Tight Oil & Gas in US; Global Tight Gas

The Energy Information Administration annually updates its estimates of the technically recoverable resources (TRR) in the nation’s major oil and gas fields. In recent years this has become a more uncertain process as attention has shifted to shale gas and “tight oil” formations, which have become newly accessible through the technology of hydrofracking. The two graphs [below] represent the latest estimates for the nation’s major formations. _RCE

USEIA 2012 Shale Oil & Gas Estimates

Shale gas resources (top) are dominated by the huge Marcellus formation, which stretches all the way from Tennessee to upstate New York. The Haynesville-Bossier is on the Texas-Louisiana border and the Eagle Ford and Woodford are also in Texas. The Fayetteville is in Arkansas. The Utica – actually part of the Marcellus formation – is in Ohio and western Pennsylvania. Most of these are now being developed.

With tight oil (below), the largest reserves are actually in the Monterey/Santos formation in Southern California. This area has long been tapped for easy oil but has not yet undergone much advanced extraction. The biggest action has been in the Bakken Shale, which has catapulted North Dakota into second place ahead of Alaska and behind only Texas as the biggest oil producing state, reducing unemployment to 3 percent in the process. As big as the Bakken is, the Niobrara, which spans western Nebraska, western Kansas and eastern Colorado, is actually larger. All this is what is now encouraging prognosticators to say that America may be able to make drastic reductions in its dependence on foreign oil.

Of course there are also vast reserves of shale gas and tight oil in other parts of the world as well, which is why the concerns about Peak Oil may also subject to revision. _RCE

Monterey/Santos Largest US Tight Oil Reserves

Outside the US, the vast tight oil & gas reserves may have to wait between 5 and 10 years for the necessary regulations and infrastructure to be contrived.

Exactly how much unconventional gas lurks outside America is a matter for conjecture, but the list of countries with potentially large reserves grows steadily. Canada and Mexico are known to have lots. Australia already produces coal-bed methane and has plenty of shale and tight gas too. South Africa also has big deposits, though a fracking moratorium was announced last year. Argentina and India could join the shale club, and so could countries that already export conventional gas, such as Algeria and Libya. Even Russia and Saudi Arabia, the largest conventional oil producers, have the stuff. But the biggest shale-gas reserves may be lurking in China.

...As in Europe, there is still a question mark over how easily American technology can be applied to China's shale beds. Like Europeans, the Chinese are tightly packed in some parts of the country, and as they become more resistant to centrally wielded power they may object to drilling on their doorstep. China also lacks gas infrastructure to serve shale fields. Much of what it has was built to connect conventional fields to markets. The country has a record of building infrastructure at lightning speed: the Turkmenistan pipeline, for instance, went up much faster than it would have done in the West. Yet coal-bed methane, although in development in China for ten years, in many places still lacks suitable pipelines linking it to markets. And two of China's big shale fields are in the parched far north-west of the country, far from the water needed for fracking.

Sinopec extracted gas from test wells in Sichuan in March, but it could be years before the gas starts flowing in earnest. Still, if all goes well there may be plenty. The IEA says that total gas production could increase fivefold by 2035, to 475bcm, of which 390bcm would come from unconventionals, over half of that from shale.

India hopes to map its shale resources and have exploration rules in place by December 2013. But it is short of water, and locals are often chary of drillers and miners. Argentina's hopes of getting at its shale probably took a blow when its government recently took control of YPF, a formerly state-owned oil and gas company that had been sold to Spain's Repsol. All in all, it is likely to be a decade or more before shale has much of an effect on global gas markets and pricing systems outside America. _Rigzone quoting Economist

China does not actually have to fully develop its tight gas resource. It can simply hold the possibility of such development over Gazprom's head, in negotiating more reasonable gas rates. Meanwhile it can develop whatever infrastructure is needed to build tight gas production over the next 10 or 15 years.

Over that same time period, expect next generation nuclear power to experience rapid development -- which will help take much of the electrical power load, and will provide cheap, high quality industrial process heat to make unconventional hydrocarbon energy & fuel production more affordable and competitive.