Shale Gas

History

Shale gas is the fastest growing energy sector in onshore USA. The relatively recent focus on shale gas development goes back 20 years, and is highlighted by the technical understanding gained, and success achieved, in the Barnett shale in Fort Worth Basin, Texas. The Barnett is now the largest producing gas field in the USA.

Historically, when drilling through shale formations operators encountered gas shows, although these rarely materialized into any significant production when a well was tested. On those occasions when the intervals did prove to be productive at commercial rates a natural fracture network could be identified. However, success in developing these intervals on a broad scale was elusive.

During the 1980’s, attention turned to where the introduction of massive artificial fractures, known as hydraulic fracturing, was proving successful. With the evolution of this hydraulic fracturing technology, the application of "slick water" (a simple blend of water and sand) treatments and high pump rates demonstrated the potential for wide scale exploitation at commercial rates. This had the effect in the Barnett shale of doubling initial well rates from the order of 400 Mcfd to around 800 Mcfd, with commensurate increases in cumulative recovery.

In late 1990’s, the application of horizontal drilling enabled more aggressive development as multiple transverse fractures could be placed along a horizontal lateral well-bore. At the same time new approaches in surface measurement while carrying out a fracture treatment, such as the use of tiltmeters and microseismic surveillance methods, started to find application by measuring the direction and extent of these treatments. This allowed even more efficient control of the process, better placement of wells and more economical exploitation. This has brought about a further step-change, making initial well rates of 2 to 4 MMcfd possible. The success in the Barnett shale has led to the application of the same approaches in similar organic shales in Arkansas, Oklahoma and elsewhere in North America. Although the basic technology of shale gas production has now been proven, the differences in rock mineralogy and geology that occur when moving over such large distances means that each new area (such as south central Kansas) still requires that the approach be refined, and proven capable of delivering commercial rates of production.

Production

Production of gas from the shales is not new, although development on a large scale is relatively recent, the best known example of which is the Barnett shale in the Fort Worth Basin of Texas.

Unlike conventional gas production, shale gas potential is not confined to limited traps or structures, and may exist across large geographic areas. Gas is held in the shale not only in tiny pores, but also in a solid solution bound onto the rock grains. The key to producing these shales is connecting the pores through the introduction of an artificial fracture system, and lowering the pressure in the rock (through production) to allow the gas in solid solution to become gaseous and flow.

In addition to higher gas prices, the ability to undertake large scale shale gas development has followed improvements in hydraulic fracturing and horizontal drilling which allows delivery of the massive fracture treatments necessary to obtain gas flows at commercial rates.

Structure

Organic rich shales are hydrocarbon source rocks, which also have the potential to be productive themselves. Oil and gas are generated within organic-rich "source" rocks within the earth's crust and then, being lighter than the water also contained in those rocks, migrate outwards and upwards through pores and fractures in the various different rock formations until they reach an impermeable barrier and are trapped, or escape into the atmosphere. Conventionally most oil and gas production has come from those volumes that have been trapped in rocks that are both porous and permeable, known as reservoirs.

While both reservoir rocks and source rocks may exist over wide areas, in conventional oil and gas plays the requirement for a trapping mechanism will generally limit the extent of any hydrocarbon accumulations to just a small proportion of the total area over which the rocks may exist.

More recently, aided by both technology and price, companies have found it economical to produce gas directly from some of the source rocks themselves, typically shales and coals.

Under the right circumstances gas has been found in sufficient volumes and been producible at sufficient rates to make these "unconventional reservoirs" key exploration and development targets. Although gas is still stored in pores and fractures as in "conventional" gas plays, in the "unconventional" shale plays these pore spaces are small and the fractures are extremely fine.

However, the rock grains also hold (adsorb) gas volumes that have never been released into the pore or fracture spaces, and will never be released (desorbed) until the reservoir pressure is reduced as a result of production. A major advantage that shale source rock reservoirs bring, is that a trap to confine the gas is no longer needed. This expands dramatically the area over which gas can be found, and moves the paradigm for establishing production away from one of location dependency (finding the traps where the gas is present) towards one of optimizing drilling, stimulation and completion techniques.

The United States Geological Survey (USGS) estimates that shale gas resources (that is technically recoverable, may be as much as twice the estimated undiscovered conventional gas resources.

Other Players

Devon Energy Inc - Barnett & Woodford
Chesapeake Energy Inc - Barnett, Fayetteville & Woodford
Newfield Exploration Inc - Woodford
Southwest Energy Inc - Fayetteville
XTO Energy Inc - Barnett