Major US supply role seen for unconventional gas

Sam Fletcher
Senior Writer

DENVER, Dec. 14 -- Over the last 20 years, unconventional natural gas in the US has grown from "just modest expectations back in the early 1980s" to become one of the dominant forces of gas supply, said Scott R. Reeves, executive vice-president of Advanced Resources International Inc., Houston, at a 2-day conference in Denver.

"Over that time, coalbed methane (CBM) and gas shale in particular came from being viewed as scientific curiosities to being two of the major contributors to US natural gas supply today. As we look forward over the next 20 years, we expect unconventional gas will play an increasing role towards supplying US domestic gas," said Reeves Dec. 13, the first day of the meeting sponsored by Strategic Research Institute, New York.

Unconventional gas resources include tight gas sands "that some have described as simply at the low-quality end of conventional gas resources. However, they are also unconventional trapping mechanisms," Reeves said.

US gas supplies increased overall to 19.4 tcf in 2003 from 19.2 tcf in 2000. Yet conventional gas production declined in that period, while unconventional gas production increased by 1 tcf. Production of tight sands gas increased from 4 tcf to 4.6 tcf, while CBM production rose from 1.4 tcf to 1.6 tcf.

"The largest percentage increase was in gas shale, from 0.4 to 0.6 tcf, largely coming from the Barnett shale, the most active and by far the largest producing gas shale play in the US today," Reeves said.

"From the early 1980s to the early 1990s, what spurred the development of CBM and the production increase was the combination of performance-based incentives in the form of the Sect. 29 [federal] tax credits, as well as research under both the Department of Energy and the Gas Research Institute," he said. Both programs have since ceased.

"Yet we still see tremendous growth in production. This demonstrates the commercial viability of CBM without any types of incentives today," Reeves said. "We see in the future perhaps new technologies such as enhanced CBM recovery opening up some of those basins of CBM that today cannot be commercial on a stand-alone basis of primary production because perhaps they are too deep or permeability is too low."

Gas shale slower
Production from gas shale, too, began in the early 1980s at low rates with the help of Sect. 29 credits and research support from DOE and GRI.

However, he said, gas shale "did not grow as fast as CBM; it's a little behind the curve. Still, there was growth in gas shale production from 1992 through today, commercial without incentives." US gas shale production grew from 65 bcf in 1980 to 600 bcf in 2003.

For gas shale, said Reeves, "We see perhaps not anything like enhanced CBM as being a driver of commercial production, but really since gas shale's development and plays are much less mature, we see the growth there to be in new plays that have not yet been developed and gas shales that have not yet been fully assessed today."

Various forecasters agree that unconventional gas production in the Lower 48 will continue to increase and will be one of the primary drivers and suppliers of the future US gas market.

"We're seeing a decline in CBM production from the San Juan basin, which historically has been the big granddaddy of production, but Powder River basin production is continuing to increase, and other basins are coming on stream. So CBM production is expected to continue to grow for the foreseeable future," Reeves said.

The National Petroleum Council's 1999 assessment of technically recoverable gas resources said 633 tcf was expected to come from future new fields. More than half of that, some 356 tcf, was projected as coming from tight sands (230 tcf), CBM (74 tcf), and gas shale (52 tcf).

"So yes, there's a sizeable resource out there," Reeves said.

Of the 12 largest US natural gas fields listed by the Energy Information Administration, 9 are unconventional, he noted. Unconventional gas "can be large plays and company-maker plays," Reeves said. "Both the DOE and the National Petroleum Council have found that unconventional gas resource bases are very large. The tight gas sands are by far the largest resource base, followed by CBM and lastly gas shale."

In 1990, the US Geological Survey assessed the Barnett shale at 1 tcf of potential gas production.

"It has produced considerably more than that today," Reeves said. "By 1998, our company along with USGS relooked at that [1990] assessment, and we bumped it up to 10 tcf. This play has not produced that much but is expected at this point to produce more than that. Nevertheless in 2003, the NPC only assessed the Barnett shale at 7 tcf. Earlier this year, the USGS came out with another assessment of 26 tcf."

Such assessments grow as experience in a particular play and basin grows and understanding of the reservoir and technology develop, Reeves said.

