Statement of Dr. Timothy S. Collett, Research Geologist, USGS

Statement of Dr. Timothy S. Collett
Research Geologist
U.S. Geological Survey, U.S. Department of the Interior
before the House Committee on Resources
Subcommittee on Energy and Mineral Resources

On Energy Technology

July 15, 2004

Madam Chair, thank you for the opportunity to discuss the importance of the technology and science needed to develop gas hydrates into a viable energy source. In this statement I will discuss the USGS assessment of the energy resource potential of natural gas hydrates and examine the technology that would be necessary to safely and economically produce gas hydrates.

In 1995, USGS made the first systematic assessment of the in-place natural gas hydrate resources of the United States. That study shows that the amount of gas in the hydrate accumulations of the United States greatly exceeds the volume of known conventional domestic gas resources. However, gas hydrates represent both a scientific and technologic challenge and much remains to be learned about their characteristics and possible economic recovery. The primary objectives of USGS gas hydrate research are to document the geologic parameters that control the occurrence and stability of gas hydrates, to assess the volume of natural gas stored within various gas hydrate accumulations, to analyze the production response and characteristics of gas hydrates, to identify and predict natural seafloor destabilization caused by gas hydrate, and to analyze the effects of gas hydrate on drilling safety.

Gas Hydrate Occurrence and Characterization

Gas hydrates are naturally occurring crystalline substances composed of water and gas, in which a solid water-lattice holds gas molecules in a cage-like structure. Gas hydrates are widespread in permafrost regions and beneath the sea in sediments of the outer continental margins. While methane, propane, and other gases are included in the hydrate structure, methane hydrates appear to be the most common. The amount of methane contained in the world's gas hydrate accumulations is enormous, but estimates of in-place gas are speculative and range over three orders-of-magnitude from about 100,000 to 270,000,000 trillion cubic feet (TCF) of gas. By comparison, conventional (reserves and technically recoverable undiscovered resources) natural gas accumulations for the world are estimated at approximately 15,400 TCF (USGS World Petroleum Assessment, 2000). Despite the enormous range of these estimates, gas hydrates seem to be a much greater resource of natural gas than conventional accumulations.

Even though gas hydrates are known to occur in numerous marine and Arctic settings, little is known about the geologic controls on their distribution. The presence of gas hydrates in offshore continental margins has been inferred mainly from anomalous seismic reflectors that coincide with the base of the gas-hydrate stability zone. This reflector is commonly called a bottom-simulating reflector or BSR. BSRs have been mapped at depths ranging from about 0 to 1,100 meters below the sea floor. Gas hydrates have been recovered by scientific drilling along the Atlantic, Gulf of Mexico, and Pacific coasts of the United States, as well as at many international locations.

Onshore gas hydrates have been found in Arctic regions of permafrost and in deep lakes such as Lake Baikal in Russia. Gas hydrates associated with permafrost have been documented on the North Slope of Alaska and Canada and in northern Russia. Direct evidence for gas hydrates on the North Slope of Alaska comes from cores and petroleum industry well logs, which suggest the presence of numerous gas hydrate layers in the area of the Prudhoe Bay and Kuparuk River oil fields. Combined information from Arctic gas-hydrate studies shows that, in permafrost regions, gas hydrates may exist at subsurface depths ranging from about 130 to 2,000 meters.

The USGS 1995 National Assessment of United States Oil and Gas Resources focused on assessing the undiscovered conventional and unconventional resources of crude oil and natural gas in the United States. This assessment included, for the first time, a systematic appraisal of the in-place natural gas hydrate resources of the United States, both onshore and offshore. Eleven gas-hydrate plays were identified within four offshore and one onshore gas hydrate provinces. The offshore provinces lie within the U.S. 200 mile Exclusive Economic Zone adjacent to the lower 48 States and Alaska. The only onshore province assessed was the North Slope of Alaska. In-place gas hydrate resources of the United States are estimated to range from 113,000 to 676,000 TCF of gas, at the 0.95 and 0.05 probability levels, respectively. Although this range of values shows a high degree of uncertainty, it does indicate the potential for enormous quantities of gas stored as gas hydrates in these accumulations. The mean (expected value) in-place gas hydrate resource for the entire United States is estimated to be 320,000 TCF of gas and approximately half of this resource occurs offshore of Alaska and most of the remainder is beneath the continental margins of the lower 48 states, underlying the Federal outer continental shelf (OCS). It is important to note that this assessment does not address the issue of gas hydrate recoverability.

