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Shale Oil and Gas Transforms America, but the Rest of the World Lags Behind

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Shale Oil and Gas Transforms America, but the Rest of the World Lags Behind Keywords: Drilling • Fracking • Shale gas • Wastewater I NDUSTRY FOCUS Would you like to receive a hardcopy of this magazine's full publication? Please include the month and year of publication and contact Mrs. Erica Riethorst at [email protected] 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 Shale oil (or kerogen 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 (pyrolysis, hydrogenation or thermal By James Chater dissolution). The oil can be heated in an enclave or in situ. 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 minerals 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 www.valve-world.net November 2013 51 I NDUSTRY FOCUS 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, Texas), where the fi rst well opened in 1981. Other formations include Haynesville (gas) Fayetteville (Arkansas), Marcellus (gas; Appalachia and New York State), Bakken (an oil shale formation straddling the border with Canada) and Eagle Ford (an oil shale formation extended from Texas across the border into Mexico). Just Marathon Oil’s shale oil operation at Eagle Ford, Texas. south of the US border, Mexico has just started exploiting its abundant reserves and China, but shale oil extraction also technology are occurring. For example, a by opening its fi rst shale gas well earlier fl ourishes in Estonia, Brazil 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 hydraulic fracturing 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 France, where patented waterless fracturing technology. Ecology Minister Delphine Batho has said The Canadian company proposes she would not allow France to be “turned propane (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 Baker Hughes 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 ENI 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 Gazprom has been accused of “sleeping” countries investing in the North America Phillips, Dow Chemical, Formosa Plastics, through the shale revolution while seeing shale boom. India is another country with Occidental Petroleum 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 Rosneft 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.
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