Making Sense of the 'Overnight' Shale Gas Revolution
- Robin Beckwith (Staff Writer JPT/JPT Online)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- February 2012
- Document Type
- Journal Paper
- 42 - 46
- 2012. Copyright is held partially by SPE. Contact SPE for permission to use material from this document.
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As the worldwide shale gas revolution becomes more entrenched, excitement surrounding it dims. It appears that momentum has slowed in areas identified as hot spots, such as Europe, Argentina, and Australia, while heightened shale gas development in the United States spins consequences for the global liquefied natural gas (LNG) market as well as continued foreign investment in US shale plays—now spurred in some areas to favor extracting shale’s more lucrative crude oil and natural gas liquids.
However, as Advanced Resources International president Vello Kuuskraa said in mid-2011, “The shale gas story in North America has been an overnight revolution that has taken 30 years to develop.” Each country that is prospective for shale gas is following its unique “overnight” revolution trajectory.
The US ‘Overnight’ Revolution
Retired US Energy Information Administration (EIA) administrator, Richard Newell, stated in late 2011 that “Shale exploration is less risky than conventional gas. It’s more akin to a manufacturing process.” This observation would be untrue without the development of horizontal drilling, multistage hydraulic fracturing, and slickwater fracturing.
Horizontal drilling has a lengthy his-tory. In the 1980s, especially to economically develop low-permeability gas reservoirs in ultradeep environments (4000 m to 5000 m), operators sought to drill horizontally, thus remaining in the pay zone for distances up to several hundred meters in order to enhance production. In addition, according to the EIA, “Practical application of horizontal drilling to oil production began in the early 1980s, by which time the advent of improved downhole drilling motors and the invention of other necessary supporting equipment, materials, and technologies, particularly downhole telemetry equipment, had brought some applications within the realm of commercial viability.”
Although experimentation dates back to the 19th century, the first official hydraulic fracture stimulation was performed in the Hugoton gas field in Grant County, Kansas, in 1947 by Stanolind Oil (Standard Oil of Indiana). The application of hydraulic fracturing techniques to stimulate oil and gas production began to grow rapidly in the 1950s.
The US benefited from a tax incentive introduced in 1980 (the Alternative Fuel Production Credit, under Article 29 of the Internal Revenue Code) which, along with high gas prices, jump-started US tight gas exploitation. The incentive ended in 1992. During the 1980s and 1990s, Mitchell Energy and Development experimented with deep shale gas production in the Barnett Shale in north-central Texas. As Mitchell’s success gradually became apparent, other companies aggressively entered this play. By 2005, the Barnett Shale alone was producing almost 500 Bcf per year of natural gas.
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