This document provides an overview of shale gas in the USA. It discusses the US shale gas revolution, which began with increased production from the Barnett Shale play using horizontal drilling and hydraulic fracturing. This led US natural gas production to increase significantly between 2000-2010. It also discusses key shale gas basins in the US like the Marcellus shale and the production and distribution of shale gas across the US natural gas pipeline network. The large increase in shale gas production has positively impacted the US energy market through increased domestic supply, lower natural gas prices, and economic benefits.
3. Contents
Introduction
The U.S shale gas revolution
o Barnett shale play production and drilling history
o U.S. Technically Recoverable Shale Gas Resources
Summary
o Annual shale gas production (Trillion cubic feet)
o United States natural gas supply versus consumption
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4. Introduction
Shale gas refers to natural gas that is trapped within
shale formations
It occurs in a wide range of colors that include: red,
brown, green, grey, and black
It is abundant
Fig 1: Shale
formation
Source: geology.com
Fig 2: Shale colors
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5. The U.S Shale Gas Revolution
Barnett shale play as the turning point
By 1997, Mitchell Energy combines horizontal drilling
and hydraulic fracturing of the rock
U.S shale gas production has increased from
virtually nothing to over 10 billion cubic feet per day
(bcfd) between 2000 and 2010
The U.S shale gas revolution have boosted gas
production by 25 per cent
Oil and gas import dependence has drop from 60 per
cent to 40 per cent
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6. The U.S Shale Gas Revolution cont’d
Growth in the production of shale gas has led to
significant decreases in prices of other natural gas
The United States is now the number one natural
gas producer in the world and
Together with Canada, accounts for more than 25
per cent of global natural gas production.
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7. Map of US shale plays
5 Source: energy information administration 11/1/2014
8. Fig 3: Barnett shale play production and
drilling history
• By 2005, gas production from Barnett Shale play alone grew to
about 5 Bcf per day surpassing total production from other shale
plays of about 2 Bcf.
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Source: Newell, 2011
9. Table 1: U.S. Technically Recoverable
Shale Gas Resources Summary
• In total only about 1percent of the TRR have been
produced 11/1/2014
7 Source: INTEK, Inc., 2010
10. Figure 4: Annual shale gas production
(Trillion cubic feet)
• Production from the Barnett Shale play has leveled off
• production from the Marcellus, Haynesville, Fayetteville and
Woodford shale plays are growing as more wells are drilled in these
plays.
8 Source: EIA, Lippman consulting (2010 estimate) 11/1/2014
11. Figure 5: United States natural gas
supply versus consumption
• In 2008, the country imported 13 percent of its natural gas supply.
That figure is expected to drop to nearly 1 percent by 2035
9 Source: KPMG Global Energy Institute , 2011 11/1/2014
13. Contents
Site Preparation
Drilling
Fracking
Fracking Fluids
Disposal of Flow back Fluids
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14. The Production Process Comprises Six
Main Steps
Site development and preparation, which involves building
access roads, production facilities and well pads.
Vertical drilling to a depth of several thousand meters, where
shale formations exist.
Drilling horizontally from the end of the vertical well,
sometimes with several horizontal wells extending in several
different directions, once the vertical well is at the appropriate
depth.
Hydraulic fracturing of shale formations, using a fracturing fluid
comprising of about 99.5 per cent water and sand, plus 0.5 per
cent chemical additives.
Recycling or the disposal of the wastewater that was used in
the hydraulic fracturing process and any naturally produced
water that is brought to the surface.
Well completion and operation, the latter lasting up to a
decade or more.
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15. Factors to be considered while selecting
drilling site
Geology
Topography
Proximity to wetlands, sensitive wildlife
Habitat or significant archeological sites
Access roads
Pipelines and utilities
Proximity to schools and homes
Available water sources
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16. Drilling
Vertical Drilling
Vertical drilling is a technique that does not use extensive lateral
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components, though the structure may include some shorter
horizontal components.
Horizontal Drilling
Horizontal drilling allows wells to move laterally instead of going
straight down, so a larger area can be reached without boring as
many holes into the surface. Unlike a vertical well, a horizontal well
can stretch for up to two miles along a shale deposit.
