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Tech Talk - Iran As an Exporter of Natural Gas
Posted by Heading Out on October 15, 2012 - 12:30pm
There has been much talk in the current presidential debates about possible changes in US energy policy, with Governor Romney suggesting that more federal land be opened for prospecting for oil. Historically, one of the regions included in such lists is the National Petroleum Reserve in Alaska. And, perhaps anticipating the debate, the current administration has already recently moved toward opening those territories up for development.** However, those fields have been determined to contain more natural gas than oil, and so hopes for finding more oil reserves has shifted into moves offshore, where Shell has continued optimism as it begins to sink new wells in the Chukchi sea – although well completions have now moved into next year. However, suggestions in the past should be noted that more of the hydrocarbons under the Arctic are gas deposits than oil, and this argument has been strengthened by the recent discovery in the Barents Sea of more gas, when oil had been anticipated.
The large volumes of natural gas that are currently being developed and marketed, whether in the United States or from Turkmenistan, are making considerable change in the economies of many countries. Russia, who lost the sales battle to supply natural gas to China, can no longer justify the expense of opening the Shtockman field because alternate supplies are coming to the market at lower costs. This in turn, will cascade on to prices in Europe, where the advent of more gas in the UK is making it difficult to justify a switch into a greater reliance on renewable sources such as wind and solar.
This scenario means that it is not a good time to have a huge reserve of natural gas, or to go to the market with this resource to generate income. This is particularly true if the country in question is Iran.
Iranian Oil Minister Rostam Qasemi has announced that Iran’s exploitation of the South Pars gas field will equal Qatar’s exploitation of the gas field by the end of Iranian calendar year 1392 (ends March 20, 2014) if $54 billion is invested in gas projects.
Iran and Qatar share the largest natural gas field in the world, a reserve that is known as South Pars in Iran and as the North Field in Qatar.
Qatar has been exporting Liquefied Natural Gas for a number of years, and has been well able to manage a steady growth in market penetration, as noted in a previous post, and this quote from two years ago:
Ras Laffan 3 Train 7 is the fourth 7.8 million tons per year LNG plant brought online by Qatar Petroleum and ExxonMobil joint ventures within the past 12 months. It matches the capacity of Ras Laffan 3 Train 6, one of the largest operating LNG production facilities in the world, inaugurated in October 2009. These mega facilities have sufficient scale to competitively reach markets around the globe. Qatar's giant North Field, which is estimated to contain in excess of 900 trillion cubic feet of natural gas, will supply both trains.
For Iran to anticipate that they can generate the infrastructure to compete with Qatar in the short term, given the time taken to invest, not only in the surface plant, but also in the tankers dedicated to the customers and the routes that must be followed, is more than naïve. That they can expect to do this at this time, more than in any time in the recent past, when there is an adequacy of supply unseen in a generation, suggests a message meant for local consumption only.
But Iran has other problems. At present, as noted last time, natural gas supplies are barely keeping pace with an acceleration in the volumes required to meet internal demand. Any move to increase production will face competition not only from Russia and Qatar (with available natural gas supplies once anticipated to be sold to the USA, and when that fell through, to China) but also potentially from the United States itself, since as The OGJ recently noted:
“U.S. LNG export potential is a major issue in Asia, particularly in Seoul and Tokyo,” said Mikkal E. Herberg, research director at the National Bureau of Asian Research (NBR)’s Energy Security Program and the report’s editor, “That’s especially true for the next 5 years until major Australian and other export projects come on line.”
With China getting more of its supply through pipelines, this may also weaken the LNG market even as Iran moves to step into these waters.
So can Iran also move its natural gas by pipeline? It is, after all, connected by land to potential customers. Well, apart from the relatively obvious problems of trying to do this at a time when the nations concerned with Iranian nuclear policy are tightening their sanctions on Iran, and as these are having more effect, the question comes back to who might be a potential customer? At present, Turkey buys the bulk of Iranian natural gas exports but the European Union is expected to include natural gas in the list of banned exports at the meeting on October 15. (Armenia and Azerbaijan buy the remainder of the current export volumes). There was a recent explosion in a gas pipeline carrying natural gas from Iran into Turkey, stopping the flow. But while that initially imposed a supply problem for Turkey, this has been met through increased purchases from Russia, which currently has plenty. Thus it would appear that while Iran has more than sufficient supplies to move into an increased export position, the current political situation will likely preclude this happening in the short term, and the global over supply may well restrict Iranian penetration into that market in the longer term.
