Wood Mackenzie just released a new study titled “Unconventional Hydrocarbons - The Hidden Opportunity,” which estimates that unconventional oil and gas resources could approach 3.6 trillion boe worldwide - about double current estimates of undiscovered conventional resources. This is very good news for the industry, particularly US and Canadian independent producers.
In North America, the unconventional petroleum sector is currently dominated by independents that have pioneered the development of heavy oil, tight gas, coalbed methane, and shale oil. Without independents, which developed new technologies and techniques (such as horizontal drilling) to exploit these formations, US reliance on foreign sources of hydrocarbons would be even greater.
The Wood Mackenzie study outlines the resource potential and location of unconventional resources and examines the challenges surrounding their development. It also identifies which companies are leading the way in this area.
In an article in the November 2006 issue of OGFJ (“Gas Shale and CBM Development in North America”), Don Warlick of Warlick International noted that higher commodity prices are a driver for unconventional hydrocarbon development in North America.
“For gas shale and CBM development, there is, indeed, gas price sensitivity,” said Warlick, adding that, “Gas shale and CBM development have flourished with increasing gas prices since 2002 and have paid off by adding reserves and long-lived production to E&P portfolios.”
Warlick, who authored a report on unconventional gas late last year, says that gas shale and coalbed methane now account for about 16% of US gas production.
Wood Mackenzie says that unconventional oil is expected to supply more than 20% of global demand by 2025. Unconventional gas is likely to be “at least as important” and will account for 42% of US demand by 2010, says the report.
On the oil side, interest in the Canadian oil sands has surged the past few years and production is expected to quadruple to 4 million barrels/day by 2020. The report notes than less than 20% of the estimated total recoverable reserves are included within current commercial projects.
Phaedra Powilanska-Burnell, managing consultant for Wood Mackenzie, believes the supermajors are poised to move into the unconventional arena: “With conventional non-OPEC supply expected to peak within the next decade and the difficulties in discovering accessible gas reserves, IOCs with growth ambition cannot afford to ignore these unconventional resources.”OGFJ
Don Stowers
Editor-OGFJ
Beyond the Well - Be sure to look for a new feature debuting this month in OGFJ, as Associate Editor Mikaila Adams launches her new column, “Beyond the Well.” Each month, Adams will feature an individual or company in the industry that has gone beyond what is expected to give back to their community through personal service and charitable work. The column can be found opposite the inside back cover in this and future issues.
