Tight oil

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Tight oil (also known as shale oil, shale-hosted oil or light tight oil, abbreviated LTO) is light crude oil contained in unconventional petroleum-bearing formations of low permeability, often shale or tight sandstone. [1] Economic production from tight oil formations requires the same hydraulic fracturing and often uses the same horizontal well technology used in the production of shale gas. While sometimes called "shale oil", tight oil should not be confused with oil shale (shale rich in kerogen) or shale oil (oil produced from oil shales). [2] [3] [4] Therefore, the International Energy Agency recommends using the term "light tight oil" for oil produced from shales or other very low permeability formations, while the World Energy Resources 2013 report by the World Energy Council uses the terms "tight oil" and "shale-hosted oil". [3] [5]

Contents

Shown are conceptual illustrations of types of oil and gas wells. A vertical well is producing from a conventional oil and gas deposit (right). Also shown are wells producing from unconventional formations: a vertical coalbed methane well (second from right); a horizontal well producing from a shale formation (center); and a well producing from a tight sand formation (left). Schematic cross-section of general types of oil and gas resources and the orientations of production wells used in hydraulic fracturing.jpg
Shown are conceptual illustrations of types of oil and gas wells. A vertical well is producing from a conventional oil and gas deposit (right). Also shown are wells producing from unconventional formations: a vertical coalbed methane well (second from right); a horizontal well producing from a shale formation (center); and a well producing from a tight sand formation (left).

In May 2013 the International Energy Agency in its Medium-Term Oil Market Report (MTOMR) said that the North American oil production surge led by unconventional oils - US light tight oil (LTO) and Canadian oil sands - had produced a global supply shock that would reshape the way oil is transported, stored, refined and marketed. [6]

Inventory and examples

Tight oil formations include the Bakken Shale, the Niobrara Formation, Barnett Shale, and the Eagle Ford Shale in the United States, R'Mah Formation in Syria, Sargelu Formation in the northern Persian Gulf region, Athel Formation in Oman, Bazhenov Formation and Achimov Formation of West Siberia in Russia, Arckaringa Basin in Australia, Chicontepec Formation in Mexico, [1] and the Vaca Muerta oil field in Argentina. [7] In June 2013 the U.S. Energy Information Administration published a global inventory of estimated recoverable tight oil and tight gas resources in shale formations, "Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States." The inventory is incomplete due to exclusion of tight oil and gas from sources other than shale such as sandstone or carbonates, formations underlying the large oil fields located in the Middle East and the Caspian region, off shore formations, or about which there is little information. Amounts include only high quality prospects which are likely to be developed. [8]

In 2012, at least 4,000 new producing shale oil (tight oil) wells were brought online in the United States. By comparison, the number of new producing oil and gas wells (both conventional and unconventional) completed in 2012 globally outside the United States and Canada is less than 4,000. [9]

Characteristics

Tight oil shale formations are heterogeneous and vary widely over relatively short distances. Tight oil reservoirs subjected to fracking can be divided into four different groups. [10] Type I has little matrix porosity and permeability – leading to fractures dominating both storage capacity and fluid flow pathways. Type II has low matrix porosity and permeability, but here the matrix provides storage capacity while fractures provide fluid-flow paths. Type III are microporous reservoirs with high matrix porosity but low matrix permeability, thus giving induced fractures dominance in fluid-flow paths. Type IV is macroporous reservoirs with high matrix porosity and permeability, thus the matrix provides both storage capacity and flow paths while fractures only enhance permeability.

Even in a single horizontal drill hole, the amount recovered may vary, as may recovery within a field or even between adjacent wells. This makes evaluation of plays and decisions regarding the profitability of wells on a particular lease difficult. Production of oil from tight formations requires at least 15 to 20 percent natural gas in the reservoir pore space to drive the oil toward the borehole; tight reservoirs which contain only oil cannot be economically produced. [8] Formations which formed under marine conditions contain less clay and are more brittle, and thus more suitable for fracking than formations formed in fresh water which may contain more clay. [ dubious – discuss ] Formations with more quartz and carbonate are more brittle. [8]

The natural gas and other volatiles in LTO make it more hazardous to handle, store, and transport. This was an aggravating factor in the series of fatal explosions after the Lac-Mégantic derailment.

