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Gustavo Coronel: Oil shales: still in the future.
Shale gas: already in the pipeline

 

PW has just published an article (“American Oil”, by Elio Ohep) on the oil shales of western United states, purported to contain immense reserves of oil in place, only comparable to those existing in Saudi Arabia. It is true that the oil shales of the United States contain much oil but it is also true that no economic extraction method has been developed so far. This makes it impossible to know how much oil will be recoverablke from these oil shales. The U.S. Geological Survey did a recent evaluation of the oil shales of the Piceance basin, Western Colorado, and estimates there are about 1.5 trillion barrels of oil in place .  When the shales are heated to 600/900 degrees fahrenheit the oil starts to seep out since the shales do not contain oil as such but a substance called Kerogen. In fact, there has to be some sort of a refining process in place in order to produce the oil. This new estimate is about 50 percent larger than previous evaluations. Other basins of the United States , such as the Uinta basin in Utah and the Green River basin of Wyoming are also being re-evaluated. USGS Energy Resources Program Web site. Visit this link for more detailed information

Shale gas is something different.

While oil shales are very promising but still in the future, there is another source of domedstic U.S. energy being tapped at this point in time. We are talking about shale gas.

What is shale gas? is natural gas contained in shales, a type of sedimentary rock with low porosities and permeabilities, the two petrophysical characteristics that allow for fluid production. For many years these unfavorable characteristics delayed the production of shale gas deposits. From 1980 onwards, thanks to better technology such as formation fracturing and horizontal drilling, the production of shale gas in the U.S. started to increase and has been booming in recent years.

Jesse Bogan reports in Forbes, July 2009, ( “The father of shale gas”) that “Gas plays have been developed at a fever pitch in recent years by independent exploration and production companies likeDevon Energy, Goodrich PetroleumandXTO Energy. But it's costly.

First they drill down several thousand feet and bank the bit horizontally through the shale. Then they send a 2 million to 4 million gallon mixture of water, sand and chemicals down to break open the rock and release the gas”.

Some analysts claim that shale gas could contribute up to half of the U.S. total gas production by 2020. Resources are very large and are distributed over several U.S. states, with some of the largest deposits concentrated in the area around Fort Worth, Texas. The main factor controlling the rate of development of these resources will be economic, since some analysts estimate that the price should be about 20 percent higher than at present to allow for intensive, continued development. A study made by the Baker Institute for Public Policy at Rice University suggests that future U.S. shale gas production could even have a geopolitical impact, influencing the prices of Russian natural gas being sold to Europe.

However, the more immediate impact of shale gas production seems to be domestic since it would seem to provide the U.S. wih a welcome, clean energy source for its transition from imported fossil fuel consumption to the production of sufficient domestic, renewable sources of energy. Natural gas is already capable of partially replacing liquid fuels in the transportation sector (although not to the extent envisioned by T. Boone pickens) and of replacing coal for electricity generation in order to help the environment. The recent acquisition of shale gas producer XTO by ExxonMobil for $31 billion underlines the growing importance and momentum of this resource for the U.S. energy sector .

President Obama’s Energy plan is based on two main objectives: to diminish imported fossil fuel dependence, usually coming from politically hostile countries and developing cleaner, non-renewable sources of energy. To this end the U.S. would invest $150 billion in the next ten years to catalyze private efforts to build a clean energy future and create five million new jobs. It is evident that the development of these new sources of cleaner energy will require time, not only the ten years of research that would be partly financed by the Federal Government, but at least another decade of commercial development, a transition that could be significantly filled by natural gas. There is no doubt that shale gas would have an important role to play, not only for the next 20 years but for many more years to come, given the importance of the deposits already identified.

Although oil shales represent a future, important resource, shale gas is already here and iys production is booming, thanks to the vision of billionaire George Mitchell. Mitchell started his efforts at getting gas from shales in the early 1980’s and spent millions and years trying to make it work. Now it works.

Rev.1

 

 

Gustavo Coronel is a 28 years oil industry veteran, a member of the first board of directors (1975-1979) of Petroleos de Venezuela (PDVSA), author of several books. At the present Coronel is Petroleumworld associate editor and advisor on the opinion and editorial content of the site. Petroleumworld does not necessarily share these views.

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Petroleumworld News 12/ 15/09

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