Shale Oil: A New Age of Oil

Abundance?

Prof. Mark Sephton & Fivos Spathopoulos

(Imperial College London)
Unconventional no longer
 What is a petroleum system?
• Definition • Conventional system
– A petroleum system – Elements are separate
encompasses a pod of • Unconventional system
active source rock and all
genetically related oil and – Number of Elements can be the
gas accumulations. same
– E.g. shale source and reservoir
Elements
– Source rock
– Reservoir rock
– Seal rock
– Overburden rock

http://petroleumsupport.com
 How long unconventional?
• Unconventional is a time specific term
• Over the next 20 years, shale gas is
destined to grow from 15% of US gas
production to roughly 50% of production.
• Eventually unconventional may become
conventional?
 What is the influence of technology?
• 1970s - The Huron Shale. United States
government and Gas Research Institute
initiated the Eastern Gas Shales Project, a
set of dozens of public-private hydro-
fracturing, and horizontal drilling pilot
projects.
• 1977 - Department of Energy pioneered
massive hydraulic fracturing in tight
sandstone formations.
• 1997 - The Barnett Shale. Mitchell Energy
developed the hydraulic fracturing
technique known as "slickwater
fracturing" that made shale gas extraction
economical.
• 2002 - Horizontal drilling in the Barnett
Shale began .
• 2012 - represents over 30% Texas’s total Slick water fracturing : involves adding
gas production and over 15,000 wells. chemicals to water to increase the fluid
flow. Twice as fast as normal.
 What is in a typical fracking fluid?
Component/Additive Percent Volume
Type
Example Compound(s) Purpose (vol) (gal)

Water Deliver proppant 90 2,700,000

Proppant Silica, quartz sand Keep fractures open to allow gas flow out 9.51 285,300

Acid Hydrochloric acid Dissolve minerals, initiate cracks in the rock 0.123 3,690

Friction reducer Polyacrylamide, mineral oil Minimize friction between fluid and the pipe 0.088 2,640

Surfactant Isopropanol Increase the viscosity of the fluid 0.085 2,550

Potassium chloride Create a brine carrier fluid 0.06 1,800

Gelling agent Guar gum, hydroxyethyl cellulose Thicken the fluid to suspend the proppant 0.056 1,680

Scale inhibitor Ethylene glycol Prevent scale deposits in the pipe 0.043 1,290

pH adjusting agent Sodium or potassium carbonate Maintain the effectiveness of other components 0.011 330

Breaker Ammonium persulfate Allow delayed breakdown of the gel 0.01 300

Crosslinker Borate salts Maintain fluid viscosity as temperature increases 0.007 210

Iron control Citric acid Prevent precipitation of metal oxides 0.004 120

Corrosion inhibitor N, n-dimethyl formamide Prevent pipe corrosion 0.002 60

Biocide Glutaraldehyde Eliminate bacteria 0.001 30

 Where is shale found?

http://www.eia.gov/analysis/studies/worldshalegas/

• Numerous shales occur throughout the world

• A number of significant shales are in Europe
• Unconventional hydrocarbons in shales are of interest to
many nations
 What is the potential of u/c
hydrocarbons in shales?
• Figure shows the technically
recoverable shale gas resource
and the fraction which has
already been produced in the US.
• Only between one and three
percent has been produced.
• The size of the remaining
resource illustrated the future
importance of shale gas.
• New and developing plays are
omitted.
US Shale Gas Technically
Recoverable Resources and
Cumulative Production
What is the connection between shale
gas and shale oil?
• Late 2000s
• Barnett success led to tight reservoir
production elsewhere
• Bakken tight oil reservoir gave
encouraging signs
• Operators of Texas Eagle Ford play
(which began as a shale gas play in
dry gas window) began drilling into
wet gas window and finally oil
window, successfully.
• Most other shale gas plays have
potential oil and wet gas windows
• The production of shale oil has
increased dramatically since 2009
 How do economics affect shale oil ?