Rotary Drilling
Rotary drilling is a technology necessary to shale gas and oil
extraction that involves using a sharp, rotating drill to bore a hole in
the earth’s crust.
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17. Drilling models
Average Well Depth in the Marcellus Shale is 5,300 ft.
14 (more than 4 times the height of the Empire St1a1t/1e/2 B01u4ilding)
18. What is Fracking?
Fracking is a well stimulation technique
Fracking is basically pumping fluids at high pressures into
producing formations to create fissures to allow more
natural gas to escape
Injection of propant allows cracks to remain open
Injection fluids are 90% water 9.5% sand and .5%
chemical additives
Fracking is not a new development
First frack job was performed in 1947
Millions of wells have been safely fracked in the last 60
years
Generally fracking is done thousands of feet below
the surface and below the water table
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21. FRACKING FLUID
Water, sand, and chemicals = fracking fluid; specific
composition depends upon the conditions of the
specific well being fractured
Friction-reducing additives create “slickwater” to allow
the fracturing fluids to be pumped at a higher rate and
reduced pressure vs. plain water
Sand allows the fractures to remain open so the gas
can escape
Slickwater Ratio: 98% to 99.5% water, 0.5% to 2%
additives (U.S. Department of Energy)
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22. A NEW ALTERNATIVE PROCESS:
LIQUID PROPANE FRACKING
Injects propane gel under high pressure into shale
instead of water
Uses 90% propane and a diester phosphoric acid
gelling agent for viscosity to carry chemicals and
sands
Propane gasifies and returns to the surface during the
process, leaving the chemicals behind.
Recovered propane is sold or reused; propane is more
expensive initially, though it can be resold.
Liquid propane is highly combustible.
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24. Risks to Surface Water: Flowback
After fracking, pressure decreases and frack fluid
flows back to the surface.
Amount of frack fluid recovered as flowback varies
from 25% to 75%.
Flowback rate in first few days can exceed 100,000
gallons per day
Will drop to ~ 50 gallons per day over time
Flowback can have frack fluids and high TDS values,
concentrations of major ions (e.g. barium, bromide,
calcium, iron), radionuclides, VOC, and other natural
occurring elements.
Source: EPA Frac Study Plan
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25. Handling/Disposing of Flowback
Flowback and produced water are held in storage tanks
and water impoundment pits prior to and during
treatment, recycling, and disposal.
Impoundments may be temporary or long-term.
Underground injection is primary method for disposal for
flowback and produced water.
.
Potential for use of publicly owned treatment works
(POTW) or commercial treatment facilities if in populated
areas.
Releases, leaks, and/or spills involving storage and
transportation of flowback and produced water could
contaminate shallow drinking water aquifers and surface
water bodies.
Source: EPA Frac Study Plan
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26. Marcellus Shale
Estimated Basin Area = 246,000 sq. km (95,000 sq.
miles)
Depth = 1,200 –2,600 meters
Estimated Technically Recoverable Gas = 260 trillion
cu. feet (tcf), or ~ 7.5 trillion cu. Meter
Estimated Water Requirement per well = 15,000 cu.
meter
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28. Contents
Facts about USA
Shale gas basins
Distribution network of shale gas
Impact of shale gas Development
Summary
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29. Some Facts about USA
USA is the third largest both in land and population in the world
US has fifty states and District of Columbia with a total land mass of 9,161,966sq km
US has a lot of natural resources with coal as the largest reserve in the world-27% of the world’s total
The US has lower 48 shale plays
Fig 1. Map of North America
Source: www.cia.gov
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30. Shale gas basins
23 permits have been issued to the Marcellus wells of which 5 have
started drilling since the beginning of 2011
Fig 2. Shale gas basins in the USA
Source: General oil and gas news, November 2011
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31. Distribution network of shale gas
The USA has a vast natural gas distribution network
The network can quickly and economical distribute gas to and from all the 48 lower
basin
Transmission is done using about 300,000 miles of pipelines
Additional 1.9million miles for transport within the utility service area
Fig 3. US natural gas pipeline network
Source: Energy information Administration, office of oil and gas, natural gas division,
gas transportation information system
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32. Impact of shale gas Development
Most important and profitable basins are the Marcellus, Barnett and the
Haynesville shale basins which have contributed massively to the US natural
gas reserves
This resulted in an 11% increase in the total natural gas reserve in 2009
It is also expected that the production of this shale gas will increase to about
47% in 2035 (source: EIA)
Shale gas has also contributed to lower natural gas prices since 2008 there
by increasing the demand for this source of energy
Fig 4. U S natural gas production from 1990-2035 in trillion cubic feet
Source: EIA 2011, Annual energy outlook
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33. Impact of shale gas Continuation
Example is the Utica basin in Ohio
Fig 5. Estimated wellhead annual natural gas price without shale gas as
against the estimated annual price impact of shale gas with corresponding
table.