Exploitation

Prerequisites for exploitation include being able to obtain rights to drill, easier in the United States and Canada where private owners of subsurface rights are motivated to enter into leases; the availability of expertise and financing, easier in the United States and Canada where there are many independent operators and supporting contractors with critical expertise and suitable drilling rigs; infrastructure to gather and transport oil; and water resources for use in hydraulic fracturing. [8]

Analysts expect that $150 billion will be spent on further developing North American tight oil fields in 2015.[ needs update ] The large increase in tight oil production is one of the reasons behind the price drop in late 2014. [11]

Outside the United States and Canada, development of shale oil (tight oil) resources may be limited by the lack of available drilling rigs: 2/3 of the world's active drill rigs are in the US and Canada, and rigs elsewhere are less likely to be equipped for horizontal drilling. Drilling intensity may be another constraint, as tight-oil development requires far more completed wells than does conventional oil. Leonardo Maugeri considers this will be "an insurmountable environmental hurdle in Europe". [9]

Detailed studies on production behaviour in prolific shale plays were light tight oil is produced have shown that the average monthly initial production of a tight oil well is around 500 barrels/day, which yields an estimated ultimate recovery in the range 150-290 thousand barrels. [12] As a consequence, exploitation of tight oil tends to be drilling intensive with many new wells needed to ramp up and maintain production over time.

Size of tight oil resources

US EIA estimated technically recoverable tight oil in shale

Following are estimates of technically recoverable volumes of tight oil associated with shale formations, made by the US Energy Information Administration in 2013. Not all oil which is technically recoverable may be economically recoverable at current or anticipated prices.

  1. Kingdom of Bahrain: 80 billion barrels [13]
  2. United States: 78 billion barrels
  3. Russia: 75 billion barrels
  4. China: 32 billion barrels
  5. Argentina: 27 billion barrels
  6. Libya: 26 billion barrels
  7. Venezuela: 13 billion barrels
  8. Mexico: 13 billion barrels
  9. Pakistan: 9 billion barrels
  10. Canada: 9 billion barrels
  11. Indonesia: 8 billion barrels

World Total: 335 to 345 billion barrels [8]

Other estimates

Australia: A private oil company announced in 2013 that it had discovered tight oil in shale of the Arckaringa Basin, estimated at 3.5 to 223 billion barrels. [14]

Production

In September 2018, the U.S. Energy Information Administration projected October tight oil production in the U.S. at 7.6 million barrels per day. [15]

The volume of oil production on tight oil formations in the US depends significantly on the dynamics of the WTI oil price. About six months after the price change, drilling activity changes, and with it the volume of production. These changes and their expectations are so significant that they themselves affect the price of oil and hence the volume of production in the future. These regularities are described in mathematical language by a differential extraction equation with a retarded argument. [16]

Tight oil differs from conventional oil, as both investment and production dynamics of tight oil is significantly faster than conventional counterparts. This may reduce risks associated with locked-in capital and also contributed to a more flexible production that reduces oil price volatility. [17] Unexpectedly, this faster dynamics can also entail lesser carbon lock-in effects and stranded asset risks with implications for climate policies. [18]

See also

Related Research Articles

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<span class="mw-page-title-main">Barnett Shale</span> Geological formation in Texas, United States

The Barnett Shale is a geological formation located in the Bend Arch-Fort Worth Basin. It consists of sedimentary rocks dating from the Mississippian period in Texas. The formation underlies the city of Fort Worth and underlies 5,000 mi² (13,000 km²) and at least 17 counties.