The USGS mean estimate of 320,000 TCF (gas hydrate in-place), despite its uncertainty, is more than two orders of magnitude larger than current estimates of natural gas from conventional sources in the U.S. (reserves and technically recoverable undiscovered resources), which is approximately 1,400 TCF. Estimates of gas hydrate concentrations in individual accumulations show a considerable range, reflecting our lack of detailed knowledge. Although the size and concentration of specific gas hydrate accumulations is still unclear, it is likely that with technological advances, it will be possible to economically extract energy from gas hydrate reservoirs. According to U.S. Department of Energy (DOE), if only 1% of the gas hydrate resources could be made technically and economically recoverable, the US could more than double its gas resource base.

Gas Hydrate Production

Gas recovery from hydrates is hindered because the gas is in a solid form and because hydrates are usually widely dispersed in hostile Arctic and deep marine environments. Similar to conventional hydrocarbon production, first recovery of a hydrate resource will occur where the hydrate is concentrated. Proposed methods of gas recovery from hydrates usually deal with dissociating or "melting" in-situ gas hydrates by (1) heating the reservoir beyond the temperature of hydrate formation, (2) decreasing the reservoir pressure below hydrate equilibrium, or (3) injecting an inhibitor, such as methanol, into the reservoir to decrease hydrate stability conditions. Computer models have been developed to evaluate hydrate gas production from hot water and steam injection. These models suggest that gas can be produced from hydrates at sufficient rates to make gas hydrates a technically recoverable resource. Similarly, the use of gas hydrate inhibitors in the production of gas from hydrates has been shown to be technically feasible; however, the use of large volumes of chemicals comes with a high economic and potential environmental cost. Among the various techniques for production of natural gas from in-situ gas hydrates, the most economically promising method is considered to be depressurization.

The Messoyakha gas field in northern Russia is often used as an example of a hydrocarbon accumulation from which gas has been produced from hydrates by simple reservoir depressurization. This occurs because there is a free gas accumulation trapped below the gas hydrates in the Messoyakha field. The Messoyakha field was developed for conventional gas, but it has long been thought that gas production was sustained because of dissociation of the overlying hydrate into the underlying free gas accumulation. Moreover, the production history of the Messoyakha field possibly demonstrates that gas hydrates are an immediate producible source of natural gas, in certain configurations (that of free gas-gas hydrate combination), and that production can be started and maintained by "conventional" methods.

The pace of gas hydrate energy assessment projects has accelerated over the past several years. Researchers have long speculated that gas hydrates could eventually be a commercial resource yet technical and economic hurdles have historically made gas hydrate development a distant goal rather than a near-term possibility. This view began to change over the past five years with the realization that this unconventional resource could be developed in conjunction with conventional gas fields. Research coring and seismic programs carried out by the Ocean Drilling Program (ODP), government agencies, and several consortia have significantly improved our understanding of how gas hydrates occur in nature and have verified the existence of highly concentrated gas hydrate accumulations at several locations. The most significant development was the production testing conducted at the Mallik site in Canada's Mackenzie Delta in 2002. In December 2003, the partners (including the USGS and the DOE) in the Mallik 2002 Gas Hydrate Production Research Well Program publicly released the results of the first modern, fully integrated field study and production test of a natural gas hydrate accumulation. The Mallik 2002 gas hydrate production testing and modeling effort has for the first time allowed for the rational assessment of the production response of a gas hydrate accumulation. Project supported gas hydrate production simulations, including those performed by Lawrence Berkeley National Laboratory, have shown that under certain geologic conditions gas can be produced from gas hydrates at very high rates exceeding several million cubic feet of gas per day.

