Natural Gas

Independent testing corroborates the existence of large reserves of natural gas at our Holbrook and Golden Eagle prospects.

Golden Eagle

Geological opinion is that the upper Pennsylvanian Beds in the Ismay Formation at our Golden Eagle fields are highly Stressed and Fractured. In addition to Helium it is expected these features will translate into a prolific source of natural gas.

Holbrook Basin

Previous test wells drilled near the apex of the Holbrook anticline produced 2 mmcf of natural gas per day. Natural gas is likely trapped along the Devonian source rocks. We expect the reefs, beaches and sandbars at the edge of the Upper Supai Salt Basin to provide an abundant source of natural gas.

Natural gas prices are at levels not seen since 2008. From 2021 prices rose more than 500% through June 2022.

Natural Gas

Viability

Demand Factors

• Higher average temperatures forces Americans to crank up the air conditioning.

• Supply has failed to keep up with strong demand for gas and there are relatively low inventory levels in the United States.

• Gas producers are under pressure from Wall Street to spend less on drilling projects and more on dividends and buybacks to shareholders.

• Europeans are reliant on energy from Russia who has slashed natural gas flows in response to Western sanctions. Prices in Europe are considerably higher than in the United States.

• Better export profits means the United States has stepped up its exports of LNG to Europe in an effort to mitigate the impact of reduced Russian gas flows.

Applications

Production

US Natural Gas Imports/Exports

Source: US EIA

Source: US EIA

What

Natural gas is a fossil fuel formed from plants, animals, and microorganisms that lived millions of years ago. It is formed underground, under intense heat and pressure which causes the carbon bonds in the organic matter to break down into methane.

Discovery

Geologists identify likely formations via seismic surveys. If the site displays potential an exploratory well is drilled. Results from the test well determines if the formation is commercially viable and if so one or more production wells are drilled horizontally or vertically. In conventional deposits, the natural gas generally flows easily up through wells to the surface and is captured on site.

Processing

Wet natural gas that comes directly from the well is sent to processing plants and processed to separate natural gas liquids (NGLs) and other impurities. Dry, consumer-grade, or pipeline quality natural gas is then usually sent through pipelines to underground storage fields or to distribution facilities for final consumption.

Storage

Natural gas is stored in large volumes in underground facilities and in smaller volumes in tanks above or below ground. Most underground storage is in depleted natural gas or oil fields close to consumption areas. Alternatives are Salt cavern storage facilities and Water aquifers.

Where

Conventional natural gas is found within large cracks and spaces between layers of overlying rock. Shale gas is found where natural gas occurs in the tiny pores within some formations of shale, sandstone, and other types of sedimentary rock. Associated natural gas occurs with deposits of crude oil.

Extraction

Natural gas is most commonly extracted by drilling vertically from the Earth’s surface. In such cases the well is limited to the gas reserves it encounters. Horizontal wells may improve production and generally have less environmental impact. Hydraulic fracturing uses processes to further expand the amount of gas that a well can access. However this practice can have negative environmental consequences.

Transportation

After natural gas is extracted, it is most frequently transported through pipelines (from 2 to 60 inches in diameter) from production fields to markets. When natural gas arrives at locations where it will be used, it flows into smaller diameter mains pipes and then into smaller service lines that go directly to homes or buildings.

LNG

Methane gas is processed into LNG by cooling it to −161°C, at which point it becomes a liquid. This reduces the volume of the natural gas by a factor of more than 600. The reduced volume facilitates economical transport by sea or road to places that do not have pipelines.

The United States is the world's largest producer of Natural Gas and since 2017 has been a net exporter.

The United States has the world's largest reserves, estimated at 1320.5 trillion cubic feet, 20% of global reserves.

The largest reserves in the USA are located in Texas, Oklahoma, and Louisiana, and even without new discoveries are estimated to last at least another 60 years.

• The United States used 30.28 trillion cubic feet (Tcf) of natural gas in 2021

• The equivalent of 31.35 quadrillion British thermal units (quads)

• Which amounted to 32% of U.S. total energy consumption.
  Source: US EIA

Source: US Stats Division