An Introduction to Unconventional Gas
Unconventional gas is currently one of the hottest topics in the energy industry. Recent improvements in drilling techniques, particularly the development of horizontal drilling and hydraulic fracturing (or fracking), have transformed the energy market of the United States, which was characterised by depleting resources, high natural gas prices and future dependence on LNG imports, into one of abundance of resources, affordability and domestic energy security. For this reason unconventional gas is often referred to as a ‘game changer’ in the energy industry.
Unconventional gas is the same gas as conventional natural gas except for the fact that it is found in different geological formations requiring more complex drilling techniques for its extraction. There are different sources of unconventional gas, the main ones being: tight gas sands (usually referred as a ‘tight gas’), gas shales (usually referred as ‘shale gas’), and coal-bed methane. Technology-wise, the extraction of gas from these geological formations is commonly easier and the recovery process less capital intensive than other sources of unconventional gas, such as basin centred gas and gas hydrates.
Hydraulic fracturing and recent developments in horizontal drilling are the two key technologies for unlocking unconventional gas resources. Hydraulic fracturing is the process of pumping a mixture of water, chemicals and sand under high pressure into underground layers of shale to fracture the rock and allow gas to flow freely from the formation. Horizontal drilling enables a single vertical well to turn horizontally at a depth of about 2 km and follow a seam of shale rock for several kilometres. A combination of these two techniques allows the extraction of unconventional natural gas in greater volumes and at much lower unit costs than previously thought possible.
These new techniques spurred a boom in the production of unconventional gas sources in the US. In two years time, the production per rig in the US has multiplied five-fold, the average lateral length has doubled, and the time needed to drill has halved. In 2010, the production of unconventional gas (mainly shale gas) in the US contributes 40% to total production of natural gas in the country and is expected to reach 50% by 2020¹ . However, there is still uncertainty about environmental impacts of the production of unconventional gas, mainly regarding the risk of groundwater contamination with fracture fluid. Currently, this generates much public debate and creates public opposition to unconventional gas production in the US. Extensive scientific research on this topic is required in order to evaluate environmental impacts and identify potential risks.
The production of unconventional gas reserves in the US has intensified the search for unconventional gas reserves around the world. It is estimated that there are 456 Trillion cubic meters (Tcm) of technically recoverable shale gas reserves worldwide, while the world’s proven conventional reserves are only about 187 Tcm². These figures indicate a large potential of unconventional gas production worldwide in the future. Currently, a number of countries have started the exploration of unconventional gas resources, including Poland, France, Sweden, Germany, the Netherlands, China and others. However, there are a number of technical and political challenges underway. For instance, the recovery of shale gas, which at the moment has the largest recovery potential in the US as well as in Europe, requires large drilling areas that in some cases may cross country borders, thereby affecting a large number of residents (especially in the densely-populated areas) and create public opposition. The geology of gas shales is different from one place to another, which requires a tailored deployment of technology for each shale gas play³4.
Despite these challenges, some eastern European countries, particularly Poland, are very active in exploring their potential for unconventional gas in order to minimize their gas import dependence. Other parts of the world, for example China and India, also have large potential for unconventional gas³. However, the evaluation of this potential is still at an early stage.
¹GTI White paper (2010). Global gas shales and unconventional gas. Unlocking your potential.
²U.S. Energy Information Administration (2011). Analysis and Projections. World shale gas resources: an initial assessment of 14 regions outside the United states
³Stevens, P (2010). The ‘shale gas revolution’: hype and reality.
4Kefferputz, R. (2010). Shale fever: replicating the US gas revolution in the EU?