• Shale gas production is commercial at gas prices in excess of $4 per million

BTU (although preferably should approach $8 per million BTU)
• The Henry Hub US benchmark dropped below $4 in mid-2011 and shale
gas production is now not commercial
• Because of high oil prices shale oil currently has better economics,
encouraging oil production
 What is a good shale oil/gas target?
• Shales that host economic quantities
of gas and oil have a number of
common properties.
• Rich in organic material 0.5% to 25%
– total organic carbon
• Mature petroleum source rocks
– Shale oil - thermogenic oil window, where
high heat and pressure have converted
kerogen to petroleum
– Shale gas - thermogenic gas window,
where high heat and pressure have
converted petroleum to natural gas
• Correct rock type
– Sufficiently brittle and rigid enough to
maintain open fractures.
Shale Oil needs Shale
 Where are organic rich shales today?
• Coastal margin sediments
Productivity
– Over 90% organic carbon
Anoxia
• High productivity
– 6% organic carbon
• Anoxic environments
– 1% organic carbon
• In the past
– Anoxic environments more
important

Coastal margins
 What is the effect of the water
column?
• Surface organic matter descends
• During its passage to the deep ocean,
marine organic matter decomposes
in the water column, releasing CO2.
– 90 % recycled in surface waters 100 % organic matter
– 9 % recycled in deeper waters produced by
• Around 1% of this organic matter photosynthesis
reaches the sea-bed intact.
• Once incorporated in the sediment, 90 % recycled in
OMZ
degradation continues 10 %
surface waters
– Aerobic and anaerobic organisms
• 0.1% of the original surface water
organic matter preserved. 9 % recycled in
1%
• Can be enhanced deeper waters
– High primary productivity
– Accelerated sinking rates
– Rapid burial 0.9 % recycled
0.1 % buried
• Low energy, low oxygen on sea bed
environments
– Several types exist
How does sea level affect shales?

Transgressive
high sea level
• Transgressions
– Oxygen minimum
anoxia shelf
zone covers shelf
• Proximity to land
– High nutrient supply
Regressive – High productivity
swamp
low sea level
• High sea level
shelf
– Widespread shale
anoxia
deposition
How are shales distributed through
time?
• Distribution
– uneven
• Favourable conditions
– transgressions
– warm climate
– anoxia
• Periods
– Tertiary
– Early Cretaceous
– Late Jurassic
– Late Carboniferous
– Late Devonian
more recent – Silurian

Klemme & Ulmishek 1991

Maturity
How does maturity affect oil and gas
generation?
• As Black Shale is buried, it is heated
(usually at 30°C km-1).
• Organic matter is first changed by the
increase in temperature into kerogen,
which is a solid form of
hydrocarbons.
• The oil window is an interval in the
subsurface where liquid is generated
and expelled from the source rocks.
• The oil window is often found in the
75-150°C interval (approx. 2-4 km
depth).
• The gas window is found in the 100-
220°C interval (4-6 km depth).
• Above 220°C the gas is destroyed
How does maturity influence
compound size?
• Alkane mixtures with depth
– variable distribution
• source and maturity
• Green River Shale, Colorado
• Shallow
– C17 mode
• algal source
– Odd C29, C31 & C33
• land plant source
• Deep
– C23 mode
• algal source
– Odd molecules lost
• maturation
 How does maturity influence
unconventional petroleum?
• “Immature” “black” shale on the Oil extraction
surface or in shallow depths, where Burial by artificial
T°< 60°-80°C, so no petroleum is pyrolysis (in-
generated naturally. situ or after
• Rock can represents an oil shale mining)
target. 60°- 80° C

• Oil generation & expulsion to Shale-oil

OIL WINDOW
conventional traps. extraction by
• Residual shale represents shale oil hydraulic
reservoir. OIL fracking

• Gas generation from maturity & 110°-130° C

cracking and expulsion to
conventional traps. GAS WINDOW Shale-gas
• Residual gas represents shale gas extraction by
reservoir. hydraulic
fracking
GAS
Where do mature shales exist?
Eagle Ford Shale Oil Play
 Eagle Ford shale
• Deposition
– Deposited in Upper Cretaceous between
~92 and 88 Ma
– Marine transgression
– Sea level depths about 100 m
– Deposited about 20-50 km from the shore.
– Lower section of the Eagle Ford consists of
organic-rich, pyritic, and fossiliferous
marine shales
– Marks the the deepest water during Eagle
Ford deposition
• Field setting
– Crops out near the town of Eagle Ford,
Texas
– Dips steadily south to over 4,500m deep in
the East
 Eagle Ford shale maturity
Depth & maturity

