IPAA: Unconventional gas changing US supply picture

Shale gas plays helped US natural gas production increase within the last year, while US oil production continues to decline, said speakers at the Independent Petroleum Association of America's annual meeting Nov. 11.

Paula Dittrick
Senior Staff Writer

HOUSTON, Nov. 12 -- Shale gas plays helped US natural gas production increase within the last year, while US oil production continues to decline, said speakers at the Independent Petroleum Association of America's annual meeting Nov. 11.

"This is the era of shale gas plays in North America," said Jeff Wojahn, president of EnCana Oil & Gas (USA) Inc.

Wojahn spoke during a chief executive roundtable at the IPAA meeting in Houston along with Mark Papa, chairman and chief executive officer of EOG Resources, and Porter Bennett, president and chief executive officer of Bentek Energy LLC.

Papa said, "It will be interesting to see how many additional resource plays will be found and how they will develop…. Technology that started in the Barnett shale (of North Texas) is now migrating to Canada and to the rest of the world."

The US Geological Survey classifies the Barnett as an unconventional gas play. Barnett shale wells are known for long-lasting production and a high drilling success rate. Two other sale plays, Haynesville in Louisiana and Texas, and Marcellus in the US Northeast, also are expected to boost US production.

"Geologic risk is now very low," Papa said, and it's not as difficult to find significant quantities of gas as it was 10-15 years ago. He expects more plays to be found, and that large independents will be the primary developers of regional unconventional plays.

Wojahn said horizontal drilling and advances in hydraulic fracturing technology has enabled oil executives to devote more time to cost management and efficient operations than to finding the gas in the first place.

Papa said horizontal drilling has been "the biggest game changer" that he has seen in his 40-year career in oil and gas.

"There always will be a place for conventional oil and gas," Papa said. "But if you stay away from horizontal drilling, as an independent you are dealing with a smaller portion of the pie."

Barnett shale
The Barnett shale has been the single biggest driver in US gas production growth, Papa said. Barnett shale production is about 4.4 bcfd today compared with 1 bcfd in production 4 years ago, he said.

EOG estimates Barnett shale production will peak next year at 4.8 bcfd and then hold at a plateau for 2-3 years before gradually winding down. Papa notes that estimates vary and that some within industry expect the Barnett to peak at 6 bcfd.

Johnson County, Tex., "will be drilled up like a pin cushion" by yearend 2009, he said.

Wojahn said EnCana is staying out of the Barnett shale peaking discussion. But he noted that emerging technology typically finds a way to sustain production for long periods.

"The Barnett shale may not be that big driver of growth as it has been, but it will remain a source of supply," said Wojahn.

Porter said the US now has abundant, predictable gas supplies, but that lawmakers who are keen on promoting alternative energy probably do not understand the availability and the economics of natural gas.

Wojahn said, "I think all of us collectively as natural gas independents have to step up to the plate and start educating the government."

Contact Paula Dittrick at paulad@ogjonline.com

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