Unconventional resource development could revitalize the US economy.

Over the last 30 years, US petroleum imports have grown from less than 30% of consumption to almost 60%, with imported petroleum products totaling US $252 billion in 2010. Petroleum imports account for about half of the US trade deficit. Booming production from unconventional resources has the potential to dramatically improve the balance of trade, strengthen the US dollar, and create jobs. Just as oil from the North Sea helped pull Britain out of the deep recession of the early 1970s, production from unconventional tight resources could promote an economic renaissance in the US.

Industry Expert Eve Sprunt 2006 President of the Society of Petroleum Engineers

When I was evaluating natural gas markets for Mobil in the 1990s, the US was viewed as an unattractive market because of the persistent “gas bubble” and associated low prices. In the early part of the last decade, after the gas bubble burst, companies were competing to get permission to build LNG receiving terminals in the US (or even in Mexico with the goal of pipelining the gas to California).

How times have changed!

I heard recently that the shale gas boom and the associated collapse in US natural gas price has led one company to consider building a liquefaction terminal in the US to export natural gas to markets where the gas prices are higher.

Impact on people

Shale gas and its liquid equivalent, shale oil/tight oil, are dramatically changing the business environment. A new trend is emerging with majors opening large new offices outside of Houston, closer to the gas shale and tight oil plays. And a greater diversity of work locations is just a tiny slice of the significant changes that will result from the unconventional plays.

If hydraulic fracturing with water remains an essential component of these unconventional plays, operators will need to provide full life cycle water management. Water usage and disposal has generated widespread community concerns. If water cannot be recycled, there are many potential sources of friction with local communities. The large volumes of water needed could impact other water users in the system. Disposal also is fraught with issues.

People who do not benefit directly from the new activity will be susceptible to manipulation by groups that object to all forms of extraction and use of fossil fuels. To secure work permits, oil and gas companies could find themselves engaging in considerably more public outreach and education than ever before. One thing that particularly irritates those who oppose the oil and gas industry is that these new plays lower the price of oil and gas making it harder for alternative energy supplies to compete.

A change in technology, workforce

Seismic technology is the workhorse for determining subsurface structures and delineating traps. Geochemists provide guidance on source material and source rock maturation. But no one ever really thought about how the hydrocarbons migrated out of the “impermeable” shale source rocks to fill the reservoirs. Subsurface expertise is essential in extending unconventional resource play concepts to new geographic regions and new formations. In shale gas and tight oil plays the search is not so much for structures as sweet spots. Part of the challenge is that it is not clear which attributes are most critical for economic production using current technology. Earth scientists and petroleum engineers must assess a large number of poorly understood factors. While there may be sufficient information about a few of these plays to develop them “manufacturing style,” identifying new plays requires a broad experience. The demand for seasoned subsurface experts comes just as the big crew change is under way. This is not a case of training the new recruits on how to do things, but rather having people with the experience to develop new methodologies.

Worldwide, companies are scrambling to quickly assess vast areas. Some non-seismic sensing technologies may emerge to join seismology as standard components of the explorationist’s tool kit.

Gas shale and tight oil plays have brought petroleum industry operations to new areas around the world and reinvigorated production in other areas. As shale development expands, it will elicit even more change.

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