An introduction to shale oil & gas Philippe Charlez, IOGP Shale drilling site in Pennsylvania - Photo Helge Hansen - Statoil IOGP members produce half of the world’s oil and a third of the natural gas Our main objective: promote safe, responsible and sustainable operations North America Europe Anadarko IADC Afren plc Eni NOGEPA RWE Dea AG API IAGC ASSOMMINERARIA Fairfield Energy Norwegian Oil & Gas Baker Hughes Kosmos Energy BG Group GALP Energia Oil Gas Denmark Shell CAPP Marathon Oil BP GdF Suez Oil & Gas UK Statoil Chevron Nexen Inc. Cairn Energy IOOA OMV Total CNR International Noble Energy DONG Energy IPIECA Perenco Holdings Tullow Oil ConocoPhillips Pemex E.ON Ruhrgas AS Maersk Oil Premier Oil WEG Devon Energy Schlumberger Energy Institute MOL plc Repsol Wintershall ExxonMobil Suncor Hess Corporation Talisman Energy 43 members active in region Husky Energy 36 members active in region Russia & Caspian region JSOC Bashneft NCOC Africa 21 members active in region Sasol Sonangol South America 41 members active in region ARPEL Petrobras IBP PLUSPETROL Pan American 31 members active in region Middle East ADNOC Qatar Petroleum Dolphin Energy RasGas Asia & Australia Dragon Oil Yemen LNG APPEA Origin Energy Kuwait Oil BHPBilliton Papuan Oil Search Cairn India Petronas 33 members active in region CNOOC PTTEP INPEX Woodside 32 members active in region 1. The US shale revolution Bakken In the 1990s and 2000s, the US is increasingly dependent on oil & gas imports. Prices are on an upward trend. It’s the trigger of an energy revolution: Marcellus Entrepreneurial experimentation in the Barnett Shale proves economic viability and triggers an energy revolution and Barnett Haynesville manufacturing renaissance. Eagle-Ford The shale revolution turns the US into one of the top global oil & gas producers First oil Second oil Oil counter crisis crisis shock Oil production peaks: Peak oil import: The US becomes the from now on, US the US has never largest gas producer in the production falls imported as world and the second much oil largest oil producer 1970 1973 1979 1986 2006 2014 Energy dependency (%) Oil dependency (%) Gas dependency (%) 75% 70% 20% Dependency = import/consumption 15% Oil 50% 60% Oil 10% Gas 25% Gas 50% 5% 0% 40% 0% 1 9 17 25 33 1 3 5 7 9 11 13 BP outlook 2014 BP outlook 2014 Shale drives down natural gas prices, giving the US economy a competitive edge 20 Gas prices ($/MBTU) Japan Energy-intensive industries benefit most: 15 Europe 10 Cement Glass Steel Petrochemicals Costs in the chemical industry drop, 5 US boosting production 0 Operating costs (US$/pound) Source: IFRI 1 3 5 7 9 11 13 1.0 BP outlook 2014 Europe 2012 Jobs are created (direct, indirect, induced) 2006 Source: IHS CERA 0.6 US Europe US 0.2 100 200 Production (Bn Pounds) US power generation moves to gas from coal, lowering GHG emissions Renewables have continued to grow, not Meanwhile, the EU moves in the opposite direction: crowded out by gas GHG (Bn tons/year) Coal consumption (Mn tons/year) 6.6 600 40% Coal 550 30% 6.2 GHG -13% Gas and coal in the Gas and coal European power mix in the US power mix 500 20% Gas 5.8 10% 450 Coal -21% Source: Pétrole et gaz informations N° 1831 5.4 400 1 3 5 7 9 11 13 1990 2012 BP outlook 2014 See also http://rhg.com/notes/neck-and-neck-us-and-european-ghg-emissions-trends 2. Some science about shale oil and gas Shale oil and gas are exactly the same products as oil and natural gas from conventional extraction. How oil & gas are formed Oil and gas are chemicals made just of two elements: carbon and hydrogen. The microscopic plants and animals that lived in the ocean millions of years ago sank to the bottom of the sea. Buried deeper and deeper under the surface of the earth, heat transformed them into hydrocarbons. Shale gas is natural gas! Shale oil and gas are exactly the same product as oil Land surface and natural gas from conventional extraction. The difference is the source: conventional exploits Overburden reservoir, shale exploits source rock Trap Conventional hydrocarbons are found in reservoirs: Reservoir 1. Coarse grains Seal 2. High permeability 3. Limited extension (at most as large as Greater London) Hydrocarbons migrate from source rock and are sometimes trapped in a reservoir Source rock Shale is found in the source rock: 1. Very fine grains 2. Very low permeability Basement 3. Very large extension (it could be as large as half of France) Technology made shale oil & gas economically viable Economic production Conventional Geologists have known about gas from shale Economic permeability for decades, but for Non economic production many years development was not economically viable. Shale oil & gas Economic production Uneconomic In the late 1990s, a permeability combination of two Non economic production proven technologies – horizontal drilling and hydraulic fracturing – and advanced IT made The first hydraulic fracturing happened in Oklahoma in 1947. gas from shale commercially viable. More than two million have been carried out by now in the US. Shale is normally at least 1,000 metres deeper than fresh water aquifers Multiple layers of steel and concrete isolate 0 m the well from the freshwater aquifers 500 Hydraulic fracturing happens thousands of metres underground. A fracture’s maximum diameter is about 1,000 600 metres. 