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Home , Shale oil extraction

Keywords: Drilling • Fracking • • Wastewater I NDUSTRY FOCUS

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Shale oil and gas transforms America, but the rest of the world lags behind

water laced with chemicals and sand used The shale revolution is leading the United States towards an industrial as a proppant because it props open the renaissance. Several industries are benefi tting from the knock-on pores of rock. effects, especially energy and petrochemicals. In the rest of the (or oil) is obtained by world, shale has not lived up to its initial promises: the know-how is heating the organic matter within the still concentrated in North America, reserves have had to be revised rock (kerogen) so as to covert it into downwards and investments will be slower and more diffi cult to synthetic oil and gas. It is then separated make. Overall, however, the success of shale gas projects is leading into combustible gas and low-grade oil to increased orders for the valves sector. used in heating or in chemical processing. Various techniques are used to heat the oil (, or thermal By James Chater dissolution). The oil can be heated in an enclave or . For instance Israel’s IEI proposes to warm up its recently Shale, shale oil, shale gas progress has lagged far behind North discovered kerogene reserves by drilling Market developments and technology America’s. holes and lowering stainless steel cables have conspired to unlock a new Shale is a fi ne-grained sediment consisting to a depth of 300m. hydrocarbon source. Thanks to “fracking” of fl akes of clays, quartzes, calcite and and advances in horizontal drilling, other that have hardened over Resources extraction of oil and gas from shale the millennia to form rock. We may The world abounds in shale resources, has become economically viable. This distinguish between shale oil and shale but estimates of the amount of reserves revolution is transforming parts of North gas. Gas is extracted by “fracking”, that is, they contain are at best rough, often America. Shale reserves are plentiful in fracturing the rocks so as to liberate the subject to revision. The largest shale oil the rest of the world too, but so far their gas. This is normally done by means of reserves are thought to be in Russia, USA

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Projects The United States is leading the world in terms of shale oil and gas exploitation. There have been some mistakes, but the country’s economy has benefi tted, dependence on imports is being reduced, and consumers are paying less for their gas (see box). Drilling is occurring in several areas. One of the most mature formations is the Barnett Shale (Fort Worth Basin, ), where the fi rst well opened in 1981. Other formations include Haynesville (gas) Fayetteville (Arkansas), Marcellus (gas; Appalachia and New York State), Bakken (an formation straddling the border with Canada) and Eagle Ford (an oil shale formation extended from Texas across the border into Mexico). Just ’s shale oil operation at Eagle Ford, Texas. south of the US border, Mexico has just started exploiting its abundant reserves and , but shale oil extraction also technology are occurring. For example, a by opening its fi rst shale gas well earlier fl ourishes in , and Germany. company called OptaSense has invented a this year. To the north of the USA, With regard to shale gas reserves, China way of “listening” to fracturing inside the Canada has many shale gas prospects, is thought to have the largest technically well through a fi bre optic cable, enabling the most developed of which is Horn recoverable reserves (1,115TCF), operators to react to events as and when River in British Columbia. However, followed by Argentina, Algeria, USA and they occur. One researcher accidentally political opposition to fracking is great, Canada (1). discovered a way of decontaminating the and Quebec province has imposed a wastewater produced by hydrofracking. moratorium. Technology A nano-engineered material, which Critics point out that has been called Osorb, soaks up the consumes huge amounts of water, can hydrocarbons like a sponge (2). Measures cause earthquakes and disrupt aquifers. are being taken to reduce water use, Moreover, the chemicals in the water either by recycling it or introducing a can cause pollution. These concerns thickening agent. Perhaps the most far- have led to outright bans, for instance reaching of these inventions is GasFrac’s in New York State and in , where patented waterless fracturing technology. Ecology Minister Delphine Batho has said The Canadian company proposes she would not allow France to be “turned (LPG) gel as a substitute for into a giant gruyère”. Hard cheese for water and chemicals. Apart from the the oil and gas companies! But these bans danger of causing a water shortage, are compensated for by countries more one disadvantage of water is that it sympathetic to shale gas, such as the USA, can impede the fl ow of hydrocarbons. UK, China and Poland. Propane gel has the advantage that it Technological progress is nonetheless reverts to vapour while still underground essential if shale gas extraction is to and thus returns to the surface in a become more sustainable. And fortunately recoverable form. Waterless fracking can the technology continues to evolve. therefore improve the effi ciency of wells, Horizontal drilling has been progressing and there are logistical gains to boot: less to the point where the horizontal leg can traffi c, easier clean-ups. Waterless fracking extend to over a mile, even up to 8,000 has already been used with some success feet. This extends the life of wells, which in North America’s dry regions, especially The FracPoint™ openhole fracture some critics charge is not long enough the Eagle Ford formation in Texas. Its main completion system is designed to isolate multiple to justify the expense and environmental disadvantage, apart from higher initial zones in open and cased holes precisely and impact of drilling. Breakthroughs in fracking costs, is the risk of explosion. reliably.

52 November 2013 www.valve-world.net I NDUSTRY FOCUS

Legend Assessed basins with resource estimate Assessed basins without resource estimate

Advanced Resources International, Inc., www.adv-res.com

Shale oil and shale gas formations, as of May 2013. Source: US Energy Information Administration and United States Geological Survey.

