Quotes: US MENA   Enter Symbol: NewsLetter: Search: advanced

Rethinking unconventional oil and gas  Join our daily free Newsletter

MENAFN - Arab News - 26/01/2013

No. of Ratings : 0
Add to Mixx!


 


(MENAFN - Arab News) Most analysts and journalists still draw a sharp distinction between the production of oil and gas from conventional fields and from unconventional resources such as shale. The reality is more complex.

In practice, it is not easy to tell where conventional petroleum production ends and unconventional production begins.

In assessing how quickly shale and other unconventional petroleum resources will be developed, location matters.

Large shale resources in countries which are already major conventional producers and exporters may not have much impact on oil and gas availability: the shale accumulations may end up "queued" behind a long line of conventional projects as the host nation restricts resource development to support prices.

By contrast, shale accumulations in countries which are net importers and/or have few conventional supplies of their own look set to be developed much more quickly.

Unconventional oil and gas resources are often located in the same sedimentary basins as conventional oil and gas fields. In many cases, the shale or tight rocks which are targeted by horizontal drilling and hydraulic fracturing were the original source for the oil and gas found in more conventional reservoirs.

Petroleum geologists talk about a "total petroleum system" (TPS) that includes all the essential elements (source, reservoir, seal and overburden rocks) and processes (generation, migration and accumulation) linked to a particular source of oil and gas.

A total petroleum system will normally include both discrete accumulations of oil and gas in conventional pools, reservoirs and fields, as well as more extensive "continuous-type accumulations" in shales and tight rocks ("The total petroleum system: the natural fluid network that constrains the assessment unit" US Geological Survey, 2000).

For decades, North Dakota produced millions of barrels from wells drilled into conventional oil accumulations found in the Madison and Lodgepole formations. But the source of that oil was probably the Bakken and Three Forks formations, which are continuous-type accumulations, and are now being targeted directly by fracking firms.

The result is that much of the prospecting for shale oil and gas is occurring in areas that have already produced conventional oil and gas. Frackers have turned their attention to the Anadarko Basin beneath Oklahoma and Kansas, areas that have been producing substantial quantities of oil and gas for a century.

Argentina's enormous Vaca Muerta shale formation is thought to be the source for several conventional oil fields in the region. China's Sichuan basin, which is highly prospective for shale gas, has been the home of the country's conventional gas industry for thousands of years.
The North Sea is also thought to contain substantial quantities of unconventional petroleum.

The main difference between conventional and unconventional accumulations is the ease with which oil and gas flows through the formation. Geologists measure this permeability in Darcy units. Permeability for the giant carbonate and sandstone reservoirs of the Middle East is a thousand times or more than for shale formations.

Until the advent of horizontal drilling and hydraulic fracturing, there was no way to extract oil and gas in commercial quantities from low-permeability rock formations such as shale. But by creating a network of tiny fissures in the rock formation, hydraulic fracturing can enable oil and gas to flow through rocks that were formerly impermeable.

However, it is important not to overstate the differences between conventional and unconventional production. Conventional oil and gas producers regularly use hydraulic fracturing, acidizing and other treatments to stimulate production from wells.

Hydraulic fracturing treatments have been performed more than a million times in the US since 1947, in most cases on "conventional" oil and gas wells, according to the National Petroleum Council ("Prudent Development: Realizing the Potential of North America's Abundant Gas and Oil Resources" 2011).

The US Energy Information Administration (EIA) estimates there are 6,622 trillion cubic feet (tcf) of technically recoverable shale gas resources in the United States and 32 other countries.

To put this in perspective, the world's proven resources of (conventional) natural gas are about 6,600 tcf, and total technically recoverable resources are roughly 16,000 tcf, so shale gas extends the conventional resource base by 40 percent ("World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States" Apr 2011).

Some of the biggest shale accumulations are likely to be found in countries that already have substantial conventional gas resources. The US is thought to have 862 tcf of shale gas, Libya's shale resources are put at 290 tcf, and Algeria's at 231 tcf.

The EIA study did not assess shale accumulations around the Middle East Gulf or in Russia and the other countries of the former Soviet Union, but they are thought to be extensive.

The report did not assess shale oil resources at all. But given the geology of total petroleum systems, it is very likely large shale accumulations will be found in the same areas and countries that already have large accumulations of conventional oil.

Crude-laden shale formations like North Dakota's Bakken, Eagle Ford and Permian in Texas, Oklahoma's Anadarko and California's Monterey are all in areas that have produced billions of barrels of conventional oil in the past.

The relationship between conventional and unconventional production in the same area is interesting and has not been properly explored yet. The basic question can be stated simply: Are unconventional oil and gas accumulations in areas already producing substantial volumes from conventional fields more or less likely to be developed than those in areas without substantial conventional petroleum production?