Oil

Wet gas

Dry gas

• The Eagle Ford play produces oil, condensate, gas and finally drier gas as
drilling proceeds down dip (to the bottom right).
• The various petroleum types are a direct response to maturity.
 Eagle Ford play
• Eagle Ford Shale
– Could be the sixth largest U.S. oilfield ever
discovered and the largest in forty years
– shale 76m thick over a 40 by 80 km area
– Originally known as a source rock, for the
Austin Chalk and other oil and gas bearing
zones in South Texas
• Production
– Advances in horizontal drilling technology
and hydraulic fracturing made economic
production possible
– Operators realised they could recover
liquids
– Oil production has increased 40 fold in a
few years
– In 2010, EOG resources estimated the oil
reserves in the Eagle Ford Shale at more
than a trillion barrels.
– Now other initially shale gas plays are
being assessed for oil – positive data
 Rock type and fracturing
• Geology can aid production
• The Eagle Ford shale has a
carbonate content up to 70%
calcite
• Makes it very brittle and easily
fractured during stimulation
• Effectively fractured rocks result
in impressive production figures
of both oil and gas
Bakken Shale Oil Play
 The Bakken Formation
• Distribution
– Underlies parts of Montana, North
Dakota, and Saskatchewan.
– The formation is entirely in the
subsurface, and has no surface
outcrop.
– Oil was first discovered within the
Bakken in 1951
– Historically, efforts to produce the
Bakken have encountered difficulties
 The Bakken Formation
• Deposition
– Late Devonian to Early Carboniferous
(360 Ma)
– Three Forks Formation consists of
shallow marine to terrestrial
sediments
– Lower Bakken shale deposited in
shallow marine anoxic conditions.
– Middle Bakken variable rocks
associated with drop in sea level and
influx of sedimentary material into
near-shore environments.
– Upper Bakken shale member
deposited in resumed anoxic
conditions
– Overlying Lodgepole Formation was
deposited in oxidizing conditions

Anglo & Buatois 2012

 The Bakken Formation

• Occupies about 520,000 km2 of the subsurface of the Williston Basin

• The Bakken is 46 m thick in NW North Dakota and it thins to the SE
• Upper and lower members consist of hard, siliceous, black organic-rich shales which form
effective seals for the middle member
• The middle member comprises five variable lithologies, from siltstones to fine-grained
sandstone and limestone, all with low permeability and porosity
• It is the temporary switch to oxygen-rich conditions that produced the shale-silt-shale
sandwich in the Bakken formation
 Bakken maturity
• Rapid subsidence in the Cretaceous took the
Bakken shales into the oil window
• Bakken shales are mature
• Oil has been generated relatively recently
– 310 Myr after source rock deposition

Nordeng & LeFever 2008

 Charging the Bakken reservoir
• The middle Bakken dolomite member is
the principal oil reservoir (at ~3.2 km
depth) Tight limestone
• Once the Bakken organic-rich shales are in
the oil window, they try to expel oil to all
directions Source rock Upper Bakken
• They are sealed from above and below by (oil source)
tight limestones so they expel the oil
towards the more porous dolomite
• Porosities in the Bakken dolomites
Porous rocks Middle Bakken
average about 5%, and permeabilities are (oil reservoir)
very low, averaging 0.04 millidarcies.
• However, the presence of horizontal Source rock Lower Bakken
fractures makes the dolomites an (oil source)
excellent candidate for horizontal drilling
• Overpressure generated by the oil may Tight limestone
produce micro-fractures thereby
enhancing their permeability
 Bakken production
• Early drilling and completion techniques
made the Bakken uneconomic
• Horizontal drilling and hydraulic fracturing
boosted well production in 2008
• In April 2008, the USGS report estimated
the amount of technically recoverable oil
at 3.0 to 4.3 billion barrels
• By the end of 2010 oil production rates
had reached 458,000 barrels (72,800 m3)
per day outstripping the capacity to ship
oil out of the Bakken
• Various other estimates place the total
reserves, recoverable and non-
recoverable with today's technology, at up
to 24 billion barrels.
Effects of Organic Source
 Organic matter in sediments
Types of organic matter in sediments
Total rock

