When Unconventional Becomes Conventional
In his talk at Shale Gas World entitled a "Holistic Model for Evolving Plays Outside North America," Hans Christian Freitag, Vice President Unconventional Resources at oilfield services company Baker Hughes, noted both the enthusiasm, on the one hand, and the slight frustration, on the other, brought about by "the brakes that are being put on" the unconventional gas industry in Poland.
"When you talk about sustainability and sustainable activity in unconventional resources, we have to look at the fact that, yes, all the operators are out there to make money, for sure - they're not a charity," he admitted. "And we have to make sure this can be done in a safe manner, we have to engage the public and we're facing that everywhere we work."
As Mr. Freitag said he was responsible at Baker Hughes for looking at the eastern hemisphere, he said that in geographies as diverse as Turkey and China, the public had been informed. "The public has been informed, so we have a gargantuan task ahead of us, trying to set the record straight. We are faced, as a 'dirty oil industry' with a lot of skepticism by the public, so we have to be more transparent than any other industry that you can think of."
He said he thought that shale gas was a more viable alternative than, for example, nuclear, noting that Germany was saying no to both nuclear and shale gas.
His presentation showed the shrinking gap between production overhang and demand, highlighting that demand would continue to rise, which had to do with population growth and developing countries' participation in the consumer culture.
"Easy oil, easy gas are over," he said. "Even Saudi Arabia is looking at shale gas. Hydrocarbons will remain dominant; yes, there's solar and wind, but let's not fool ourselves. We have supplies for the next decades and it's not going to go away."
Freitag hearkened back to the era of the Troll field in Norway, in the 1960s, which contained a huge gas resource.
"For the technology that was available to Shell at that time, this field was considered uneconomical and it was returned to the Norwegian state, who gave it to Norscudro who went and looked at what they had," he recalled, adding that the different provinces had gas, and some oil, but it was uneconomical to drill vertically, so they studied it.
"They got all the information they could from the surface and then they drilled horizontal wells in the early 1990s, when horizontal drilling was just invented," he explained. "They drilled eight wells and they drilled them very quickly, cored them logged them and they started flowing. They turned this into a success - this was 1992."
Today, he said the Troll field was the world's most complex extended-reach drilling (ERD) project in which Baker Hughes had played a very vital role in its development.
He continued, "Since this field was considered uneconomical by Shell, it has produced USD 10 billion in revenue for the oil company. To put things in perspective, what's unconventional today will be conventional tomorrow. This has to do with technology and understanding and entrepreneurialism - going out there and actually doing something."
His presentation depicted a horizontal going for the sweet spot and how the ability to do that was improving.
According to Mr. Freitag, the success of unconventional gas in the US did not happen overnight. He gave a list of the keys to success there, including fiscal environment, having the infrastructure in place, public acceptance early on, a large number of operators (most independents), the rapid trialing of new technology, and the sharing of information.
He made mention of the "people who screw up" in the industry, explaining the need for regulation.
"We have a responsibility towards the industry as well as towards the public," he added, "to protect groundwater. Nobody wants gas coming out of their tap."
Of the independent oil and gas prospectors, who had made the shale gas revolution a success, he said, "They're mean, they're lean, fast and want to get something done, but now we see the IOCs are stepping in and they bring with themselves a very determined approach to learn and be more efficient at drilling these wells."
Regarding the development of shale gas in Europe, he asked whether it was commercially viable, whether the infrastructure was being installed, and considering environmental impact/public acceptance, the small number of operators, utilization of the appropriate technology, and the sharing of information.
"And because of the way that the information is shared, people found out very quickly. You had hundreds if not thousands of wells being drilled and that's what necessary, because you can do a lot from the surface, studies and so on, but the proof of the pudding is in the eating, and the deliverability of a particular play has to be proved up by wells," explained Mr. Freitag.
He offered a global assessment of unconventional gas resources across the world, that activity was moving ahead very rapidly in Latin America and China, for example, as well as in Australia.
About Poland's place as the spearhead for developing Europe's resources, he asked: "Is it commercially viable? Is it of interest to actually be here? The infrastructure is being installed or is in place, and this year the environmental impact and the public acceptance are things that we all have to work on together.
"We have a very small number of operators," he continued. "I'm not saying you have to have a bunch but there has to be a lot more activity. Are we using the right technology yet? Yes or no?" asked Baker Hughes' Hans-Christian Freitag.
Doug Bentley, European Unconventional Resource Manager, Schlumberger Ltd., who has spent two and a half years in Poland, offered some perspective on what it's like to drill in the Baltic basin in northern Poland.
Mr. Bentley showed a photograph of what he said was the first shale production test with a reported natural production rate from November of this year. He commented, "The thing to take away from this is, it's very positive. This is very good for Poland."
According to him, the number of basins evaluated by Schlumberger was three; wells drilled totaled 33; 30 pilot holes; five horizontal wells; seven vertical stimulations; three horizontal well stimulations; and 23 horizontal stages.
"The number of wells that have established and reported production," he added, "is one."
He offered the Fayetteville shale in the US as a basis for comparison, saying that over the same period of time the client there had drilled 33 wells, leasing 857,000 acres of property.
"From June 2004 to June 2005, he announced that he had a shale play, did 22 vertical wells and four horizontal wells. From there, they basically started ramping up," recalled Mr. Bentley, who said he'd let the numbers speak for themselves for any comparison to Poland.
He offered: "For me, international's going to take more time - there's no question. The environment, the attitude, the will, desire here in Poland is very positive, people want to move forward and actually do things.
"At the end of the day, you have the possibility that you see here," he showed on his slide, "and the availability and understanding come up. In Europe, we're still in exploration - there's no question about that."