"Many of these unconventional gas resources are assessed low, particularly in the early stages of their development," he said.

'Game-changing' technology
Cavitation cycling, a fracture method using compressed air or foam in the San Juan basin, was cited by Scott as one of the previous "game-changing technologies" developed for unconventional gas production. Others included multiple-zone completions in the Black Warrior basin, reservoir simulation, and horizontal drilling. Many of the same technologies were successfully applied in gas shale development, along with nitrogen fracs and water fracs.

There also was a shift in thinking when the industry began developing CBM from the shallow, low-rank coal formations of the Powder River basin, which many in the industry at first shrugged off, said Reeves.

Game-changing technologies of the future could include the next-generation "sweet spot" exploration techniques that are applied before the well is spudded. "What you really want to know is where to drill in the first place," Reeves said.

"Natural fractures are going to be the key to and have been the key in the past to commercial production from gas shales, tight sands, and CBM. The cleat system is not sufficient in coal in and of itself to provide commercial [production] rates. You have to have an overlying natural fracture system that is open for these things to be commercial," he said.

"What you're really looking for is areas of enhanced fracturing, perhaps fault-related fracturing or flexure-related fracturing," said Reeves.

Other new development techniques could include intensive resource development with improved drilling and completion practices, intelligent optimization of operations, and enhanced recovery.

Tomorrow's giants
As for the emerging plays that could be tomorrow's giants, Reeves said, "We don't know." However, he noted that there is "not a lot of development yet" in northern and central Appalachia, among coal deposits along the Gulf Coast, and in Green River basin.

"The Green River basin contains 314 tcf, by far the single largest resource base of CBM. We think that's going to be a place of increasing activity. The coals are very deep there and will require special technology. We think something like enhanced CBM technology will help unlock that," said Reeves.

Enhanced CBM technology could also prove effective in the high-rank tight coals of Appalachia, he said.

The Gulf Coast features "a low-ranked coal that's been overlooked in the past. Everyone has been focused on the Powder River basin, but we think [the Gulf Coast] is going to be an area of increasing activity. You see a not-insignificant amount of activity in leasing and pilot projects in north Louisiana today," he said.

Potential gas shale plays are being identified "all over the US," said Reeves, but there is not a lot of international gas shale activity. However, CBM development is widespread around the globe.

Contact Sam Fletcher at

Related Articles

Puma Energy completes purchase of Murco’s UK refinery, terminals

07/02/2015 Singapore-based Puma Energy Group Pte. has completed its purchase of UK midstream and downstream assets from Murco Petroleum Ltd., a subsidiary of ...

BP to settle federal, state Deepwater Horizon claims for $18.7 billion

07/02/2015 BP Exploration & Production Inc. has agreed in principle to settle all federal and state claims arising from the 2010 Deepwater Horizon inciden...

MARKET WATCH: NYMEX oil prices plummet on crude inventory build, Iran deadline extension

07/02/2015 Oil prices plummeted more than $2/bbl July 1 to settle at a 2-month low on the New York market after a weekly government report showed the first ri...

API to issue recommended practice to address pipeline safety

07/01/2015 The American Petroleum Institute expects to issue a new recommended practice in another few weeks that addresses pipeline safety issues, but the tr...

Shell Midstream Partners takes interest in Poseidon oil pipeline

07/01/2015 Shell Midstream Partners LP has completed its acquisition of 36% equity interest in Poseidon Oil Pipeline Co. LLC from Equilon Enterprises LLC, a s...

Shell makes FID on Appomattox deepwater development in Gulf of Mexico

07/01/2015 Royal Dutch Shell PLC has taken a final investment decision (FID) on the Appomattox deepwater development, authorizing construction and installatio...

MARKET WATCH: Oil prices decline as US crude inventories post first gain in 9 weeks

07/01/2015 Oil prices on July 1 surrendered much of their gains from the day before after the release of a government report showing the first rise in US crud...

BHP, Woodside move to decommission Stybarrow field

07/01/2015 BHP Billiton Ltd. and Woodside Petroleum Ltd. have started preparations for decommissioning of the Stybarrow group of oil fields in production lice...

