IER: World shale energy resources greater than we know

By The Bakken Magazine Staff | June 18, 2015

While the U.S. has done more than any country in the world to capitalize on its oil and gas shale energy resources, the potential of shale energy is far greater than what’s technically and economically recoverable today.

“People have known for a long time that there’s a whole lot of oil and natural gas trapped in shale, but it doesn’t matter if it’s there and you can’t get it out in a cost-effective manner,” said Dan Simmons, vice president of policy for the Institute for Energy Research in Washington, D.C.

When oil prices are above $50 a barrel and new technologies such as improved underground imaging are combined with horizontal drilling and hydraulic fracturing, they provide access to resources that were previously unavailable.

“That’s pretty exciting because there are large amounts of oil and natural gas resources in the world, but if you don’t have the technological means of accessing them, it really doesn’t matter,” Simmons said. “That is one of the great things that the hydraulic fracturing revolution has showed us. Technology can change and improve to bring a lot of these resources online. In the past, it was technologically and economically impossible.”

In an analysis of data from the Energy Information Administration, IER says that hydraulic fracturing and horizontal drilling have led to “an oil and gas production renaissance” in the U.S. with more than 40 percent of production coming from shale formations.  

An assessment of global shale and gas resources conducted by Advanced Resources International for EIA found 137 shale formations in 41 countries outside the U.S. Worldwide, the company estimates that 345 billion barrels of shale oil and 7,299 trillion cubic feet of shale gas are technically recoverable.

IER defines technically recoverable resources as oil and natural gas that could be produced using current technology, regardless of price and production costs. In contrast, economically recoverable resources can be profitably produced under current market conditions.

According to IER, only four countries have produced commercial quantities of oil and gas from shale plays. They are the U.S., Canada, China and Argentina. However, China produced only a small amount of shale gas and Argentina produced just a small amount of shale oil.

“Out of the four countries, only the United States is a major producer of both shale oil and gas,” the IER analysis says.

EIR also notes that in the U.S., “a large portion of shale gas production is from the Appalachian Basin’s Marcellus Shale where gas production has more than tripled in the past three years from 4.8 billion cubic feet per day in 2011 to 14.6 billion cubic feet per day in 2014.”

Simmons reasoned that the amount of oil and gas in shale is far greater than current estimates, which will increase with more exploration, better economics and improved technologies.

For example, in 2002, he said the U.S. Geological Survey estimated the amount of technically recoverable natural gas in the Marcellus formation was 2 trillion cubic feet. By 2011, the estimate had increased to 84 trillion cubic feet. That wasn’t because the amount of gas increased, but because of changes in economics and technology.

“I believe that there are a lot more shale resources around the world, but what actually matters is being able to drill and to experiment. People are then able to figure out the best ways to produce it,” Simmons said. “When you can look, you find a lot more resources than you knew, even in known areas.”