<span class="mw-page-title-main">Petroleum reservoir</span> Subsurface pool of hydrocarbons

A petroleum reservoir or oil and gas reservoir is a subsurface accumulation of hydrocarbons contained in porous or fractured rock formations. Such reservoirs form when kerogen is created in surrounding rock by the presence of high heat and pressure in the Earth's crust.

<span class="mw-page-title-main">Shale gas</span> Natural gas trapped in shale formations

Shale gas is an unconventional natural gas that is found trapped within shale formations. Since the 1990s a combination of horizontal drilling and hydraulic fracturing has made large volumes of shale gas more economical to produce, and some analysts expect that shale gas will greatly expand worldwide energy supply.

<span class="mw-page-title-main">Piceance Basin</span>

The Piceance Basin is a geologic structural basin in northwestern Colorado, in the United States. It includes geologic formations from Cambrian to Holocene in age, but the thickest section is made up of rocks from the Cretaceous Period. The basin contains reserves of coal, natural gas, and oil shale. The name likely derives from the Shoshoni word /piasonittsi/ meaning “tall grass”.

<span class="mw-page-title-main">Bakken formation</span> Geological rock formation known for crude oil and gas production

The Bakken Formation is a rock unit from the Late Devonian to Early Mississippian age occupying about 200,000 square miles (520,000 km2) of the subsurface of the Williston Basin, underlying parts of Montana, North Dakota, Saskatchewan and Manitoba. The formation was initially described by geologist J. W. Nordquist in 1953. The formation is entirely in the subsurface, and has no surface outcrop. It is named after Henry O. Bakken (1901–1982), a farmer in Tioga, North Dakota, who owned the land where the formation was initially discovered while drilling for oil.

<span class="mw-page-title-main">Bend Arch–Fort Worth Basin</span> Major petroleum producing region in Texas and Oklahoma

The Bend Arch–Fort Worth Basin Province is a major petroleum producing geological system which is primarily located in North Central Texas and southwestern Oklahoma. It is officially designated by the United States Geological Survey (USGS) as Province 045 and classified as the Barnett-Paleozoic Total Petroleum System (TPS).

<span class="mw-page-title-main">Monterey Formation</span> Miocene geological sedimentary formation in California

The Monterey Formation is an extensive Miocene oil-rich geological sedimentary formation in California, with outcrops of the formation in parts of the California Coast Ranges, Peninsular Ranges, and on some of California's off-shore islands. The type locality is near the city of Monterey, California. The Monterey Formation is the major source-rock for 37 to 38 billion barrels of oil in conventional traps such as sandstones. This is most of California's known oil resources. The Monterey has been extensively investigated and mapped for petroleum potential, and is of major importance for understanding the complex geological history of California. Its rocks are mostly highly siliceous strata that vary greatly in composition, stratigraphy, and tectono-stratigraphic history.

<span class="mw-page-title-main">Oil reserves in the United States</span> Oil reserves located in the United States

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<span class="mw-page-title-main">Montney Formation</span>

The Montney Formation is a stratigraphical unit of Lower Triassic age in the Western Canadian Sedimentary Basin in British Columbia and Alberta.

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The petroleum industry in Ohio dates from 1859. Ohio continues to produce significant quantities of oil and gas, having produced more than 1 billion barrels of oil and 9 trillion cubic feet of natural gas since 1860. Unconventional resources, primarily in eastern Ohio, are likely to increase production in Ohio.

<span class="mw-page-title-main">Tight gas</span> Natural gas produced from reservoir rocks

Tight gas is commonly used to refer to natural gas produced from reservoir rocks with such low permeability that massive hydraulic fracturing is necessary to produce the well at economic rates. The gas is sealed in very impermeable and hard rocks, making their formation "tight". These impermeable reservoirs which produce dry natural gas are also called "Tight Sand".

<span class="mw-page-title-main">Fracking</span> Fracturing bedrock by pressurized liquid

Fracking is a well stimulation technique involving the fracturing of formations in bedrock by a pressurized liquid. The process involves the high-pressure injection of "fracking fluid" into a wellbore to create cracks in the deep-rock formations through which natural gas, petroleum, and brine will flow more freely. When the hydraulic pressure is removed from the well, small grains of hydraulic fracturing proppants hold the fractures open.

