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An introduction to shale oil & gas
Philippe Charlez, IOGP
Shale drilling site in Pennsylvania - Photo Helge Hansen - Statoil
AnadarkoAPIBaker HughesCAPPChevronCNR InternationalConocoPhillipsDevon EnergyExxonMobilHess CorporationHusky Energy
IADCIAGCKosmos EnergyMarathon OilNexen Inc.Noble EnergyPemexSchlumbergerSuncorTalisman Energy
North America
36 members active in region
Afren plcASSOMMINERARIABG GroupBPCairn EnergyDONG EnergyE.ON Ruhrgas ASEnergy Institute
EniFairfield EnergyGALP EnergiaGdF SuezIOOAIPIECAMaersk OilMOL plc
NOGEPANorwegian Oil & GasOil Gas DenmarkOil & Gas UKOMVPerenco HoldingsPremier OilRepsol
RWE Dea AG
ShellStatoilTotalTullow OilWEGWintershall
Europe
43 members active in region
ARPELIBPPan American
PetrobrasPLUSPETROL
South America
31 members active in region
Sasol Sonangol
Africa
41 members active in region
JSOC Bashneft NCOC
Russia & Caspian region
21 members active in region
APPEABHPBillitonCairn IndiaCNOOCINPEX
Origin EnergyPapuan Oil SearchPetronasPTTEPWoodside
Asia & Australia
32 members active in region
ADNOCDolphin EnergyDragon OilKuwait Oil
Qatar PetroleumRasGasYemen LNG
Middle East
33 members active in region
IOGP members produce half of the world’s oil and a third of the natural gas
Our main objective: promote safe, responsible and sustainable operations
Bakken
Marcellus
HaynesvilleBarnett
Eagle-Ford
1. The US shale revolution
In the 1990s and 2000s, the US is increasingly dependent on oil & gas imports. Prices are on an upward trend. It’s the trigger of an energy revolution:Entrepreneurial experimentation in the Barnett Shale proves economic viability and triggers an energy revolution and manufacturing renaissance.
The shale revolution turns the US into one of the top global oil & gas producers
1973 1979 1986
First oilcrisis
Second oilcrisis
Oil countershockOil production peaks:
from now on, US production falls
1970 2006
Peak oil import: the US has never
imported as much oil
The US becomes the largest gas producer in the
world and the second largest oil producer
2014
Oil
Gas
Energy dependency (%)
0%
25%
50%
75%
1 9 17 25 33
Dependency = import/consumption
BP outlook 2014
0%
5%
10%
15%
20%
40%
50%
60%
70%
1 3 5 7 9 11 13BP outlook 2014
Oil dependency (%)
Oil
Gas
Gas dependency (%)
Shale drives down natural gas prices, giving the US economy a competitive edge
Cement Glass Steel Petrochemicals
Europe
Europe
US
US
100 2000.2
0.6
1.0
20122006
Production (Bn Pounds)
Operating costs (US$/pound) Source: IFRI0
5
10
15
20
1 3 5 7 9 11 13
Gas prices ($/MBTU)
US
Europe
Japan
BP outlook 2014
Energy-intensive industries benefit most:
Costs in the chemical industry drop, boosting production
Jobs are created (direct, indirect, induced) Source: IHS CERA
Source: Pétrole et gaz informations N° 1831
Coal
Gas
Gas and coal in the European power mix
10%
20%
30%
40%
1990 2012BP outlook 2014
US power generation moves to gas fromcoal, lowering GHG emissions
See also http://rhg.com/notes/neck-and-neck-us-and-european-ghg-emissions-trends
Coal consumption (Mn tons/year)
400
450
500
550
600
5.4
5.8
6.2
6.6
1 3 5 7 9 11 13
Coal -21%
GHG (Bn tons/year)
GHG -13%
Meanwhile, the EU moves in the opposite direction:
Gas and coalin the US power mix
Renewables have continued to grow, not crowded out by gas
2. Some science about shale oil and gas
Shale oil and gas are exactly the same products as oil and natural gas from conventional extraction.
Oil and gas are chemicals made just of two elements:
carbon and hydrogen.
The microscopic plants and animals that lived in the
ocean millions of years ago sank to the bottom of the sea.
Buried deeper and deeper under the surface of the
earth, heat transformed them into hydrocarbons.
How oil & gas are formed
Basement
Land surface
Overburden
Shale oil and gas are exactly the same product as oil and natural gas from conventional extraction.
The difference is the source: conventional exploits reservoir, shale exploits source rock
Source rock
Shale gas is natural gas!
Reservoir
Seal
TrapConventional hydrocarbons are found in reservoirs:1. Coarse grains
2. High permeability
3. Limited extension (at most as large as Greater London)
Shale is found in the source rock:1. Very fine grains
2. Very low permeability
3. Very large extension (it could be as large as half of France)
Hydrocarbons migrate from source rock and are sometimes trapped in a reservoir
The first hydraulic fracturing happened in Oklahoma in 1947.
More than two million have been carried out by now in the US.
Geologists have known about gas from shale
for decades, but for many years
development was not economically viable.
In the late 1990s, a combination of two
proven technologies –horizontal drilling and hydraulic fracturing –and advanced IT made
gas from shale commercially viable.
Non economic production
Non economic production
Economic production
Economic production
Uneconomic permeability
Shale oil & gas
Economic permeability
Conventional
Technology made shale oil & gaseconomically viable
11 E
iffel
tow
ers
0 m
500
1,000
1,500
2,000
2,500
3,000
9 Ei
ffel t
ower
s
Shale is normally at least 1,000 metres deeper than fresh water aquifers
Multiple layers of steel and concrete isolate the well from the freshwater aquifers
600 m
Hydraulic fracturing happens thousands of metres underground.