There are some reasons to think unconventional oil and gas deposits may be developed more quickly if an area has a (recent) history of conventional production.

Producing areas like North Dakota, Texas and the North Sea already have pipelines and other infrastructure to enable quick development of extra oil and gas from fracked wells. They benefit from a well-developed network of service companies. Local residents may be more comfortable about oil and gas drilling in their midst.

But in other countries, shale gas and oil accumulations may be developed much more slowly, or not at all, if there are already substantial conventional resources.

If Saudi Arabia discovered significant quantities of shale oil that doubled its conventional resources, would it double output? The answer is almost certainly that it would not. Marketing significant quantities of unconventional oil or gas would threaten to undermine the price for its existing conventional output.

Saudi Arabia is prospecting for shale accumulations, but for gas, not oil.
The same logic probably applies to Algeria (which has enormous shale gas resources according to the EIA) and Qatar (which was not assessed). Both are already major conventional gas exporters. Neither country has an interest in producing large volumes of unconventional gas as well.

The main exception is the United States, which has produced enormous amounts of shale gas, and is now producing large volumes of shale oil, in addition to its large conventional output. The result has been a dramatic drop in prices which has caused severe problems for natural gas producers and cut returns for oil drillers.

In the US, however, oil and gas exploration and production is disbursed among a large number of companies, the market is highly competitive, and strict antitrust rules outlaw any attempt to coordinate production decisions.

In contrast, in countries like Algeria or Libya, production is in the hands of one or a small number of companies, under state control or at least heavily regulated. Monopoly suppliers of oil and gas are likely to produce less and seek higher prices.

Only countries like Argentina or Ukraine, which have relatively modest conventional production but large shale resources, are likely to push for rapid development of unconventional resources.

China is something of an intermediate case. The country has enormous unconventional gas resources, especially in the Sichuan basin, which the government is keen to develop. But until now most of the prospecting activity has been controlled by a small number of state-owned firms that already produce conventional oil and gas.

Some observers, like the International Energy Agency, question whether this has blunted their incentive to explore and develop shale fields. The latest licensing round seems to try to solve that problem by awarding exploration licenses to a much wider range of firms, many of which do not currently have conventional output.

 






  MENA News Headlines
Apr 24 2014Qatar- HH Sheikha Moza Meets Mayor of Kobe Visits RIKEN Research Institution ,Qatar News Agency
(MENAFN - Qatar News Agency) Kobe April 24 - Her Highness Sheikha Moza bint Nasser Chairperson of Qatar Foundation for Education Science and Community Development (QF) today held a meeting with the ...

Apr 24 2014Qatar- Sidra-BMC Event Boosts Biomedical Research Publishing ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - A symposium organised jointly by Sidra Medical Research Centre and BioMed Central (BMC) mulled trends in research and on open access publishing here ...

Apr 24 2014Qatar- Mannai Corp Q1 Net Profit up 73% to QR 150.1 Million ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Exchange listed Mannai Corporation (QE: MCCS) net profit is up 73% to QR 150.1 Million for the first quarter of fiscal year 2014 ending March 31 ...

Apr 24 2014Bahraini firms forecasted to grow 10 pct ,MENAFN
(MENAFN) In a report based on a study of over 650 companies across GCC, Kuwait Financial Centre (Markaz) forecasts a growth of the Bahraini companies' earnings by 10 percent in 2014, Gulf Daily News ...

Apr 24 2014Israeli Army Storms Deir Samit Village West of Hebron ,Qatar News Agency
(MENAFN - Qatar News Agency) bron April 24 - Israeli army forces stormed at dawn Thursday Deir Samit village southwest of Hebron city in the West Bank. The Israeli forces conducted raid and search ...

Apr 24 2014Qatar Airways to add more seats on Doha-Vienna route ,MENAFN
(MENAFN) Qatar Airways plans to offer more 1.700 seats on its Doha-Vienna route beginning from September 2014, according to Gulf News. The company aims to expand the growing passenger demand from ...

Apr 24 2014Qatar- QFC Authority Five-a-Side Football Tournament Kicks Off ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - Qatar Financial Centre (QFC) Authority's first Five-a-side Football Tournament is displaying dribbling skills of executives from Doha's financial ...

Apr 24 2014Qatar Stock Exchange Down 0.05% ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - The Qatar Exchange ended in the red area when trading closed Thursday at 12954.93 points (0.05%) down 6.63 points from the previous closing of 12961.56 ...

Apr 24 2014Georgian Justice Minister Leaves Doha ,Qatar News Agency
(MENAFN - Qatar News Agency) Doha April 24 - HE Minister of Justice of Georgia Tia Tsulukiana left Doha on Thursday morning wrapping up a two-day official visit to the country. An agreement on ...

