There’s a world of opportunity in unconventional resources.
Literally.
Basins around the world hold identified potential for unconventional resource development and a combination of exploration, assessment and evaluation seems certain to uncover other favorable plays.
Earlier this year, Canada’s National Energy Board (NEB) issued a report estimating the marketable natural gas potential of the lightly drilled Liard basin at 219 trillion cubic feet (Tcf), or about 6.2 trillion cubic meters.
The majority of the Liard basin lies in British Columbia, but it extends northward into the Northwest Territories and the Yukon. The basin has natural gas production potential in both the Exshaw and Patry shales, the report said.
“From a reservoir perspective, it’s really deep so there’s a lot of pressure. And in fact it’s double overpressured. There’s a lot of gas there,” said Mike Johnson, technical leader-hydrocarbon resources for the NEB in Calgary.
In Argentina, the Vaca Muerta shale might draw more than $10 billion in future investment from ExxonMobil Corp., according to the company’s chief executive officer.
Vaca Muerta could be the world’s second-largest shale gas deposit. ExxonMobil has already invested $200 million in Argentina shale development and plans another $250 million pilot project.
In China, “shale gas development has been focused on the Longmaxi formation in the Sichuan basin, which is estimated to hold 287 Tcf of technically recoverable volumes,” according to the U.S. Energy Information Administration.
China and Russia might offer the greatest possibility for unconventional resource exploration and assessment outside the United States, based on the size of the countries and their known geology.
Industry Comeback Required
To evaluate projected resource plays and identify new prospects, drill bits need to start spinning again. That will require a comeback in both industry investment and worldwide oil and natural gas prices.
It also will take industry commitment, said Melissa Stark.
Stark is the energy managing director and global liquefied natural gas lead in London for Accenture, a global services firm that provides strategy, consulting, digital, technology and operations services for companies in 120 countries.
“For unconventional resources to be developed outside of the U.S., companies have to commit to being in a basin for five to 10 years,” she said.
“There’s a need to commit significant investment because a certain well density and base infrastructure is required to really understand an entire basin and to get the operational scale to drive down unit costs,” Stark added.
Accenture issued a 2014 overview titled “International Development of Unconventional Resources: If, Where and How Fast?” that identified a number of other prospective basins for resource-play development.
As a disclaimer, recoverable resource estimates are guesses at this point, and will remain so until more drilling and evaluation take place.
West Siberian basin, Russia.
The Bazhenov shale has been compared to the Bakken and is estimated to hold technically recoverable resources of 75 billion barrels of oil and 285 Tcf of gas. This tight oil play area has a long production history, good infrastructure and easy access.
Burgos basin, Mexico.
The Eagle Ford shale extends south into the Burgos basin, in an area that already accounts for a significant share of Mexico’s hydrocarbon output. Infrastructure is already in place with service and supply support nearby.
Cooper basin, Australia.
With multiple shale gas, basin-centered gas and deep coal-seam gas possibilities, the Cooper basin is one of the most intriguing unconventional resource exploration areas in the world. Targets are mostly Permian; mature source rock is found across the basin.
South Ghawar basin, Saudi Arabia.
Oil and gas production already exists in Saudi Arabia – to put it mildly – but unconventional resources are a new frontier for the country. Exploration and assessment has begun in South Ghawar, the Rub’ al Khali desert and the northwest. Availability of water is an issue. The Saudi oil ministry has estimated South Ghawar unconventional gas reserves at more than 600 Tcf.
Karoo basin, South Africa.
Recoverable shale resources in the Karoo basin could total as much as 390 Tcf. Prospective, mature black shale is present but a lack of available water could stymie development. Infrastructure is poor, and access to services and a trained oil and gas workforce is limited.
Bowland basin, United Kingdom.
Unconventional production has yet to be unlocked in the Bowland basin, where estimates of total recoverable gas volumes range all the way from 12 Tcf to 130 Tcf. Significant opposition to resource development, especially hydraulic fracturing, exists in the United Kingdom.
Baltic basin, Poland.
The Baltic basin in northern Poland is a leading area for unconventional resource exploration in mainland Europe, but a number of large operators have abandoned their search there. With estimated total recoverable resources of 105 Tcf gas and 1.2 billion barrels of shale oil, the basin holds significant production possibility from mostly Palaeozoic targets, including Lower Silurian, Ordovician and Upper Cambrian. Infrastructure and access to services are good.
Concern over legal and regulatory issues, environmental opposition and spotty drilling results slowed the first wave of exploration in the country. But last year Poland and China signed a memorandum of cooperation in geology and mining, which could help restart shale gas development.
Canada
In Canada, the Liard basin is now the country’s second-largest known gas resource after the Montney shale in British Columbia and Alberta, and it ranks ninth in the world, the NEB said.
Johnson said the Liard’s shales have over 200 meters of thickness in places. Formations are about 80 to 90 percent silica, rock prone to easy fracturing, “and there’s no frac barrier,” he noted.
Source rocks are of Devonian-Mississippian boundary age, equivalent to the Bakken formation in North Dakota “although the rocks are quite different,” Johnson observed.
The new Liard resource assessment was a joint effort by the NEB, the British Columbia Oil and Gas Commission, the Yukon Geological Survey, the Northwest Territories Geological Survey and the British Columbia Ministry of Natural Gas Development.
Producing resource plays in Canada include the Montney, Horn River, Duvernay and Alberta Bakken. And there’s plenty of room left over for resource exploration and development, Johnson said.
Possibilities include the Utica shale in Quebec and the Horton Bluff shale in Nova Scotia and New Brunswick, he noted. The Canol shale in the Northwest Territories is a potential tight oil play and the Mackenzie Valley area has other resource options, Johnson added. The northern plays are in the area of conventional oil production at Norman Wells.
“We’re talking scales on the size of the big U.S. plays. There’s a ton of gas here. From the economic standpoint, however, it’s challenged right now,” Johnson said.
NOCs Take the Lead
Given constrained economics in most unconventional resource plays and the need for continued investment commitment from operators, national oil companies (NOCs) are likely to emerge as near-term leaders in development, according to Stark.
“With that in mind, the next most likely countries to develop unconventional resources are the ones with NOCs who are committed for the long-term – for example, Argentina, China and Saudi Arabia,” Stark noted.
“The UK also bears watching as the government has made a commitment and has put in place supportive regulations and incentives. But in terms of scale of resource development, the major players are expected to be the national oil companies,” she said.