Analytical methods
Total organic matter
minerals
• Bitumen (soluble)
- solvent extraction
- fractionation
Bitumen (soluble) • Kerogen (insoluble)
kerogen - pyrolysis (thermal
(insoluble) degradation)
- chemical degradation
- spectroscopic techniques
asphaltenes
- IR, UV, NMR
aromatic hydrocarbons & resins
aliphatic hydrocarbons

Hydrocarbons (H & C) C,H,S & N molecules

Mol. Wt. < 600 au Mol. Wt. > 500 au
 Kerogen Types
• Type I kerogens
– Lacustrine organic matter
– High H/C (> 1.5), Low O/C (< 0.1)
• Type II kerogens
– Marine organic matter
– High H/C (~0.1), Low O/C (~0.1)
• Type III kerogens
– Land organic matter
– Low H/C (<0.1), High O/C (<0.3)
• Type IV kerogens
– No petroleum potential
 Kerogen structure
Oil prone Gas prone

• Kerogen chemistry • Kerogen type

– Composed of biopolymers – Type I = long aliphatic chains
– Aliphatic or aromatic – Type II = medium aliphatic chains
– Proportions determine “kerogen type” – Type III = aromatic rings, short chains
 Kerogen type and petroleum

Type I Type II Type III Type IV

WAX OIL NONE

 Kerogen type and shale oil
• Type I Type I Type II
– Produces ‘waxy’ crude
– Flow assurance is the critical issue
– Risk of the crude oil solidifying in
flow equipment, for example when
exposed to low temperatures in the
oceans.
– The technology to solve these
problems exists
– Chemical additives, down-hole
pumps, heated pipelines
• Type II
– Produces normal crude
– Flow problems are absent WAX OIL
– Relative simplicity is economically
attractive
 Kerogen types in the UK
• Type I kerogens (lacustrine) Type I
– E.g. Midland Valley,
Carboniferous
• Type II kerogens (marine)
– E.g. South England & Yorkshire ,
Jurassic
• Type III kerogens (coal swamp)
Type III
– E.g. Pennines, North West &
North East, Carboniferous
• The UK has a large amount of the
most favourable shale oil source Type II
rock starting material
• However, the correct maturity is
also needed – must be in oil
window www.bgs.ac.uk
 UK shale oil
• Where there is oil there has
been a mature shale
• Barring further maturation
that has cracked or even
destroyed the oil a residual
oil should be present
• Oil seeps and wells are good
indicators of mature shale

Conventional wells drilled in the UK for oil

(●) and gas (●) (Harvey & Gray 2012).
The role of shale-oil in future
energy predictions

Can shale-oil change the “Peak Oil”

curve?
 The news: The US will overtake Saudi Arabia’s oil output by around 2020!
(IEA, World Energy Outlook, 12 Nov. 2012)

Production of crude oil & liquids, MMBbl/day • « By around 2020, the United
States is projected to become the
US Saudi Arabia Russia largest global oil producer » and
overtake Saudi Arabia. "The result
is a continued fall in U.S. oil
imports (currently at 20% of its
needs) to the extent that North
America becomes a net oil
exporter around 2030.

• This shift will be driven primarily

1990 2011 2015 2020 2025
The IEA's conclusions are partly supported by OPEC, which
acknowledged for the first time in early November 2012 that
shale oil would significantly diminish its share of the U.S.
market.
by the faster-than-expected deve-
lopment of hydrocarbon resources
locked in shale and other tight
rocks that have just started to be
produced by a new combination of
two technologies: hydraulic fra-
cturing and horizontal drilling.
• US oil production is predicted to
peak in 2020 at 11.1 MMBbl/day,
up from 8.1 MMBbl/day in 2011.
 FORECASTS OF OIL
DEPLETION IN THE
WORLD:
The
“HUBBERT 1956 CURVE”
(or “Peak Oil”)

versus the

“USGS 2000 CURVE”

Extra reserves
needed
 Hubbert Peak Graph showing that oil production has peaked in non-
OPEC and non-FSU countries

40

35

30

25
MMBbl/day

20

15

10

0
2000 2010
The production of some
countries follows the
Hubbert Curve.
Canada, however, has
modified the curve due
to the addition of oil
sands production
Peak oil curve in the United States: modification from 2010 onwards

Hubbert “peak oil” curve

Production of shale-oil could mitigate the reduction in US oil production by
producing millions of barrels per day for many years.

