Tuesday, May 18, 2010

Technology of Shale Gas Plays

[Note: A version of this blog entry will appear in World Oil (May, 2010)]

There is no easy way to write about shale gas. It is remarkable how soon the previously unthinkable becomes routine. As recently as the late 1990s, it was commonplace during drilling to get a burp of gas while passing through shale, and ignore it. Shale was the 'background rock' that held the interesting formations: conventional sandstone and carbonate reservoirs with good porosity, permeability, and structural settings. Below conventional reservoirs, shale has always been important as source rock; a basic picture that has not changed.

In ancient oceans plankton and clay settled to the sea floor and were preserved by the low-oxygen environment. Sediment piled up over geologic time compressing, burying, and heating the organic-rich mud, transforming it to black shale containing a mixture of organic material called kerogen. Further burial and heating of the shale cracks the enormous kerogen molecules to generate oil and, at higher temperature, gas. Thus shale is the hydrocarbon kitchen generating oil and gas, then expelling it to be pooled and trapped farther up in those well-studied reservoirs. What we did not know until recently was that enough gas stayed behind to make shale itself a viable target. A century of study has been pointed at the conventional reservoir, while the idea of shale as a primary gas reservoir is barely 20 years old.

Shale is the finest-grained member of the clastic rock family that includes sandstone, siltstone, and mudstone. In a sense, grain size is all that defines a shale, but our common notion also includes something about clay minerals, depositional environment (e.g., deep water), and organic content. Shale variability is bewildering, including wide ranges of porosity (3-15%), permeability (milli to micro darcies), mineralogy (clay, silica, carbonate), total organic carbon (2-10%), and mechanical properties. A complicated picture indeed, and a case could be made that many of the famous 'shales' are not shale at all -- parts of the Bakken are dolomite, sandstone, and siltstone; the Barnett is mostly mudstone; and the Marcellus is part siltstone with up to 60% silica content. One is reminded of the old MIT physics story about a PhD qualifying exam where the candidate was asked to define the universe and give three examples.

But shale gas plays are here to stay. The motivation is clear. Take, for example, the Barnett play in Texas where shale gas production grew from 100 BCF/yr in 2000 to 1400 BCF/yr in 2008, an annual growth rate of 34%. The play names themselves have taken on a billion dollar buzz: Barnett, Haynesville, Utica, Woodford, Marcellus, and even the quaint Fayetteville. This is quite a shift of fortune for a shale previously famous only for a fault in the local railroad cut on Dickson Street in Fayetteville, AR.

Unconventional gas resources are generally grouped into tight gas sands, coal bed methane, and shale gas. Tight gas is the leader in proved reserves, but recent growth seen in U.S. reserves has been due almost entirely to shale gas. Recent estimates for 2008 indicate that shale gas accounts for more than 30% of U.S. gas reserves. What is it that sparked this shale gas boom, when we had been drilling right through it for decades?

Consider the most mature and best-studied shale gas play, the Barnett. From the first well in 1981, shale gas was on a slow growth curve until two key technologies combined to blow the cork out of the bottle -- horizontal drilling and massive fracture jobs. All those years when shale gas was just a curious show on the way down to a conventional target, the shale was being tested by a vertical well bore. Even the thickest gas shales have a relatively thin vertical zone with the best production. A vertical well encounters only this thin gas-rich zone, but a horizontal bore can open up several thousand feet of the good stuff. The best horizontal Barnett wells can make about three times the gas production of the best vertical wells. Since 2003, horizontal drilling has been standard procedure in every shale gas play. Meanwhile, a change in fracturing technology around 1998 brought the cost of frac jobs down significantly and allowed operators to do bigger treatments. As with the geology of shales, frac technology is a vast field of study. The goal is to expose more reservoir rock by injecting fluid to create fractures, and proppants to keep them open. Big jobs in the Barnett can involve pumping 7-8 millions gallons of material down the well from an armada of pump trucks. No circus coming to town can match the spectacle.

As a geophysicist, I would be remiss not to mention seismic technologies related to shale gas. As with all things shale, the literature is vast; over 400 pages of technical papers published by the Society of Exploration Geophysicists alone. Daunting, but I'll mention a few highlights.

