Shale Oil: A new age of abundance?


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Prof. Mark Sephton & Fivos Spathopoulos (Imperial College London

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Shale Oil: A new age of abundance?

  1. 1. Shale Oil: A New Age of Oil Abundance?Prof. Mark Sephton & Fivos Spathopoulos (Imperial College London)
  2. 2. Unconventional no longer
  3. 3. What is a petroleum system?• Definition • Conventional system – A petroleum system – Elements are separate encompasses a pod of • Unconventional system active source rock and all genetically related oil and – Number of Elements can be the gas accumulations. same – E.g. shale source and reservoirElements – Source rock – Reservoir rock – Seal rock – Overburden rock
  4. 4. How long unconventional?• Unconventional is a time specific term• Over the next 20 years, shale gas is destined to grow from 15% of US gas production to roughly 50% of production.• Eventually unconventional may become conventional?
  5. 5. What is the influence of technology?• 1970s - The Huron Shale. United States government and Gas Research Institute initiated the Eastern Gas Shales Project, a set of dozens of public-private hydro- fracturing, and horizontal drilling pilot projects.• 1977 - Department of Energy pioneered massive hydraulic fracturing in tight sandstone formations.• 1997 - The Barnett Shale. Mitchell Energy developed the hydraulic fracturing technique known as "slickwater fracturing" that made shale gas extraction economical.• 2002 - Horizontal drilling in the Barnett Shale began .• 2012 - represents over 30% Texas’s total Slick water fracturing : involves adding gas production and over 15,000 wells. chemicals to water to increase the fluid flow. Twice as fast as normal.
  6. 6. What is in a typical fracking fluid? Component/Additive Percent Volume Type Example Compound(s) Purpose (vol) (gal)Water Deliver proppant 90 2,700,000Proppant Silica, quartz sand Keep fractures open to allow gas flow out 9.51 285,300Acid Hydrochloric acid Dissolve minerals, initiate cracks in the rock 0.123 3,690Friction reducer Polyacrylamide, mineral oil Minimize friction between fluid and the pipe 0.088 2,640Surfactant Isopropanol Increase the viscosity of the fluid 0.085 2,550Potassium chloride Create a brine carrier fluid 0.06 1,800Gelling agent Guar gum, hydroxyethyl cellulose Thicken the fluid to suspend the proppant 0.056 1,680Scale inhibitor Ethylene glycol Prevent scale deposits in the pipe 0.043 1,290pH adjusting agent Sodium or potassium carbonate Maintain the effectiveness of other components 0.011 330Breaker Ammonium persulfate Allow delayed breakdown of the gel 0.01 300Crosslinker Borate salts Maintain fluid viscosity as temperature increases 0.007 210Iron control Citric acid Prevent precipitation of metal oxides 0.004 120Corrosion inhibitor N, n-dimethyl formamide Prevent pipe corrosion 0.002 60Biocide Glutaraldehyde Eliminate bacteria 0.001 30
  7. 7. Where is shale found?• Numerous shales occur throughout the world• A number of significant shales are in Europe• Unconventional hydrocarbons in shales are of interest to many nations
  8. 8. What is the potential of u/c hydrocarbons in shales?• Figure shows the technically recoverable shale gas resource and the fraction which has already been produced in the US.• Only between one and three percent has been produced.• The size of the remaining resource illustrated the future importance of shale gas.• New and developing plays are omitted. US Shale Gas Technically Recoverable Resources and Cumulative Production
  9. 9. What is the connection between shale gas and shale oil?• Late 2000s• Barnett success led to tight reservoir production elsewhere• Bakken tight oil reservoir gave encouraging signs• Operators of Texas Eagle Ford play (which began as a shale gas play in dry gas window) began drilling into wet gas window and finally oil window, successfully.• Most other shale gas plays have potential oil and wet gas windows• The production of shale oil has increased dramatically since 2009
  10. 10. How do economics affect shale oil ?• Shale gas production is commercial at gas prices in excess of $4 per million BTU (although preferably should approach $8 per million BTU)• The Henry Hub US benchmark dropped below $4 in mid-2011 and shale gas production is now not commercial• Because of high oil prices shale oil currently has better economics, encouraging oil production
  11. 11. What is a good shale oil/gas target?• Shales that host economic quantities of gas and oil have a number of common properties.• Rich in organic material 0.5% to 25% – total organic carbon• Mature petroleum source rocks – Shale oil - thermogenic oil window, where high heat and pressure have converted kerogen to petroleum – Shale gas - thermogenic gas window, where high heat and pressure have converted petroleum to natural gas• Correct rock type – Sufficiently brittle and rigid enough to maintain open fractures.
