Slide 1

Natural Gas Technologies For The Future Melanie Kenderdine Gas Technology Institute Energy and Nanotechnology: Strategy for the Future Houston, Texas May 2-4, 2003

Slide 2

Drivers for Natural Gas Demand Resource Abundance Overall Growth in Energy Demand Geopolitics of Oil Inexpensive Power Generation Environmental Benefits

Slide 3

World Gas Consumption By Region, 1999 & 2020 1999 2020 est. Africa C./S. America North America W. Europe Middle East Dev. Asia Eastern Europe Ind. Asia Source: EIA, International Energy Outlook, 2002

Slide 4

% World Gas Reserves By Region North America 3 3 W. Europe 4 4 C./S. America 8 8 Africa 79% of the worlds gas reserves are in 12 countries Asia & Oceania 5 5 36 Middle East 36 Eastern Europe 8 8 Source: EIA, International Energy Outlook, 2002

Slide 5

World Coal/Gas/Oil Consumption By Region, 1999/2020 W. Europe Middle East C./S. America Africa Dev. Asia Ind. Asia North America Eastern Europe Source: EIA, International Energy Outlook, 2002

Slide 6

% World Oil/Gas/Coal Reserves By Region: Geopolitical Issues In Focus C./S. America Asia & Oceania 36 Middle East 57 North America W. Europe Eastern Europe Africa 26 5 5 18 2 2 4 4 8 8 6 6 8 8 6 6 9 9 3 3 27 36 7 7 30 8 8 3 3 Source: EIA, International Energy Outlook, 2002 Oil Gas Coal

Slide 7

Global Electricity Consumption: 75% Demand Increase by 2020

Slide 8

Economics of New Baseload Electric Plant Costs Are Driving US Gas Demand

Slide 9

% Increases in CO 2 Emissions, 1999/2020 North America + 42% North America + 42% W. Europe +21% W. Europe +21% C./S. America +139% C./S. America +139% Middle East +72% Middle East +72% Africa +140% Africa +140% Eastern Europe +45% Eastern Europe +45% Ind. Asia +23% Ind. Asia +23% Dev. Asia +122% Dev. Asia +122% Worldwide Carbon Emissions Expected to Increase 61%

Slide 10

Technology Challenges for Natural Gas

Slide 11

Challenge #1: Developing Conventional/ Unconventional Gas Resources Near Term Enhanced Drilling Enhance Seismic Techniques Reservoir Management Unconventional Gas Production Mid Term Ultradeep-Water Production Unconventional Gas Production from multiple sources Deep Drilling Advanced Coalbed Methane Long Term Methane Hydrates New Architecture for Ultradeep-water Production and Transport

Slide 12

Slide 13

Countries With Coalbed Methane Development Programs United States Canada Brazil United Kingdom Russia Ukraine China Australia

Slide 14

Slide 15

Location of World s Known and Expected Methane Hydrate Deposits

Slide 16

Enormous potential resource. USGS estimates that there are 320,000 tcf in the US. Methane is 10 times more effective than CO 2 in causing global warming. Impacts of methane hydrate production unknown. Gas hydrates may cause landslides on the continental slope Production methods unclear Role in ecosystem not clearly understood Methane Hydrates: Long Term Potential, Significant Hurdles

Slide 17

Challenge #2: Accessing Stranded Natural Gas Resources Near Term LNG Infrastructure and Efficiency LNG Quality Gas to Liquids Mid Term Super Pipelines Floating LNG Production/ Regasification/ Storage GTL Compressed Natural Gas Transport Long Term Methane Hydrates Gas by Wire

Slide 18

10-60 tcf60-160 tcf160-300 tcf 1500 tcf World s Stranded Gas Reserves By Region and Amount Import Markets $11 $8 $6 $10 $6 $5 ($US Recent Price) Source: World LNG/GTL Review

Slide 19

World s LNG Facilities and Markets: Growing Regional and Global Markets Existing Facilities Proposed Facilities Markets Source: World LNG/GTL Review

Slide 20

17 LNG Liquefaction (Export ) Terminals 40 Regasification (Import) Terminals 130 LNG Tankers (120 M Metric Ton Capacity) Source: University of Houston Institute for Energy Law & Enterprise LNG Costs and Infrastructure Gas Production: $.30 - $1.30 Liquefaction: ..$1.00 - $2.50 Shipping.$.60 - $1.10 Regasification...$.40 - $1.50 TOTAL: $2.30 - $6.40 Source: GTI LNG Source Book, 2001