1,500 Fracture profiles Aquifer of potable water 11 Eiffel towers 9 Eiffel towers 2,000 1000 After Warpinski et al Fracture tops (m) 2000 2,500 Depth Fracture bottoms 600 m 3000 Depth of fracturing stages 3,000 4000 6000 fracturation stages Life-cycle water usage and radioactivity Compared with conventional gas, shale gas requires only 1.7% additional water. Forbidden (>20) Industry can use fresh water, but also brackish and sea water. Full body scanner (10) Energy M3/MWh Nuclear 2.1 Admitted (<20) Coal 1.9 Gas 1 Shale gas 1.017 Advised (<1/yr) Water in storage before use Barnett (0.1/yr) RT Paris New-York (0.08) Living in a shale gas basin like the Barnett in the US exposes a person to as much radiation as flying a round trip from Paris to New York City. One medical scanner is equivalent to living for 100 years in the Barnett basin. Fracturing fluids are 90% water, 9% sand, 1% chemicals Sand 9% - 1,500 to 2,000 tons - Chemicals 0.5-1% keeps the fissures in the rocks open - used to viscosify The industry and allows the gas to flow to the well the fluid, remove voluntarily discloses bacteria and the chemicals it prevent corrosion uses for hydraulic fracturing in the EU: www.ngsfacts.org Additional information on chemical disclosure for Polish wells can be found at www.opppw.pl Water 90% - 10,000 to 20,000 m3/well (5 to 10 pools) - no need of high quality water: sea water or water from salted aquifers also works Produced water is handled carefully and can be reused 1. The water flowing back from the well to the surface is treated and it can be fully reused. 2. Treatment captures the methane mixed in the water, avoiding GHG Drilling + fracturing emissions. + logistics Fugitive emissions 7% 4% 3. The reduction of methane flaring and venting further Flaring Electrical 53% reduces GHG emissions. 36% & venting generation JA Costa (2011) Total , T. Stephenson (2012) IPIECA J. Broderick, et al (2012) Tyndall Centre University of Manchester Allen T et al (2013) Low footprint: a shale gas pad has the extension of two football fields Pad = 2 x 100 m Horizontal multifractured Dep Pad during drilling (lasts about 1 year) Solar panels Wind mills Source: Lane Energy, Poland To produce an equivalent amount of energy with wind mills or Pad in production (lasts about 20 years) solar panels, we would need 10 to 30 times the surface Source: Chesapeake http://zebu.uoregon.edu/disted/ph162/l4.html Earthquakes: less than the vibrations from a truck Source: International Gas Union Truck vibration Industrial activities induce low- intensity seismic events: • Mining, dams • Geothermal energy Blackpool* = 2.3 • Oil & gas extraction Hydraulic fracturing In shale gas, vibrations are * In 2011 there were small tremors at Preese Hall near Blackpool, UK, where hydraulic fracturing operations were taking place. generally lower than a truck passing by. The Paris metro vibrations are equivalent to 7 times Blackpool Shale is a global phenomenon! Shale gas Shale oil Notional additional resources Country Gas Oil Gboe Gboe Poland 25 3,3 Gboe Gbbl France 23 4,7 Conventional 1100 1650 Romania 9 0,3 Shale oil & gas 1200 350 Denmark 5 0 Additional (%) 110 20 UK 4 0,7 97 76 Netherlands 4 2,9 49 Others 9 1 Total 80 12,9 190 9 Source : EIA 2013 96 120 Russia Europe Canada 58 93 6 US 32 5,661 7,140 Algeria 13 China Mexico ? 42 74 2,587 Gas 136 5 18 Mature stage Brazil 66 314 Oil Australia Pilot stage 0 27 1,381 South Non-mature stage Africa Argentina The EU has potentially significant shale resources Europe’s shale gas resources are Main shale gas resource areas in Europe within the Top 10 worldwide Sources EIA 2014 Production could contribute to EU security of supply, employment, growth Benefits could be significant, even without being revolutionary Production (bcf/day) 20 4 daily French consumption 15 Shale gas boom In 2035, the EU is expected to import 10 2 daily French consumption 89% of its gas. Shale gas can cut that to as little as 62% 5 Some shale gas It could mean up to 1.1 million new 0 jobs created by 2050.