The potential for gas hydrates as an economically viable resource has been impacted by higher natural gas prices and forecasts of future tighter supply. Gas hydrates are often compared to coalbed gas resources, which were also considered to be an unconventional (uneconomic) resource in the not too distant past. However, once the resource was geologically understood, the reservoir properties defined, and the production challenges addressed, coalbed gas became an important part of the nation's energy mix. Now, coalbed gas is a viable fuel in its own right and accounts for almost 10% of the natural gas production in this country. Access to pipelines and other infrastructure also plays a critical role in determining the economic viability of a resource, and even large volumes of Arctic hydrates might remain stranded until a pipeline is built.

Safety and Seafloor Stability

Seafloor stability and safety are two important issues related to gas hydrates. Seafloor stability refers to the susceptibility of the seafloor to collapse and slide as the result of gas hydrate dissociation. The safety issue refers to petroleum drilling and production hazards that may occur in association with gas hydrates in both offshore and onshore environments.

Seafloor Stability

Along most ocean margins the depth to the base of the gas hydrate stability zone becomes shallower as water depth decreases; the base of the stability zone intersects the seafloor at about 500 meters, a depth characterized by generally steep topography on the continental slope. It is possible that both natural and human induced changes can contribute to in-situ gas hydrate destabilization, which may convert hydrate-bearing sediments to a gassy water-rich fluid, triggering seafloor subsidence and catastrophic landslides. Evidence implicating gas hydrates in triggering seafloor landslides has been found along the Atlantic Ocean margin of the United States and off northern Europe. The mechanisms controlling gas hydrate induced seafloor subsidence and landslides are not well known; however, these processes may release large volumes of methane to the Earth's oceans and atmosphere.

Safety

Throughout the world, oil and gas drilling is moving into regions where safety problems related to gas hydrates may be anticipated. Oil and gas operators have described numerous drilling and production problems attributed to the presence of gas hydrates, including uncontrolled gas releases during drilling, collapse of wellbore casings, and gas leakage to the surface. In the marine environment, gas leakage to the surface around the outside of the wellbore casing may result in local seafloor subsidence and the loss of support for foundations of drilling platforms. These problems are generally caused by the dissociation of gas hydrate due to heating by either warm drilling fluids or from the production of hot hydrocarbons from depth during conventional oil and gas production. The same problems of destabilized gas hydrates by warming and loss of seafloor support may also affect subsea pipelines.

National Research Agenda for Gas Hydrate Energy Development

The Methane Hydrate Research and Development Act of 2000 (P.L. 106-193) authorizes the expenditure of $43 million over 5 years and directs the DOE, in consultation with USGS, Mineral Management Service (MMS), National Science Foundation (NSF), Department of Defense (DOD), and Department of Commerce (DOC), to commence basic and applied research to identify, explore, assess, and develop methane hydrates as a source of energy. However, for two decades prior to this Act, the bureaus of the Department of Interior studied gas hydrates within their various missions using base research funds.

The USGS is investigating many aspects of gas hydrates to understand their geological origin, their natural occurrence, the factors that affect their stability, and the possibility of using this vast resource in the world energy mix. The USGS is investigating the resource potential of gas hydrates in the Mackenzie Delta of Canada in partnership with an international consortium, led by the Geological Survey of Canada, that has also tested the technology needed to economically produce gas hydrates.

Seismic-acoustic imaging to identify gas hydrate and its effects on sediment stability has been an important part of USGS marine studies since 1990. USGS has also conducted extensive geochemical surveys and established a specialized laboratory facility to study the formation and dissociation of gas hydrate in nature and also under simulated deep-sea conditions. Gas hydrate distribution in Arctic wells and in the deep sea has been studied intensively using geophysical well logs. These efforts have also involved core drilling of gas-hydrate-bearing sediments in cooperation with the Ocean Drilling Program (ODP) of the National Science Foundation, and, most recently a cooperative drilling program onshore in northern Canada.

