The Oil And Gas Revolution - 1821 Words

INTRODUCTION The Shale gas revolution has demonstrated a quantum leap from almost nothing in 2000 to over 30 billion cubic metres in 2011. This caused a crash of natural gas prices in the United States, significantly changing the country’s natural gas future outlook (Mangeri, 2012). The US oil and gas fracking revolution is a new paradigm which has made the country a game changer in the oil and gas scheme of things, and has immense implications for economics, energy and geopolitics. It is projected that in a few years, the US will surpass Saudi Arabia as the number one oil producer worldwide, having overtaken Russia as the number one natural gas producer in 2012 (Birol, 2013). This would exert a negative pressure on global oil prices,†¦show more content†¦Fracking involves pumping a mixture of sand, water and chemicals with surface pumping trucks, through horsepower machines, down a perforated pipe into a reservoir at extremely high pressures to form small fractures in shale forma tions that release the oil and gas to flow up into the well. No two shale formations are the same. There are differences in thickness, porosity and permeability of shale formations which mean a lot more wells need to be drilled in various areas of the field before an idea of the recoverability rate can be assessed from the formation. Shale oil operations are intensive, in that it needs wells to be drilled continuously in order to increase and maintain production. Nevertheless, a significant portion of US Shale oil at USD 50-65 per barrel is actually profitable, thereby rendering them unaffected by a drop in oil prices. The United States has over twenty large shale oil formations, chief of which is the Eagle Ford shale, whose boom in recent times revealed an endowment with respect to hydrocarbon, comparable to Bakken/Three Forks; which is a tight oil formation county in Montana and North Dakota. Technological advancements have grown tremendously in Shale gas operations as well as production, efficiency and well flow management (EPRINC, 2011a). These advancements have significantly crashed well drilling time by over 30%, which translates to a significant reduction in costs. The extension of