** September Alaskan pipeline flows were at 517 kbdm against the average for this year of 537 kbd, however as winter gets established the latest volume reported for 10/09/12 was 580 kbd, moving the pipeline away for the critical numbers.
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Is Iran indeed planning to convert their share of the gas to LNG or GTL ? Is it possible they are going low(er) tech ?
Wondering what the $54 billion for 'exploitation' amounts to. It doesn't really sound like anything Qatar is doing. I recall Shell spent $19 billion on two phases of their Pearl GTL.
This from South Pars phase 6,7 and 8:
Iran is the leader in enhanced oil recovery by gas injection, as far as I can tell. The potential there could easily exceed recovery for conventional waterflood followed by CO2 EOR.Enhanced oil recovery by gas injection would make perfect sense. Gas is cheaper than oil, it will still be in the ground possible to use later and the most important safely away from the competing neighbour.
NGL is a waste which should be forbidden by all nations thinking about the next generation for all cases except where flaring is the only available alternative. A lot of the gas is wasted. If gas where scarse it could be used as a chemical feedstock.
There would of course be someone telling you the gas is stranded and could not be used. Most certainly it would be very useful if scarse. Either it is not scarse and could not expected to be in the future or they could simply tap another reservoir.
Reference to the advent of more gas in the UK is highly misleading. For a more realistic picture refer to https://www.og.decc.gov.uk/pprs/full_production/monthly+associated+gas+p....
As for the Shtokman field, this is a frontiers-of-technology development. History tells us that such developments usually suffer serious cost and schedule overruns, so it's hardly surprising that Gazprom is reluctant to open its chequebook until gas prices are higher. However, it's not been shelved forever - see http://www.themoscowtimes.com/business/article/total-says-shtokman-not-d... and https://www.adr.com/Markets/GlobalNewsStory?docID=1-DN20121001005695-2ME....
Turkey is not a member of the European Union, so I can't see why EU restrictions on Iranian gas should affect Turkish imports.
I therefore suspect Iranian gas export potential is greater than the article suggests.
I am wondering, too, whether the additional availability of gas is more an "apparent availability of gas" rather than a real availability of gas. In some ways, I wonder if the situation is more one of a "counting ones chickens, before they are hatched," than a real additional availability of gas.
Even if the US exports natural gas from Alaska, this is still a few years off. The need for natural gas is going to be high in quite a few places--Britain, Germany, and Japan, quite likely. I haven't gone through the exercise of trying to match up apparent need with possible supply. It seems like China could absorb any amount of gas, given its low use to date, for example. There is also the issue of the ships needed to transport the gas, and the LNG structures needed on both ends for the new gas.
It seems like any ramp-up will be slow, and the ability to absorb new oil supply will be high at the other end. So in the end, supplies may still be tight.
Gail
I agree, especially about the tightness of supply in the UK.
Having said that, there is a curious prediction for UK NG production.
Official projections for 2012 onwards see a sudden levelling-off of the previous precipitous fall!
Seems a sudden optimism to me, but we are still going down and will need larger imports.
It will be interesting to see the 2012 numbers
http://og.decc.gov.uk/assets/og/data-maps/chapters/production-projection...
Previous history of steep declince here http://www.decc.gov.uk/assets/decc/11/stats/publications/dukes/5954-duke...
phil
On October 8, 2012, just 30 months after the start of construction, Nord Stream's fully-integrated twin pipeline system will come on-stream.
Gas from vast fields in northern Russia is flowing through the Unified Gas Supply System of Russia into Gazprom's new, state-of-the-art Compressor Station Portovaya. The compressor station enables the secure transmission of gas via the 1,224 kilometre Nord Stream Pipelines all the way to Germany through the Baltic Sea without interim compression.
http://www.nord-stream.com/press-info/we-deliver/
I agree, Nord Stream Pipeline will help. What other international pipelines are currently agreed to, and under construction?
900 trillion cubic feet is a whole lot of Qatar gas. I did notice that a couple major potential LNG customers were not mentioned this time around, India and Japan. The latter of course has had a major uptick of interest in the product since the tsunami swamped its nuclear ambitions.
Other boys and girls besides Iran have been talking up LNG exports to the local audience. An all Alaska natural gas pipeline terminating in a yet to be determined southcentral Alaska port bubbled back to the top of the news lately. No doubt the !!! $65 billion !!! cost estimate for such a project is preliminary--it would seem you might need to know if you were piping the gas to Prince William Sound or the Cook Inlet before any meaningful numbers could be tossed around. No one up here is holding their breath over this last burst of oil/pipeline company hot air. Pretty much that newly chummy bunch is just sucking all the $ they can from Sarah Palin's ill timed if not ill conceived AGIA framework.