Slide 21

R & D Needs for Liquefied Natural Gas: Lowering Cost, Increasing Flexibility Floating LNG liquefaction/ regasification/ storage facilities Subsea cryogenic pipelines for offloading product to onshore storage facilities Use of salt caverns for LNG storage Micro-LNG facilities

Slide 22

Gas To Liquids Technology: Accessing Stranded Gas, Serving Middle Distillate Market Gas to Liquids technology enables us to bring stranded gas to markets by converting gas into high quality liquid fuels that can be transported to market in the existing petroleum infrastructure

Slide 23

Capital costs of GTL have been reduced by 60% in last decade. Still, syngas step accounts for 60% of the capital costs. Research to address this cost: Direct conversion from methane to desirable liquid hydrocarbon via catalytic oxidation Catalysis improvements for indirect conversion Plasma technology for conversion of natural gas into syngas before catalytic reaction Ceramic membranes Co-location with LNG plants Gas To Liquids Technology: Reducing Capital Costs

Slide 24

Challenge #3: Extending the Resource Base By Developing Alternatives to Natural Gas Near Term Wind Energy Geothermal Energy Mid Term Coal Gasification Coal Liquefaction Enhanced Oil Recovery Biomass Gasification Solar Photovoltaics Long Term Hydrogen and Hydrogen Infrastructure Affordable Nuclear Power Plants With Manageable Waste

Slide 25

Enhanced Oil Recovery Could Change the Geopolitics of Oil Venezuela 272 billion barrels heavy oil Canada 300 billion barrels heavy oil Saudi Arabia reserve estimates: 250 billion barrels Steve Holditch, SPE Conference, 2002

Slide 26

EOR Technology Challenges to Produce Venezuelan/Canadian Heavy Oil Reserves Evaluation of formations* Special engineering* New types of completion methods* Significant hydraulic fracturing* Horizontal and multi-branched well bores* Advanced drilling technologies* + Carbon sequestration Desulfurization technologies *Steve Holditch, SPE Conference, 2002

Slide 27

Anthracite/BituminousSubbituminous/Lignite

Slide 28

Coal/Biomass Gasification: Rivals Natural Gas in Environmental Quality Produce hydrogen, ammonia, or synthetic natural gas from coal or biomass High-efficiency production of electricity with no release of carbon dioxide to the atmosphere High-sulfur coal easily handled with GTIs technology Green Power From Coal

Slide 29

R &D Challenges for Commercial Coal or Coal/Biomass Gasification Lowering of Cost -- $1200 per megawatt hr. compared to $900 for conventional coal fired plant Membranes to separate oxygen from air for gasification process and hydrogen and CO 2 from coal gas Feeding and uniformity of feedstock Improved gasifier designs Advanced cleaning technologies Recycling of solid wastes + Carbon sequestration

Slide 30

Challenge #4: More Efficient Use of Natural Gas/ Environmental Mitigation Near Term Power Generation Gas Turbines Distributed Generation End Use Efficiency Mid Term Advanced Gas Turbines Large Scale Distributed Generation Fuel Cells Gas to Liquids Gasification Long Term Carbon Sequestration Super Batteries

Slide 31

World s 3 Major Auto Manufactures Moving To Low Sulfur Diesel Engines/Regulations US: 15 ppm 2006 US: 15 ppm 2006 EU: 50 ppm 2005 EU: 50 ppm 2005 Japan: 50 ppm 2004 Japan: 50 ppm 2004 Germany: 10 ppm 2003 Germany: 10 ppm 2003 Global Diesel Market: 36 million barrels per day

Slide 32

Environmental Regulations Could Drive Gas to Liquids Market 43% lower 45% lower 9% lower 30% lower Hydrocarbons Carbon Monoxide Nitrogen Oxides Particulates Petroleum Derived Diesel Gas Derived Diesel