Shale gas is an unconventional natural gas produced from shale, a type of sedimentary rock. Shale gas has become an increasingly important source of natural gas in the United States over the past decade, and interest has spread to potential gas shales in Canada, Europe, Asia, and Australia. One analyst expects shale gas to supply as much as half the natural gas production in North America by 2020.

<span class="mw-page-title-main">Bazhenov Formation</span> Oil-bearing rock formation in Russia

The Bazhenov Formation or Bazhenov Shale is a geological stratum in the West Siberian basin. It was formed from sediment deposited in a deep-water sea in Tithonian–early Berriasian time. The sea covered more than one million square kilometers in the central basin area. Highly organic-rich siliceous shales were deposited during this time in anoxic conditions on the sea bottom. The sea was connected to the world's oceans and contains trace minerals derived from dissolved minerals and organic materials similar to sapropel sediments in the Black Sea.

As of 2013 the Cline Shale, also referred to as the "Wolfcamp/Cline Shale", the "Lower Wolfcamp Shale", or the "Spraberry-Wolfcamp shale", or even the "Wolfberry", is a promising Pennsylvanian oil play east of Midland, Texas which underlies ten counties: Fisher, Nolan, Sterling, Coke, Glasscock, Tom Green, Howard, Mitchell, Borden and Scurry counties. Exploitation is projected to rely on hydraulic fracturing.

an organic rich shale, with Total Organic Content (TOC) of 1-8%, with silt and sand beds mixed in. It lies in a broad shelf, with minimal relief and has nice light oil of 38-42 gravity with excellent porosity of 6-12% in thickness varying 200 to 550 feet thick.

<span class="mw-page-title-main">Wattenberg Gas Field</span>

The Wattenberg Gas Field is a large producing area of natural gas and condensate in the Denver Basin of central Colorado, USA. Discovered in 1970, the field was one of the first places where massive hydraulic fracturing was performed routinely and successfully on thousands of wells. The field now covers more than 2,000 square miles between the cities of Denver and Greeley, and includes more than 23,000 wells producing from a number of Cretaceous formations. The bulk of the field is in Weld County, but it extends into Adams, Boulder, Broomfield, Denver, and Larimer Counties.

<span class="mw-page-title-main">Fracking in Canada</span>

Fracking in Canada was first used in Alberta in 1953 to extract hydrocarbons from the giant Pembina oil field, the biggest conventional oil field in Alberta, which would have produced very little oil without fracturing. Since then, over 170,000 oil and gas wells have been fractured in Western Canada. Fracking is a process that stimulates natural gas or oil in wellbores to flow more easily by subjecting hydrocarbon reservoirs to pressure through the injection of fluids or gas at depth causing the rock to fracture or to widen existing cracks.

<span class="mw-page-title-main">Oil and gas reserves and resource quantification</span> Industry concept of crude oil and natural gas reserves and resources

Oil and gas reserves denote discovered quantities of crude oil and natural gas that can be profitably produced/recovered from an approved development. Oil and gas reserves tied to approved operational plans filed on the day of reserves reporting are also sensitive to fluctuating global market pricing. The remaining resource estimates are likely sub-commercial and may still be under appraisal with the potential to be technically recoverable once commercially established. Natural gas is frequently associated with oil directly and gas reserves are commonly quoted in barrels of oil equivalent (BoE). Consequently, both oil and gas reserves, as well as resource estimates, follow the same reporting guidelines, and are referred to collectively hereinafter as oil & gas.

<span class="mw-page-title-main">Unconventional (oil & gas) reservoir</span> Type of hydrocarbon reservoir

Unconventional reservoirs, or unconventional resources are accumulations where oil & gas phases are tightly bound to the rock fabric by strong capillary forces, requiring specialised measures for evaluation and extraction.