But since you mentioned AK oil early on I thought I'd throw out the September Pump Station #1 volume average--517,020 b/d--a little more healthy than August's when the average Trans Alaska Pipline System (TAPS) flow dropped to under 400,000 b/d. I was told that quite a bit of maintenance was happening on the North Slope this summer.
There is also a good tug-o-war over current state oil tax regimen going on right now, with the former oil company lobbyist who is now governor pulling for a wholesale rewrite and a coalition of state legislators pulling for a more modest go slow approach. No doubt the current oil tax regimen that resulted from passing Sarah Palin's ACES package (interesting that the current governor didn't make his voice heard when that was going through--he was Palin's lieutenant governor) is not properly structured for the high oil prices and something has to give, but one has to wonder just how much of the recent hubbub on a gas line is just oil company grandstanding that is more about influencing the Alaskans and their legislators on oil tax structure change than anything else.
Throw in Great Bear's summer effort, which has given some state legislators dreams of sugar plum fairies (read ramping from zero to half million barrels a day of shale oil production on the North Slope in maybe five years--rigggghhhhhht) dancing in their heads, and we do get our fair share of entertainment from press releases and sound bites in this resource owner state.
Luke,
Just nitpicking. The tsunami was not the real problem as the earthquake did the real destruction - before the waves arrived. I am making this correction because the previous version is the version that TEPCO and the Japanese government are spinning - which does not bear close examination.
Hiroshima Univ. Historian: Don’t believe Tepco’s lies — Fukushima meltdowns caused by quake not tsunami — Smoke, radiation spike, loss of coolant, collapsed walls and pipes were all before wave hit
Interesting development, though after-the-fact it's a little bit like, "it wasn't the fall that killed him, it was the impact with the ground".
Here is the transcript of the Dr. Jacobs video you linked. It loaded in seconds--not sure if that Youtube video ever finished loading on my end of the wire connection. Jacobs' little speech has less substance in it than this August 11, 2011 article from The Independent and it doesn't have much.
Mitsuhiko Tanaka, the nuclear plant designer whose assertion is critical to this interpretation of the event, did make a self damning revelation about a coverup he was involved in on Fukushima #4.
Here is what I understand. No one interviewed could see the drywell or wetwell containment. The damage seen was to the secondary containment and piping outside of it. The emergency cooling system for this type reactor during a station blackout circulates water in a loop from the wet well through the reactor core and back. When the emergency generators were lost even that minimal capability was lost. If the emergency circulation system would have had power the wet well would have cooled the reactor for day bringing down the heat generated from 6% of operational level (SCRAM drops it from 100% to 6%) to about 1%.
I don't know how much time that buys but if all resources could have been brought to bear in that window a better fix would likely have been achieved. Good chance much if not all of the plant would still have been a loss. But it was old and was hit by a 9.0 earthquake, if the seawall had held back the wave and the damage been contained to the immediate plant area very likely the public would have found the risk much more acceptable.
But all resources couldn't be brought to bear on the Fukushima Daiichi plant. Twenty thousand people had just been drowned, hundreds of thousands displaced. Huge amounts of debris clogged what was left of the roads and on and on.
I will hold by my original statement that it was the tsunami the swamped Japan's nuclear ambitions, and put Japan in the LNG market in a big way.
Of course if all the piping to the emergency circulation systems of all three operating reactors was compromised by the earthquake that is a different story--one that certainly will eventually find its way to the light of day--if that was the case.
I found the link to the AREVA reconstruction of the event (4,5 MB PDF). It is worth viewing.
Iran have truly lots of supply of LNG yet, they have to solve first the political issue they with other country like US. If they want to penetrate the global market in long terms.
I don't know if supply is the correct term. I agree that Iran has extensive gas resources and reserves.
I wonder if Iran even intends to enter the LNG market ? Someone correct me if i'm wrong, I don't believe Iran is producing or selling any LNG.
Tony
Looks like you could be right. As of September 12th but unattributed news info.
http://www.bloomberg.com/news/2012-09-02/iran-and-china-suspend-3-3-bill...
But ...
"On hold" or abandoned? Some work already done on the export terminal?
http://iranlng.ir/home-currentstatus-package3-en.html
Phil