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Unconventional Oil and Gas Resources

New Challenge for the Industry, Great Opportunities for YPs

“A game changer,” “a revolution,” and “a paradigm shift”—those are descriptions of the development of unconventional resources (UCRs) seen in the United States news media. The Wall Street Journal called unconventional gas plays “the biggest energy innovation of the decade.” For young professionals (YPs), UCRs provide the opportunity to grow with a field destined to lead the industry in the future.

Unconventional oil and gas is a term used to describe production reserves that cannot be obtained using historical recovery methods. Oil reserves have become more difficult to extract as a result of location, depth, and formation. Therefore, the need for new technology and methodologies grows with every completion. Shale gas, heavy oil, bitumen, and increasingly deep gas fields are examples of unconventional oil and gas. The economics of retrieving unconventional oil has been a concern in the past, but new technologies and the decrease in conventional oil have created an economic opportunity for UCRs.

How Big Is the Pie?

The US Energy Information Administration (EIA) estimated that technically recoverable shale gas resources jumped by 134% in 2011 (EIA 2010; 2011a). According to the EIA, shale gas produced 2.3 Tcf of natural gas in 2008, an 11% share of the natural gas market (2011c), and it is expected to produce 12.3 Tcf by 2035, a 47% share of the market, with production growing at more than 5% per year (2011a).

According to the World Shale Gas Resources study conducted by EIA (2011b), China has the largest shale gas resources of the 32 countries reviewed, at 1,275 Tcf or 19.3% of the estimated world supply. The US has 861 Tcf of shale gas (13%), and Argentina holds 774 Tcf (11.6%), followed by Mexico (10.3%), Australia (6%), and Canada (6%). The study quotes 6,622 Tcf for total shale gas resources, which is almost equal to the world’s proved natural gas reserves.

Kawata and Fujita (2001) quoted Hans-Holger Rogner of the International Atomic Energy Agency, who estimated gas resources of 9,000 Tcf in coalbed methane, 16,000 Tcf in shale, and 7,400 Tcf in tight sands throughout the world. Rogner ranked North America as the top unconventional gas resource holder (25%), followed by the former Soviet Union (16%), and China (15%).

Because of the availability of conventional reservoirs outside the US, worldwide unconventional plays have largely been overlooked until recently, and in many cases, they had not been studied. Based on the US experience, the need and technical capacity to produce from these reservoirs around the world is likely to emerge in coming decades.

As long as the unconventional share in the world portfolio of hydrocarbon resources continues to grow, industry professionals will have to ask whether we are ready for this “revolution.” Undoubtedly, “revolutionary thinking” is required and several paradigm shifts will occur during the journey, with the clear need to challenge the basics of petroleum engineering. UCR development presents the challenge and opportunity of the unknown. Experience is key, but fresh, new ideas will drive the future.

SPE YP Members Speak

A survey was conducted during the third quarter of 2011 among 90 SPE YPs and student volunteers from various locations and covering a range of disciplines, with the key emphasis on what UCR development will bring to YPs.

When respondents were asked about their experience in UCRs, 44% said they have no experience; 21% said they have significant experience; and the remainder said they have some (Fig. 1).

Notwithstanding the relatively low experience level, 57% said they would pick UCR development given a choice between two job opportunities, assuming all other conditions are the same (Fig. 2).

Only a total 26% of the survey group said they felt adequately equipped and educated to perform a job in UCR development, while 55% said they were somewhat ready or would need a minor transition period and the remainder said they were not ready (Fig. 3).

Concerning training at the university level, only 1% of respondents said that most petroleum engineering departments have adequate programs to fulfill the upcoming demand for UCR development engineers. More than half, 57%, responded that programs require updating, split almost evenly between those saying that a minor update was needed (28%) and those saying that programs were obsolete and required a major update (29%). The rest of the survey respondents, 42%, said that most university programs are generic and equip graduates with an absolute minimum, with most learning occurring at the workplace (Fig. 4).

On the availability of professional training in UCRs, just 7% of respondents said that the needed training courses are widely available and well designed, and 66% said that courses are available to a limited extent (56%) or that there is a clear lack of courses (10%). The remaining 27% said that training courses are widely available, but their quality suffers from a lack of industry experience in UCRs (Fig. 5).

The survey results are encouraging because they show an eagerness by YPs to enter the UCR area. As training and education methods improve, YPs will be capable of contributing sooner to a field that represents so much of the future of the oil and gas industry.

References

EIA. 2010. Annual Energy Outlook. Report No. DOE/EIA-0383(2010), US DOE, Energy Information Administration (April 2010).

EIA. 2011. Annual Energy Outlook. Report No. DOE/EIA-0383(2011), US DOE, Energy Information Administration (March 2011).

EIA. 2011. World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States, US DOE, Energy Information Administration (April 2011).

EIA. 2011. Natural Gas Gross Withdrawals and Production, US DOE, Energy Information Administration (October 2011).

Kawata Y. and Fujita K. 2001. Some Predictions of Possible Unconventional Hydrocarbon Availability Until 2100. Paper SPE 68755-MS presented at the SPE Asia Pacific Oil and Gas Conference, Jakarta, 17–19 April 2001. http://dx.doi.org/10.2118/68755-MS


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