Source: Continental Economics Inc. January 2012
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34. Impact of shale gas Continuation
For people of this area the decrease in price reflected directly on the
commercial industrial and residential consumers
In this same year cost of electric generators also decreased due to lower
natural wellhead prices which translated to lower fuel priced levied by
electric utilities company such as Columbus Southern power and Ohio
Power Company
Also lower wholesale prices of electricity paid by retailers
Table 2: Estimated annual cost saving for Ohio state consumers
Source: Continental Economics Inc. January 2012
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35. Continuation
On a broader perspective, this is the economic contribution of shale gas in
the US as of 2010
Fig 6. Shale gas employment contribution in 2010
Source: IHS Global Insight study, The Economic and Employment
Contributions of Shale Gas in the United States, released in December 2011
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36. Summary
Natural gas delivery is perceived by consumers to
be more reliable than in the past
It is more environmentally friendly as compared to
coal, oil, etc
It is also forecasted to increase 0.6% annually from
2009 until 2035.
It is described as the world energy market changer
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38. Contents
Chemical Composition
Market Potential
Shale Gas Benefits
Security and Sustainablity
Environmental impacts
Conclusion
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39. Chemical Composition
So far, We know that shale gas is natural gas
produced from Shale formations.
The chemical makeup of shale gas consists of-
Primarily of Methane (atleast 90 percent)
Wet gas (approx 10 percent)
**Wet gas: contains and appreciable proportion of hydrocarbon
compunds
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40. Market potential
Potential to turn world‘s energy potential
on to its head.
Its abundant
It burns cleaner than fossil fuels
Its cheap (there are no guarantees that
natural gas prices will ever rise high
enough to make the high costs, financial
risk, and extended development periods
worth the returns)
It offers carbon-friendly way to help in
meeting the world energy needs
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41. Shale gas and its benefits
A clean generating source for almost a quarter of the
US electric power
Effecient heating, water heating and cooking for
homes and buisiness.
Raw materials for fertilizers and pharmaceuticals,
cosmetics, medical implants, sports equipment,
electronics, plastic toys and paints.
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42. A heat source for generating system used in
numerous industrial and commerical applications
including the steel, plastics, automatic as well as in
schools, hospitals and in military bases.
Natural gas can outperform conventional fuels with
significantly higher octane rating.
Better fuel efficiency and lower operating costs while
reducing the emissions.
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43. Natural gas consumption is quite dispersed with
electric power, industrial, and transportation use
driving future demand growth
U.S. dry gas consumption
trillion cubic feet
Source: EIA, Annual Energy Outlook 2013
History Projections
Electric
power
Industrial
Transportation
Commercial
Residential
32%
33%
6%
12%
14%
31%
33%
3%
19%
13%
*Includes combined heat-and-power and lease and plant fuel.
**Includes pipeline fuel.
Gas to liquids
2%
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44. Key success factors
Supply
Shale gas plays must be big enough to warrant the
tremendous investment in time and money required
to extract and fully exploit it. The play should be
sufficiently close to markets to facilitate distribution
Demand
Natural gas prices are currently depressed in some
regions (e.g. the Americas), and the wealth of newly
viable shale gas plays could drop prices even farther
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45. Key success factors
-Continued..
Infrastructure
Shale gas production and distribution requires more
than wells. Production sites must be adequately
serviced by roads and pipelines
Reputational risk
While the environmental safety of shale gas
production is still under study, many shale gas
developers are meeting strong opposition from
environmental groups on the basis of health and
safety concerns related to hydraulic fracturing
technology and water usage.