The Integrated Ocean Drilling Program (IODP), the Ocean Drilling Program (ODP), and their predecessor the Deep Sea Drilling Project (DSDP) have contributed greatly to our understanding of the geologic controls on the formation, occurrence, and stability of gas hydrates in marine environments. The first focused program of scientific drilling into gas hydrate deposits occurred on Leg 164 in 1995 off the East Coast of the United States to determine the distribution of gas hydrates, gas composition, and the affect of hydrate formation on sediment characteristics. In the summer of 2002, ODP Leg 204 investigated the formation and occurrence of gas hydrates in marine sediments at Hydrate Ridge off the Oregon coast. The shipboard scientists successfully deployed new core systems for recovering and analyzing gas-hydrate-bearing sediments at in situ pressures conditions; thus allowing the correlation of sediment properties with seismic, conventional wireline and logging-while-drilling downhole data.

In the North Slope of Alaska, USGS is participating in several gas hydrate energy assessment projects with DOE and various industry partners. The USGS is assessing the recoverability and potential production characteristics of onshore natural gas hydrate accumulations overlying the Prudhoe Bay, Kuparak River, and Milne Point oil fields. With BLM and the Alaska Division of Geological and Geophysical Surveys (DGGS), USGS is assessing and characterizing the resource potential of selected gas-hydrate/free-gas accumulations on public lands on the North Slope of Alaska. Information from this study will then be used to assess and characterize the gas hydrate potential in National Petroleum Reserve, Alaska (NPRA); Arctic National Wildlife Refuge (ANWR); and the State lands between. The ultimate goal of this joint work is to assess the economically recoverable resource potential of gas hydrates and associated free gas accumulations in northern Alaska by FY 2007.

Under the Methane Hydrate Research and Development Act of 2000, the DOE funds laboratory and field research on both Arctic and marine gas hydrates. Among the current Arctic studies is a three-year program sponsored by Maurer Technology and Anadarko Petroleum Corporation in partnership with the DOE. Anadarko spudded the "Hot Ice 1" well on the North Slope of Alaska in March 2003 and completed it in February of 2004. Hot Ice 1 was designed to validate geological, geophysical, and geochemical models of Arctic gas hydrate occurrences.

BP Exploration (Alaska) and DOE also have undertaken a project to characterize, quantify, and determine the commercial viability of gas hydrates and associated free gas resources in the Prudhoe Bay, Kuparuk River, and Milne Point field areas in northern Alaska. The University of Alaska in Fairbanks, the University of Arizona in Tucson, and USGS are also participating in the Alaska BP project. Under Phase 1 of this project, gas hydrates and associated free gas-bearing reservoirs in the Milne Point oil field are being studied to determine reservoir extent, stratigraphy, structure, continuity, quality, variability, and geophysical and petrophysical property of these hydrocarbon-bearing reservoirs. The objective of Phase 1 is to characterize reservoirs and fluids, leading to estimates of the recoverable reserve and commercial potential, and the definition of procedures for gas hydrate drilling, data acquisition, completion, and production. Phases 2 and 3 will integrate well, core, log, and production test data from additional test wells.

Several Gulf of Mexico hydrate research programs are underway. The most comprehensive study is a Joint Industry Project (JIP) led by ChevronTexaco which is designed to further characterize gas hydrates in the Gulf of Mexico. Participants include ConocoPhillips, Total, Schlumberger, Halliburton Energy Services, MMS, Japan Oil Gas and Metals National Corporation, and India's Reliance Industries. The JIP is planning to drill and core multiple Gulf of Mexico sites beginning in April 2005. While the primary goal of this JIP is to better understand the safety issues related to gas hydrates, the results of the program will also allow a better assessment of the commercial potential of marine gas hydrates.

