On the heels of an April 23 article in The New York Times headlined, “A New ‘OPEC’ Emerges: The U.S.,” this year’s Unconventional Resources Technology Conference (URTeC) will take that topic into the field, tracking the country’s shale boom from its inception to turning the United States into the world’s No. 1 petroleum and natural gas producer in 2014 – overtaking Saudi Arabia and Russia.
In a presentation titled, “Shale Plays: How Technology, Governments, Regulators, Academia and the Public Have Changed the World’s Energy Supply and Demand Equation,” AAPG member Joseph H. Frantz Jr., vice president of Engineering Technology for Range Resources Corp. in Canonsburg, Pa., will share his insights on:
- The making of shale plays.
- Their contribution to saturating the gas and oil markets as a result of rapid technological changes.
- Predictions about how shale energy will power the world.
- The importance of community buy-in into the industry.
“There are shale reservoirs all over the world, and other countries are looking to the U.S. as the originator of this technology, specifically horizontal drilling and hydraulic fracturing, for access to and knowledge on how to use it,” said Frantz, who has been traveling the United States and Europe as a Distinguished Lecturer for the Society of Petroleum Engineers discussing the history and implications of the shale boom to the world.
In addition to the technology that makes the extraction of oil and gas from source rocks possible, Frantz covers the obstacles that can make new shale plays costly at the onset, namely the lack of manpower, equipment, roads, pipelines, compressors and gas processing systems.
New technology also is responsible for an uptick in production, as wells are now drilled and completed in much shorter timeframes, and spacing between hydraulic fractures has become smaller.
“The result is longer wells, more fractures and more productivity per well,” Frantz said. “As a country, we can produce high volumes faster than ever before from shales.”
Of course, increased production rates naturally have a bearing on the global market, as seen by the dramatic dip in oil prices that began last year. Frantz said this is just one of many price cycles the industry has experienced over the past 50 years.
“In the long term, the world’s energy demand is predicted to increase for decades to come,” he explained. “That demand is going to be filled by a growing exploitation of shale reservoirs.”
Sudden Impact
Getting people on board with shale energy – and the type of drilling and completions activities it takes to produce hydrocarbons from source rocks – is imperative, Frantz said.
He praised industry in the United States for proactive campaigns that separate myths from facts regarding the controversial practice of hydraulic fracturing.
“The industry and regulatory agencies have done a great job of educating people,” he said. “Last year, my family and I drove from Denver toward Grand Junction, and all along the interstate were billboards that showed the benefits of the oil and gas industry to the state of Colorado.”
Aware that environmental activists have launched efforts in Colorado and in other states to ban hydraulic fracturing as a way to reduce the production of hydrocarbons, Frantz stressed that industry has gone above and beyond to protect people and the environment in developing shale energy sources.
“I’ve been in the business for almost 35 years and I’ve never seen our industry collaborate with stakeholder groups at this level to guide how we do our business,” Frantz said. “There is more focus on safe practices and protecting the environment now than ever before,” he added.
Audiences often ask him if industry is winning the battle against those who oppose fossil fuels and initiate movements to ban drilling. His answer is a resounding “absolutely.”
“Polls taken in various states are positive toward our industry,” he said. “New York has been a battleground state that has not allowed hydraulic fracturing, but there will be a day when they will open it up, and those communities will be able to receive the same positive benefits that communities in neighboring Pennsylvania have experienced, beyond purchasing gas at a much more affordable price.”
In Europe, however, where people typically do not own the mineral rights to their property, operators may have a harder time getting citizens on board.
“In the world today, it seems like there must be some direct benefit to the communities for people to buy in and allow development to occur,” Frantz said. “The industry also creates many long-term jobs and new business that can revitalize large areas and communities, like what happened in the Marcellus.”
He used his home state of Pennsylvania as an example. There, operators pay a yearly impact fee per well. A substantial portion of the fees is distributed back to the local communities based on the amount of drilling activity in an area, he explained.
“The world needs more oil and gas over the coming decades,” Frantz said. “Clearly shale reservoirs have and will provide a significant source of long-term oil, gas and natural gas liquids worldwide. They can quickly ramp up production once full-scale development begins.”