridors in California, Colorado and elsewhere.

In some cases, the research can be focused on creating new and better tools for testing and refinement of future processes and equipment. At SwRI, researchers are looking at various aspects of separation technology as a means to separate oil, gas and water, or some combination of them.

“In general, the industry doesn’t have a lot of data on these products or the components of these productions in field kinds of conditions,” said Buckingham.

As such, SwRI is trying to develop some standardized testing procedures and capabilities where operators can capture data on different internal components under real operating conditions, he said. “So when they go to design separators to operate under these conditions, they’ll have some data to better predict the performance. Right now, their prediction is based on air and water data.”

It is in the interest of the large operators, like ExxonMobil, to have equipment makers more aware of the performance of their equipment under real-world field conditions, so the SwRI team is hoping this project will drive new technology development to create better products that perform well and hold up in field conditions both on and offshore.

Similarly, Buckingham’s colleague at SwRI, Klaus Brun, machinery program director, outlines the testing of LNG as a fracking fluid, high-pressure proppant mixing, CO2 and sour/acid gas reinjection studies, and wet gas compression as a myriad of research efforts, all of which are tied closely to their potential future value in the field.

“Normally, when you make LNG, you have to maintain a fairly high quality by removing water, CO2, etc. from the gas,” Brun said. “In this particular case, it is probably not necessary, at least to take all of it out. We need a rough [as opposed to refined] LNG process, and then you have to take the LNG to whatever the fracking pressures are [10,000 psi, etc.].

“So, we’re looking at various top-side processes to produce LNG at reasonable costs. Since LNG requires a refrigeration process, there are several refrigeration approaches – straight refrigeration, or the Joule-Thomson effect, and there are various approaches. We’re trying to find the right hybrid process.”

Brun explained that part of the challenge is determining how much CO2 should be removed from the wellhead gas. “CO2, when you cool the natural gas down, forms dry ice that can plug piping and valves with crystal CO2. So we are going to have to remove some of the CO2 and do something with it before you reinject it.”

SwRI is doing the project for DOE in partnership with Schlumberger, Brun said. The project was kicked off in early 2015 as a three-year $2-3 million undertaking.

Brun and the SwRI exudes the state of today’s industry-wide research, focusing on physical properties and processes working with industrial and energy industry giants from GE to Siemens and Solar Turbine, pooling financial and intellectual resources, all to keep pushing forward.

Even in the midst of depressed global oil prices and whittled down capital budgets, no one is suggesting that R&D efforts should not remain robust. The future involves forward moving, forward thinking. There is no turning back.

Richard Nemec is P&GJ’s West Coast correspondent based in Los Angeles. He can be reached at: rnemec@ca.rr.com.

From Mars to Earth – Heaven Sent Technology Advances

Three years ago as NASA landed a space-age dune buggy on Mars, NASA engineers carefully developed a methane-detecting “sniffer” as a means of enabling the unmanned rover to test for potential life on the red planet through the presence of CH4 (methane’s chemical composition).

Called a “tunable laser spectrometer,” the technology has been brought down to earth by NASA’s Jet Propulsion Laboratory (JPL), which is working with San Francisco-based Pacific Gas and Electric Co. (PG&E) in developing a smaller version that can be used in leak detection along major expansion of transmission and distribution pipelines. It’s a chance to save money and improve safety for PG&E’s Francois Rongere, manager of research, development and innovation.

Industry analysts like Housley Carr, at RBN Energy LLC, are predicting big things for drones with the Federal Aviation Administration (FAA) loosening up restrictions for some civilian applications and making the energy industry a high-priority potential user. In fact, Carr wrote last spring that “drones are getting involved in just about everything – geologic mapping, site surveying, methane detection, pipeline inspection, you name it.”

Combining a miniaturized version of the JPL-refined technology with light devices such as unmanned aerial systems (UAS), or drones, has the advantage of more precision in spotting leaks and doing it with a very light, small-scale technology, according to Rongere. “It gives us high precision to find leaks and fix them quickly,” he said. “With UASs we have something that is both light and sensitive.”

In California it is a three-part effort underway, with JPL as the inventor of the sensor helping to miniaturize it further, a laboratory at the University of California Merced campus providing a host of drones for various applications, and PG&E providing the field testing. On a national and international basis, the parties are working under the umbrella of PRCI and some of university work at Merced is tied to NYSEARCH, the Northeast Gas Association’s R&D arm.

Tested on the ground in 2015 through use of PG&E field technicians at the combination utility, the technology’s integration with drones is scheduled to happen in mid-2016, said Rongere, noting that on a parallel track, FAA should have a final set of regulations for commercial deployment of UASs by late 2015 or early in 2016.

While he won’t give specific numbers on cost savings, Rongere said the drone deployment obviously can save a lot of time and money “by finding more leaks and finding them faster at a reasonable price.” And if PG&E and other operators spend less on leak surveys, they can do more of the surveys, and that should enhance safety.

“This is something the company wants to do – increase the frequency of leak surveys, and the reduction of costs will, in fact, drive more surveys,” he said.

In addition to the obvious applications to pipeline systems, Rongere added the technology can be used with compressor stations, too, and in that way help expand the industry’s response to the Obama administration’s call to reign in methane emissions nationally to mitigate future climate change effects.

Even in its current state of infancy, drone applications for private industry are getting on everyone’s radar. RBN Energy’s Carr noted the FAA as of May had already granted over 400 approvals for commercial drone flying, with tight restrictions, such as staying within an operator’s “visual line of sight” (VLOS). He cited FAA as considering allowing some drone use outside VLOS.

“[FAA] is working with BNSF, the railroad giant with big crude oil-by-rail shipping, on using drones over long distances in rural and isolated areas to inspect rail infrastructure,” Carr wrote in his blog report.
– Richard Nemec

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