  12. 12. Shale Oil needs Shale
  13. 13. Where are organic rich shales today?• Coastal margin sediments Productivity – Over 90% organic carbon Anoxia• High productivity – 6% organic carbon• Anoxic environments – 1% organic carbon• In the past – Anoxic environments more important Coastal margins
  14. 14. What is the effect of the water column?• Surface organic matter descends• During its passage to the deep ocean, marine organic matter decomposes in the water column, releasing CO2. – 90 % recycled in surface waters 100 % organic matter – 9 % recycled in deeper waters produced by• Around 1% of this organic matter photosynthesis reaches the sea-bed intact.• Once incorporated in the sediment, 90 % recycled in OMZ degradation continues 10 % surface waters – Aerobic and anaerobic organisms• 0.1% of the original surface water organic matter preserved. 9 % recycled in 1%• Can be enhanced deeper waters – High primary productivity – Accelerated sinking rates – Rapid burial 0.9 % recycled 0.1 % buried• Low energy, low oxygen on sea bed environments – Several types exist
  15. 15. How does sea level affect shales? Transgressive high sea level • Transgressions – Oxygen minimum anoxia shelf zone covers shelf • Proximity to land – High nutrient supply Regressive – High productivity swamp low sea level • High sea level shelf – Widespread shale anoxia deposition
  16. 16. How are shales distributed through time? • Distribution – uneven • Favourable conditions – transgressions – warm climate – anoxia • Periods – Tertiary – Early Cretaceous – Late Jurassic – Late Carboniferous – Late Devonian more recent – Silurian Klemme & Ulmishek 1991
  17. 17. Maturity
  18. 18. How does maturity affect oil and gas generation? • As Black Shale is buried, it is heated (usually at 30°C km-1). • Organic matter is first changed by the increase in temperature into kerogen, which is a solid form of hydrocarbons. • The oil window is an interval in the subsurface where liquid is generated and expelled from the source rocks. • The oil window is often found in the 75-150°C interval (approx. 2-4 km depth). • The gas window is found in the 100- 220°C interval (4-6 km depth). • Above 220°C the gas is destroyed
  19. 19. How does maturity influence compound size? • Alkane mixtures with depth – variable distribution • source and maturity • Green River Shale, Colorado • Shallow – C17 mode • algal source – Odd C29, C31 & C33 • land plant source • Deep – C23 mode • algal source – Odd molecules lost • maturation
  20. 20. How does maturity influence unconventional petroleum?• “Immature” “black” shale on the Oil extraction surface or in shallow depths, where Burial by artificial T°< 60°-80°C, so no petroleum is pyrolysis (in- generated naturally. situ or after• Rock can represents an oil shale mining) target. 60°- 80° C• Oil generation & expulsion to Shale-oil OIL WINDOW conventional traps. extraction by• Residual shale represents shale oil hydraulic reservoir. OIL fracking• Gas generation from maturity & 110°-130° C cracking and expulsion to conventional traps. GAS WINDOW Shale-gas• Residual gas represents shale gas extraction by reservoir. hydraulic fracking GAS
  21. 21. Where do mature shales exist?
  22. 22. Eagle Ford Shale Oil Play
  23. 23. Eagle Ford shale• Deposition – Deposited in Upper Cretaceous between ~92 and 88 Ma – Marine transgression – Sea level depths about 100 m – Deposited about 20-50 km from the shore. – Lower section of the Eagle Ford consists of organic-rich, pyritic, and fossiliferous marine shales – Marks the the deepest water during Eagle Ford deposition• Field setting – Crops out near the town of Eagle Ford, Texas – Dips steadily south to over 4,500m deep in the East
  24. 24. Eagle Ford shale maturityDepth & maturity Oil Wet gas Dry gas • The Eagle Ford play produces oil, condensate, gas and finally drier gas as drilling proceeds down dip (to the bottom right). • The various petroleum types are a direct response to maturity.
