Natural gas prices are at a six-year low, but that's not slowing one unconventional—and historically costly—method for extracting gas for energy. Shale gas reserves are contributing to the 11 percent rise in natural gas production the United States has seen in the past two years. But the deposits have been known about for decades—why are these resources drawing attention now?
Last August, Chesapeake Energy had only four rigs tapping into the Haynesville shale natural gas deposit in northwest Louisiana and east Texas. Now, the company has 24—and plans to add eleven more by next summer. Despite the economic downturn and the collapse of natural gas prices (now at a six-year low), energy companies like Chesapeake are charging into shale gas deposits because of the growing pressures for cleaner, abundant domestic energy. Haynesville is one of
several massive layers (pdf) of ancient shale throughout the country that energy experts think could contain gargantuan amounts of gas. Conservative estimates have Haynesville holding more than the United States currently uses in a year—about 25 trillion cubic feet. Others say it could hold more than eight times that amount. Similar prospects lie in other shale deposits around the country, but these deposits have been known about for decades, with little interest from energy companies. Why is shale gas just now on the rise?
Between a Hard Rock and a Bottom Line
America’s first natural gas well tapped the shale underneath Fredonia, New York, in 1821. But the trapped gas could only trickle through the dense shale and the endeavor proved unprofitable for large-scale exploration. Energy companies turned to sources in porous sedimentary rocks and sandstone, where the gas flowed more quickly and drilling was easier. The problem with shale gas (not to be confused with
oil shale, the sedimentary rock that must be mined and heavily processed to extract kerogen) lies in its density. Despite the fact that some shale layers are continuous for hundreds of miles, traditional vertical wells could draw gas only from a tiny area—it's not like tapping a whole pool of oil from one point. For generations, energy explorers have avoided shale, even drilling past the hard rock to tap the faster flowing gas in sandstone and sedimentary deposits.
The Horizontal Drill
Shale's true potential was first seen during the energy crisis in the 1970s when the Carter Administration predicted the U.S. had an overabundance of shale gas, says Penn State's Terry Engelder who studies the Marcellus shale, which stretches across the northern Appalachian Mountains. At the time, there was no economical way to tap these rocks, so the administration pushed for more research to tackle the problem of taking advantage of the dense, gas filled rocks.
By the late 1970s, when energy crisis abated and oil prices dropped, a cheaper shale drilling technology was little past the drawing boards, and by the 1980s, the U.S. mostly lost interest in pursuing shale gas, says Dave Morehouse, a gas exploration expert with the Energy Information Administration. But the dream of tapping these huge reservoirs came back with force in the 1990s, he says, when energy explorers began to refine a process called
horizontal drilling (pdf). This technique, which drills through a layer of shale, can complete a full 90-degree turn underground by boring with an angled coupling that can turn about 10 degrees per 100 feet.
Once the drill has turned completely horizontal, Engelder says, the drillers change to a bit that makes slight corrections, bobbing up and down by a degree or two, a movement he calls "porpoising." With the horizontal hole in place, the team makes multiple fractures in the rock to release the gas. In the end, the well pulls natural gas from a far greater area than an old-fashioned vertical well.
Source: Energy Information Administration, Office of Oil and Gas.
While horizontal drilling has roots as far back as the 1940s (with exploration in the Gulf of Mexico and the Appalachian Mountains), the technique first became viable in the late 80s, according to the EIA, and by 1990 the cost premium shrank from 300 percent to 17 percent return on investment. At this point, energy companies began the long process of exploring the United States' potentially mammoth shale deposits. Four (known as the "big four") massive shale gas deposits were identified—the Barnett, Haynesville, Fayetteville and Marcellus. The first target for gas companies was the Barnett shale deposit in northern Texas, Engelder says. Firms explored it in the 1990s and drilled the first horizontal wells in 2002.
As wells start up, drillers have begun to get a better idea of just how good their guesses of the amount of gas in a site are. "Every time you drill a new well, you develop a huge new body of scientific knowledge," Chesapeake energy spokesman Jim Gipson says. Years of drilling the Barnett have helped energy explorers pick up the learning curve for tapping these unconventional deposits with the horizontal techniques. "It took a few years to know that these things were gangbusters economically," Morehouse says.
Why Shale Is Back Now
Even with better technology, techniques and huge prospects for profit, times are tough in the natural gas business. Drilling a horizontal well can cost four times as much as conventional drilling—about $4 million, compared to the $1 million for a vertical well and this extra up-front cost hurts when natural gas prices (and thus profits from gas) are low. When the natural gas price tanked this past October, Gipson says, Chesapeake Energy trimmed its operations to survive—dropping its number of operating wells from 156 last August to 96 now, which cut daily gas production by 400 million cubic feet. Meanwhile, the firm’s partners provided enough cash to keep pursuing the potential in Haynesville, so Chesapeake forged ahead.
If energy companies can overcome the current recession and start exploiting shale gas, the volume of these deposits has the potential to change energy policy, Engelder says. If gas companies can prove the reliability they claim—that a shale gas well can continue to pump gas steadily for 20 or 30 years—policy makers could count on a huge, consistent domestic supply of natural gas to replace carbon-dense oil or coal. The low carbon content of gas is a major enticement to companies, with talks in Congress of enacting a carbon tax or cap-and-trade system, the latter garnering the
support of President Obama. U.S. shale gas could have implications beyond our borders as well—with dwindling production and a growing reliance on Russian gas, Europeans are investing billions
in exploring U.S. fields and purchasing drilling technology. However, Dave Morehouse says, all this is still years away: More money, drilling and time will be needed before energy explorers can see if shale gas can live up to its potential.
Source:
http://www.popularmechanics.com/science/earth/4318390.html
