Posted 10:41 am Sunday, September 18, 2011
HAYNESVILLE SHALE: Technology Makes Gas A Game-Changer
By CASEY MURPHY
Business Editor
Business Editor
Steven Holditch wouldn't have dreamed to say a decade ago that the United States could ever be energy independent. Now, he is changing his tune.
New technology is changing the face of the oil and gas industry, making way for the production of natural gas that could help the country become more energy dependent.
Holditch, head of the Harold Vance Department of Petroleum Engineering at Texas A&M University, said everything came together with several advancing technologies, such as horizontal hydraulic fracturing, or "fracking," in the last 10 years that has changed the landscape of the oil and gas industry.
He believes the country might never be completely energy independent, but new drilling for natural gas across the country can help make oil exports less significant.
"What you're doing in the Haynesville and other gas shales in Texas is just the first step in developing these types of reservoirs in the entire world," Holditch told a group of oil and gas professionals in May at a Texas Independent Producers and Royalty Owners Association conference at the East Texas Oil Museum in Kilgore.
The Haynesville Shale, which spans Louisiana, East Texas and Arkansas, is one of the world's largest known reserves of natural gas.
"What you're witnessing in the Haynesville is going to be repeating itself over and over again in the next 30, 40 years, all around the world now that we've figured out how to find the source rocks," he said.
Geologist Harold Beaird, of Tyler, believes the shales being drilled in East Texas, and across the country, are changing the whole picture of natural gas.
"It's put a lot of new vitality in our drilling in the U.S.," he said. "It changed Pennsylvania and New York into gas producing states and changed their political scene because they love the taxes that it generates up there."
Along with the Barnett, Haynesville and Eagle Ford shales in Texas, there are the Marcellus in Pennsylvania, New York and West Virginia, and the Bakken Shale in North Dakota.
And there's going to be many more, Beaird said.
NEW ZONE
The Haynesville Shale is not a new zone; it's a new producing zone, Beaird said. What's new is the technology that has improved the capability of producing gas from shale.
For 100 years, the industry has produced oil and gas from sandstone and limestone.
"We've known shale has had porosity for decades," Beaird said. "We know that shale has been everywhere. We've drilled through shale for 100 years in the industry and in some cases we knew it looked like it had gas in it, but we knew it didn't have permeability."
To be a producing zone, there has to be porosity, holes in the rock, and permeability, whether the holes join together. If there is no permeability, the oil and gas won't move out of the rock, he said.
The most significant first well to produce gas from shale was a well drilled in 1981 by George Mitchell in Wise County, Beaird said. He fracked the well and captured gas, he said.
But when Mitchell first drilled there, the industry didn't pay attention because everyone thought nothing could be produced from shale. After Mitchell drilled four or five wells, people began to notice and started believing it looked important, Beaird said. That field now has about 12,000 gas wells in it, he added.
Mitchell completed that first big well in the Barnett Shale in 2001, while the first big well completed on the Haynesville Shale by Chesapeake Energy was in 2007, Beaird said.
"It took that long really for people to stop and think this shale production can be big," he said. "It had to overcome prejudices that you just don't get production out of shale."
Now, there are 1,400 to 1,500 wells on the Haynesville Shale field, with many more to be drilled, he said. Drilling and fracking technique improvements have made that possible.
Now, they are able to drill horizontal, lateral wells. That, with a great increase in new fracking technology -- which creates permeability by creating cracks in the rock -- has allowed shale to be a new producing horizon, he said.
"It's a big thing," Beaird said of the Haynesville. "It's an historic gas field. Probably right now it is the major gas-producing field in the U.S."
Until about 10 years ago, it was widely believed most of the producible natural gas reserves had been depleted, Fair Oil Co. President Bob Garrett said. But since the discovery of several natural gas shales in the country, including three of the biggest found in Texas, everything known about natural gas reserves has changed.
The East Texas oil field was a high-quality, hard-to-find field but once discovered was relatively easy to produce to make a lot of money, Holditch said.
He believes there has to be higher natural gas prices and better technology to extract the resources more economically.
"As technology improves, we continue to find more oil," Holditch said.
Since drilling for oil began in the late 1800s and early 1900s, the world has produced 784 billion barrels of oil up until 1996, he said. However, since 1996, the world has produced another 367 billion barrels worldwide -- that's 1.15 trillion barrels of oil that have been produced since the industry began, he added.
North America has produced 224 million barrels, but most of that was done in the 1940s through 1960s. Europe and Eurasia have produced the most -- 226 million barrels, he said.
Since 2000, conventional oil reserves have come up to about 1.3 trillion barrels. "So 1.4 trillion barrels have been produced and we know where another 1.3 trillion are," he said.
Although everyone thinks the oil and gas industry is an old business, "we're a young, up-and-coming business," Holditch said. "It's a really good business to get in to right now."
NEW TECHNOLOGY
Since technology has improved and the country has learned more about natural gas shales, everything is changing.
"We're going to the source rocks where they live," said Eric Potter, program director for energy research at the Bureau of Economic Geology at The University of Texas at Austin. "It has changed the face of our industry. It's where we are now."
Shale source rocks can spin off oil and gas depending on how deep it is buried and its temperature. "These shales can be very complicated," Holditch said.
Geology and geophysics is just as important to understanding how the shales were deposited, he said, adding that they have to understand the geology and know where and how to drill, as well as finding the sweet spots.
Back in the early days, "it was pure wildcatting," Garrett said. "No maps to go on; just drilling. Because of the lack of technology, it took about six months to drill one well."
Oil and gas technology has come a long way through the years, most recently with horizontal drilling, which allows natural gas shales -- tight rocks with little or no permeability -- to be explored.
"We've always known there were rich sources of natural gas locked up in these tight rocks ... ," Garrett said. "The conventional way of drilling doesn't work on them."
Oil, mostly found in sandstone, is drilled vertically, but the new technology allows explorers to drill down, then horizontally, Garrett said. The technology came about in the 1990s and was experimented in South Texas on Austin chalk.
Mitchell Energy, of Houston, was the first to use the application on the Barnett Shale, Garrett said. Hydrofracturing technology -- where water, sand and chemicals are used to put high pressure on the shale formation to fracture it open -- followed.
Beaird said everyone thought Mitchell was crazy because everyone knew "you can't get gas out of shale -- that was an old line thought that now has gone out the window."
While working for Lonestar Gas Co. in Dallas for 20 years, Beaird said they drilled many wells in the Barnett field and knew there was gas in it. But because everyone knew gas couldn't be produced from shale, they never tried to drill for it until Mitchell proved it could be done.
Through experience since that first highly developed shale play, technology is getting better all the time, Garrett said.
"The industry realized it was a very effective technique," he said. "They had known about the Haynesville Shale for a long time and went back and used the new technology on it."
The current production out of the Haynesville has spread, with the Texas and Louisiana state line appearing to cut through the middle of it. Potter said it will spread more in the future as more is learned about it.
Beaird believes it will be a long time before the Haynesville field is drilled up completely. He thinks there will be another 10 years of active drilling on the play.
Garrett said there are "virgin reservoirs" all over the world that have never been tapped before because the technology wasn't there.
Beaird agreed. He believes the shales known about now are just the start.
"There's going to be many more surprises about new producing zones in old formations," he said of natural gas. "It's pumping excitement back into old areas. There's nothing much older than East Texas and North Louisiana you know and we're getting a boom all over again."
