The Pennsylvania State University The Graduate School John and Willie Leone Family Department of Energy and Mineral Engineering PATENT ANALYSIS OF SHALE GAS TECHNOLOGY TO IDENTIFY THE U.S. GOVERNMENT’S ROLE IN ITS DEVELOPMENT A Thesis in Energy and Mineral Engineering by Seth Ofosuhene Apenteng 2016 Seth Ofosuhene Apenteng Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Science August 2016 The thesis of Seth Ofosuhene Apenteng was reviewed and approved* by the following: John Yilin Wang Assistant Professor of Petroleum and Natural Gas Engineering Thesis Co-advisor Zhen Lei Associate Professor of Energy and Environmental Economics Thesis Co-advisor Mku Thaddeus Ityokumbul Associate Professor of Mineral Processing and Geo-environmental Engineering Sanjay Srinivasan Professor of Petroleum and Natural Gas Engineering Interim Associate Department Head for Graduate Education *Signatures are on file in the Graduate School iii ABSTRACT The substantial increase in shale gas production has allowed the United States to achieve self- reliance and greatly improved its energy security, and this has in turn had an influence on the world economy as well as geopolitical developments. The U.S. Department of Energy estimate a 45% increase in total U.S. dry natural gas production, from 24.4 Tcf in 2013 to 35.5 Tcf in 2040. The analysis in this thesis helps us understand technologies landscape and role of government and industry in Shale Gas technology development. iv TABLE OF CONTENTS List of Figures .......................................................................................................................... v Chapter 1 Introduction ............................................................................................................. 1 Chapter 2 Literature Review .................................................................................................... 4 2.1 Industry Structure in Shale Gas Development ........................................................... 4 2.1.1 The Role of the Natural Gas in the US Energy Portfoloio ...................................... 4 2.1.2 The US Shale Gas Basins ........................................................................................ 11 2.2 The Evolution of Drilling Technology in Shale Gas Development ........................... 17 2.2.1 Shale Gas Geology .................................................................................................. 23 2.2.2 The Drilling Technology ......................................................................................... 26 2.2.3 The Hydraulic Fracturing Process ........................................................................... 74 2.2.4 The Fracture Treatment Monitoring Methods ......................................................... 80 2.2.5 The Life Cycle Stages of a Shale Gas Investment .................................................. 81 Chapter 3 Problem Statement .................................................................................................. 86 Chapter 4 Methodology ........................................................................................................... 88 4.1 Scientific Literature Patent Analysis Methodology ................................................... 89 4.2 AcclaimIP Patent Analysis Methodology .................................................................. 102 Chapter 5 Patent Analysis from Scientific Literature .............................................................. 103 5.1 Filing Trend Analysis ................................................................................................. 104 5.2 Assignee Analysis ...................................................................................................... 106 5.3 Technological Distribution Analysis .......................................................................... 108 5.4 Intellectual Property Analysis .................................................................................... 112 5.5 Government Funding Analysis .................................................................................. 116 Chapter 6 Patent Analysis from AcclaimIP Software .............................................................. 119 6.1 Filing Trend Analysis ................................................................................................. 120 6.2 Assignee Analysis ...................................................................................................... 121 6.3 Technological Distribution Analysis .......................................................................... 122 Chapter 7 Discussion and Recommendations .......................................................................... 123 7.1 Role of Government Policies ..................................................................................... 123 7.2 Role of Evolving Technologies .................................................................................. 127 7.3 Role of Economics and Political Factors ................................................................... 137 Chapter 8 Conclusion ............................................................................................................... 142 References ........................................................................................................................ 143 v LIST OF FIGURES Figure 1. Trend in different types of gas production in the U.S., units of trillion cubic feet .......................................................................................................................................... 2 Figure 2. The nominal expenditures as percent of US nominal GDP ...................................... 5 Figure 3. The nominal expenditures as percent of nominal gross output ................................ 5 Figure 4. The primary energy use by fuel 1980-2040 (quadrillion Btu) .................................. 6 Figure 5. The natural gas consumption by sector 1990-2040 (in trillion cubic feet) ............... 7 Figure 6. The annual average Henry Hub spot natural gas prices,1990-2040 ($/mill Btu) ..... 7 Figure 7. The total US natural gas production, consumption and net imports, 1990-2040 (trillion cubic feet) ........................................................................................................... 8 Figure 8. The natural gas production by source, 1990-2040 (trillion cubic feet) .................... 9 Figure 9. The US unconventional gas production by source, 1990-2018 (bcf/day) ................ 10 Figure 10. The US shale basins ................................................................................................ 11 Figure 11. The daily production of the US shale plays, 1998-2008 (MMcf/day) .................... 13 Figure 12. The key characteristics of the most active US shale gas plays ............................... 13 Figure 13. Drill bit ................................................................................................................... 33 Figure 14. The Rotary drill rig ................................................................................................. 34 Figure 15. The typical vertical and horizontal gas well schematic. ......................................... 40 Figure 16. The typical casing and cementing program for horizontal shale wells ................... 44 Figure 17. The downhole schematic of a cementing operation in progress ............................. 45 Figure 18. Christmas tree ......................................................................................................... 51 Figure 19. Gate valve with non-rising stem ............................................................................. 51 Figure 20. Wellhead ................................................................................................................. 55 Figure 21. The plugs on the perforated case hold .................................................................... 60 Figure 22. Blowout Preventer Stack ........................................................................................ 65 Figure 23. High pressure mud pump ........................................................................................ 68 vi Figure 25. The typical shale fracturing basic materials per stage ............................................ 79 Figure 26. The fracturing fluid additives, main compound and common uses ........................ 80 Figure 27. Numer of Patents Per Year .................................................................................... 105 Figure 28. Assignee Patent Distribution .................................................................................. 106 Figure 29. Technlogy Field Trend ........................................................................................... 110 Figure 30. Patent Technology Field Distribution ..................................................................... 110 Figure 31. Intellectual Property in Directional Drilling Technology ....................................... 111 Figure 32. Intellectual Property in Seismic Imaging Technology ........................................... 112 Figure 33. Intellectual Property in Drilling Fluids Technology ............................................... 113 Figure 34. Intellectual Property in Wellbore Technology ....................................................... 113 Figure 35. Patents with Government Funding ......................................................................... 115 Figure