In anticipation of gas hydrate production in Federal waters, MMS has recently launched a project to assess gas hydrate energy resource potential on acreage under MMS jurisdiction. The MMS must update its resource assessment models to include gas hydrates, as fair market value must be determined for offshore tracts to be offered in the next "Five Year Oil and Gas Leasing Program." An effort is underway using seismic amplitude data, existing core holes, shallow well logs, temperature data, gas composition distribution, and sediment thickness over salt to delineate and estimate the areas on the slope of the Gulf of Mexico which are likely to contain gas hydrates, and those areas where they are unlikely to occur. Four occurrence types will be evaluated: vein-filled muds adjacent to vent areas, pore-filling of sands which occur completely within the gas hydrate stability zone, pore-filling of sands which straddle the gas hydrates stability zone with free gas trapped below, and gas hydrates contained in cap rock. Economic models are being developed for the final evaluations.

International Gas Hydrate Research and Development Efforts

Many countries are interested in the energy resource potential of gas hydrates. Countries including Japan, Canada, and India have established large gas hydrate R&D programs, while China, Korea, Norway, Mexico and others are investigating the viability of forming government-sponsored gas hydrate research programs. In 1995, the Government of Japan established the first large-scale national gas hydrate research program, which now plays a leading role in worldwide gas hydrate research efforts. Plans for 2004 include drilling and coring between 10 and 20 wells in the Nankai Trough off Japan's east coast where gas hydrates were recovered during previous field studies in 2000. Japan has budgeted more than $65 million (US) for next year's gas hydrate studies.

The government of India also is funding a large national gas hydrate program to meet its growing gas requirements. Seismic data have been acquired on the Indian continental margin and current plans call for drilling and coring dedicated gas hydrate wells in 2004. In addition, gas hydrates were recently discovered during drilling for conventional oil and gas resources in the Krishna-Godavari Basin.

One of the most successful multi-national efforts is the Mallik International Consortium composed of the Japan National Oil Corporation (JNOC; now named the Japan Oil, Gas, and Metals National Corporation) the Geological Survey of Canada, USGS, DOE, GeoForschungZentrum-Potsdam, the Indian Ministry of Petroleum Geology and Natural Gas, Gas Authority India Ltd, and the International Continental Scientific Drilling Program. For the first time, this group proved that it is technically feasible to produce gas from gas hydrates. This modern, fully integrated, production testing of gas hydrates at the Mallik site in the Mackenzie Delta of Canada, was accomplished in 2002 and the results will be fully released this fall. Depressurization and thermal heating experiments, with real time formation monitoring, at the Mallik site were successful. The results demonstrated that gas could be produced from gas hydrates with different concentrations and characteristics, exclusively through pressure stimulation. The data supports the interpretation that the gas-hydrate-bearing sediments are much more permeable and conducive to flow from pressure stimulation then previously thought. In one test, the gas production rates were substantially enhanced by artificially fracturing the reservoir.

Production Potential of Gas Hydrates -- Technical Challenges

In order to release, or produce, the gas from a gas hydrate, we must change the temperature or pressure conditions controlling its occurrence. The most economically promising method of producing gas from gas hydrates appears to be depressurization of the reservoir. Results from the Mallik test well support this supposition. However, much more information is needed before production of this unconventional resource in these frontier regions becomes viable. For example, gas production is dependent upon the permeability of the host rock, and therefore, the type of sediment in which the hydrate occurs and understanding flow rates and paths is critical to potential production. Despite the apparent obstacles to the development of gas hydrate resources, it is important to remember that extraordinary technological developments in the petroleum industry -- three-dimensional seismic techniques, secondary recovery methods, and horizontal drilling, for example -- have allowed the extrication of resources once thought to be unavailable. Natural gas hydrates may also become economically extractable.

On-shore Alaska and the offshore Gulf of Mexico are proven exploration targets for gas hydrates. In the Gulf of Mexico, industry has begun assessing hydrate potential on their oil and gas leases. Industry-Government partnerships are expected to drill hydrate prospects on the North Slope of Alaska in the near future -- hence, the first domestic production of hydrates is expected to occur in Alaska, where gas from the hydrates will either support local oil and gas field operations, or be available for commercial sale if and when a gas pipeline is constructed. In both Alaska and the Gulf of Mexico, critical drilling and transportation infrastructure exists, which will allow gas hydrate prospects to be drilled and produced from existing installations.