The arrival of shale gas has created a shale gas business by holding a second including the Cardium shale oilfi eld in value chain, reviving US industries and round of auctions in which both Chinese Alberta. No doubt it will use this occasion providing jobs. Electricity prices have been companies and Sino-foreign ventures to acquire knowledge in horizontal drilling driven down, encouraging a revival in were allowed to bid. A third round could and fracking technology, which it can then energy-intensive industries such as steel, take place later this year. apply to its own shale formations. Other petrochemicals and fertilizers. The French Russia, like China, has abundant shale companies that have invested in North steelmaker Vallourec is building a plant resources but little of the technological America include France’s Total, Italy’s in Youngstown, Ohio, at the heart of the expertise needed to develop them. The and Norway’s Statoil, which owns a large Marcellus and Utica shales, to produce the US shale gas boom is threatening Russia’s stake in the Marcellus shale. seamless OCTG tubes used in horizontal status as the no. 1 gas producer, and Russia and China are not only the only drilling. Along the GoM coast, Chevron has been accused of “sleeping” countries investing in the North America Phillips, Dow Chemical, Formosa , through the shale revolution while seeing shale boom. India is another country with Occidental and Williams its exports squeezed. However, efforts plentiful, though unproven, shale reserves, are among those building or expanding are under way to regain the lost ground. and it also faces the challenge of acquiring chemical facilities (3). In return for opening up its Arctic waters expertise as well as developing an China is believed to hold huge reserves to ExxonMobil, Russian oil company infrastructure. To this end, India’s Reliance of shale gas, larger than those of the USA has gained a share in the US Industries acquired a 40% share of Atlas and Canada combined. It hopes one company’s projects in North America, Energy’s leasehold in the Marcellus shale. day to produce half the gas it consumes from its own shale resources. However, What are countries paying for Country USD price per BTU development has been slower than their natural gas? Canada 2.86 expected, and China is likely to miss its The answer (below) makes more pleasant 2015 target for production. The country reading if you happen to live in North USA 3.34 lacks technological know-how, therefore America than if you live in Asia, as the UK 9.73 it is looking for partners, especially US further east you go, the higher your gas Germany 10.48 oil and gas companies, and has invested bill is likely to be. The astonishingly cheap India 10.75 heavily in both US and Canadian tight gas prices in North America lead to one formations. Also, the Chinese company conclusion: the continent can look forward Brazil 11.95 has signed an agreement with Shell. In to a great future as a natural gas exporter. China 12.75 December 2012 China opened up its

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Marcellus black shale exposure on Interstate 80.

Australia has developed a major gas land of Cheddar and Cheshire cheese, industry and is a key exporter to China. The shale value chain gruyère holds no fears. However, as in The country is likely to develop its shale The shale revolution is stimulating a many other parts of the world, it is early and gas resources at a moderate pace. number of projects in the USA and days yet, and a great deal of geological The Norwegian national Statoil has just several other parts of the world: research and test drilling would have to acquired the Southern Georgina play • Boardwalk Field Services will occur before prospects became clearer. in Australia, its fi rst shale operatorship construct a cryogenic gas Conclusion outside the USA. Elsewhere in Australasia, processing plant in the Eagle Even in North America, the shale revolution has started to eye its East Ford Shale. is still in its early days but in the rest Coast Basin, believed to have strong • Dominion is building a natural of the world, it has hardly even begun. potential for shale oil. gas processing and fractionation Development is being held up for various Europe is one region where shale plant in Natrium, West Virginia. reasons, including shortage of expertise, prospects are not quite as rosy as • Alstom has been asked by technical diffi culties, poor infrastructure and once thought. A few years ago the Estonia to build a power plant EIA predicted that Poland had enough that will run on shale oil. inadequate regulative frameworks. In the US the shale boom has increased the demand reserves for 300 years; later, this fi gure • Chesapeake and partners are was revised down to 70 years. Poland building a natural gas processing for valve- and valve-related products and suffered a setback when ExxonMobil, plant in Columbiana County. also given a boost to other industry areas. Marathon and Talisman Energy withdrew. • VKG is upgrading its shale oil It is too soon to say when or whether this Among the reasons cited were lack refi nery complex in Kothla-Jarve, will happen in the rest of the world. of profi tability, technical obstacles not Estonia. References encountered in the North American • will build its fi rst oil shale- shales, and complicated environmental fi red thermal power station. (1) www.eia.gov/analysis/studies/ regulations. Poland has sought to reverse worldshalegas. the damage by promising to improve (2) http://oilprice.com/Energy/Natural- regulations and announcing that no shale England doubled (4). Drilling companies Gas/Breakthrough-in-Fracking- profi ts will be taxed before 2020. have estimated that they could extract Wastewater-Cleanup.html. Elsewhere in Europe, expectations in about 130 trillion cubic feet of shale gas (3) www.economist.com/news/special- the UK continue to fl uctuate. In June (compared to UK annual consumption report/21573279-shale-gas-and- 2013 a government report stated that of 3 billion cubic feet). The British oil-bonanza-transforming-americas- shale resources could be far greater than government is favourable to shale energy-outlook-and-boosting-its. previously thought, with the estimate development and is introducing measures For other projects, see box. for shale gas reserves in the north of to streamline project approvals. In the (4) BBC report, 7 June 2013.

56 November 2013 www.valve-world.net