This is a fantastic story about shale gas, and the title couldn't be more appropriate :)

The Future is Shakey

The New York Times ran a big article this past week on the future of shale gas. In the piece, the paper discusses the potential for shale gas development around the globe. According to the writers, shale will help western Europe reduce its dependence on Russian gas imports. And eventually shale gas production will become a major source of supply for energy-hungry developing markets like China and India. In short, shale will be an energy savior for much of the planet.
In terms of science, this makes sense. There are certainly extensive shale deposits in many countries around the world. And many of these are known to be gas-bearing. The NYT correctly points out that there are, or have been, investigations of shale gas potential in Germany, France and Poland. I've reviewed projects in Hungary and Romania that also show promise for large gas-in-place volumes.
And the push for shale gas outside of the established fields of North America is gaining strength. Italian oil major ENI recently paid $280 million for a 27.5% stake in leases in Texas' Barnett shale, held by long-standing unconventional gas developer Quicksilver Resources. More than just gaining production upside, ENI is looking to up its shale gas knowledge here. After learning what works in the Barnett, the hope is that the company will be able to apply this expertise to shale plays in other parts of the world.
To be sure, this is a worthwhile pursuit for gas producers. The success that North American producers have had with shale plays like the Barnett, Haynesville, Horn River and perhaps now the Marcellus of the northeast U.S. (more on that in a moment) certainly suggests that shale gas can be a profitable and prolific enterprise. There is all the likelihood that some shales in other parts of the world will prove equally successful.
But this won't happen overnight. To suggest that shale gas is going to quickly become a solution to world energy demand is misleading. Yes, we know of a lot of shales around the globe that hold a lot of gas. But getting that gas out is another matter altogether.
First, there's the issue of developing proper completions. Shale gas wells are far from conventional. This isn't just "plug and play" technology, where you spot the shale, drill a hole, and then sit back and watch the gas come flowing up. Getting gas to flow from shale almost always requires "fracking". A more-complex method of completing a well, where fluid is pumped down the well and then put under pressure until it cracks the rock around the wellbore.
Fracking is common practice in North America. We know a lot about the science behind it, and there are a number of service companies that do it very well. But it takes time and effort to design a proper frac. The well operator must decide how much fluid they need to put down the well. And how much pressure to apply.
The chemistry of the frac fluid is also a science unto itself. Fracs can be performed with water, foam, or a host of proprietary chemicals. If the target shale contains clay, care has to be taken to choose a frac fluid that won't cause clays to swell and plug the cracks through which gas is supposed to flow.
Fracs can be "energized" by adding nitrogen or carbon dioxide gas to the fluid. In some cases this increases the gas flow from the well. But in other types of shale, energized fracs damage the producing formation and result in less gas being recovered. In the Marcellus shale, operators originally tried energized fracs that had worked on wells in Texas. The results were sub-par. The play didn't open up until some operators began trying non-energized "slickwater" fracs that had been successful in the Barnett shale.
A final consideration in frac design is "sanding". Sometimes cracking a gas-bearing rock is not enough to keep gas flowing. Some formations, especially deeper shales, have the annoying habit of "healing". The rock flows like Plasticine, sealing off the cracks created by fracking and choking off gas flows just a few weeks or months after completion.
To prevent this, operators often inject sand into their frac fluid. The sand grains are shot into the cracks in the producing formation and hold these fractures open. Done properly, sanding can greatly increase gas flow rates. But it's a fine balance. Putting too much sand into the well can plug up the cracks and actually reduce flow rates. But if not enough sand is included, there will not be enough force to prevent cracks from healing. Some well operators even use specialty products like tiny ceramic beads, rather than natural sand, for their fracs. A lot of variables to consider.

At What Cost?

There is a lot that goes into designing a proper frac. Making this a challenging task. But it is certainly not a show-stopper. The petroleum industry is getting better and quicker at assessing shales and designing fracs to match. During the pioneering work in the Barnett shale, it took a decade to get the frac right. But in the most recent wave of shale gas development across North America, it has taken much less time to optimize completions.
The technical challenges in getting shales to flow gas are manageable. Proper fracs can certainly be designed for shales around the planet. The bigger issue is making these procedures economic.
The technology that goes into pulling off a successful shale frac doesn't come cheap. These completions require a lot of specialized equipment. Let's look at the aforementioned Marcellus shale for a moment. In prime acreage in Pennsylvania and West Virginia, the Marcellus is found at depths up to nine thousand feet (about three thousand meters). Putting enough pressure down a deep well like this to crack the shale requires upwards of 12,000 horsepower. That's one-eight the power of a jet-engine! The operator needs to bring a serious motor on site.
Another problem with complex fracs is they have to be completed smoothly. Any stops and starts in the procedure can cause major problems. In the worst case, delays can completely compromise the well, wasting the millions spent drilling the hole in the first place. This means that when the frac is begun, all necessary supplies must be on site and ready to go.
This is an issue because of the sheer volume of materials required. In the Marcellus, a vertical well requires thousands of barrels of water to complete the frac job. A horizontal well needs tens of thousands of barrels. All of this water must be on hand. It can't be trucked in as needed. If a delivery is late, the whole well might be ruined. Same goes for the two hundred tons of frac sand required for typical well.
The solution is to build on-site storage for these supplies. For water, this usually involves digging a large pit near the wellsite. At considerable cost. The sand doesn't need a pit, but it does require significant expense not only to purchase the sand but also to have it delivered by truck to site. A process that can take a few days, given the large volumes involved.
Once all of this is assembled, the operator needs to make sure they have all of the equipment (and equipment personnel) needed to smoothly move water and sand from storage to the well bore. This can require 20 different pumps. All of which have to be connected and managed. Far from a simple operation.
The kicker is that all of this expensive equipment needs to be backed up. We discussed above that any delays during the frac procedure can compromise the whole well. With millions in drilling costs at stake, most shale gas operators choose to have back-up engines and pumps on site. If something breaks, you just can't afford to wait for another to be delivered. And all of this back-up equipment costs yet more money.
The bottom line is that drilling a shale gas well is an exercise in project management. Operators need to get a lot of equipment and supplies on site. Often from several different contractors. They then need to manage all of these pieces through the drilling process. And do it all at as low a cost as possible. If your well ends up cash flowing $15 million worth of gas, it's great if your original drilling costs were only $10 million. But not so good if you spent $20 million to drill.
Given all of these cost-control considerations, operators have a hard time managing things economically even in many of the most popular U.S. shale gas plays. And these are areas where drill rigs, supplies and trained labor are plentiful. The challenge becomes greater trying to pull this off in a completely new shale play. Especially if the play is in a country with little oil and gas activity. Trying to pull together all of the necessary pieces to drill and complete a well can get expensive fast.
Cost control is what makes the difference between an industry and a science project. Shale gas around the planet won't be developed on a large scale until people can make money doing it (and preferably a lot of money). And that will take time as local professionals get acquainted with the technology involved.

http://www.oilprice.com/article-death-of-the-dollar-is-the-end-of-the-greenback-truly-at-hand.html