Shale Gas Economics: Extracting from domestic oil reserves
The shale definition extends beyond just natural gas. Although we’ve known for many years that natural shale gas and oil shale reserves were trapped in hard dense deposits of shale formed from ancient sea basins millions of years ago, we did not have all of the technologies needed to access these resources economically until recently. As a result, previously uneconomic resources are now available for exploration and development. In the last five years, natural gas reserves grew 30 percent and in the last few years alone we have increased onshore natural gas production by more than 20 percent – an accomplishment that most energy experts thought impossible a few years ago. And the shale definition is more than just natural gas, the Energy Information Agency (EIA) reports: “Shale plays known primarily for natural gas production-or where horizontal drilling initially targeted natural gas-are also seeing accelerating oil-focused drilling.” Noting that in North Dakota “total oil production has approximately tripled since 2005.”
Shale gas play locations
Shale gas maps show “plays” are found throughout the Mountain West, the South and throughout the Northeast’s Appalachian Basin. These plays are geographic areas where companies are actively looking for natural gas, and shale oil reserves in shale rock. The Barnett shale play in Texas, for example, is 5,000 square miles and provides 6 percent of U.S. natural gas. The Marcellus shale play that stretches across Pennsylvania, New York, Ohio and West Virginia covers ten times the square miles of the Barnett, but has only recently started to be developed. The development of the Marcellus and Barnett Shale natural gas has boosted local economies—generating royalty payments to property owners, providing tax revenues to the government and creating much-needed American jobs.
Impacts of shale oil reserve resources
The EIA reports that over 750 trillion cubic feet of technically recoverable shale gas and 24 billion barrels of technically recoverable shale oil resources in discovered shale plays. Responsibly developing these resources creates jobs and fuels our economy. And the key to unlocking these resources is through the process of hydraulic fracturing, also known as fracking – a common shale gas extraction process definition.
Fracking has emerged as a contentious issue in many communities, and it is important to note that there are only two sides in the debate: those who want our oil and natural resources developed in a safe and responsible way; and those who don’t want our oil and natural gas resources developed at all. Development does bring with it some challenges, but the oil and natural gas industry has and will continue to work with concerned citizens, regulators and policy makers to make sure that it is done responsibly.
EIA is currently in the process of updating maps of major tight oil and shale gas plays, including the Eagle Ford and Marcellus plays, which will help to better characterize the geology of key areas of production in the United States. EIA’s most recent maps focus on shale and tight oil plays, and characterize plays based on geologic characteristics, including rock type and age. Understanding geologic history and processes helps exploration and production companies reduce the risk of drilling dry, nonproducing wells and better understand hydrocarbon resource potentials.
Production of crude oil and natural gas occurs in two classes of rock: source rocks and reservoir rocks. Source rocks are sedimentary rocks in which hydrocarbons (organic chemical compounds of hydrogen and carbon) form. Reservoir rocks are both porous, meaning that there are open spaces, or voids, within the rock, and permeable, meaning fluids are able to flow within them. After forming in the source rock, hydrocarbons, which can vary from simple structures, like methane (a constituent of natural gas), to very complex structures, like bitumen (contained in tar sands), can migrate to the reservoir rock.
Historically, nearly all hydrocarbons produced domestically were withdrawn from carbonate and sandstone reservoirs. However, over the past decade, production from shale and other tight rock formations, spurred by advances in exploration and production technology, has grown dramatically.
Geologic formations that contain oil and gas include clastic or detrital rocks (formed from pieces of pre-existing rocks or minerals), chemical rocks (formed by chemical precipitation of minerals), and organic rocks (formed by biological debris from shells, plant material, and skeletons). The three most common sedimentary rock types encountered in oil and gas fields are shales, sandstones, and carbonates.
Classifying these rock types primarily depends on characteristics such as grain size and composition, porosity (pore space within and between grains), and cement (a chemically formed material that holds the grains together), each of which can influence oil and gas production.
Shale is formed by the accumulation of very small sediments deposited in deep water, at the bottoms of rivers, lakes, and oceans. Shales are the most abundant clastic sedimentary rock, and because of their potential for a high organic content, shales are considered to be the primary source rocks for hydrocarbons.
Sandstone is created by larger sediment, deposited in deserts, river channels, deltas, and shallow sea environments. These rocks tend to be more porous than shales, and consequently make excellent reservoir rocks. Sandstone is the second most abundant clastic sedimentary rock and is the most commonly encountered reservoir rock in hydrocarbon production.
Carbonate is created by the accumulation of shells and skeletal remains of water-dwelling organisms in marine environments. The third most abundant sedimentary rock, carbonate (e.g., limestone) rocks are also very good reservoirs and are commonly encountered during hydrocarbon production.
Geologic age is an important determinant of hydrocarbon potential, beyond the characteristics of source and reservoir rocks. Identifying fossils, other chemical markers, and correlating rocks across different formations allows earth scientists to determine the age of the rock and to understand the processes that influenced the sediments and organic material over time.
While many rocks of different ages produce oil and natural gas, domestic areas of prolific production include formations from several different geologic periods: the Devonian (416 to 359 million years ago (mya), the Carboniferous (359 to 299 mya), the Permian (299 to 251 mya), and the Cretaceous (145 to 65 mya). During these periods, organic-rich materials accumulated and, over time, heat and pressure chemically altered originally organic chemicals into natural gas and oil.