Shale/Unconventional Resources

Unconventional resources include tight, shale, and coal bed methane resources.

“Tight” refers to hydrocarbon producing formations with reservoir permeability on the micro-Darcy scale. Tight resources are not generally economically producible without additional stimulation (i.e. hydraulic fracturing), which adds additional costs to development. The term came about in the 1980s when the US Federal government decided to implement subsidies to encourage the development of new natural gas resources.

“Shale” refers to a shale hydrocarbon source formations with reservoir permeability on the nano-Darcy scale. Shale formations can only be produce economically with additional stimulation.

Coal bed methane, or CBM, are coal seams which contain significant volumes of natural gas and can be produced, generally through additional stimulation.

Unconventional resources have only reached commercial scale production in North America, but early stage exploration activity is ongoing in dozens of countries around the world. Therefore, we have divided this section into:

• North America Unconventional Resources – Click above tab to view this section
• International Unconventional Resources – Click above tab to view this section

Each of these resources is making a major impact on the production of hydrocarbons around the world. The map below details the presence of these three resources types around the world.

North America is blessed with abundant shale gas resources. Natural gas production in the United States has expanded dramatically over the last few years due to shale gas production. Production from shale gas has expanded dramatically in the United States over the last few years, from 753 Bcf to over 3 Tcf in 2009, a fourfold increase. The figure below details natural gas production in the United States by play since 2005.

Play	Production (Bcf)					Reserves (Tcf)
	2005	2006	2007	2008	2009	2009
Barnett	511	723	915	1,501	1,745	26,493
Haynesville	1	1	1	25	321	10,468
Marcellus	120	110	1	2	76	4,478
Fayetteville	-	18	93	279	527	9,070
Woodford	-	7	36	168	249	6,389
Antrim	120	110	119	122	132;	2,499
Other plays	-	-	15	19	60	1,247
Total	753	968	1,180	2,116	3,110	60,644

Research into shale gas production began in the 1980s. All of the key shale technologies, particularly hydraulic fracturing and horizontal drilling, were pioneered in the Marcellus shale basin by the US Department of Energy, the National Energy Technology Laboratory and what is now the Research Partnership to Secure Energy for America (RPSEA). However, they never attempted fracturing at rates high enough to produce at economic rates. In the mid-1990s, George Mitchell, the founder and CEO of Mitchell Energy, applied those very same technologies, but at higher rates, in the Barnett shale in Texas and eventually came across the right combination that enabled him to produce natural gas at economic rates. By 2000, Mitchell Energy was producing over 100 Bcf per year and rapidly expanding production. In August 2001, Devon Energy acquired Mitchell Energy for $3.1 billion, validating the shale gas revolution.

There are more than 40 known shale plays in the United States, along with dozens in Canada. Until recently, the majority of North American shale gas production has been generated by five plays: the Barnett (in north Texas), Fayetteville (in Arkansas), Haynesville (in northwest Louisiana and east Texas), Marcellus (in Pennsylvania, New York and West Virginia) and Woodford (in Oklahoma) plays in the US and the Horn River and Montney (both primarily in British Columbia) plays in Canada. These plays have been collectively been referred to the as the “Magnificent Seven” and together are generally expected to generate the majority of shale gas production in North America.

Due to the North American pricing environment, most recent development activity has been driven by so called, “liquids-rich” formations, including the Eagle Ford, Granite Wash, and Bakken plays in the US, among others, and the Montney, Cardium, Viking plays, along with several other tight oil formations across Canada. Development activities have continued in the Magnificent Seven plays (collectively, the Barnett, Fayetteville, Haynesville, Marcellus, Bakken, Horn River and Montney shales), though at significantly reduced levels, and in many cases, largely due to leasing requirements.

For more detailed information about various plays, select from the list of below.

The world is awash in potential shale resources. The EIA estimates that there are 6,622 Tcf of recoverable shale gas reserves around the world, 71% of which are located outside of North America. The map below details the potential unconventional gas basins around the world, including shale gas, tight gas and coal bed methane (CBM).

The EIA estimates that the world contains the following shale potential:

Region	Technically Recoverable Resources	Percentage of Total Areas Examined
Continent	(Bcf)	(% of total)
North America	1,931	29%
Asia	1,389	21%
South America	1,225	18%
Europe	639	10%
Africa	1,042	16%
Australia	396	6%
Total	6,622
Source: EIA

Outside of North America, Poland, China, and Argentina, as well as India have received a good deal of attention due to the potential magnitude of their shale resources. Australia has also seen significant activity as well.

However, over 30 countries have seen at least early stage shale exploration activity over the last 1-2 years, including:

• Europe: the United Kingdom, France, Germany, Sweden, Switzerland, Spain, Austria, Hungary, Ukraine, Bulgaria, and Estonia
• MENA: Algeria, Morocco, Jordan, and Turkey
• Latin America: Argentina, Uruguay, Colombia, and Brazil
• Asia Pacific: New Zealand and Indonesia
• Sub-Sahara Africa: South Africa

For more details on the activity in the countries/regions above, please choose from the links below:

• Poland
• China
• India
• Europe
• Middle East & North Africa
• Latin America
• Asia Pacific
• Sub-Sahara Africa