Tullow Oil provides production update on Jubilee, other fields

07/01/2015 Tullow Oil PLC reported that gross production for the Jubilee field offshore Ghana averaged 105,000 b/d in this year’s first half, up from 102,000 ...
White Papers

Solutions to Financial Distress Resulting from a Weak Oil and Gas Price Environment

The oil and gas industry is in the midst of a prolonged worldwide downturn in commodity prices. While ...
Sponsored by

2015 Global Engineering Information Management Solutions Competitive Strategy Innovation and Leadership Award

The Frost & Sullivan Best Practices Awards recognise companies in a variety of regional and global...
Sponsored by

Three Tips to Improve Safety in the Oil Field

Working oil fields will always be tough work with inherent risks. There’s no getting around that. Ther...
Sponsored by

Pipeline Integrity: Best Practices to Prevent, Detect, and Mitigate Commodity Releases

Commodity releases can have catastrophic consequences, so ensuring pipeline integrity is crucial for p...
Sponsored by

AVEVA’s Digital Asset Approach - Defining a new era of collaboration in capital projects and asset operations

There is constant, intensive change in the capital projects and asset life cycle management. New chall...
Sponsored by

Transforming the Oil and Gas Industry with EPPM

With budgets in the billions, timelines spanning years, and life cycles extending over decades, oil an...
Sponsored by

Asset Decommissioning in Oil & Gas: Transforming Business

Asset intensive organizations like Oil and Gas have their own industry specific challenges when it com...
Sponsored by

Squeezing the Green: How to Cut Petroleum Downstream Costs and Optimize Processing Efficiencies with Enterprise Project Portfolio Management Solutions

As the downstream petroleum industry grapples with change in every sector and at every level, includin...
Sponsored by
Available Webcasts

The Resilient Oilfield in the Internet of Things World

When Tue, Sep 22, 2015

As we hear about the hype surrounding the Internet of Things, the oil and gas industry is questioning what is different than what is already being done. What is new?  Using sensors and connecting devices is nothing new to our mode of business and in many ways the industry exemplifies many principles of an industrial internet of things. How does the Internet of Things impact the oil and gas industry?

Prolific instrumentation and automation digitized the industry and has changed the approach to business models calling for a systems led approach.  Resilient Systems have the ability to adapt to changing circumstances while maintaining their central purpose.  A resilient system, such as Maximo, allows an asset intensive organization to leverage connected devices by merging real-time asset information with other critical asset information and using that information to create a more agile organization.  

Join this webcast, sponsored by IBM, to learn how about Internet of Things capabilities and resilient systems are impacting the landscape of the oil and gas industry.


On Demand

Taking the Headache out of Fuel License and Exemption Certificates: How to Ensure Compliance

Tue, Aug 25, 2015

This webinar, brought to you by Avalara, will detail the challenges of tax document management, as well as recommend solutions for fuel suppliers. You will learn:

-    Why it’s critical to track business partner licenses and exemption documents
-    The four key business challenges of ensuring tax compliance through document management
-    Best practice business processes to minimize exposure to tax errors


Driving Growth and Efficiency with Deep Insights into Operational Data

Wed, Aug 19, 2015

Capitalizing on today’s momentum in Oil & Gas requires operational excellence based on a clear view of what your business data is telling you. Which is why nearly half* of oil and gas companies have deployed SAP HANA or have it on their roadmap.

Join SAP and Red Hat to learn more about using data to drive process improvements and identify new opportunities with the SAP HANA platform running on Red Hat Enterprise Linux. This webinar will also show how your choice of infrastructure impacts the performance of core business applications and your ability to achieve data-driven insights quickly and reliably.

*48% use SAP,


OGJ's Midyear Forecast 2015

Fri, Jul 10, 2015

This webcast is to be presented by OGJ Editor Bob Tippee and Senior Economic Editor Conglin Xu.  They will summarize the Midyear Forecast projections in key categories, note important changes from January’s forecasts, and examine reasons for the adjustments.


Emerson Micro Motion Videos

Careers at TOTAL

Careers at TOTAL - Videos

More than 600 job openings are now online, watch videos and learn more!


Click Here to Watch

Other Oil & Gas Industry Jobs

Search More Job Listings >>
Stay Connected