While the US frets about a dependence on foreign oil, few seem to notice the upswing in domestic gas output.
Tapping into the shale gas boom
While Americans fret about their growing dependence on foreign oil, few seem to have noticed an upswing in domestic gas output. And this unexpected surge could pave the way for the world's biggest energy consumer to become self sufficient in natural gas - years after US production was widely believed to have peaked. Since the beginning of last year, US gas production has grown 8.4 per cent while oil production has stayed flat.
The nation's gas producers have not waited for politicians to tell them to drill. They have been drilling flat out for the past 18 months, with new gas wells being developed at more than twice the rate they were in 2002. The upturn in US gas output has been all the more surprising following nine years of flat production. Even more remarkably, it has largely resulted from producers tapping hitherto untouched gas deposits. Some of the new resources - found in large shale beds - are in parts of the US that have previously seen little if any hydrocarbon development.
"New technologies have allowed the rapid emergence of gas shales as a major energy source, representing a truly transformative event for US energy supplies," says Aubrey McClendon, the chairman and chief executive of Chesapeake Energy, a large US gas producer. A study by Navigant Consulting and commissioned by the American Clean Skies Foundation, a non-profit advocacy group founded by Mr McClendon, predicts that annual production from US shale basins could exceed 14 trillion cubic feet (tcf) within 10 years, up from about five tcf this year.
The rush to develop shale gas is a relatively new trend, and one so far unique to North America. But in one sense it takes the US industry back to its roots. The first commercial gas well on the continent, drilled in 1821, tapped a Devonian shale gas deposit near Fredonia, New York, far from the current hub of US oil and gas activity in Texas. Drillers moved west as they made successive discoveries in porous carbonate and sandstone formations that yielded gas faster and more easily than shale, a common dark grey rock with the consistency of a school blackboard. Soon, legendary gas discoveries such as Kern River in California and the Texan Panhandle/Hugoton fields caused memories of the old Appalachian shale gas deposits to fade.
But petroleum geologists never lost their interest in shale beds, considering them the most likely source for all other oil and gas accumulations. Now, with production declining from most conventional US onshore gasfields, decades of groundwork on shale gas is paying off. The gas found in shale beds is not trapped in the rock itself, but in organic material finely interleaved with mineral layers. When subjected underground to heat and pressure, the organic detritus yields first oil, then, with more pressure-cooking, natural gas. The geological conditions leading to gas formation are more prevalent than the narrower temperature and pressure parameters producing oil, so gassy shales are commoner than their oil-bearing counterparts, oil shales.
The US has world-class supplies of both. The government estimates the nation's oil shale resource at 2.1 trillion barrels of oil in place, of which about ten per cent may be recoverable with current technology. The Gas Technology Institute, an industry-led research group, estimates that organic shale reservoirs in the US may contain up to 780 tcf of gas, with a recovery potential of at least 20 per cent.
In other words, with about 200 billion barrels of recoverable oil and 150 tcf of recoverable gas available in known onshore locations, the US could become self-sufficient in oil and gas just by exploiting its shale beds. That amount of untapped oil is equivalent to 76 per cent of Saudi Arabia's proven oil reserves. The volume of recoverable shale gas is nearly triple the total proved gas reserves of Canada, the country supplying more than 90 per cent of US gas imports.
"American producers can clearly supply enough natural gas to meet today's uses and become an economical source of transportation fuel for generations to come," says Mr McClendon. Some industry pundits even wonder if a new North American gas supply bubble could be forming. While shale oil production is environmentally controversial - one reason it has not so far been attempted on a commercial scale in the US - shale gas is entirely another matter. Although technically challenging to produce cost effectively, its exploitation requires only high-precision modifications of standard drilling, well stimulation and reservoir management techniques used to produce gas from conventional fields. Moreover, gas is regarded as the least polluting fossil fuel, due to its lower carbon content than either oil or coal.