The timing for expected commercial production of hydrates is uncertain. The DOE has estimated that gas production from gas hydrate could begin about 2015. In September of 2003, the National Petroleum Council (NPC) reported that we will not likely see significant production from gas hydrates until sometime beyond 2025. However, initial production from gas hydrates will most likely occur much sooner, especially in areas such as the North Slope of Alaska or in other countries. Estimates vary on when gas hydrate production will play a significant role in total world energy mix; however, it is possible that hydrates will be able to provide a domestic supply of gas.

Production Potential of Gas Hydrates -- The Role of the USGS

USGS research on gas hydrates is focused on: (1) the energy-resource potential they represent; (2) sea floor stability, and (2) the impact they might have on global climate change. The potential global abundance of gas hydrates is enormous: they are estimated to contain twice the amount of carbon existing in all other fossil fuels on Earth. Methane, the most common gas in natural hydrates, is the cleanest burning of all the fossil fuels and produces significantly less carbon dioxide and other products during combustion than either coal or oil generating the same amount of heat. The challenge is to determine whether recovery of hydrates is economically and environmentally feasible for observed reserves. The USGS 1995 Energy Assessment of the United States, which included the first-ever assessment of total national gas hydrate reserves, was based on simplistic assumptions about the hydrate stability zone and incomplete understanding of the distribution and occurrence of hydrates.

The USGS seeks to improve understanding of hydrates as an energy resource in general and as a potential energy resource for the United States, so hydrates can be effectively produced and managed as a national resource.

The immense volume of gas hydrates worldwide may be a potential resource of extraordinary richness. Our understanding of these resources, however, is rudimentary. We do not yet know if these accumulations exist in sufficient concentration to make them economically viable, nor do we know whether even concentrated accumulations can be developed economically. Therefore, one of the most critical needs is additional scientific research on production methods. It is generally believed that gas hydrate can be produced by standard techniques used today to exploit conventional oil and gas resources. However, it is certain that new drilling and production technology will contribute to the ultimate producibility of gas hydrates. We know that hydrates must be produced by releasing the gas from the hydrate form by the methods previously described. However, there has only been one hydrate production test to date (the Mallik project). Much more information is needed on: (1) the geology of the hydrate-bearing formations, on a large scale - the distribution of hydrates both throughout the world and on small scale -- their occurrence and distribution in various host sediments; (2) the reservoir properties/characteristics of gas hydrate reservoirs; (3) the production response of various gas hydrate accumulations; and (4) the economics controlling the ultimate resource potential of gas hydrates. The USGS, other federal agencies, and domestic and international consortia must work together in studying, evaluating, and understanding the geologic and engineering properties critical to the realization of hydrates as a viable energy source.

The timeframe for when gas hydrates might contribute to the national energy supply cannot yet be projected. The DOE has a long-term goal of enabling the commercial production of methane from hydrates by 2015; the 2003 NPC report on Natural Gas is less optimistic. Other countries, for example Japan and India, have substantially shorter timeframes to attain production status. Regardless of when hydrates are commercially viable, conventional oil and gas exploration and development activities in both permafrost and deep-water marine environments are regularly exposed to gas hydrate induced geologic hazards. Understanding the impacts of drilling into the gas hydrate stability zone, from pressure/temperature disturbances created by drilling or initiated by the production of warm fluids brought up from depth, are hazard and safety issues that need to be further studied and assessed.

Conclusions

Our knowledge of naturally occurring gas hydrates is limited. Nevertheless, a growing body of evidence suggests that: (1) a huge volume of natural gas is stored in gas hydrates; (2) production of natural gas from gas hydrates may be technically feasible; (3) gas hydrates hold the potential for natural hazards associated with seafloor stability and release of methane to the oceans and atmosphere; and (4) gas hydrates disturbed during drilling and petroleum production pose a potential safety problem. The USGS welcomes the opportunity to collaborate with domestic and international scientific organizations and industry to further collective understanding of these important geologic materials.

Thank you, Madam Chair, for the opportunity to present this statement. I will be happy to respond to any questions you may have.