Omar Abou-Sayed, Advantek Waste Management Services

The development of shale gas and tight oil in the U.S. over the past decade or so, sometimes called the “Shale Revolution,” has altered the industry in dramatic and likely permanent ways. Though the change seemed sudden, the foundation was laid long ago.

The history of U.S. shale began in 1825 when early experiments in the extraction of natural gas from shallow, low-pressure fractures first showed promise. While R&D continued on and off for the next 166 years, the technology to bring this resource to a viable industrial scale would not arrive until 1991.

Advances such as horizontal drilling and hydraulic fracturing allowed pioneers at Mitchell Energy to successfully carry out the first economic shale fracture in the Barnett Basin in 1998. Shale gas became the fastest-growing contributor to U.S. energy production, and soon the same techniques were being applied to tight oil formations.

According to the U.S. Energy Information Administration (EIA), there are seven major shale sites which account for the majority of the production from the country’s shale resources.

Permian: Western Texas, Southeastern New Mexico

Producing 8 billion cubic feet (Bcf) of natural gas and 2.2 million barrels of oil per day (MMbbl/d), this is one of the largest productive basins in the U.S. Drilling first began in the 1920s, but thanks to advances in hydraulic fracturing, the Permian is now second only to the Ghawar oil field in Saudi Arabia for daily production. While the historical production in the Permian is from mature fields, it is also host to one of the most important emerging shales. In November 2016, the U.S. Geological Survey identified the Wolfcamp Shale, located within Permian, as the “largest continuous oil and gas deposit ever found in the United States.” Moreover, several other major deposits are found in the broader Permian basin.

Eagle Ford: Southern Texas

At more than 400 miles in length, the Eagle Ford Shale is also one of the larger shale plays in the U.S. It currently produces about 1 MMbbl/d and almost 6 Bcf/d of natural gas. Though the acreage containing gas (the “gas window”) saw the first significant development, the current activity is mostly in the “oil window.” The deposit extends across the border into Mexico as well, though the Mexican side has not yet seen significant development.

Bakken: Montana and North Dakota

The Bakken Formation, found principally in North Dakota but extending into Montana and Canada, produces almost 1 MMbbl/d of oil and 1.7 Bcf/d of natural gas. Oil was first found in Bakken in 1951, but its true commercial viability only began in the last decade. There may be as much as 400 billion barrels of oil equivalent (Bboe) in place in Bakken. An estimate from the U.S. Geological Survey conservatively puts the potential total yield from this play at 4.3 Bbbl of oil, or roughly 1% of the total oil in place. More recent recovery estimates put that number at between 3% and 10%. Production economics for the Bakken suffer from a lack of export pipeline infrastructure to transport Bakken crude to refineries; though several pipeline projects are in various stages of planning or development, currently most Bakken crude reaches market by truck and rail. Reducing this transport bottleneck will result in higher net prices for Bakken operators which should result in development of currently marginal acreage.

Marcellus and Utica Shales, Appalachian Basin (New York, Pennsylvania, Ohio and West Virginia)

First discovered in 1839 near Marcellus, N.Y., development of the Marcellus shale began in earnest during the mid-2000s. With each well producing prolific amounts of natural gas, the Marcellus is shale is primarily a gas play. It is one of the top five natural gas sites in the world, with an incredible output of 19 Bcf every 24 hours. Eight out of 10 drilling sites in Marcellus are focused on natural gas. The Marcellus only produces about 38,000 bbl/d of oil, making it one of the smallest oil producers in the country.

The Utica, by contrast was discovered relatively recently in 2011. Geologically, it is found deeper than the Marcellus and although their footprints have significant overlap, the stacking is not perfect. The shale was first discovered in 2008 in Canada during early hey-day of Marcellus development. Today, it produces 4.1 Bcf of natural gas and more than 40,000bbl/d of oil. Production has climbed steadily over the last few years.

Given the ability in many cases to access these horizons from the same acreage, combined with the prolific nature of the wells, the Marcellus/Utica basins provide some the lowest production costs for natural gas in the U.S. Evidence of this is that despite the recent price crash for oil and gas, activity and rig count levels in this region remained fairly constant.

Niobrara: South Dakota, Colorado, Nebraska and Wyoming

Niobrara, spanning across four states with the heaviest drilling in northeast Colorado, produces about 440,000 bbl of oil and 4.5 Bcf of natural gas each day. The play is still in its early days of development and has higher production costs than several of the more mature shale basins. The play was discovered in just around the turn of the last century, though as with the other shale resources, significant production was uneconomic until recently. The Niobrara It is located near other more mature fields like in the Denver-Julesburg Basin and the Powder River Basin, providing additional scale for attracting industry activity. Commercial drilling in Niobrara is still in its early stages, but comparisons are being made to the Bakken play. Rig deployment and monthly yield have been rising steadily in recent months.

Haynesville: Louisiana, Arkansas, and Texas

The Haynesville shale, located in Louisiana and east Texas, was one of the juggernaut fields during the early days of the shale revolution. It is an extremely deep and thick formation. Though it has since been eclipsed by the Marcellus/Utica shale complex in terms of total daily production and unit costs, the Haynesville remains a very important and competitive resource producing about 6.1 Bcf of natural gas and 43,000 barrels of oil each day. The third-largest producer of natural gas in the country, the Haynesville has triggered a renaissance in petrochemical production (particularly ethylene crackers) in the Gulf Coast.

Emerging Plays

As the industry works to reduce development costs and refine completion techniques, new shale and tight oil deposits can become economically viable. Some emerging shale plays include:

  • The Tuscaloosa Marine Shale, Louisiana and Mississippi, prospective for oil and natural gas;
  • The Smackover Brown Dense Shale, Louisiana and Arkansas, prospective for oil and natural gas;
  • The Cumnock Shale, North Carolina, prospective for natural gas; and
  • The Floyd and Neal Shales, Mississippi and Alabama, prospective for natural gas.

New Foundation For Production

Shale gas and tight oil development, spurred by advances in drilling and completion technologies, has emerged as a lynchpin to the country’s energy production. In 2000, shale gas accounted for a mere 1% of natural gas production in the U.S. A decade later that number had jumped to over 20%.

According to the EIA, we can expect shale gas to account for about 46% of the U.S. natural gas supply by 2035. Tight oil production from shale sites is also projected to climb in that time period, making up 63% of total U.S. crude oil and condensate production.

Omar Abou-Sayed is the founder and CEO of Advantek Waste Management Services.