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Marcellus Shale

Overview of Shale Gas Production

Natural gas is undoubtedly the superstar of U.S. domestic hydrocarbon resources.  First, it is relatively abundant with proven reserves in excess of 318 trillion cubic feet.  Second, it is the cleanest burning fossil fuel used in electric generation with carbon emissions about half that of coal.  Finally, residential customers can directly use natural gas for end-uses including space heating, water heating, and clothes drying.

Geologically, natural gas reserves occur in several broad categories.  Conventional natural gas reserves occur in porous formations like sandstone.  A low permeability layer of overlying rock acts like a seal and traps the gas in these formations.  These conventional reserves are sometimes associated with oil reserves.  Natural gas also occurs in low permeability formations like shale and tight sands.

Conventional natural gas production is often associated with offshore reserves in the Gulf of Mexico.  This is problematic for two main reasons.  First, offshore gas production is vulnerable to interruptions from tropical storms.  This was especially evident in 2004 and 2005 when Hurricanes Ivan, Dennis, Katrina and Rita wreaked havoc on the natural gas market.  In addition, there is the matter of transporting natural gas from the Gulf of Mexico to the northeast population centers.  Transportation adds to the cost of natural gas and is subject to constraints and bottlenecks.

Gas-rich shale formations present an interesting opportunity for natural gas producers.  Shale gas reserves are dispersed throughout the U.S. resulting in lower transportation costs.  Geographic dispersal of reserves also reduces the risks of concentrated supply.  With shale gas, U.S. natural gas prices are far less volatile than when supply was dependent on conventional production from the Gulf of Mexico.

Shale Gas Production

The following production data from the U.S. Energy Information Administration shows the dramatic increase in shale gas production from 2008 to 2013.  Also of note, four states account for over 80% of all U.S. shale gas production.

 Shale Gas Production in billion cubic feet

United States2,1163,1105,3367,99410,37111,415

Natural Gas Fracking

The challenge in shale gas production lies with the shale itself.  Producers cannot simply drill into the shale formation and recover the gas.  Shale is a non-porous medium and there is no way for the gas to flow to the well.  This is where hydraulic fracturing enters the picture.  Sometime referred to as “fracking,” the fracturing process is an interesting technological approach to making shale gas a recoverable energy resource.

Typically, a horizontal well is drilled through the shale formation.   Horizontal drilling establishes a well that extends parallel to the shale formation.  Barnett Shale wells in Texas often extend 1500 to 5000 feet along the shale formation.  Horizontal drilling accesses a greater volume of shale per well than vertical drilling.  This reduces the amount of surface disruption associated with shale gas production.

Once drilling is complete, fracturing fluid is injected into the well at extremely high pressure.  Fracturing fluid is primarily composed of water, sand, and surfactants.  The high-pressure fluid creates tiny fractures in the shale that can extend out as far as 1000 feet from the well.  Once the fractures are created, the pressure is reduced and the fluid flows back to the well.  The sand grains remain behind in the cracks to keep them propped open so that gas can flow to the well.  Sometimes aluminum oxide or ceramic particles are used in lieu of sand.  That is shale gas production in a nutshell: drill horizontal well, inject fluid, fracture shale, prop open the cracks, recover fluid.

Fracking Concerns

There are, of course, issues associated with the extraction of any natural resource.  The amount of water required for the fracturing process is significant.  In parts of the U.S. where drought conditions exist, there are questions on how to best use scarce water resources.  Potential contamination of groundwater is also an issue.  Surfactants are used in fracturing fluid to reduce the surface tension between the fluid and the shale.  This allows for a more complete recovery of the fracturing fluid.  There are concerns about the impact of injecting these chemicals into the ground.  Furthermore, there are concerns about disposing of the fracturing fluid after recovery as it may contain contaminants liberated from the shale itself.  Finally, there is debate as to whether increased seismic shallow seismic activity results from shale gas production.  Shallow faults could be activated by the surfactants used in the fracturing fluid.

While these concerns need to be addressed to minimize any adverse effects of hydraulic fracturing, it is indisputable that shale gas has reshaped the U.S. energy market.  Actions by some state and local governments to ban hydraulic fracturing, while well-intentioned, do not advance the science of energy resource recovery.  Current shale gas production technologies have advanced significantly over the past decade and can be carried out in a manner that minimizes environmental impact.

About: Charlie Hewitt

Charlie Hewitt has more than 25 years of in-depth energy experience having served in executive and managerial roles at some of the largest retail energy providers in North America.His expertise covers a wide range of retail energy disciplines including pricing, contracting, risk management, and credit. He holds an MBA from UT Arlington, MA and BS degrees in geology from UT Austin, and was a TXU environmental research fellow.

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