Global Rivalry over Shale Oil/Gas
Shale oil and gas market has been gathering steam across the globe over the past decade. Many countries, particularly the United States, have developed new technologies to produce and process shale oil and gas.
The shale oil and gas industry has reached the stage that US President Donald Trump hopes to make the country energy-independent before his term ends. He plans new laws and instructions for facilitating and accelerating extraction from hydrocarbon reservoirs.
China is home to 1,275 tcf (35 tcm) of shale gas, the largest in the world. It is followed by the United States, Argentina, South Africa, Canada and Australia. Among them, the US has been working to increase shale oil and gas production over recent years. This country is the biggest energy consumer in the world.
The daily increasing shale gas activities in the US brought production from 390 bcf (11 bcm) in 2000 to 11.41 tcf (320 bcm) in 2013. The US shale gas output is forecast to exceed 20 tcf (560 bcm) by 2040. Then the world’s largest economy would be able to largely supply its domestic gas needs. The US would become a net natural gas exporter in 2020. In 2013, the US was producing higher volumes of shale gas compared with offshore and onshore natural gas.
In mid-1970s, the US Department of Energy, in cooperation with Gas Research Institute (GRI), undertook widespread efforts for the commercial production of gas from the Huron Shale in the east. This cooperation led to the development of technology which was instrumental in extracting natural gas from shale gas.
Large-scale natural gas production from shale gas reserves started after the 1980s and the 1990s when Mitchel Energy and Development started shale gas production in the Barnett Shale in Texas.
After this successful gas recovery, other companies joined the game. Natural gas production from the Barnett Shale reached 1.4 bcf (40 mcm) by 2005.
After the profitability of shale gas production was proven in Barnett and Fayetteville, operations were started for extracting from Marcellus, Haynesville, Woodford and Eagle Ford.
Shale gas development is a determining factor in the US natural gas market. The US Energy Information Administration estimates the country’s recoverable shale gas at 750 tcf (21 tcm). The US shale gas is mainly located in Northeast, particularly Marcellus. Northeast holds 472 tcf (13.5 tcm), of which 410 tcf (11.5 tcm) is concentrated in Marcellus. Then the play in the Gulf of Mexico with 100 tcf (3 tcm) and Southwest with 76 tcf (2.2 tcm) are the second and third biggest ones.
Development in Shale Production
North America is currently the world's largest shale gas producer. It owes this status to the hydraulic fracturing technology for extraction from shale fields. According to studies, the wells drilled in the US shale plays can produce between 2 mcf/d and 5 mcf/d (56,000 to 140,000 cubic meters) of natural gas. Within two to three years, a well’s production falls to 1 mcf/d (28,000 cubic meters). Under such circumstances, regular drilling in shale gas plays would be inevitable.
Inclination for shale production over recent years has led to the development of new technologies for causing artificial fractures in the wellbores. Furthermore, horizontal drilling to increase the friction between the reservoir and the wellbore is widely used. In some cases, horizontal drilling continues as far as 3,000 meters for the production targets to materialize. Such technological advancements would increase production at lower costs, while a significant number of drilling rigs are operating in shale zones.
Developing the horizontal drilling technology alongside hydraulic fracturing has facilitated extraction of unconventional gas deposits, particularly shale gas. Hydraulic fracturing dates back to the 19th century, but it became widespread since the 1950s.
As indicated earlier, natural gas production in shale plays is not important due to their geological structure. Production from shales is done mainly in the first two years. According to EIA, most shale recovery has been from Haynesville, Eagle Ford and Barnett-Woodford. The minimum shale gas recovery was from Cincinnati Arch with 120 mcf/d (3.4 mcm/d).
Russia
Russia is currently the largest supplier of gas to Europe. According to BP, Russia was known to hold about 17% of the world’s proven natural gas reserves in 2013. That means future 1,168 tcf (33 bcm) plus current 339 tcf (9.5 bcm).
Europe
Unlike the US, Europe has not been very active in shale gas production mainly due to high population, existence of numerous obstacles to land accessibility and environmental concerns. It has to be acknowledged that the volume of the US unconventional gas reserve is seven times higher than that of Europe.
Europe would end its dependence on Russian gas as well as LNG imports, should it develop its shale gas in the future. Europe is investing in shale gas while at the same time envisioning widespread energy-saving activities.
Europe is forecast to hold about 639 tcf (18 tcm) of shale gas. Poland, France and Norway are the largest holders of shale gas in Europe with respectively 187 tcf, 180 tcf and 83 tcf of shale gas.
The important point is the significant difference between conventional and unconventional natural gas reserves in Europe. In other words, Europe’s shale gas reserves are 3.5 times higher than its conventional gas deposits.