Slide 33

Ultra-deepwater Coalbed Methane LNG Efficiencies Methane Hydrates Fuel Cells Hydrogen Renewables Ultra-deepwater Coalbed Methane LNG Efficiencies Methane Hydrates Fuel Cells Hydrogen Renewables Coal/Biomass Gasification Pipelines/Superpipelin es LNG Efficiencies Coalbed Methane Energy Efficiency Methane Hydrates Coal/Biomass Gasification Pipelines/Superpipelin es LNG Efficiencies Coalbed Methane Energy Efficiency Methane Hydrates Infrastructure Improvements Super Pipelines/Pipelines Energy Efficiency LNG Coalbed Methane Methane Hydrates Infrastructure Improvements Super Pipelines/Pipelines Energy Efficiency LNG Coalbed Methane Methane Hydrates Ultra-deepwater Distributed Generation Gas-to-Liquids LNG Efficiencies Energy Efficiency Ultra-deepwater Distributed Generation Gas-to-Liquids LNG Efficiencies Energy Efficiency Gas-to-Liquids Coalbed Methane Coal Gasification LNG Efficiencies Gas-to-Liquids Coalbed Methane Coal Gasification LNG Efficiencies Enhanced Oil Recovery Ultra-deepwater Development LNG CNG Transport Methane Hydrates Renewables Enhanced Oil Recovery Ultra-deepwater Development LNG CNG Transport Methane Hydrates Renewables LNG Infrastructure CNG Transport Unconventional/Ultra-deep Gas to Liquids Fuel Cells Hydrogen Methane Hydrates Enhanced Oil Recovery Renewables LNG Infrastructure CNG Transport Unconventional/Ultra-deep Gas to Liquids Fuel Cells Hydrogen Methane Hydrates Enhanced Oil Recovery Renewables Ultra-deepwater Distributed Generation Gas-to-Liquids LNG Efficiencies Energy Efficiency Coal Gasification Ultra-deepwater Distributed Generation Gas-to-Liquids LNG Efficiencies Energy Efficiency Coal Gasification Regional Supply/Demand Patterns Suggest Various Technology Pathways for Natural Gas All regions should invest in carbon sequestration

Slide 34

Government R&D Expenditures in Select Countries for Nanotechnology US.$700 M per year DOE$197 M (Fy04 req) EU.$600 M per year Japan$1 B (2002) Taiwan..$600 M per year

Slide 35

Challenge #1: Developing Conventional/ Unconventional Gas Resources Near Term Enhanced Drilling Enhance Seismic Techniques Reservoir Management Unconventional Gas Production Coalbed Methane Mid Term Ultradeep- Water Production Unconventional Gas Production from Shales/Tight Sands/Deep Drilling Advanced Coalbed Methane Long Term Methane Hydrates New Architecture for Ultradeep- water Production and Transport Possible Nanotechnology Applications Advanced fluids mixed with nanosized particles to improve drill speed Nanosensors for reservoir characterization Removal of gas impurities via nano separation Nanocrystalline substances for drilling materials

Slide 36

Challenge #2: Accessing Stranded Natural Gas Resources Near Term LNG Infrastructure and Efficiency LNG Quality Gas to Liquids Mid Term Super Pipelines LNG GTL Compressed Natural Gas Transport Long Term Methane Hydrates Gas by Wire Possible Nanotechnology Applications Nanocatalysis for gas to liquids production Nanoscale membranes for gas to liquids production Nanostructured materials for compressed natural gas transport

Slide 37

Challenge #3: Extending the Resource Base By Developing Alternatives to Natural Gas Near Term Wind Energy Geothermal Energy Mid Term Coal Gasification Coal Liquefaction Enhanced Oil Recovery Biomass Gasification Solar Photovoltaics Long Term Hydrogen and Hydrogen Infrastructure Affordable Nuclear Power Plants With Manageable Waste Possible Nanotechnology Applications Nanotubes for fuel cell cars Nanocatalysis for coal liquefaction Nanocomposites for hydrogen storage Nanosensors for reservoir characterization Filters for more efficient ethanol processing

Slide 38

Challenge #4: More Efficient Use of Natural Gas/ Environmental Mitigation Near Term Power Generation Gas Turbines Distributed Generation End Use Efficiency Mid Term Advanced Gas Turbines Large Scale Distributed Generation Fuel Cells Gas to Liquids Gasification Long Term Carbon Sequestration Super Batteries Possible Nano-technology Applications Nano-crystals or photo catalysts to speed up the breakdown of toxic wastes Nano-scale coatings for more efficient catalytic conversion Nano-structure catalysts to remove pollutants/ impurities from natural gas Nanocrystalline materials for water treatment Polymeric nano-particles to remove pollution from catalytic conversion

Slide 39

Nanotechnology: Avoid the Valley of Death Maximize interdisciplinary collaboration Involve industry as stakeholders Utilize university research capability Leverage federal/national labs Emphasize pre-competitive results Include studies on technology choices/ down selection & technology migration Societal Implications of Nanoscience and Nanotechnology, Sep/ 29,2000