American Oil and Gas Reporter - March 2020 - 91

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ConventionCoverage: Independent Oil and Gas Association of West Virginia
He cited the example of coupling AI
and machine learning with wireless and
low-powered sensors that could be deployed at extremely low cost for everything from regulatory compliance to predicting pipeline failures 10-20 years in
the future.
"We have been working on advanced
pipeline materials, including self-healing
materials and materials embedded with
sensors to be deployed particularly in
transmission and distribution systems,"
Anderson cataloged. "We are at the forefront of being able to classify and certify
methane emissions and emission reductions. We are developing areal leak detection and emission measurements that
even can find some of our legacy wells

across the Appalachian Basin, so we can
plug them for future generations."
AI is making inroads into the transmission segment as well, mentioned a
speaker on IOGAWV's afternoon pipeline
panel. Shawn Tolle, commercial business
manager for TransCanada U.S. Pipeline
East, remarked that he frequently received
producer requests to move additional volumes of gas. At present, he said, he must
forward the request to TransCanada's facility group, which analyzes it and returns
an answer in about a day.
But with AI, he forecast, the analysis
can be run in real time. "That technology
is really close," he enthused. "It will
make us more nimble as a company,
which will enable us to help you make

quick decisions."
Turning to adding value to the natural
gas resource, NETL's Anderson saluted
DOE's Oak Ridge National Laboratory
outside Knoxville, Tn., where he said
scientists were developing new technologies and uses for carbon, including
research into carbon fiber for reinforced
plastics that can be distributed across
the country's aging infrastructure.
He also mentioned DOE's new "oneof-a-kind in the world facility that can
research different reactions and conditions,
including ways to put energy into systems
such as microwave to lower the cost of
converting methane into higher-value
products . . . that can add value to our
natural gas resources."
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U.S. Gas Production Grows Inexorably
CHARLESTON, W.V.-U.S. natural gas
production is destined to grow about 10
billion cubic feet a day during the next five
years-come high prices or low-the luncheon
keynote speaker advised the Independent
Oil and Gas Association of West Virginia
winter meeting on Feb. 22 in Charleston.
Further, warned Scott Potter, managing
director of business development for
RBN Energy LLC in Houston, burgeoning
liquefied natural gas exports may not be
the gas-price panacea for which many
are hoping.
Potter presented a scenario he termed
healthy gas and healthy oil prices of
$2.25 an Mcf and $55 a barrel. Under
those assumptions, he projected U.S. gas
production would rise from 100 Bcf/d at
present to 110 Bcf/d by 2025, driven by
wet gas plays and associated gas from
crude oil plays. "Production stays flat in
the dry gas basins. Appalachian wet, the
Bakken, Permian and Eagle Ford are
where the growth is with healthy gas and
healthy oil prices," he assessed.
But, Potter acknowledged, he frequently
is admonished that today's gas prices are
not healthy. "So, what does it look like if
crude oil prices stay healthy and gas
prices go low?" he posed.
The answer, he suggested, is pretty
much the same thing. Under a low-gasprice scenario, he said, RBN expects production from dry-gas basins to drop about
5 Bcf/d. "But the crude oil and wet basins
more than make up the difference," Potter
maintained. "We still end with 110 Bcf/d
of natural gas production, but a significantly

greater proportion comes from the crude
oil producers versus dry gas producers."
The reason, he explained, is that in
the Permian Basin, which is driving crude
oil and associated gas production, natural
gas represents 3% of a producer's revenue
stream. "Whether he gets $1.00, $0.50
or doesn't get anything for his gas really
doesn't drive his decision whether to drill
wells," Potter stated. "You can't expect
low gas prices to result in a decrease in

As long as crude oil prices remain above
$55 a barrel, associated gas from the Permian Basin and other unconventional resources plays will continue to push up
domestic gas supplies, even if dry gas
production flattens in the face of lower
natural gas prices, Scott Potter, managing
director of business development for RBN
Energy, tells the Independent Oil and Gas
Association of West Virginia winter meeting, Jan. 22 in Charleston, W.V.

natural gas production as long as crude
oil prices stay healthy."
LNG Export Wall
Turning to LNG, Potter acknowledged
the phenomenal growth in U.S. exports
during the past few years. "In 2016, we
were at zero," he reported. "Now we are
at 8.0 Bcf/d. Out of a 90 Bcf/d (domestic
natural gas) market, close to 10% is being
put on ships and sent somewhere else."
Further, he assessed, liquefaction capacity under construction or being planned
could raise U.S. LNG exports to 15 Bcf/d
by 2025, which he said would satisfy
25% of a global 60 Bcf/d LNG market.
The fly in that ointment is international
LNG prices, which Potter observed had
dropped from around $12 an MMBtu in
August 2018 to between $4 and $5 an
MMBtu last summer. With the rapid
uptick in U.S. exports since 2016, he
held, "We have crushed LNG prices, just
like we crushed crude oil prices and
natural gas liquids prices."
A year ago, he said, LNG developers
were optimistic about the prospects of
signing 20-year contracts for $6.50 an
MMBtu. "Now they are saying, 'We don't
know if we are going to be around a year
from now if we don't get somebody to
sign a contract.'
"As far as growth in LNG markets,
until prices firm, we may be hitting a
wall pretty soon," Potter concluded. "(LNG
exports) aren't going to grow much beyond
15 Bcf/d until prices firm. And for them
to firm, demand has to grow."
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MARCH 2020 91

American Oil and Gas Reporter - March 2020

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