A fracture’s maximum diameter is about 600 metres.
Dept
h (m
)After Warpinski et al
Depth of fracturing stages
Aquifer of potable water
6000 fracturation stages
Fracture tops
Fracture bottoms
4000
3000
2000
1000
Fracture profiles
Life-cycle water usage and radioactivity
RT Paris New-York (0.08)
Full body scanner (10)
Barnett (0.1/yr)
Admitted (<20)
Advised (<1/yr)
Forbidden (>20)
Living in a shale gas basin like the Barnett in the US exposes a person to as much radiation as flying a
round trip from Paris to New York City. One medical scanner is equivalent to living for 100
years in the Barnett basin.
Compared with conventional gas, shale gas requires only 1.7% additional water.
Industry can use fresh water, but also brackish and sea water.
Energy M3/MWhNuclear 2.1Coal 1.9Gas 1Shale gas 1.017
Water in storage before use
Water 90% - 10,000 to 20,000 m3/well (5 to 10 pools) - no need of high quality water: sea water or
water from salted aquifers also works
Chemicals 0.5-1% - used to viscosifythe fluid, remove
bacteria and prevent corrosion
Sand 9% - 1,500 to 2,000 tons -keeps the fissures in the rocks open and allows the gas to flow to the well
Fracturing fluids are 90% water, 9% sand, 1% chemicals
The industry voluntarily discloses the chemicals it uses for hydraulic fracturing in the EU: www.ngsfacts.org
Additional information on chemical disclosure for Polish wells can be found at www.opppw.pl
1. The water flowing back from the well to the surface is treated and it can be fully reused.
2. Treatment captures the methane mixed in the water, avoiding GHG emissions.
3. The reduction of methane flaring and venting further reduces GHG emissions.
JA Costa (2011) Total , T. Stephenson (2012) IPIECAJ. Broderick, et al (2012)
Tyndall Centre University of ManchesterAllen T et al (2013)
53%36%
4%7%
Drilling + fracturing+ logistics
Electricalgeneration
Flaring& venting
Fugitiveemissions
Produced water is handled carefully and can be reused
Pad
100 m= 2 x
Horizontal multifractured
Dep
Low footprint: a shale gas pad has the extension of two football fields
Pad during drilling (lasts about 1 year)
Pad in production (lasts about 20 years)Source: Chesapeake
Wind mills
Solar panels
To produce an equivalent amount of energy with wind mills or solar panels, we would need 10 to 30 times the surface
http://zebu.uoregon.edu/disted/ph162/l4.html
Source: Lane Energy, Poland
Earthquakes: less than the vibrations from a truck
Industrial activities induce low-intensity seismic events:
• Mining, dams• Geothermal energy• Oil & gas extraction
In shale gas, vibrations are generally lower than a truck passing by.
The Paris metrovibrations are equivalent to 7 times Blackpool
Hydraulicfracturing
Source: International Gas Union
Blackpool* = 2.3
Truck vibration
* In 2011 there were small tremors at Preese Hall near Blackpool, UK, where hydraulic fracturing operations were taking place.
?
1,381
7,1405,661
314
2,587
Shale is a global phenomenon!
Mature stage
Pilot stage
Non-mature stage
China
190
32
Argentina
136
27
Algeria
120
6
Canada
97
9
US
96
58
Mexico
93
13
Australia
74
18
South Africa
66
0
Russia
49
76
Brazil
42
5 Gas
Oil
Notional additional resourcesGas Oil
Gboe GbblConventional 1100 1650Shale oil & gas 1200 350Additional (%) 110 20
Source : EIA 2013
Shale gas Shale oil
Gboe GboePoland 25 3,3France 23 4,7Romania 9 0,3Denmark 5 0UK 4 0,7Netherlands 4 2,9Others 9 1Total 80 12,9
Country
Europe
Main shale gas resource areas in Europe
The EU has potentially significant shale resources
Europe’s shale gas resources are within the Top 10 worldwide
Sources EIA 2014
In 2035, the EU is expected to import 89% of its gas. Shale gas can cut that to as little as 62%
Lower energy prices compared with a no-shale gas scenario: higher available income for households and a more competitive industry.
It could also mean up to 3.8 trillion euros added to the economy between 2020 and 2050.
Source: Poyry/IOGP 2013
0
5
10
15
20
1 11 21 31 41 51
Production (bcf/day)
Shale gas boom
Some shale gas
2 daily French consumption
4 daily French consumption
50 years productionSource: Poyry/IOGP 2013
It could mean up to 1.1 million new jobs created by 2050.
A 30-year development would require:• 23,000 to 50,000 wells• 450 mln m3 to 1 bln m3 water*• 230 km2 to 500 km2
* in 2012, France used 33 Gm3
Production could contribute to EU security of supply, employment, growth
Benefits could be significant, even without being revolutionary
IOGP activities on shale gas
• NGS Facts (chemicals disclosure website): http://www.ngsfacts.org
• IPIECA/IOGP Good Practice Guidelines, Dec. 2013: http://www.iogp.org/pubs/489.pdf
• IOGP Fact Sheets: Chemicals, Seismicity, Emissions, Water: http://www.iogp.org/PapersPDF/v2_Shale_FAQs_1.2_high.pdf
• Studies: • Poyry/Cambridge Econometrics – Estimating the macroeconomic potential of
shale gas in Europe: http://www.iogp.org/PapersPDF/poyry_public_report_ogp__v5_0(1).pdf
• ERM – Recovered water management study in shale wells: http://www.iogp.org/PapersPDF/water-mgmt_OGP_Final_Report_2(2).pdf
For more information please contact:
www.iogp.org
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