Why Shale Gas Could be a Savior for Addressing Global Energy Need
Basim Faraj, Ph.D., Unconventional Gas Specialist, New Plays at Talisman Energy, can give a laundry list of people in the developing world whose energy needs are not likely to be met.
Faraj paints a picture of the world’s impending energy needs.
“There are 1.5 billion people with no access to electricity – something we don’t think about. There are also 2.5 billion who don’t have modern cooking or heating. And there are supposed to be 900 million additional households by 2030. There are 300 million Chinese middle class citizens; and then contrast that with 300 million people in India without electricity.”
“Meeting this energy demand will require trillions of dollars of investment,” explains Faraj. “So we need to start thinking about this now.”
“We’re consuming over 30 billion barrels of oil per year,” he added. “We will reach peak oil – it doesn’t matter when it will happen. We are already seeing how difficult it is to extract oil. When was the last time we were able to find 30 billion barrels?”
Faraj said he believes that natural gas could supplement the decline of oil, as the former can take over many of the latter’s functions.
“It’s also the cleanest energy,” he added. “For the heating value per CO2 generated we see how clean methane is.”
Faraj explains exactly why oil majors are jumping on to the shale gas bandwagon.
“It’s the dilemma they are facing. In the 1960s international oil companies had access to 85% of the oil and gas fields around the world; now countries are independent, and state companies are in control of 73% of national oil company (NOC) reserves.”
He said, “Investment in all energy sources is needed. Demand is set to increase by 35% by 2030. Natural gas is expanding and unconventional gas supplies are set to meet 50% of that by 2030.”
According to Faraj, the Exxon Mobil Corporation deal with unconventional natural gas producer XTO Energy Inc., an all-stock transaction valued at $41 billion in December of 2009, showed how the industry came to grips with the importance of shale gas.
He spoke of some of XTO’s many shale gas properties like the Eastern Region/Freestone, Barnett, Fayetteville and Woodford, and how they were paying off: XTO’s stock price since its initial public offering jumped from $13 to $584 a share.
The shale gas resource is stupendous, according to Professor Faraj.
“I’ve been working on Marcellus for like five years with Talisman,” he said, “but our educational experience was a problem. Haynesville is just an amazing shale: some prolific wells, a big big play. Eagle ford is an addition probably in the last year, and it also has oil.”
He added, “Yes, you can produce oil from shale – this is the second wave from this amazing rock.”
“We’ve gathered a great deal of information about shale in North America in the last years. You really have to core these shales. We’ve cored around 14 kilometers at 22 basins where there are 89 formations and 275 wells.”
Production is declining, Faraj said, at a very steep rate. Half of production came from wells started in the last three years. “This means we have to continue drilling all of the time.”
“In Canada, which is exporting about 55% of production, we can’t do that. If we continue, in 20 years’ time Canada will be a net importer of gas. That’s the changing world of energy demand.”
According to Faraj, if 1 trillion cubic feet (TCF) of gas can heat 15 million homes for one year, there’s some good news: the Barnett shale has over 300 TCF, Haynesville has twice as much, and Marcellus is huge (1,500 TCF), and this number will keep increasing in time.
“Right now shale gas production is 22% of the total gas production in the US,” he said. “In January it was 14%. In 2-3 years it should be over 30%. Some oil rigs are being transferred to the Barnett because they’re getting better returns.”
He noted the steep initial production declines for shale plays, with the first 3-4 years being the most critical ones for yields.
The challenge, he said was getting the reserves out. Professor Faraj offered a simile between drilling for shale gas and making coffee with either ground coffee or whole beans, to give an idea of what happens with fracing for shale gas.
“If you take 200 coffee beans, you grind it first. That’s 16 grams. The surface area is a fraction of a square meter, you increase the surface are dramatically (ground beans 800sqm); It would take 11 hours to make coffee with whole beans – that’s basically what we are trying to do with hydraulic fracturing.”
“You need a lot of surface area to get it,” he said, showing a photo of a massive shale gas operation in Canada to demonstrate the immensity of production.
He said techniques like microseismic could be used to pinpoint where the rock releases sound energy.
“You end up with what’s called the stimulated rock volume. Within four years production has tripled from horizontal fracing, and lateral lengths have increased. There are so many innovations, some I can’t even talk about now,” said Faraj.
“Now we are able to recover 50% of the gas from advances in frac technology,” he said, adding that the difference compared to conventional gas was the ability to be able to extract more.
“Can we do it in urbanized area?” he asked. The answer seemed to be yes, as he showed conference participants at the Global Shale Gas Summit Chesapeake rigs near Dallas-Fort Worth airport.
“We’ve learned a great deal in last few years, and know geochemistry is critical,” stated Faraj, who concluded, “the argument for shale gas, i.e. ‘where is it going to come from?’ is over.’”
Commitment was needed though, he said, to make a transfer of the technology from the US.
In closing, Professor Faraj gave his blessing to those in attendance: “May the shale be with you.”
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