By Yossie Hallander

Link to OpEd

The fracking revolution is still largely misunderstood by the oil and gas industry. It helped the US attain a measure of independence from imported oil but even today we import about 6.5m barrels a day, equivalent to one-third of US consumption.

However, the current low price of oil is making many shale operations unprofitable, causing massive lay-offs and threatening to bankrupt many companies in the oil patch. US oil production is declining again.

Here is where oil and gas companies get it wrong. The fracking revolution is not about oil; it is about natural gas and natural gas liquids such as ethane and propane.

Most fracking wells produce more hydrocarbons, in the form of natural gas and natural gas liquids, than oil.

That is one of the main reasons the price of these energy sources has collapsed. In many cases, the wells have been shut down, or the excess of these gas and liquids are flared, or burnt off, into the air.

The solution is to use them in the transportation sector, specifically to turn natural gas into alcohol fuels to run millions of vehicles that are already on the road. This will increase the revenue from each fracking well and the industry will become profitable at oil-price levels under $50 a barrel.

The US is awash with natural gas. Last year, the average Henry Hub price per million British Thermal Units — the standard industry benchmark for gas contracts — was $2.61. This was equivalent to about a third of the of cost of oil calculated by the calorific measure over the same period.

However, in the most important shale-oil regions the price is even as low as $1.

The price of natural gas liquids is much lower still and is often measured in cents. Sometimes it turns negative.

Much of this resource continues to be unexploited. In 2014, drillers flared 288.7bn cu ft of gas, compared with 91.2bn in 2000. That amounts to more than $10bn worth of natural gas simply wasted.

Of course, cheap natural gas has become a favoured fuel for power generation as coal-fired plants are slowly phased out. But the transition is costly and time-consuming. Even if natural gas reached 100 per cent adoption (something that is not likely to happen in the next two decades) it would only replace $28bn of coal-related costs a year.

The largest opportunity is to replace $135bn worth of imported oil a year, or more than $300bn of oil used overall, largely in the transportation sector.

Natural gas has been used as a vehicle fuel for years, in compressed form known as CNG. It is mostly used in larger vehicles such as refuse trucks and city buses. The fuel is an ideal replacement for the diesel market and should grow in the coming years.

But it is not a solution for the gasoline or petrol markets. Passenger vehicles that run on CNG cost thousands of dollars more than their gasoline-powered counterparts. Conversions of the current fleet are similarly expensive.

Even so, there are 250m gasoline cars, trucks and SUVs on US roads today that could potentially run on alcohol fuels like ethanol and methanol.

Most ethanol in the US is derived from corn. However, ethanol could also be produced from natural gas at prices much lower than gasoline. Methanol, for example, is already made from natural gas.

As part of taking economic advantage of low commodity prices, the conversion of gas could be done close to the wellhead and, once converted to liquid, there would be no need to expand pipeline infrastructure to transport it.

The most convenient aspect of fuel derived from the conversion of natural gas to alcohol is that it can be used immediately in more than 19m flex-fuel vehicles already on the road.

These are factory-built to use any combination of gasoline or ethanol blends up to E85, the specification for a fuel blend containing 85 per cent of denatured ethanol fuel and 15 per cent gasoline.

Additionally, tens of millions of other gasoline-only vehicles could potentially be modified to run on alcohol fuels simply through software changes to the on-board computers.

There is no need to wait decades for a new fleet of high-tech vehicles, or massive taxpayer investment, to bring alcohol fuels based on natural gas to market.

The current US fleet is ready to consume cheaper fuels, as shown by the many E85 stations in the country that earn higher revenue and margins on their ethanol-based E85 fuel sales than gasoline.

All that is needed to make this a reality is the will, and the vision, to diversify our transportation fuels market.

The result would be an entirely new revenue source for oil and gas companies, increased employment, a reliable, cheaper price for consumers and a stronger and safer US economy that keeps more of its fuel expenditures at home.

The opportunity is right beneath our feet.

Yossie Hollander is co-founder of the Fuel Freedom Foundation and founder of Our Energy Policy Foundation, a non-partisan group that promotes fuel choice in the transport sector

 

Read more: http://www.fuelfreedom.org/wp-content/uploads/Yossie-Hollander-piec...

Republished with permission.

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Bluflame:

I love that moniker!

To give you a little of my background:

My friend Jim from Granville and I worked at Japan Gasoline Corporation (JGC) in Yokohama at the same time, though we didn't know it at the time.  He was seconded from BP to Aramco as an engineer on the Ras Tanura refinery expansion and I was a translator/interpretor.  Since then, JGC has progressed to join the ranks of such luminaries as Fluor, Foster Wheeler and Air Liquide.  Now, JGC, Fluor and, I think, Bechtel are preparing the FEED for PTT Global's Belmont cracker.  JGC has also worked with PTT on several other projects in Africa and Kazakhstan.