Apr 24 2014Egyptian Premier Off to Chad ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egyptian Prime Minister Ibrahim Mehlib left cairo on Thursday for Chad the first leg of a three-day two-state trip that will also take him to Tanzania ...

Apr 24 2014Israeli Tanks Enter Gaza Border area ,Qatar News Agency
(MENAFN - Qatar News Agency) Gaza April 24 - Six Israeli military tanks on Thursday entered a border area in the southern Gaza Strip witnesses said. The tanks crossed into Gaza in an area called ...

Apr 24 2014President Salva Kiir Relieves his Chief of the General Staff ,Qatar News Agency
(MENAFN - Qatar News Agency) Juba April 24 -South Sudanese President Salva Kiir relieved Chief of the General Staff of south sudan army James Hoth Mai. This came in a presidential decree aired ...

Apr 24 2014Omani non-oil exports to enter African markets ,MENAFN
(MENAFN) A senior official at the Oman Chamber of Commerce and Industry (OCCI) said that the Sultanate is seeking expansion in new African markets, in a time it is looking forward to reduce its ...

Apr 24 2014Australian Federal Parliament Deputy Speaker Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Canberra April 24 - Australian Federal Parliament Deputy Speaker Bruce Scott met here Thursday with HE Qatar's Ambassador to Australia Yousef bin Ali Al ...

Apr 24 2014Afghan Guard Shoots Dead 3 Foreigners in Hospital ,Qatar News Agency
(MENAFN - Qatar News Agency) Kabul April 24 - Three foreigners including a doctor were shot dead and their colleague wounded when a guard of a private Cure Hospital opened fire on them in the ...

Apr 24 2014Uruguay Public Health Minister Meets HE Qatari Ambassador ,Qatar News Agency
(MENAFN - Qatar News Agency) Montevideo April 24 -Minister of Public Health in Uruguay Maria Susana Mu?iz met here on Thursday with HE qatari ambassador to the republic of Uruguay mohamed hassan ...

Apr 24 2014US Secretary of State Meets Egyptian Intelligence Chief ,Qatar News Agency
(MENAFN - Qatar News Agency) shington April 24 - US Secretary of State John Kerry has met with the Egyptian Intelligence Chief Major General Mohammed Ahmed Fareed al-Tohami who is currently ...

Apr 24 2014King bids to reassure Saudis as MERS deaths hit 85 ,AFP
(MENAFN - AFP) King Abdullah was in the Saudi commercial hub of Jeddah on Thursday in a bid to reassure a worried public as the death toll from the MERS virus hit 85. The Red Sea city has seen a ...

Apr 24 2014Egypt's Interim President Receives Phone Call from South African President ,Qatar News Agency
(MENAFN - Qatar News Agency) Cairo April 24 - Egypt's Interim President Adly Mansour has received a telephone call from President of the Republic of South Africa Jacob Zuma in which they discussed ...

Apr 24 2014Sharjah Ladies Club organizes "Sharjah Ladies run" at the University City ,MENAFN Press
(MENAFN Press) Sharjah Ladies Club gears up to launch "Sharjah Ladies run" at the Sharjah University City. With over 250 participants, the activity aims to encourage women and enable them to ...

more...


 
Live Currency Rates






Google

 
 

Middle East North Africa - Financial Network

MENAFN News Market Data Countries Tools Section  
 

Middle East North Africa - Financial Network
Arabic MENAFN

Main News
News By Industry
News By Country
Marketwatch News
UPI News
Comtex News

IPO News
Islamic Finance News
Private Equity News

How-To Guides
Technology Section

Travel Section

Search News

Market Indices
Quotes & Charts

Global Indices
Arab Indices

US Markets Details

Commodoties

Oil & Energy

Currencies Cross Rates
Currencies Updates
Currency Converter

USA Stocks
Arab Stocks
 

Algeria 
Bahrain 
Egypt 
Iraq
Jordan 
Kuwait 
Lebanon
Morocco 
Oman 
Palestine
Qatar 
Saudi Arabia 
Syria
Tunisia 
UAE 
Yemen

Weather
Investment Game
Economic Calendar
Financial Glossary

My MENAFN
Portfolio Tracker

Voting

Financial Calculators

RSS Feeds [XML]

Corporate Monitor

Events

Real Estate
Submit Your Property

Arab Research
Buy a Research

Press Releases
Submit your PR

Join Newsletters


 
© 2000 menafn.com All Rights Reserved.  Terms of Service | Privacy Policy | Contact Us | Advertise | About MENAFN | Career Opportunities | Feedback | Help