The drilling boom continues in the US and Canada, but challenges remain.
Shale production has made North America the envy of the world, and the revolution has staying power that will not vanish within the next few years, according to ConocoPhillips CEO Ryan Lance.
Speaking during the Deloitte Oil and Gas Conference in Houston on Nov. 19, Lance said shale production in the US and Canada has increased 37% since 2005 and continues to grow.
The production surge has led to 33 proposed export terminals in North America, multibillion-dollar projects predicated on low natural gas prices continuing in North America, Lance said, later noting that global demand and competing supplies will, however, restrict the number of projects that are actually built. The global demand is projected to only grow about 850 Mcm/d (30 Bcf/d) by 2025, while the export capacity for the proposed projects is about 1.2 Bcm/d (45 Bcf/d). “Supply and demand is going to play a key role in determining which of these projects move forward,” he said.
But the North American drilling boom continues. “Today we’ve gotten back to 10 MMb/d. I think new records are coming,” Lance said. And the payouts have not only impacted the E&P sector; the chemicals industry has witnessed a revival as well. “We are now no longer an importer of LPG. We are an exporter. Even foreign companies are coming back to invest because of the cheap natural gas prices.”
There are other sources of growth fueling this energy renaissance. Gulf of Mexico (GoM) deepwater production doubled during the 1990s, flattened out, and is rising again. Production here was about 1 MMb/d in 1996, but that could increase to just less than 2 MMb/d by 2020.
“There is a new tranche of production startups that have been announced that are coming on, and new areas are yielding fairly large discoveries whether we’re talking about the Miocene, the Paleogene, the Pliocene, even the Jurassic, or the subsalt that is going on in the GoM,” Lance said.
The US has already surpassed other countries in terms of natural gas production, becoming the world’s No. 1 producer at about 1.8 Bcm/d (65 Bcf/d). The US also is on track to pass Russia this year in total oil and gas production and is predicted to pass Saudi Arabia in the next few years, Lance said. The International Energy Agency forecasts US oil production will reach 11.6 MMb/d by 2020.“We can export energy to our allies now. We have a greater diplomatic influence in the world today,” Lance said. “With this rising supply in self sufficiency, it weakens some of the more hostile producers that might want to hold us hostage.”
But there are some challenges. These, Lance said, include weak demand in North America resulting in low prices, infrastructure permitting delays, import/export issues, public concern about hydraulic fracturing, oil and gas workers approaching retirement age, and costly regulations.
Then, there are technology challenges and critical water issues. Lance said the industry has made a lot of progress in this area and continues looking for ways to reduce water usage. Using the Canadian oil sands as an example, he spoke of taking brackish water, instead of potable water, and turning it into steam to help recover oil.
Technological opportunities also remain in maximizing recovery and production.
“We still don’t really have the optimum completion around these unconventionals. How much of that gross volume are we effectively stimulating? I don’t think the industry really has a good handle on that,” Lance said. “We’ve got a lot of technology that ourselves and others are looking at to try to improve that – how to keep the bit drilling quickly and fast. There is the surface issue.”
Added to that are the issues of water management and how to reuse water to make quality fluids and continue stimulating the wellbore, he continued. He predicts a lot of subsurface advances will be forthcoming over the next five to 10 years as the industry works to get the ultimate recovery from investments.
“I think we’re in the first inning of this unconventional story,” Lance said.
Contact the author, Velda Addison, at vaddison@hartenergy.com.
Shale production has made North America the envy of the world, and the revolution has staying power that will not vanish within the next few years, according to ConocoPhillips CEO Ryan Lance.Speaking during the Deloitte Oil and Gas Conference in Houston on Nov. 19, Lance said shale production in the US and Canada has increased 37% since 2005 and continues to grow.
The production surge has led to 33 proposed export terminals in North America, multibillion-dollar projects predicated on low natural gas prices continuing in North America, Lance said, later noting that global demand and competing supplies will, however, restrict the number of projects that are actually built. The global demand is projected to only grow about 850 Mcm/d (30 Bcf/d) by 2025, while the export capacity for the proposed projects is about 1.2 Bcm/d (45 Bcf/d). “Supply and demand is going to play a key role in determining which of these projects move forward,” he said.
But the North American drilling boom continues. “Today we’ve gotten back to 10 MMb/d. I think new records are coming,” Lance said. And the payouts have not only impacted the E&P sector; the chemicals industry has witnessed a revival as well. “We are now no longer an importer of LPG. We are an exporter. Even foreign companies are coming back to invest because of the cheap natural gas prices.”
There are other sources of growth fueling this energy renaissance. Gulf of Mexico (GoM) deepwater production doubled during the 1990s, flattened out, and is rising again. Production here was about 1 MMb/d in 1996, but that could increase to just less than 2 MMb/d by 2020.
“There is a new tranche of production startups that have been announced that are coming on, and new areas are yielding fairly large discoveries whether we’re talking about the Miocene, the Paleogene, the Pliocene, even the Jurassic, or the subsalt that is going on in the GoM,” Lance said.
The US has already surpassed other countries in terms of natural gas production, becoming the world’s No. 1 producer at about 1.8 Bcm/d (65 Bcf/d). The US also is on track to pass Russia this year in total oil and gas production and is predicted to pass Saudi Arabia in the next few years, Lance said. The International Energy Agency forecasts US oil production will reach 11.6 MMb/d by 2020.
But there are some challenges. These, Lance said, include weak demand in North America resulting in low prices, infrastructure permitting delays, import/export issues, public concern about hydraulic fracturing, oil and gas workers approaching retirement age, and costly regulations.
Then, there are technology challenges and critical water issues. Lance said the industry has made a lot of progress in this area and continues looking for ways to reduce water usage. Using the Canadian oil sands as an example, he spoke of taking brackish water, instead of potable water, and turning it into steam to help recover oil.
Technological opportunities also remain in maximizing recovery and production.
“We still don’t really have the optimum completion around these unconventionals. How much of that gross volume are we effectively stimulating? I don’t think the industry really has a good handle on that,” Lance said. “We’ve got a lot of technology that ourselves and others are looking at to try to improve that – how to keep the bit drilling quickly and fast. There is the surface issue.”
Added to that are the issues of water management and how to reuse water to make quality fluids and continue stimulating the wellbore, he continued. He predicts a lot of subsurface advances will be forthcoming over the next five to 10 years as the industry works to get the ultimate recovery from investments.
“I think we’re in the first inning of this unconventional story,” Lance said.
Contact the author, Velda Addison, at vaddison@hartenergy.com.
0 comments:
Post a Comment