The 'War for Porosity' in the Appalachian Basin

When it comes to the challenges and concerns of how to store the raw material hydrocarbons in the Appalachian Basin, we are at crunch time.

According to Dan Billman, it is a conversation that should have already started.

“It is likely past time to have this discussion,” he said.

Billman has more than 32 years’ experience in the Appalachian Basin, with the last 27 as a consulting geologist and president of Billman Geologic Consultants, Inc. Prior to independent consulting, he worked as an exploration and development geologist for Mark Resources Corporation and Eastern States Exploration Company.

He explained that, as the shale revolution took off in the Appalachian Basin, “production of more than just methane increased,” alluding to the natural gas liquids and the production of ethane, butane and propane, as well as everything from ethane crackers to make plastics and gas-to-liquids plants to make low-sulfur fuels, oils, waxes and hydrogen.

All of this resulted in what Billman is calling a “war for porosity” in the Appalachian Basin, about which he will speak at the AAPG 2021 Global Super Basins Leadership Conference this month.

Storage Shortage

“So, the Appalachian Basin,” he said, “needs underground methane storage, natural gas liquids storage and possibly hydrogen storage.”

And it is a need that keeps growing, both in degree and in kind.

“As we continue to drill there is likely a continued market for saltwater disposal – also potentially needing underground storage,” he said.

These storage reservoirs include a backbone of pipelines from source locations to key manufacturing locations, plus associated monitoring equipment and appropriate pumps or compressors to move the materials.

Image Caption

The Shell Pennsylvania Petrochemicals Complex is an under-construction ethylene cracker plant located in Potter Township, Penn., about 25 miles from Pittsburgh. It is expected to begin operating in the early 2020s, producing more than a million tons per year of plastic pellets. Photo by Don Zuch.

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When it comes to the challenges and concerns of how to store the raw material hydrocarbons in the Appalachian Basin, we are at crunch time.

According to Dan Billman, it is a conversation that should have already started.

“It is likely past time to have this discussion,” he said.

Billman has more than 32 years’ experience in the Appalachian Basin, with the last 27 as a consulting geologist and president of Billman Geologic Consultants, Inc. Prior to independent consulting, he worked as an exploration and development geologist for Mark Resources Corporation and Eastern States Exploration Company.

He explained that, as the shale revolution took off in the Appalachian Basin, “production of more than just methane increased,” alluding to the natural gas liquids and the production of ethane, butane and propane, as well as everything from ethane crackers to make plastics and gas-to-liquids plants to make low-sulfur fuels, oils, waxes and hydrogen.

All of this resulted in what Billman is calling a “war for porosity” in the Appalachian Basin, about which he will speak at the AAPG 2021 Global Super Basins Leadership Conference this month.

Storage Shortage

“So, the Appalachian Basin,” he said, “needs underground methane storage, natural gas liquids storage and possibly hydrogen storage.”

And it is a need that keeps growing, both in degree and in kind.

“As we continue to drill there is likely a continued market for saltwater disposal – also potentially needing underground storage,” he said.

These storage reservoirs include a backbone of pipelines from source locations to key manufacturing locations, plus associated monitoring equipment and appropriate pumps or compressors to move the materials.

And the key word Billman wants to underscore in all this: time.

“Exploration and permitting of storage facilities takes time,” said Billman. “Construction takes time – both surface facilities and subsurface, be that drilling wells or cavern mining take time.”

Underground storage facilities are widely accepted as much safer than the above-ground facilities.

And some of the manufacturing facilities in the basin have start times of 2021 and 2022; unfortunately, he said, some have “little to no storage ahead of the project.”

Billman, who has extensive development and exploration knowledge in both unconventional (shales and tight gas sandstones), recently worked with Rice Energy Inc., helping it to acquire acreage positions in the Appalachian Basin, resulting in a major company in the Marcellus and Utica Shale plays.

He clearly knows the terrain and said what lies ahead in Appalachia isn’t so much a dark tunnel as much as it is a long one.

“It will take a while. Infrastructure is catching up. We need pipelines to get the natural gas to population centers, LNG terminals, power plants, gas-to-liquids plants, etc.,” he said.

Further, as drilling continues, Billman said there will likely be carbon dioxide capture and sequestration as well as a continued market for saltwater disposal, which will also need underground storage.

“There are entities, often associated with power plants, looking for carbon sequestration options,” he said.

Billman added, “Often the carbon storage question is the cart before the horse. The power plant is already sited and then carbon storage is considered.”

And there is only so much space.

“All will potentially compete for underground porous and permeable reservoirs or ‘constructed reservoirs’ (mined storage reservoirs),” he said.

Further Industry Impacts

As to 2020 generally, and COVID-19 specifically, Billman said the effects of the pandemic were not uniformly suffered.

“The Northeast, being a major population center, was certainly affected by COVID-19,” he said, citing transportation, which took a significant hit.

“Office buildings are empty as folks are working from home or not working at all,” he noted.

Something like a domino effect then occurred.

“There’s no need to heat an empty office complex. So, natural gas consumption, used for both heating and electric generation has been off. Natural gas storage is full,” he said.

Billman said the recovery – and the infrastructure – will take some time.

“In the Appalachians, we do not have a supply problem, we have a demand problem. And the problem is getting the gas to where the demand is,” he explained.

Fortunately, the Appalachian Region is in a good position for the next wave. In fact, according to the Department of Energy, the Appalachian region benefits from a friendly business environment, public infrastructure, workforce development and innovation through public-private partnerships.

Billman, the AAPG delegate representing the Pittsburgh Geological Society and AAPG Advisory Council member representing the Eastern Section, said that is true up to a point.

“The Appalachians are not an oil-centric basin, so when oil tanked, we just kept producing,” he said. “And then, as produced associated gas in the Permian and similar basins dropped, that took natural gas off the market, making Appalachian gas just a little more valued.”

There is no one-size-fits-all explanation for all regions.

“The business environment can certainly change from state to state,” he said, pointing out that New York outlawed high-volume hydraulic fracture treatments, which he said dryly, “I’m not sure I would call that ‘business friendly.’”

Even in Appalachia, states handle oil and natural gas taxation very differently.

“So, there is not a one-size-fits-all answer there. Workforce development and innovation have been big in Appalachia of late. I think those will help drive the natural gas industry and associated manufacturing, like ethane crackers and gas-to-liquids plants,” said Billman.

And it’s not like COVID-19 is, or will be, the only stumbling block.

“Pipelines have become a ‘hot button’ issue for the anti-oil and natural gas crowd,” he said.

Billman believes if pipeline projects are allowed to continue and the industry can move the product to electric plants, LNG terminals, manufacturing facilities, etc., the industry will be fine.

“If not, there is no place to take the BCFs of gas produced on a daily basis,” he said.