When faults are nearly vertical, the chances of cutting one in a vertical well are small. But when horizontal wells are steered laterally for several thousand feet the chances increase. At up to $10 million per well, an unmapped fault is not a pleasant surprise. Only seismic imaging can lead to optimized drill plans by mapping fault networks in 3D, while also indicating important natural fracture trends. Modern full azimuth 3D seismic data can deliver a truly remarkable view of the subsurface, including very small faults, using advanced seismic attributes like curvature and coherence. Finally, I can only mention the recent, and extraordinary, progress in microseismic monitoring of frac jobs.

For now concentrated in North America, there is a mad scramble to find shale gas analogs elsewhere in the world. But like all unconventional resource plays, shale gas is a thin margin business, even in a hypercompetitive, high technology, open market situation like the U.S. Success elsewhere will depend on regulatory and business environments every bit as much as geology.


I would like to thank Larry Rairden (EOS Energy) and Mary Edrich (Geokinetics) for useful discussions and sharing of information.

Reference Links

O. Skagen, 2010, "Global gas reserves and resources: Trends, discontinuities and uncertainties" (Statiol) PPT

DOE Energy Information Administration (EIA), U.S. Shale Gas Production

R. LaFollette, 2007, "An Investors guide to shale gas" (BJ Services) PDF

Potential Gas Committee Report

Thursday, May 13, 2010

Why CO2 and global warming is a hard sell

This week I was at the 9th DOE conference on carbon capture and sequestration (CCS) in Pittsburgh. One of the speakers, Paal Frisvold of the NGO Bellona Foundation, asked for a show of hands as to who thought climate change was a major problem (maybe half) and how many thought that anthropogenic CO2 was a cause (less than half). And this was at a CCS meeting!

I have written elsewhere in this blog about my worldview of carbon dioxide (CO2).

At the 2010 OTC in Houston, I gave an overview talk on CCS. Part of the discussion is on point with this topic. The CO2 chain of effect is shown in the diagram below. Burning fossil fuel generates energy, water, and CO2. This is chemistry and cannot be refuted. Furthermore, there is direct, tangible evidence that atmospheric CO2 levels are tracking fossil fuel combustion.

The primary effect of increasing atmospheric CO2 is typically given as 'climate change', specifically global temperature increase (global warming). But as the diagram shows, anthropogenic CO2 is competing with many other climate change drivers, including the natural CO2 cycle. Although there is good scientific evidence for connecting atmospheric CO2 and global temperature, it is a confusing and ambiguous argument for public consumption. Global warming is easy ridicule, since much of the world population experiences a significant winter season every year.  A global rise of 0.5 degrees C is alarming to researchers, but undetectable in everyday life.

A more direct effect of human CO2 emission is acidity of the ocean. As atmospheric CO2 rises, uptake by the ocean increases, forming a weak acid and lowering the ocean PH. Unlike climate change where there will be winners and losers, increasing global PH disrupts food chains and thus affects everyone on the planet.

In my opinion, ocean acidification -- rather than global warming -- should be the primary public message and motivation for CO2 emissions reduction.

Tuesday, May 11, 2010

Day 2 CCS Conference

Every time someone sees I am with U Houston the Economides paper comes up. This claimed the entire CCS scientific community was full of crap about geologic storage capacity. Rebuttal from EU-Zero emissions platform says it is erroneous.

Heard on the floor:

It takes energy equivalent of 1/3 bbl of oil to produce 1 bbl of heavy oil from shale. Not much energy profit there.

A 500 MW power plant burns 200,000 kg of coal per hour (can anyone confirm this?)

Speaker notes:

1. James Markowsky (DOE Asst. Sec. Fossil Fuels)

Obama administration committed to CCS. Presidential CCS task force in place. Planning 10 large scale CCS in US by 2014.

2. Paal Frisvold (Bellona Foundation)

Fossil fuels --CCS--> renewables

CCS is the bridging technology.


3. Nick Otter (Global CCS Institute; Founded 2009)

Fossil fuels ---> renewables

No silver bullet, silver buckshot .... Every viable action will be needed

4. Brendan Beck (International Energy Agency)...Stand-in Speaker for Beck

Need 50% CO2 emissions reduction to top out at 450 ppm CO2 (by 2050) to limit temp increase to 2 deg C.  This will require ~3000 CCS projects worldwide.  Projects in UK = 4.  Now a dedicated CCS unit within IEA.

