Unconventional Natural Gas
Unconventional Natural Gas
Unconventional Natural Gas
• Unconventional natural gas is gas that is coaxed
from rock (shale, tight sandstone) or sources
>15,000' feet below the earth's surface.
• Our local form of natural gas is Marcellus shale,
which is providing a significant amount of
natural gas that is being shipped to various parts
of the country to power electrical plants, heat
homes, or be used by various industries.
• It is a cleaner domestic alternative to other fuels
like coal and oil.
• It is a fossil fuel, and does create some
greenhouse gas emissions.
More about Marcellus Shale…
• Underlies an area of 95,000 square miles from
southern New York across Pennsylvania, and
into western Maryland, West Virginia and
• It is wedge-shaped as it is thicker in the east and
thins to the west.
• The thicker sections are composed of sandstone,
siltstone, and shale while the thinner sections
consist of finer grained organic rich black shale
interblended with organic lean gray shale.
factors that affect shale gas production:
day-to-day production costs
the costs of leasing land
the productivity of the wells drilled
and the mix of natural gas produced
• Expected future revenues depend on how much
a typical well is likely to produce over its lifetime
and future prices.
• For example, wells that produce crude oil as well
tend to be more profitable than wells producing
just natural gas
Economics of Different Types
• Recent studies have estimated the total
economic impacts of the development and
exploration in the Haynesville, Barnett,
Fayetteville and Marcellus shales.
• Loren C. Scott and Associates estimated that the
Haynesville Shale extraction activities in
Louisiana generated approximately $10.6 billion
in new business sales in 2009.
• Barnett Shale in the Fort Worth, Texas area in
2008 generated 111,131 permanent jobs.
• There have also been employment due to
Marcellus Shale development in Pennsylvania
and West Virginia.
• Considine concluded that this development
created over 57,000 jobs in Pennsylvania and
West Virginia in 2009.
• Considine also estimated the economic impact of
Marcellus Shale development in New York,
Pennsylvania, and West Virginia in 2020.
• His analysis shows a total employment impact in
2020 at between 101,000 and 283,000 jobs.
• U.S. oil and gas production is on the rise due to
the remarkable surge in unconventional oil and
• By the end of 2013, the U.S. is likely to become
the world’s top producer of crude oil and natural
▫ This means that the U.S. is producing more
hydrocarbons than Russia and Saudi Arabia.
• In 2010, unconventional gas production reached
around 15% of global gas production.
▫ Most of this comes from North America.
• The output of shale gas increased by a factor of
11 over the last decade, just under one-third of
total unconventional gas production in 2010.
• Soaring unconventional gas production led to a
drop in import of Liquid Natural Gas (LNG)
requirements and revised expectations in the
United States has had a significant impact on
global gas demand.
▫ In 2008, it was widely viewed that the import of
LNG in the U.S. was likely to increase in the
• This led to what is called a “gas glut” where there
was more gas on the markets than was needed
and gas spot prices in the U.S. and in Europe
• Since 2010, global demand has recovered, but
LNG imports have remained low in the U.S. due
to growth in cheap domestic gas production.
• Because of this, the U.S. is no longer importing
from the LNG market, but considering exporting
LNG from places like Texas.
• Although many countries are years behind the
U.S., some have made great efforts in exploring
their own unconventional gas sources.
▫ Australia has good Coal Bed Methane (CBM)
potential, but is most likely to success in projects
focusing on LNG from CBM.
▫ China, India, and Indonesia have produced small
amounts of unconventional gas and are looking at
ways to increase their respective volumes.
▫ Countries like Argentina, Algeria, and Mexico may
also have large shale gas potential.
“The Department of Environmental Protection (DEP), Office of
Oil and Gas Management regulates the safe
exploration, development and recovery of Marcellus Shale
natural gas reservoirs in a manner that will protect the
commonwealth’s natural resources and the environment.”
Commonwealth of Pennsylvania
Department of Environmental Protection
• The extraction and use of shale gas can affect the
• the leaking of extraction chemicals and waste
into water supplies
• the leaking of greenhouse gases during
• the pollution caused by the improper processing
of natural gas
• Several studies show a wide range of leakage
• from less than 1% of total production to nearly
• Using data from the EPA’s most recent
Greenhouse Gas Inventory yields a methane
leakage rate of about 1.4%
• down from 2.3% from the EPA’s previous
• Besides using water and chemicals however, it is
also possible to frack shale gas with only
liquified propane gas. This reduces the
environmental degradation considerably. The
method was invented by GasFrac, of Alberta,
• Where coal exploration requires altering
landscapes far beyond the area where the coal is,
aboveground natural gas equipment takes up
just one percent of the total surface land area
from where gas will be extracted.
A Quick Look…
Fossil Fuel Emission Levels
- Pounds per Billion Btu of Energy Input
Source: EIA - Natural Gas Issues and Trends 1998
Effects on Water
The Hydraulic Fracturing Water Cycle
In the Community…
Weighing the Options…
• Abundant fracking gas stabilizes
• Availability of gas improves energy
• Gas, when replacing coal, improves
• Wealth creation and growth due to
selling drilling rights
• Industry growth through access to
convenient and cost-efficient fuel
• Stimulates jobs & economy
• Fracking gas gives more options to
balance a variable, renewable-based
• Creates minor earthquakes (2 on
the Richter scale)
• Possible future earthquakes with
structural damage to buildings
• Methane is a potent greenhouse
gas, contributing the global
• Low-cost gas stops efforts on
• Fracking uses vast amounts of
water and acids
• Risk of contaminating water
• Water needs to be cleaned
“County oil and gas leasing just goes on & on,” The Athens (OH) News, December 15, 2011.
World Energy Council, “Survey of Energy Resources: Focus on Shale Gas,” 2010, page 14.
Chesapeake Energy, 2010 Annual Report, page 4. http://phx.corporateir.net/External.File?item=UGFyZW50SUQ9OTEzODB8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1
P. Kennedy, A Guide to Econometrics, 6th Ed., (Malden, MA: Blackwell Publishing 2009), pp. 173-76.
U.S. Energy Information Administration, Natural Gas Annual, 2011.