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Unlocking Piceance-Uinta Basin's Natural-Gas Potential

Unlocking Piceance-Uinta Basin's Natural-Gas Potential

Uinta Mountains sunset glowing light in Utah. (Johnny Adolphson | Dreamstime.com)

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Friday, 21 June 2019 12:59 PM Current | Bio | Archive

It may be surprising to learn that there is a natural gas play in the western United States that rivals the Marcellus Shale.

As a result of the shale boom, the U.S. already accounts for 20 percent of global natural gas production, yet there is another world-class formation — in addition to the Marcellus, the Eagle Ford and the Haynesville — that could give the U.S. an even more important role in international energy markets.

The Piceance-Uinta basin, located between Utah and Colorado, is poised to become a game-changer for exports of liquefied natural gas (LNG) from the West Coast to Asian energy consumers. This play’s unique geographic location, access to energy infrastructure and first-tier hydrocarbon reserves makes it the ideal candidate to export LNG to Asia’s burgeoning markets.

The Mancos Shale, located in the Piceance Basin, is estimated to have more than 66 TCF, making it the second-largest natural gas formation in the U.S. To put it in perspective, 1 TCF is enough to heat 15 million homes for a year.

Furthermore, the United States Geological Survey (USGS) estimates that there is an additional 24 TCF of gas in the Mesa Verde formation. Finally, the USGS also estimated that there is 13.09 BCF of undiscovered natural gas in the Uinta Basin. Combined, these formations might contain more natural gas than the Marcellus shale, making the Piceance-Uinta basin a world-class natural gas reservoir and the obvious candidate to compete in the Asian markets.

Why isn’t this gas already in Asian markets? The short answer is that there is a missing piece to the puzzle of exports — a 250-mile pipeline segment. While there is a lot of infrastructure already in place, the last leg that would bring the gas to the coast is still unfinished and fraught with uncertainty. To the project’s credit, there is already 680 miles of pipeline infrastructure of 1.5 BCF per Day (BCFD) of capacity in place.

Moreover, the Piceance-Uinta basin is located in the middle of vast midstream market which gives it a competitive advantage over other shale plays that struggle to deliver product to market. Next, the Ruby Pipeline, which is the largest segment of the journey for Piceance-Uinta natural gas to Oregon is under-utilized. It has a capacity of 1.5 BCFD but only uses 80 percent of it. The last piece of the puzzle is the Pacific Connector and its construction is underway. This pipeline would connect the westernmost end of the Ruby Pipeline in Malin Hub to the Jordan Cove LNG facility in Coos Bay, Oregon.

The Jordan Cove project, combined with the ever-rising demand for natural gas in Asia, is the last building block needed to bring U.S. natural gas to Asia. If approved, Jordan Cove would create the opportunity to export LNG to Asia which has been, historically, the largest consumer of it, and give the U.S. the ability to compete like never before with market leaders such as Australia.

Despite the economic opportunity, the Oregon Department of Environmental Quality recently denied a water permit for the Jordan Cove project, throwing up a hurdle that the developer hopes to overcome. Whatever the outcome, Asia’s growing demand for energy will be met one way or another, with natural gas from places other than the U.S. including Russia. There is also a strong possibility that China and India will meet their massive energy needs with coal or other more carbon-intensive fuels.

If we’re in favor of carbon emissions reductions, economic growth and decreasing the world’s dependence on fuel from places hostile to the U.S. like Russia, we should also be in favor of infrastructure like the Pacific Connector and Jordan Cove.

Ryan Scott is Vice President at HBW Resources. He previously worked at Deloitte & Touche’s Strategy & Operations Consulting practice.

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It may be surprising to learn that there is a natural gas play in the western United States that rivals the Marcellus Shale.
piceance, uinta, basin, potential
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2019-59-21
Friday, 21 June 2019 12:59 PM
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