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46. Security and Sustainablity
How much is there?
Enough for 110 Years of Use
At the 2009 rate of U.S. consumption (about 22.8 Tcf
per year), 2,552 Tcf of natural gas is enough to
supply approximately 110 years of use.
Shale gas resource and production estimates
increased significantly between the 2010 and 2012
Outlook reports and are likely to increase further in
the future.
* Tcf – Trillion Cubic Feet
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47. Key risks that impact Future Shale
gas Production
How shale gas development will impact investment
in renewable energy sources
With price uncertainity, managing costs and financial
risks are top priorities for industry
Public opinion of shale gas on environmental and
community impacts
As shale gas transforms supply and demand of the
world’s energy mix, geopolitical factors will continue
to create risk.
Strict environmental regulations on exploitation
Arbitary restrictions on drilling locations
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48. Environmental impacts
Ground water contamination
Some have asserted that fracking chemicals used in
the process could leak into underground rivers and
reservoirs.
Health effects of long-term exposure
to chemicals commonly used in
fracking are being evaluated by
regulatory agencies
Pic: Dissolved methane contamination in drinking water in Haynesville,
US
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49. Case: Dimock, PA: "Ground Zero" In The Fight Over
Fracking
Background
Two facts about Dimock, Susquehanna
County are indisputable:
Heavy concentrations of methane
contaminated the drinking water of
several dozen families.
The town has become “ground zero”
in the battle over whether or not
hydraulic fracturing is safe.
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*Source: StateImpact Pennsylvania 2009
11/1/2014
50. Gasification
When gas migrates into groundwater, the build-up of
pressure due to gasification may lead to tremors or
explosions.
Water usage risks
Frackling can be water intensive
depending on the water
management methods used.
Surface water and soil risks
Rise may also arise the volume of chemicals that
pollute the surface water and soil
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51. Conclusion
The potentiality of the shale gas reserves in
US proves to be secure and sustainable
proportion of natural gas for electricity
production.
Measures have to be taken in
environmental aspects to avoid the
contamination or pollution of the
environment. Also regulations should
ensure that Shale gas production would not
affect the environment.
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53. References
Clark, C., Burnham, A., Harto, C. & Horner, R., 2012. Hydraulic
Fracturing and Shale Gas Production: Technology, Impacts, and
Policy, s.l.: U.S. Department of Energy.
EIA, 2010. International Energy Outlook, Texas: Texas railroad
commission.
INTEK, Inc., 2010. Review of Emerging U.S. Shale Gas and Shale
Oil Plays, Washington D.C: U.S. Energy Information Administration.
Jacoby, H. D., O’Sullivan, F. M. & Sergey, P., 2012. The Influence of
Shale Gas on U.S. Energy and Environmental Policy, Cambridge:
Economics of Energy & Environmental Policy.
KPMG Global Energy Institute , 2011. Shale Gas –A Global
Perspective, s.l.: KPMG International.
Martineau, D. F., 2007. History of the Newark East field and the
Barnett Shale as a gas reservoir. AAPG Bulletin, Volume 91, pp. 399-
403.
Medlock, K. B., Jaffe, A. M. & Hartley, P. R., 2011. Shale gas and U.S
National Security. s.l.: James A. Baker III Institute for Public Policy of
Rice University.
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54. References
EIA, 2013. Annual Energy Outlook
http://stateimpact.npr.org/pennsylvania/tag/dimock/
http://www.britannica.com/EBchecked/topic/641260/wet-gas
http://www.all-lc.com
IHS Global Insight study, The Economic and Employment
Contributions of Shale Gas in the United States, released in
December 2011
Energy information Administration, office of oil and gas, natural gas
division, gas transportation information system.
General oil and gas news, November 2011
International Gas Union (IGU) Final Booklet 2012
EPA (U.S. Environmental Protection Agency), 2012b, EPA's Study of
Hydraulic Fracturing and Its Potential Impact on Drinking Water
Resources, http://www.epa.gov/hfstudy/index.html, accessed April
27, 2012.
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