  25. 25. Eagle Ford play• Eagle Ford Shale – Could be the sixth largest U.S. oilfield ever discovered and the largest in forty years – shale 76m thick over a 40 by 80 km area – Originally known as a source rock, for the Austin Chalk and other oil and gas bearing zones in South Texas• Production – Advances in horizontal drilling technology and hydraulic fracturing made economic production possible – Operators realised they could recover liquids – Oil production has increased 40 fold in a few years – In 2010, EOG resources estimated the oil reserves in the Eagle Ford Shale at more than a trillion barrels. – Now other initially shale gas plays are being assessed for oil – positive data
  26. 26. Rock type and fracturing• Geology can aid production• The Eagle Ford shale has a carbonate content up to 70% calcite• Makes it very brittle and easily fractured during stimulation• Effectively fractured rocks result in impressive production figures of both oil and gas
  27. 27. Bakken Shale Oil Play
  28. 28. The Bakken Formation• Distribution – Underlies parts of Montana, North Dakota, and Saskatchewan. – The formation is entirely in the subsurface, and has no surface outcrop. – Oil was first discovered within the Bakken in 1951 – Historically, efforts to produce the Bakken have encountered difficulties
  29. 29. The Bakken Formation• Deposition – Late Devonian to Early Carboniferous (360 Ma) – Three Forks Formation consists of shallow marine to terrestrial sediments – Lower Bakken shale deposited in shallow marine anoxic conditions. – Middle Bakken variable rocks associated with drop in sea level and influx of sedimentary material into near-shore environments. – Upper Bakken shale member deposited in resumed anoxic conditions – Overlying Lodgepole Formation was deposited in oxidizing conditions Anglo & Buatois 2012
  30. 30. The Bakken Formation• Occupies about 520,000 km2 of the subsurface of the Williston Basin• The Bakken is 46 m thick in NW North Dakota and it thins to the SE• Upper and lower members consist of hard, siliceous, black organic-rich shales which form effective seals for the middle member• The middle member comprises five variable lithologies, from siltstones to fine-grained sandstone and limestone, all with low permeability and porosity• It is the temporary switch to oxygen-rich conditions that produced the shale-silt-shale sandwich in the Bakken formation
  31. 31. Bakken maturity• Rapid subsidence in the Cretaceous took the Bakken shales into the oil window• Bakken shales are mature• Oil has been generated relatively recently – 310 Myr after source rock deposition Nordeng & LeFever 2008
  32. 32. Charging the Bakken reservoir• The middle Bakken dolomite member is the principal oil reservoir (at ~3.2 km depth) Tight limestone• Once the Bakken organic-rich shales are in the oil window, they try to expel oil to all directions Source rock Upper Bakken• They are sealed from above and below by (oil source) tight limestones so they expel the oil towards the more porous dolomite• Porosities in the Bakken dolomites Porous rocks Middle Bakken average about 5%, and permeabilities are (oil reservoir) very low, averaging 0.04 millidarcies.• However, the presence of horizontal Source rock Lower Bakken fractures makes the dolomites an (oil source) excellent candidate for horizontal drilling• Overpressure generated by the oil may Tight limestone produce micro-fractures thereby enhancing their permeability
  33. 33. Bakken production• Early drilling and completion techniques made the Bakken uneconomic• Horizontal drilling and hydraulic fracturing boosted well production in 2008• In April 2008, the USGS report estimated the amount of technically recoverable oil at 3.0 to 4.3 billion barrels• By the end of 2010 oil production rates had reached 458,000 barrels (72,800 m3) per day outstripping the capacity to ship oil out of the Bakken• Various other estimates place the total reserves, recoverable and non- recoverable with todays technology, at up to 24 billion barrels.
