Shale Gas

Gas Shales Drive the Unconventional Gas Revolution

Gas Shales Drive the Unconventional Gas Revolution
Vello A. Kuuskraa, President ADVANCED RESOURCES INTERNATIONAL, INC. Arlington, VA Washington Energy Policy Conference The Unconventional Gas Revolution National Capital Area Chapter/US Association for Energy Economics Center for Strategic and International Studies March 9, 2010, Washington,D.C.
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March 5, 2010

Gas Shales Drive the Unconventional Gas Revolution

The “Paradigm Shift”
Driven by a new understanding of the size and availability of gas shales and unconventional gas, a “paradigm shift” is underway on natural gas supplies.

This “paradigm shift” began a decade ago in the U.S. with only modestfanfare.
• • Low cost coalbed methane in the San Juan Basin of Colorado and New Mexico led the way. Next was the introduction of highly productive tight gas development at the Jonah and Pinedale fields in western Wyoming. Third was the emergence of the Barnett and now the other North American gas shales.

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Gas Shales Drive the Unconventional Gas RevolutionGas Shales: What’s the Big Deal?
“Shale Gas is the most important energy development since the discovery of oil”
Fred Julander, CEO of Julander Energy

“Mission Critical: Can Shale Gas Save the World?”

ASPO, September 21, 2009

“Shale Gas Blasts Open World Energy Market”
The Sunday Times November 1, 2009

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Gas Shales Drive the Unconventional GasRevolution

Three Critical Questions
Three questions need to be addressed, if gas shales and other unconventional gas resources are to be a major pathway to a lowcarbon future:
• Question #1. Will there be adequate supplies of natural gas?
Our company, Advanced Resources International, has undertaken detailed, basin-level assessments of gas shales and other unconventional gas resources.Similar work is underway by other companies and agencies.

• Question #2. What role could technology play to assure natural gas supplies remain affordable?
Past R&D by DOE/NETL, GRI and industry has “cracked the technology code.” Additional technology progress is needed to lower costs and improve productivity.

• Question #3. Can these new natural gas resources be developed in an environmentallysound way?
Significant segments of the industry are pursuing “green development” - - reducing surface impacts, re-using produced water and capturing methane emissions.

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JAF28178.PPT

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Gas Shales Drive the Unconventional Gas Revolution

What Is Unconventional Gas?
COALBED METHANE
• Self-Sourcing Reservoir • Gas Adsorbed in Coal • Requires Depressuring and UsuallyDewatering

RESOURCE PLAYS

• Unconventional gas formations are “continuous”, deposited over large areas rather than in discrete traps. • The geologic setting of unconventional gas is several orders more complex than conventional gas. • For coalbed methane and gas shales, the gas source, trap and reservoir are the same, not three distinct elements as for conventional gas.

GAS SHALES
•Self-Sourcing Plus Traditional Porosity Reservoirs • Gas Adsorbed in Organic Matter • Requires Pervasive Natural or Created Fracture Network

TIGHT GAS SANDS
• Continuous Deposition • Low Permeability • Both Traditional and “BasinCenter” Settings
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Gas Shales Drive the Unconventional Gas Revolution

How Much Do Gas Shales Contribute Today?
Production of gas shaleshas gown by ten-fold and is expected to reach 10 Bcfd, equal to 18% of U.S. natural gas production this year.
12 10 8 6 4 2 0 2000
2000 (Bcfd) 0.2 0.9 1.1 2009 (e) 2010 (e) (Bcfd) (Bcfd) 0.9 1.6 0.2 0.7 0.5 0.7 1.4 1.8 4.6 4.8 0.8 0.8 8.5 10.4
JAF2010_18.XLS

Annual Production (Dry, Bcf/d)

Haynesville Marcellus Woodford Fayetteville Barnett Other Total

2001

2002

2003

2004...