From: American Shale Oil, LLC (AMSO)

 Monthly oil production in Texas, January
1988-July 2012
70

Millions of barrels 60

50

40

30

From: American Enterprise Institute website

The exponential increase in Texas crude oil production over the last two years is largely the
result of the large increase in oil production from the Eagle Ford Formation in Texas,
discovered in 2008. Eagle Ford crude production has more than doubled over the last year,
from 120 532 bbl/day in July 2011 to more than 310 000 bbl/day in July 2012.
 World oil depletion per
Major Producer

Reserves: 1.25 trillion barrels

Depletion: 23.3 billion barrels/year
Source: National Geographic, issue 6,
2004
Shale-oil production in the US, from selected plays
US oil production including the Green River Oil Shales (retort) (IEA)

2038
Historical and projected U.S. oil & gas production MMBoe/day

Unconventional gas

Conventional gas

Unconventional oil

Conventional oil

Source: IEA World Energy Outlook 2012

Peak Oil line modified line?

 Future oil price projections (from International Energy Outlook reports)

Since 2009, the price forecasts are lower, but always higher than $100/Bbl.

Historic

2000 projection

2005 projection
$US/barrel

2007 projection

2009 projection

2010 projection

2011 projection

2012 projection
 Political decisions on the management of remaining energy
sources and viable renewable ones.

Early 2000s

Affordable “Green” energy

“Easy”, cheap fossil Transition: expensive
(including energy for
fuel energy fossil fuels
transportation)

20-50 years?

This period can provide enough time

for R & D of cheap, “green” energy
sources, allowing a smooth transition
to the “era of renewables”.

This time gap can only be filled by expensive and controversial

conventional exploration in remaining remote areas of the globe
(e.g. Arctic?) plus shale-gas, shale-oil, pyrolysed oil, coalbed
methane, oil sands, gas hydrates (?). Horizontal fracking has
long been and is still used in “enhanced petroleum recovery” to
drain old, conventional oil/gas fields.
 Without shale oil

From: “Peak of the Oil Age” by K. Aleklett, M. Höök, K. Jakobsson, M. Lardelli, S. Snowden, B. Söderbergh
Energy Policy, Volume 38, Issue 3, March 2010, Pages 1398-1414
 CONCLUSION
• Shale-oil can only help the situation towards a renewable energy world, whenever
that comes. It is not an infinite fuel and it is expensive.
• Shale-oil could give a few extra decades of fossil fuel, in the future and soften the
collapse of the “Hubbert” curve.
• Even the “optimistic” USGS curve drops in the future.
• Shale-extracted products could give the “breathing space” needed during the
current, transitional period, when conventional, cheap petroleum is nearing its end.
Unless another renewable & affordable transportation fuel is developed, fossil fuels
will still be the most energy-efficient option.
• Current conventional exploration is focused on ultra-deep, expensive and
dangerous drilling (US Gulf of Mexico, Angola, Brazil), politically-troubled areas
(Iraq, Libya) or, remote and sensitive areas (Arctic).
• A long (100-years-plus) future for fossil fuels may only be envisaged if (i) natural
gas replaces oil in transportation and other energy needs; and, (ii) if the technology
allows the exploitation of the massive methane reserves (gas hydrates) under the
oceans.
• Shale-extracted exploration & production is now a strongly political and social
issue. The geological and engineering problems have mostly been solved.
 CONCLUSIONS FROM IEA’s WORLD ENERGY OUTLOOK, 12 Nov. 2012

• Policy makers face critical choices in reconciling energy, environmental &

economic objectives

•Changing outlook for energy production and use may redefine global

economic & geopolitical balances

•As climate change slips off policy radar, the “lock-in” point moves closer

and the costs of inaction rise

•The gains promised by energy efficiency are within reach and are essential

to underpin a more secure and sustainable energy system