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Einstein was once asked by a journalist refusing to open their mental windows to new
what made for genius. He thought ideas, and frankly allergic to innovative thought.
about the question for some moments Remember in years past executives at the Majors
and then replied “The simple ability refused to believe in shale, and said openly that it
to recognize the obvious”. There is, was impossible to extract hydrocarbons from shale
alas, little genius in the global oil & gas rock. It was Independents like George Mitchell who
industry but we should be able to see the “obvious” developed the technology to do it despite much
even without genius. derision. This attitude led to dominance in the shale
The evidence is piled high that the “Shale sector by Independents not the Majors.
Revolution” is bringing fundamental change; a Now many Majors and other conventional,
new age of energy surplus to replace an era of establishment thinkers see shale production as
energy shortage. This said, much of leadership in a cyclic event not a fundamental change in the
the industry speaks about the Shale Revolution energy market. This, in my view, is a serious and
as a cyclical event, not a structural change, and dangerous mistake.
that energy prices will very soon return to “normal
Shale production and global
“Shale Revolution” is bringing demand
fundamental change; a new age of energy
What are the reasons to believe that shale
surplus to replace an era of energy production will continue growing and lead to
shortage. a permanent surplus with oil and gas supply,
outracing global demand? Let us list some of the
levels.” This, alas, is an unfortunate triumph of hope main reasons.
over reason. And as one should know, hope may
make a “good breakfast” but a very “poor supper”. These are early days for the Shale
It is a grave misfortune that too many senior Revolution
executives in the hydrocarbon and contractor
industries are ten thumbed administer types We only recover on average 3%-5% of the
hydrocarbons in a shale development. Moreover,
95% on average is C1’s or methane. However, in
future with better technology we will learn how to
transform the physical characteristics of the calcite
(sodium carbonate and calcium carbonate) and
have hydraulic fissures that stay open longer and
allow us to double or triple our current recovery
rates.
Remember, it was only a few decades ago that
we were only recuperating 20%-25% of the
hydrocarbons from conventional wells. With
today’s technology, we are recovering 45%-50% at
conventional wells or more. Consequently, in the
near future as we climb the learning curve we will
double or triple US shale oil & gas reserves and
substantially increase production potential at lower
costs (figure 1). This means that global supply
will rapidly increase in the future. However, global
demand is highly unlikely to grow at a similar pace.
Fig. 1 – North American Shale Gas Experience curve The Independents control the best
shale properties in the USA
They purchased the best shale properties with
the most “sweet spots” and liquid potential. The
Independent entrepreneurs amassed huge fortunes
and kept buying into more shale developments
while natural gas was selling for $ 13 per million
btu.
Many even borrowed heavily to increase their shale
Impiantistica Italiana - Settembre-Ottobre 2015 19
