PRELIMINARY REPORT ON THE ECONOMICS OF GAS PRODUCTION FROM NATURAL GAS HYDRATES

• Main Authors: Matt Walsh, Steve Hancock, Scott Wilson, Shirish Patil, George Moridis, Ray Boswell, Tim Collett, Carolyn Koh, Dendy Sloan
• Other Authors: The Pennsylvania State University CiteSeerX Archives
• Format: Text
• Language: English
• Subjects: Arctic
• Online Access: http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.205.404; http://www.netl.doe.gov/technologies/oil-gas/publications/2008_ICGH/ICGH_5435_NETLfld.pdf

Economic studies on simulated natural gas hydrate reservoirs have been compiled to estimate the price of natural gas that may lead to economically viable production from the most promising gas hydrate accumulations. As a first estimate, large-scale production of natural gas from North American arctic region Class 1 and Class 2 hydrate deposits will be economically acceptable at gas prices over $CDN2005 10/Mscf and $CDN2005 17/Mscf, respectively, provided the cost of building a pipeline to the nearest distribution point is not prohibitively expensive. These estimates should be seen as rough lower bounds, with positive error bars of $5 and $10, respectively. While these prices represent the best available estimate, the economic evaluation of a specific project is highly dependent on the producibility of the target zone, the amount of gas in place, the associated geologic and depositional environment, existing pipeline infrastructure, and local tariffs and taxes. Class 1 hydrate deposits may be economically viable at a lower natural gas price due largely to the existing free gas, which can be produced early in project lifetimes. Of the deposit types for which hydrates are the sole source of hydrocarbons (i.e. Class 2, 3, and 4 deposits)