  34. 34. Effects of Organic Source
  35. 35. Organic matter in sedimentsTypes of organic matter in sediments Total rock Analytical methods Total organic matterminerals • Bitumen (soluble) - solvent extraction - fractionation Bitumen (soluble) • Kerogen (insoluble) kerogen - pyrolysis (thermal (insoluble) degradation) - chemical degradation - spectroscopic techniques asphaltenes - IR, UV, NMR aromatic hydrocarbons & resins aliphatic hydrocarbons Hydrocarbons (H & C) C,H,S & N molecules Mol. Wt. < 600 au Mol. Wt. > 500 au
  36. 36. Kerogen Types• Type I kerogens – Lacustrine organic matter – High H/C (> 1.5), Low O/C (< 0.1)• Type II kerogens – Marine organic matter – High H/C (~0.1), Low O/C (~0.1)• Type III kerogens – Land organic matter – Low H/C (<0.1), High O/C (<0.3)• Type IV kerogens – No petroleum potential
  37. 37. Kerogen structure Oil prone Gas prone• Kerogen chemistry • Kerogen type – Composed of biopolymers – Type I = long aliphatic chains – Aliphatic or aromatic – Type II = medium aliphatic chains – Proportions determine “kerogen type” – Type III = aromatic rings, short chains
  38. 38. Kerogen type and petroleumType I Type II Type III Type IVWAX OIL NONE
  39. 39. Kerogen type and shale oil• Type I Type I Type II – Produces ‘waxy’ crude – Flow assurance is the critical issue – Risk of the crude oil solidifying in flow equipment, for example when exposed to low temperatures in the oceans. – The technology to solve these problems exists – Chemical additives, down-hole pumps, heated pipelines• Type II – Produces normal crude – Flow problems are absent WAX OIL – Relative simplicity is economically attractive
  40. 40. Kerogen types in the UK• Type I kerogens (lacustrine) Type I – E.g. Midland Valley, Carboniferous• Type II kerogens (marine) – E.g. South England & Yorkshire , Jurassic• Type III kerogens (coal swamp) Type III – E.g. Pennines, North West & North East, Carboniferous• The UK has a large amount of the most favourable shale oil source Type II rock starting material• However, the correct maturity is also needed – must be in oil window
  41. 41. UK shale oil• Where there is oil there has been a mature shale• Barring further maturation that has cracked or even destroyed the oil a residual oil should be present• Oil seeps and wells are good indicators of mature shale Conventional wells drilled in the UK for oil (●) and gas (●) (Harvey & Gray 2012).
  42. 42. The role of shale-oil in future energy predictions Can shale-oil change the “Peak Oil” curve?
  43. 43. The news: The US will overtake Saudi Arabia’s oil output by around 2020! (IEA, World Energy Outlook, 12 Nov. 2012) Production of crude oil & liquids, MMBbl/day • « By around 2020, the United States is projected to become the US Saudi Arabia Russia largest global oil producer » and overtake Saudi Arabia. "The result is a continued fall in U.S. oil imports (currently at 20% of its needs) to the extent that North America becomes a net oil exporter around 2030. • This shift will be driven primarily by the faster-than-expected deve- lopment of hydrocarbon resources locked in shale and other tight rocks that have just started to be 1990 2011 2015 2020 2025 produced by a new combination of two technologies: hydraulic fra- cturing and horizontal drilling.The IEAs conclusions are partly supported by OPEC, whichacknowledged for the first time in early November 2012 that • US oil production is predicted toshale oil would significantly diminish its share of the U.S. peak in 2020 at 11.1 MMBbl/day,market. up from 8.1 MMBbl/day in 2011.
