Sweet and Sour

The full version of this article can be read in the April 2011 edition of Hydrocarbon Engineering.

Over the past several decades, sulfur industry analysts have authored numerous papers offering forecasts for involuntary sulfur supply exceeding demand at increasing rates. These predictions are founded primarily on the anticipated accumulation of several compounding factors, including greater demand for hydrocarbon products, increasing ‘sourness’ of reserves, reductions in permissible atmospheric emissions, hydroprocessing for cleaner fuels and trends in refinery bottoms upgrading. However, in 2010, many signs point to a future fuelled by unconventional gas. Not only is unconventional gas incredibly abundant, it has recently become economic to produce and is relatively ‘sweet’, containing little or no sulfur.

Shale gas has been called a game changer, a revolution, creating a paradigmatic shift in the North American energy industry. It promises to deliver abundant, economical natural gas for decades to come, not only in North America, but also in many other energy intensive regions of the world such as China, Europe, India and Australia. Some are relying on shale gas to generate electricity with half the greenhouse emissions of coal, while others are touting it as the vehicle fuel of the future. With its low sulfur content, unconventional gas will certainly affect the sulfur supply outlook for the future, but how much of an impact can be expected?

The sulfur ‘glut’

It is not the supply/demand imbalance in any given year that has raised the real concern for the industry. The primary focus has been the potential for year over year accumulated surpluses resulting from the fact that sulfur is an involuntarily produced byproduct, appearing to have ever increasing production potential as the world turns to increasingly sour oil and gas reserves.

During the 2005 – 2007 period, an effective undersupply was experienced, evidenced by soaring prices in 2007 – 2008, in some cases more than tenfold above the average price for the period. Elemental sulfur prices in excess of US$ 800/t created enthusiasm and interest for sulfur producers but wreaked havoc on buyers who rely on sulfur as an important raw feedstock for their industries. The sulfur price volatility encountered during the 2007 – 2008 period should not go unnoticed; to the contrary, perhaps it should be used to demonstrate just how fragile the sulfur balance may be.

The rise of unconventional gas

Current studies estimate a global shale gas reserve of approximately 16 100 trillion ft³, compared to 6600 trillion ft³ for conventional gas. Based on the current subsurface technologies available, it is estimated that nearly 40% of this endowment will be economically recoverable. Thus, recoverable shale gas reserve volumes are approximately equivalent to current conventional gas reserve volume estimates. It should be emphasised that these are the best estimates available today and are expected to change as more accurate assessments are performed in the future. However, given this recent supplement of sweet, unconventional natural gas that will double the world’s gas supply, it appears safe to conclude that there will not be a 'peaking' of sweet gas any time in the near future.

The full version of this article can be read in the April 2011 edition of Hydrocarbon Engineering.

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