Houston gas processors hype shale at annual meet
By Adrienne Blume
Process Editor
The Houston chapter of the Gas Processors Association (HGPA) held its annual meeting on October 11 at the Pine Forest Country Club, complete with breakfast, presentations by industry executives, lunch, and an afternoon golf tournament.
Shale gas development and new midstream projects were heavy focuses at the meeting, which drew more than 180 attendees.
However, HGPA Chairman Kyle Kubin of Targa Resources reminded the audience that environmental concerns remain at the top of the agenda. Mr. Kubin noted that, in many cases, midstream firms are viewed as polluters.
"We are at war with the regulatory and legislative arenas," he cautioned, and encouraged a continuing focus on environmental initiatives and regulatory compliance by midstream companies.
Jim Tramuto, vice president of governmental and regulatory strategies for Southwestern Energy, was the first speaker. Mr. Tramuto discussed the motivations for protecting the future of shale gas, and noted that there has been a 67% increase in shale gas production over the past three years.
Mr. Tramuto also explained that today's "paradigm shift" in energy production is driven by technology, as compared to the regulation-driven shift seen in the 1980s.
As other industry executives have stressed in recent conversations with Hydrocarbon Processing, transparency and full disclosure are the keys to preserving the future of shale oil and gas development.
Mr. Tramuto said that companies should strive to: (1) be good and responsible neighbors by working in partnership with local communities; (2) provide transparency and access to information; (3) remain committed to innovations, especially new technologies that can reduce environmental impacts; and (4) abide by appropriate state and federal regulations and take into account the unique geological characteristics of each state.
Mr. Tramuto also touched on the prospect of US exports of liquefied natural gas (LNG), asserting, "If it makes economic sense and can be financed, and if you can line up markets on the other side, then it [LNG export terminals] can be constructed."
The second speaker at the HGPA meeting, Purvin & Gertz managing consultant Walt Hart, discussed infrastructure developments for natural gas liquids (NGLs). Purvin & Gertz expects refinery production of NGLs to be fairly flat through 2014, and the eventual decline of gasoline demand will serve to further this trend.
The key to the expansion of NGL supply in the US, Mr. Hart said, is shale gas. Around 390 million bpd of NGLs - around 19% of the total US NGL supply - currently come from shale gas. By 2014, Purvin & Gertz anticipates that NGL from shale will rise to 33% of the total US NGL supply.
Harking back to Mr. Tramuto's presentation, Mr. Hart acknowledged, "If the shale gas goes away, the party's over. What Jim is talking about on the regulatory front is really important."
Mr. Hart also spoke about the future of US gas processing, and noted that most new gas processing plants will be built to serve unconventional shale plays outside the US Gulf Coast region. Between 2009 and 2010, US gas processing capacity increased 17%, with 85% of the nation's new gas processing capacity cropping up outside of the Gulf Coast.
After a short networking and coffee break, attendees gathered to hear Kent Wilkinson, vice president of Chesapeake Natural Gas Ventures, speak about creating demand for natural gas. Mr. Wilkinson asserted that natural gas is the best fuel to drive the US economy and meet American energy needs. Gas currently has a 75% cost advantage over oil, which makes it affordable.
He also stressed the scalability and achievability of natural gas energy. With nearly $1 million leaving the US economy each minute to purchase foreign energy, greater production of domestic gas - especially from shale - is the best way for the US to strengthen its energy security.
The last speaker of the day was Kristen Holmquist, Bentek Energy's manager of energy analysis. Ms. Holmquist discussed future prospects for shale energy in light of shale's boom in popularity over the last 5–6 years. Prices for natural gas and coal began to align in October 2010, and shortly thereafter gas prices dove below those for coal. Oil prices remain high, making natural gas more price-attractive as a fuel.
Ms. Holmquist noted that much coal-to-gas switching has been seen in the US Northeast and Southeast. However, high coal stockpiles will limit future fuel switching unless the excess can be exported to China and other countries where coal is in high demand.
Ms. Holmquist also highlighted return-on-investment levels for the various shale plays throughout the US, stressing that liquids-rich wells pay off the fastest. If the infrastructure is developed and the demand forecasts are accurate, the shale "party" will continue, she said.
To this end, gas exports to Mexico and the development of additional LNG export terminals will be necessary, she noted.
The HGPA meeting concluded with a networking lunch and a golf tournament enjoyed by a number of attendees. The national Gas Processors Association (GPA) annual meeting will be held in April 2012 in New Orleans, Louisiana.
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