  44. 44. FORECASTS OF OIL DEPLETION IN THE WORLD: The “HUBBERT 1956 CURVE” (or “Peak Oil”) versus the “USGS 2000 CURVE”Extra reservesneeded
  45. 45. Hubbert Peak Graph showing that oil production has peaked in non- OPEC and non-FSU countries 40 35 30 25MMBbl/day 20 15 10 5 0 2000 2010
  46. 46. The production of some countries follows the Hubbert Curve.Canada, however, hasmodified the curve due to the addition of oil sands production
  47. 47. Peak oil curve in the United States: modification from 2010 onwards Hubbert “peak oil” curve
  48. 48. Production of shale-oil could mitigate the reduction in US oil production by producing millions of barrels per day for many years.From: American Shale Oil, LLC (AMSO)
  49. 49. Monthly oil production in Texas, January 1988-July 2012 70 Millions of barrels 60 50 40 30 From: American Enterprise Institute websiteThe exponential increase in Texas crude oil production over the last two years is largely theresult of the large increase in oil production from the Eagle Ford Formation in Texas,discovered in 2008. Eagle Ford crude production has more than doubled over the last year,from 120 532 bbl/day in July 2011 to more than 310 000 bbl/day in July 2012.
  50. 50. World oil depletion per Major ProducerReserves: 1.25 trillion barrelsDepletion: 23.3 billion barrels/yearSource: National Geographic, issue 6,2004
  51. 51. Shale-oil production in the US, from selected plays
  52. 52. US oil production including the Green River Oil Shales (retort) (IEA) 2038
  53. 53. Historical and projected U.S. oil & gas production MMBoe/day Unconventional gas Conventional gas Unconventional oil Conventional oil Source: IEA World Energy Outlook 2012Peak Oil line modified line?
  54. 54. Future oil price projections (from International Energy Outlook reports)Since 2009, the price forecasts are lower, but always higher than $100/Bbl. Historic 2000 projection 2005 projection $US/barrel 2007 projection 2009 projection 2010 projection 2011 projection 2012 projection
  55. 55. Political decisions on the management of remaining energy sources and viable renewable ones. Early 2000s Affordable “Green” energy “Easy”, cheap fossil Transition: expensive (including energy for fuel energy fossil fuels transportation) 20-50 years?This period can provide enough time for R & D of cheap, “green” energysources, allowing a smooth transition to the “era of renewables”. This time gap can only be filled by expensive and controversial conventional exploration in remaining remote areas of the globe (e.g. Arctic?) plus shale-gas, shale-oil, pyrolysed oil, coalbed methane, oil sands, gas hydrates (?). Horizontal fracking has long been and is still used in “enhanced petroleum recovery” to drain old, conventional oil/gas fields.
  56. 56. Without shale oilFrom: “Peak of the Oil Age” by K. Aleklett, M. Höök, K. Jakobsson, M. Lardelli, S. Snowden, B. SöderberghEnergy Policy, Volume 38, Issue 3, March 2010, Pages 1398-1414
  57. 57. CONCLUSION• Shale-oil can only help the situation towards a renewable energy world, wheneverthat comes. It is not an infinite fuel and it is expensive.• Shale-oil could give a few extra decades of fossil fuel, in the future and soften thecollapse of the “Hubbert” curve.• Even the “optimistic” USGS curve drops in the future.• Shale-extracted products could give the “breathing space” needed during thecurrent, transitional period, when conventional, cheap petroleum is nearing its end.Unless another renewable & affordable transportation fuel is developed, fossil fuelswill still be the most energy-efficient option.• Current conventional exploration is focused on ultra-deep, expensive anddangerous drilling (US Gulf of Mexico, Angola, Brazil), politically-troubled areas(Iraq, Libya) or, remote and sensitive areas (Arctic).• A long (100-years-plus) future for fossil fuels may only be envisaged if (i) naturalgas replaces oil in transportation and other energy needs; and, (ii) if the technologyallows the exploitation of the massive methane reserves (gas hydrates) under theoceans.• Shale-extracted exploration & production is now a strongly political and socialissue. The geological and engineering problems have mostly been solved.
  58. 58. CONCLUSIONS FROM IEA’s WORLD ENERGY OUTLOOK, 12 Nov. 2012• Policy makers face critical choices in reconciling energy, environmental &economic objectives•Changing outlook for energy production and use may redefine globaleconomic & geopolitical balances• climate change slips off policy radar, the “lock-in” point moves closer Asand the costs of inaction rise•The gains promised by energy efficiency are within reach and are essentialto underpin a more secure and sustainable energy system