Transcript Marcellus Shale - Kenneth M. Klemow

By: Chris Kemple, Tim Fisher, Steve Reinauer, and Rose
Morgans
 Q: Dr. Halsor’s presentation suggested that shale gas is
geographically best developed in certain locations
based on geology.
 1-What are the reserves of shale gas worldwide? In the
US? In Pennsylvania?
 2-Approximately how much of the shale gas has been
tapped at the moment?
 3-Are some reservoirs too difficult to get to?
 Natural gas shale can be found in Canada, Europe, Asia and
Australia.
 Beach Petroleum Limited (company) is planning to drill in
the Cooper Basin in South Australia
 A Multitude of companies are drilling in Canada’s
populated cities of British Colombia, Alberta, Ontario,
Quebec and Nova Scotia.
 Marcellus Shale plays are widespread in China; No
companies or development yet, but US is working closely
with China to develop technology there. There is much
opportunity due to geographical terrain and land available.
 ExxonMobil has 750, 000 acres of leasehold in Germany
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and developing wells in the Mako Trough in Hungary.
ConocoPhillips (company) is exploring Marcellus shale
development assets in Poland
Shell Gas Company is investigating Marcellus shale assets
in Sweden
In the U.K., Eurenergy Resource Corporation is making
preparations for drilling in basins near Great Britain.
India has potential, but a complication with its government
issued leasing of land for petroleum only is making drilling
opportunities for shale gas virtually impossible at the
moment.
 Overall, gas plays of Marcellus shale can be found in basins,
the oceans and in small amounts practically anywhere else.
 In Pennsylvania specifically, solid amounts of shale gas
aren’t immediately known, as research is wrapping up
regarding that full amount. Full estimates will be
completed by early 2010.
 So far, PA has leased over 74,000 acres of state forest to
Marcellus shale drilling companies.
 Whitmar Exploration Company, a large drilling company
with huge amounts of land leasing, is planning to start
drilling in Luzerne County by 2010.
 In 2005 there were about 15,000 wells in the US, and
4,185 alone were completed in 2007.
 The US has only been producing a small fraction of
total Marcellus shale gas potential.
 6% of all natural gas in the US comes from shale gas
plays (Barnett Oil Field) in Texas
 Total Natural Gas resources in North America
exceeded 2,300 trillion cubic feet; 500 trillion cubic
feet of this amount is recoverable from Shale gas plays.
In the lower part of the US alone the shale gas amount
is estimated at 385 trillion cubic feet.
 In 2007, the US Department of Energy stated that the
US uses 1.4 trillion cubic feet of shale gas per year.
They also made a rough estimate that there is enough
Natural gas overall for 90 years. An additional 26 years
can be added to that number due to Marcellus Shale
drilling alone. In their last statement, the Department
of Energy noted that a rate of 3 to 4 trillion cubic feet
would be sustainable for decades.
 In the US so far, 19.3 trillion cubic feet has been tapped
so far.
 Marcellus shales contain radon gas, Uranium and
Uranium-238, which are radioactive. Marcellus shales also
contain enormous amounts of Carbon, which might make
these shales combustible.
 Some gas plays lie in deep basins out in the ocean, or in
mountainous terrain, making it harder to get manpower
and equipment out to those areas.
 Lastly, when some shales are cut and exposed to the surface
for mining, acid rain can cause decomposition of that
exposed shale. This leads to toxic runoff from elements
within the shale, and corrosion as a whole; this is a
nightmare for any roads or industrial structures near the
exposed shale as landslide/cave-ins become an unprepared
for hazard.
 Chemicals are added to the water to facilitate the
underground fracturing process that releases natural
gas.
 The resulting volume of contaminated water is
generally kept in above-ground ponds to await removal
by tanker or injected back into the earth.
 Higher natural gas prices in recent years and advances
in hydraulic fracturing and horizontal completions
have made shale gas wells more profitable.
 Shale gas tends to cost more to produce than gas from
conventional wells, because of the expense of massive
hydraulic fracturing treatments required to produce
shale gas, and of horizontal drilling. However, this is
often offset by the low risk of shale gas wells.
 North America has been the leader in developing and
producing shale gas because of high gas prices in that
market. The great economic success of the Barnett
Shale play in Texas in particular has spurred the search
for other sources of shale gas across the United States
and Canada.
 Natural Gas Act
 In 1938, the federal government became involved
directly in the regulation of interstate natural gas with
the passage of the Natural Gas Act (NGA).
 This act constitutes the first real involvement of the
federal government in the rates charged by interstate gas
transmission companies.
 The Natural Gas Policy Act of 1978
 Creating a single national natural gas market
 Equalizing supply with demand
 Allowing market forces to establish the wellhead price of
natural gas
 This act attempted to accomplish these goals by
statutorily setting 'maximum lawful prices' for the
wellhead sale of natural gas and by linking interstate gas
markets.
 The Natural Gas Wellhead Decontrol Act of 1989
 The NGWDA stated that first sales of natural gas were to
be free of any federal price regulations.