Ethylene prices are hovering ~$.20/gal. now. Not too long ago, they were at $.80/gal. That situation is likely weighing on the cracker decisions, although it will be 4-5 yrs between a "go" decision for any of the Ohio River crackers and first shipments. No one expected the drastic price decline, and now no one is expecting a quick recovery. Further complicating matters, several Gulf coast projects are in various stages of construction. So, it's still a "craps shoot". 

BluFlame

Nice graphic of INEOS' Dragon ships:

First ‘Dragon’ class liquid gas transport vessel featuring Wärtsilä...

The first in a series of 27,500 cbm ‘Dragon’ class vessels ordered by Evergas, a world renowned owner and operator of seaborne petrochemical and liquid gas transport vessels, is being delivered from the Sinopacific Offshore & Engineering (SOE) shipyard in China today. The vessel features a comprehensive Wärtsilä solutions package, including two Wärtsilä 50DF dual-fuel engines, Wärtsilä propulsion equipment including the gearbox, two Wärtsilä 20DF auxiliary generating sets, a Wärtsilä LNG fuel system and a Wärtsilä cargo handling system. The various systems are fully integrated to achieve maximum efficiencies. The order with Wärtsilä was placed in the beginning of 2013.

The ‘Dragon’ class ships are to be chartered by INEOS Europe for the transportation of ethane to Europe from the Mariner East project in the USA. The carriers are purpose built for the transportation of ethane, although they in addition can carry a wide range of petrochemical gases, LPG and LNG. Operational safety and efficiency, economic fuel consumption, and compliance with all applicable environmental regulations were the overriding considerations in the placing of the contract with Wärtsilä.

The various individual Wärtsilä solutions are integrated to form a fully optimised package. Furthermore, by engineering and supplying the complete cargo plant, the gas fuel supply system and the propulsion plant enables Wärtsilä to achieve optimal energy consumption efficiency for the entire vessel. This is clearly demonstrated, for example, where the LNG supply system is integrated with the cargo handling system so that it can be used to cool the cargo. In so doing, less energy and power is needed to keep the cargo temperature suitably low, thus providing a more efficient and environmentally sound overall system.

“The delivery of the first in this series of the Dragon class vessels marks the beginning of a new era in the transportation of liquefied gases. The highly advanced technological solutions that Wärtsilä provides makes these ships the most modern and environmentally sustainable gas carriers ever built,” says Steffen Jacobsen, CEO, Evergas.

The Dragon class vessels are 180 metres long and 26.6 metres wide with a draft of approximately 9 metres. They represent the largest ethane carriers in their class in the world.

 

Source: Wartsila

I notice she's short enough but a little too big across the beam for the St. Lawrence.

St. Lawrence max. 23.8 metres across the beam x 225.6 metres long.

The Panama Canal can handle a ship 289.56 metres long x 32.31 metres across the beam.

Hi Joseph!

These ships will only be plying between Marcus Hook on the Delaware River (Philadelphia) i.e., the terminus for the Mariner East pipeline, and Grangemouth, Scotland and Norway.  Two are already working, one is on its maiden voyage from Dalien and four or five more are under construction at the Sinopacific Offshore & Engineering shipyard in Dalien.

Thank you for the interesting and informative replies Thomas.

I enjoyed learning more about these ships and a little about the shipyard that built them.

Hi Joseph!

You're welcome!  By the way, my interest in gas and oil and ships goes back a long way:  For 30 years I was a translator for Japan Gasoline Corporation (now participating in the FEED study for the PTT Global cracker) and Mitsui Engineering and Shipbuilding, a major supplier of offshore rigs (as well as some pretty impressive ships.

PTT Global America LLC has selected INEOS Technologies’ Innovene™ S HDPE process for its new polyethylene project in Ohio, USA.

INEOS Technologies is pleased to announce that it has licensed its Innovene S Process for the manufacture of medium density and high density polyethylene to PTTGC America LLC, an affiliate of PTT, Thailand’s largest petrochemical and refining company, at its new cracker complex to be located near Dilles Bottom, Ohio, USA.

The Innovene S HDPE plant will consist of two lines having a total capacity of 700 KTA, producing a wide range of polyethylene grades to serve the growing demand for high performance products in the US and export markets.

Peter Williams, CEO of INEOS Technologies, said: “INEOS is delighted to have been selected by PTTGC as its licensing partner for the HDPE plant in Ohio . We look forward to working with the PTTGC team to deliver an asset that will meet fully both the current and future requirements of PTTGC’s customers.”

Panod Awaiwanond, General Manager of PTTGC America stated that: "PTTGC is very excited by this project based on the US Shale Gas economics. We have chosen a very dynamic location for the plant at Dilles Bottom, Ohio with a highly skilled work force and support of the local and state governments. The INEOS Innovene S technology fits with our economic and market needs to ensure a successful project for all of our new stakeholders"

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