Economic Analysis of a Marine Gas Hydrate Operation from the sea floor and its sediments: The case of hydrate bearing sediments in the Atwater Valley

Economic Analysis of a Marine Gas Hydrate Operation from the sea floor and its sediments: The case of hydrate bearing sediments in the Atwater Valley

Harskamp, J.P.R.

Ruiter, J.J. (mentor)
Rudolph, E.S.J. (mentor)
Van Muijen, H. (mentor)
Vercruijsse, P.M. (mentor)

Civil Engineering and Geosciences

Resources Engineering

2010-06-03

Natural gas is an important energy source. Recently the world-wide consumption is rapidly increasing due to the growing demand caused by industrial growth and also by shifting to cleaner energy source driven environmental concerns. To satisfy demand also in the future, it is necessary to look for alternatives sources of supply of energy. An alternative could be the gas production from Natural Gas Hydrates (NGH), which are ice-like crystalline compounds that form from water and gas at low temperature and high pressure. NGH are found in subsurface either near the surface in arctic regions or in deep water marine environments. The estimated volume of NGH with respect to energy contains twice the amount of currently recoverable world-wide fossil fuels. IHC Merwede (IHC) is interested in the potential of deep sea mining of NGH. This defines the research question: “Is deep sea mining of gas hydrates from the sea floor and sediments feasible from a technological and economic perspective?” An extensive review of literature on NGH-deposits shows that they exist globally but occur predominantly around the edge of the continents in marginal marine basins and some in permafrost regions. The occurrence of hydrates depends on the temperature, pressure and the kind of gas. Depressurization, thermal- and chemical stimulation are three possible dissociation mechanisms for the production of hydrocarbon gases from NGH. For further research the Atwater Valley in the Gulf of Mexico was chosen based on the high potential and available information about this site. This research was necessary to verify the technological and economic perspective of mining marine natural gas hydrates. The main conclusions concerning the technological perspective were identified: Deep sea mining of gas hydrate bearing sediments (GHBS) is possible from a technological point of view. However, for a reliable feasibility study on potential mining operations of GHBS more research into geological data needs to be done. Nevertheless, this study shows that existing know-how and equipment for deep-sea mining could be used to excavate GHBS. Thereby, future investigations should focus on the intermediate transport of the excavated sediment to a separation unit. Even though several technologies are available to remove liquids and solids from gases there are no operational plants to process GHBS. Compressed Natural Gas seems to be the best way to transport the gas from the mining site to its market. The main conclusions concerning the economic perspective were identified as: The project’s economic viability of the base case is negative. A sensitivity analysis (a relative change of +/- 30% on the input variables) shows that the economic viability remains always negative. This is mainly caused by the high operating- and capital expenditures. Especially the CAPEX on the initial phase of the operation is high. The revenues are not high enough to offset these expenses. To make the mining economically attractive, the required gas price has to be almost ten times the current gas price of 4.2 US$/mmBtu. Nevertheless this thesis provides insight into the various aspects of the recovery of natural gas from GHBS operated from a vessel. Based on the conclusions of this research it is recommended to: Do detailed research into: geotechnical properties of GHBS such as compressive-, tensile- and cohesive strength; the behaviour of NGH during extraction and vertical transportation; the environmental impact of physical mining of marine gas hydrates; the processing of GHBS; the producable reserves from NGH-deposits; and technological innovations to lower OPEX and CAPEX. The developed cash flow model for NGH-operations allows evaluating the financial parameters. Further research and development is recommended to optimise the model for other deep sea mining operations.

hydrates
deep sea mining
natural gas
feasibility study

http://resolver.tudelft.nl/uuid:d15748e5-4cdd-44cc-91a5-1a496a87b584

2012-06-03

Student theses

master thesis

(c) 2010 Harskamp, J.P.R.