Shale Gas - Explanatory Notes

Shale Gas

Shale gas is the name given to a form of natural gas consisting of hydrocarbons that is contained within shale and sometimes siltstone rocks, which are very fine-grained and common sedimentary rocks consisting of clay and other minerals, predominantly quartz and calcite. The gas itself is stored interstitially within pore spaces and or fractures in the rock or adsorbed onto the organic components within the shale. This hydrocarbon gas has usually formed in place by natural processes rather than having formed and migrated from source rocks elsewhere. Over a period of millions of years, heat and pressure due to burial at substantial depth combine to transform the organic matter within the rock into hydrocarbons in the form of oil or gas.

Source: New Standard Energy

Shale gas vs. other forms of unconventional gas

Unconventional natural gas is generally termed unconventional because traditionally it has been more difficult or expensive to extract. However, in the USA, unconventional natural gas deposits are beginning to make up an increasingly larger percent of the supply picture. Although usually much deeper underground, shale gas has advantages over other forms of unconventional gas such as coalbed methane because of the very large volumes of deposits due to good porosity and the regionally extensive nature of shale. In comparison to coalbed methane, more gas is recoverable from shale gas wells, the land footprint is typically smaller and the resources are situated well below any surface groundwater.

Source: US Energy Information Administration

Shale gas extraction

The most critical requirement for economically exploiting shale gas reservoirs is the accurate determination of ‘gas in place’. Shale has low permeability, so gas production in commercial quantities requires fractures to provide permeable pathways for the gas to flow to the well. Shale gas has been produced for years from shales with natural fractures. However, the shale gas ‘boom’ in recent years has been due to the introduction of modern technology in directional drilling and hydraulic stimulation to create extensive artificial fractures or enhance natural fractures around well bores. While older shale gas wells were typically vertical, more recent wells are drilled horizontally in the gas bearing shale formations and require artificial stimulation to produce the gas.

Well stimulation is conducted by pumping water into the well bore at a sufficient pressure to open a fracture in the surrounding rock formation. This is crucial in low permeability rock, such as shale, as it exposes more of the formation to the well bore and greater volumes of gas can be produced by the increased surface area.

Increasing importance

Significant technological developments and improvements in the cost effectiveness of directional drilling, well stimulation and conversion, have seen shale gas has become an increasingly viable and important source of natural gas.

In recent years a shale gas ‘boom’ has been led by the US, where approximately one third of all new gas discoveries are now shale related. In terms of overall market share, shale gas has increased from nil less than 10 years ago to now account for 23% of all US gas production. This growth pattern is expected to increase in the near future with the US Energy Information Administration (EIA) predicting shale gas to comprise as much as half of the total natural gas production in North America by 2035.

In Australia growing interest in shale gas resources is evident with a rapidly increasing number of local and foreign operators including multinational oil and gas developer CononcoPhillips, Mitsubishi Corporation, Beach Energy and AWE. Significantly for the Canning Basin area, both ConocoPhillips and Mitsubishi Corporation have recently made a combined staged commitment of over A$260m towards unconventional oil and gas exploration. Other significant developments in the Australian shale gas industry include the successful stimulation of Buru Energy’s Yulleroo 2 well, which shares the same Laurel Formations of tight sand and shale as Greenrock’s EP417 & Seven Lakes SPA project areas.