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Shale oil production dependent upon 'drilling intensity' that will be hard to sustain, Harvard study says

From Green Right Now Reports Fracking for natural gas requires drilling a large number of wells, because each well’s production declines dramatically not long after being brought on line, a...

From Green Right Now Reports

Oil shale 2 - PROMOFracking for natural gas requires drilling a large number of wells, because each well’s production declines dramatically not long after being brought on line, a new paper out of Harvard University shows.

“…The U.S. shale oil boom is mostly a function of bringing as many wells as possible online, due to the dramatic decline in production that follows the early months of activity with each new well,” writes author Leonardo Maugeri of the Belfer Center for Science and International Affairs at the Harvard Kennedy School in an analysis “The Shale Oil Boom: A U.S. Phenomenon“.

The analysis notes that the shale oil boom is going after a “large resource” of oil and natural gas found in shale formations in several parts of the U.S., which could make the country “the largest global oil producer in just a few years.”

However, accessing those “tight oil” formations that are accessed via hydraulic fracturing or fracking (also known as horizontal drilling) requires a “drilling intensity” that makes the industry subject to both price drops and “environmental opposition in new and populated areas.”

“Drilling intensity in U.S. shale oil plays skyrocketed from a few hundred wells brought online (e.g., becoming productive) before 2011 to more than 4,000 in 2012 – a figure that outpaces the total number of oil and gas wells (both conventional and unconventional) brought online in the same year in the rest of the world (except Canada),” Maugeri writes.

As an example, he reports that it took 90 new producing wells per month just to maintain North Dakota’s Bakken-Three Forks oil production of 770,000 barrels per day.

The Bakken operations are often cited as an example of how shale oil has provided an economic and supply boom.

The relatively unpopulated, rural areas where shale oil production has soared — North Dakota and rural Texas (in the Eagle Ford and Permian Basin regions)  — has allowed the U.S. to achieve a drilling intensity that’s kept supply high, Maugeri writes. But this intensity would be virtually impossible to replicate in more populated areas or most other countries.

“The drilling-intense nature of the shale business is a factor that will make the expansion of the shale phenomenon in other parts of the world improbable – at least in this decade. But there are other factors that will make the global replication of a U.S. style shale boom difficult, including an absence of private mineral rights in most countries, as well as the absence of the U.S. independent companies whose guerilla-style operational mindset has proven essential to the exploitation of shale formations that (unlike conventional oil and gas fields) require companies to move on a micro-scale, on multiple micro-objectives, and flexibly leverage short-term opportunities.”

Another factor that may limit the oil boom, or add costs, is the earthquakes that appear to be linked to the disposal of fracking waters into deep injection wells, the study reports.

This represents “a problem for the oil industry” because the waste water must be stored or disposed of somewhere.

Other studies have determined that fracking fluid disposal wells were to blame for a 2011 earthquake in Prague, Oklahoma and a 2012 earthquake in Youngstown, Ohio, Maugeri writes.

He predicts the industry will face stricter disposal requirements, such as those now imposed in Ohio, as a result of the earthquake connection.

Maugeri is the Roy Family Fellow at the Belfer Center for Science and International Affairs. He previously worked as a senior vice president of strategy and development at the oil company Eni. He’s authored four books on the industry, including  The Age of Oil: the Mythology, History,  and Future of the World’s Most Controversial Resource (Praeger, 2006), and Beyond the Age of Oil: The  Myths and Realities of Fossil Fuels and Their Alternatives (Praeger, 2010).

He defines the shale and tight oil referred to in his report as “conventional oils (light oils with low sulfur content)  trapped in unconventional formations whose extremely low porosity and permeability makes it extremely difficult for producers to extract hydrocarbons.”
 


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