The hunt for shale gas is on
Friday, 26/03/2010
Shale gas the new frontier for natural gas production
The search for natural gas to replace depleting reserves of oil has now turned to shale stone formations.
Unlike the traditional sub-sea reservoirs where gas is found in limestone like formations, shale gas is literally bound up in relatively shallow bands of shale.
New Standard Energy is exploring for shale gas in the far north of Western Australia and is in a race with majors like Beach Petroleum and AWE to be the first to make a significant discovery.
Managing director Sam Willis says shale gas extraction has exploded in the US in the last five years, and Australia is just starting to catch up.
He says shale gas is likely to be a strong economic rival to the new coal seam methane gas industry that is under development here.
"The coal seam methane wells are much shallower and have lighter rates of production," he says.
"They're not comparable in terms of the pure economics that are associated with them.
"The concept is certainly interchangeable in terms of producing from a bed of either coal or shale."
Increasing importance of shale gas
Shale gas deposits were originally ignored as producers sought larger reserves with a higher resource concentration in order to maximise their investment returns.
Throughout the 1980s, shale appraisal commenced but it wasn’t until the following two decades, through significant technological developments and improvements in the cost effectiveness of drilling, well stimulation and conversion, that shale gas become an increasingly viable and important source of natural gas.
The emergence of shale gas as a competitive alternative has changed the international gas landscape, reducing the requirement for LNG imports to the USA and lowering the outlook for global LNG demand growth.
How shale gas is extracted
The most critical requirement for economically exploiting shale gas reservoirs is the accurate determination of ‘gas in place’.
Shale has low permeability, so gas production in commercial quantities requires fractures to provide permeability.
Shale gas has been produced for years from shales with natural fractures. However, the shale gas boom in recent years has been due to the introduction of modern technology in hydraulic fracturing to create extensive artificial fractures around well bores.
While older shale gas wells were typically vertical, more recent deposits are horizontal and require artificial stimulation to produce.
Shale gas tends to cost more to produce than gas from conventional wells due to the expense of hydraulic fracturing and horizontal drilling.
Horizontal drilling the key
Horizontal drilling allows producers to drill horizontally beneath neighborhoods, schools and airports.
For example, much of the gas in the largest producing deposit, the Barnett Shale in Texas, is beneath the city of Fort Worth.
In addition to extended reach, horizontal drilling may increase production because a horizontal well exposes more rock (and therefore more fractures) to the wellbore because it is usually designed with the horizontal portion of the well in the productive formation.
Hydraulic fracturing the next step
Hydraulic fracturing is conducted by pumping water into the well bore at a sufficient pressure to create a fracture in the surrounding rock formation down hole.
This is crucial in low permeability rock, such as shale, as it exposes more of the formation to the well bore and greater volumes of gas can be produced by the increased surface area.
Without hydraulic fracturing, many would not produce at an economically viable rate.
Shale gas vs other natural gas sources
Unconventional natural gas is generally termed unconventional because it is more difficult to extract, usually because the technology to reach it has not been developed fully, or is too expensive.
However, unconventional natural gas deposits are beginning to make up an increasingly larger percent of the supply picture. Although usually much deeper underground, shale gas has advantages over other forms of unconventional gas such as coalbed methane because of the very large volumes of deposits due to good porosity and the extensive nature of shale.
In comparison to coalbed methane, more gas is recoverable from shale gas wells and the land footprint is typically smaller.
The ABC acknowledges the information on shale gas and its extraction supplied by New Standard Energy
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