References

  1. 1 2 Mills, Robin M. (2008). The myth of the oil crisis: overcoming the challenges of depletion, geopolitics, and global warming. Greenwood Publishing Group. pp. 158–159. ISBN   978-0-313-36498-3.
  2. ↑ IEA (29 May 2012). Golden Rules for a Golden Age of Gas. World Energy Outlook Special Report on Unconventional Gas (PDF). OECD. p. 21.
  3. 1 2 IEA (2013). World Energy Outlook 2013. OECD. p. 424. ISBN   978-92-64-20130-9.
  4. ↑ Reinsalu, Enno; Aarna, Indrek (2015). "About technical terms of oil shale and shale oil" (PDF). Oil Shale. A Scientific-Technical Journal. 32 (4): 291–292. doi:10.3176/oil.2015.4.01. ISSN   0208-189X . Retrieved 2016-01-16.
  5. ↑ World Energy Resources 2013 Survey (PDF). World Energy Council. 2013. p. 2.46. ISBN   9780946121298.
  6. ↑ "Supply shock from North American oil rippling through global markets", IEA, International Energy Agency, 14 May 2013, retrieved 28 December 2013
  7. ↑ Bloomberg (May 17, 2013). "Chevron says shale to help make Argentina energy independent". FuelFix. Retrieved May 18, 2013.
  8. 1 2 3 4 5 "Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States" (PDF). U.S. Energy Information Administration (EIA). June 2013. Retrieved June 11, 2013.
  9. 1 2 "The Shale Oil Boom: a US Phenomenon" by Leonardo Maugeri, Harvard University, Geopolitics of Energy Project, Belfer Center for Science and International Affairs, Discussion Paper 2013-05
  10. ↑ Allen, J.; Sun, S.Q. (2003). "Controls on Recovery Factor in Fractured Reservoirs: Lessons Learned from 100 Fractured Fields". SPE Annual Technical Conference and Exhibition. doi:10.2118/84590-MS.
  11. ↑ Ovale, Peder. "Her ser du hvorfor oljeprisen faller" In English Teknisk Ukeblad , 11 December 2014. Accessed: 11 December 2014.
  12. ↑ Wachtmeister, H.; Lund, L.; Aleklett, K.; Höök, M. (2017). "Production Decline Curves of Tight Oil Wells in Eagle Ford Shale" (PDF). Natural Resources Research. 26 (3): 365–377. doi: 10.1007/s11053-016-9323-2 . S2CID   114814856 . Retrieved 12 October 2017.
  13. ↑ Ellyatt, Holly (8 May 2018). "Bahrain discovery of 80 billion barrels of oil". www.cnbc.com.
  14. ↑ England, Cameron (January 23, 2013). "$20 trillion shale oil find surrounding Coober Pedy 'can fuel Australia'". The Advertiser. Adelaide. Retrieved January 21, 2017.
  15. ↑ Jessica Resnick-Ault (September 17, 2018). "U.S. shale oil production to rise to 7.6 million barrels per day in October". Reuters. Retrieved 2018-12-06.
  16. ↑ Malanichev, A.G. (2018). "Modelling of Economic Oscillations of Shale Oil Production on the Basis of Analytical Solutions of a Differentiation Equation with a Retarded Argument" (PDF). Journal of the New Economic Association. 2 (38): 54–74. doi: 10.31737/2221-2264-2018-38-2-3 – via Elsevier's Scopus.
  17. ↑ Kleinberg, R.L.; Paltsev, S.; Ebinger, C.K.E; Hobbs, D.A.; Boersma, T. (2018). "Tight oil market dynamics: Benchmarks, breakeven points, and inelasticities". Energy Economics. 70: 70–83. doi: 10.1016/j.eneco.2017.11.018 .
  18. ↑ Wachtmeister, Henrik; Höök, Mikael (2020). "Investment and production dynamics of conventional oil and unconventional tight oil: Implications for oil markets and climate strategies". Energy and Climate Change. 1: 100010. doi: 10.1016/j.egycc.2020.100010 .
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