Q: how to handle intellectual property rights in CCS technology? Public funds to developed shared knowledge, thorny.

Q: Is climate change skepticism on the rise?  Climate change is CCS driver. At political level there is none.  At popular level, there is a vocal faction that jumps on every opportunity.

5.  John Quigly (PA Dept Conservation and Nat Resources)

PA climate is marching north, by 2050 PA climate will be like northern Alabama today. Climate change is key issue.

Central issue for onshore CCS in US is assembling the necessary pore space. One 500 MW coal power plant CCS will require about 100 sq.mi. of pore space. (In Canada, everything below 15 m is owned by the crown).

PA is considering a '3% requirement', where 3% of electricity in PA must come from CCS-enabled power plants.


Q: Can pore space come from state and federal park system? Not in PA, and not likely overall. There has been some discussion about federalizing deep saline aquifers, but nothing definite.

6. Stu Dalton (Elec Powre Res Institute)

US 2005 CO2 emissions = 588 MtCO2/yr. Worldwide funding of CCS about $30B.

Natural gas CO2 emission about half that of coal, but after 2030 even natural gas without CCS will not be good enough.

CCS will happen when: cost of CCS < cost of not doing CCS

CO2 Chain...... Capture, Compression, Transport, and Storage

7. David Mohler (CEO Duke Energy)

Current mix is 75% coal, by 2030 it will be 30%.

China claims CO2 capture cost for coal power at $12/tonne (unverified, in response to question)

Monday, May 10, 2010

Day 1 CCS Conference

This is day 1 of the DOE-sponsored carbon capture and sequestration (CSS) conference in Pittsburgh, Pennsylvania. My first trip to Pitt and I took some time yesterday and today to walk around and get a feel for the place. The Hilton (convention hotel) is downtown so that is the area I explored. The town was, surprisingly, founded by George Washington himself in 1758. How many places can claim that? Market square is a standard destination easy walking distance from the hotel, but completely torn up due to construction. Yesterday I had the 'big fish' at Primanti Bros Bar and Grill. Fabulous, but not for the faint of heart. Cole slaw, french fries, and cheese ON the sandwich.

General impression of downtown is one of cool art deco buildings (or older) and, compared to Houston, not much activity. A workday in downtown Houston is like a beehive, here it is like a few beetles strolling around. Nice, but you get the feeling you came in late on a really good party.

First event at the conference was registration and happy hour. Funny how this small (~900) conference comes up with great finger food and free bar, when the SEG with 9000 has 1 drink ticket then a cash bar, and food is nothing but chaos. I visited every booth in an hour and had good conversations at each.

Met a guy I knew from email, Mark Wilkinson (Baker Hughes), and had a couple of drinks. Finally found out the cost of CO2 for oil enhanced oil recovery (EOR) projects in the US onshore. I had kept hearing oil people simply say 'CO2 is expensive', but with no info to back it up. A prof from New Mexico Tech said it was a closely held number that depends on pipeline access, purpose of use, recovery after use, etc. But basically, it is $1/MCF (~$19/tonne). It turns out, contrary to my previous suspicions, that CO2 used in EOR is pretty accurately accounted for on return to the surface. Something like 50% of the CO2 is lost to the formation. At the end of an oil EOR project, it is common for the operator to 'blow down' the reservoir in order to recover what CO2 he can for reuse or resale. An interesting discussion ensued about the CO2 credit of $10/tone in the 2008 emergency stabilization bill. If this were upped to $20 (equal to the pure sequestration credit), and an end-of-project bonus added for CO2 left in the reservoir, then economics of oil and tax incentives would go a long way toward our CO2 sequestration goals.

At dinner there was great food, another open bar, and everyone in a big room. The keynote was by a BP bigwig, who had the double sad duty of talking about the Gulf oil spill and trying to get his talk out over 800 loud people eating dinner. One of the organizers mentioned that the Obama administration had a CCS working group, but had accepted the euro phrase of 'carbon capture and storage', so it sounds like the term 'sequestration' is on the way out.

I can see the advantages of a small conference. Interesting that people were complaining about the shuttle busses, I guess earlier conferences were even smaller and just done in the hotel.