Energy Companies Plan to Step Up Shale Gas Activity

Oil & Gas IQ

This month, Royal Dutch Shell began drilling for shale gas in Sweden in one of the latest developments within the sector.

The prospects are good, as there are potentially enough resources to make the country self-sufficient for a decade.

"We are drilling the first well and expect to finish this month," said a spokesperson for the firm.

"It's a promising area. There could be enough gas to cover Sweden's gas needs for at least 10 years," he added.

Shell is drilling the first three exploration wells during the first quarter of the year and the spokesperson told Reuters that full-scale operations may be possible within five to 10 years.

Hydraulic Fracturing Concerns

However, there have been some concerns expressed over the impact of drilling for shale gas on ground water.

Goeran Gustafson, a science teacher who is active in a green group that is aiming to stop the project, has suggested that heavy metals and other dangerous substances may contaminate it.

Similar anxiety has also arisen around the shale gas drilling in the United States. However, Rex Tillerson, chief executive of Exxon Mobil Group, recently told a hearing before the Congress energy and environment subcommittee that the hydraulic fracturing technique for extracting shale gas was safe.

"We can now find and produce unconventional natural gas supplies miles below the surface in a safe, efficient and environmentally-responsible manner," he stressed.

Shale Gas Exploration

While these debates are ongoing, energy businesses are continuing to make the most of their shale gas investments.

This month, Pioneer Natural Resources Company announced a second successful exploration exercise in the Eagle Ford shale gas well in south Texas.

The Robert Crawley Gas Unit Number One well, which is located in Live Oak County flowed at an initial production rate of around 17 million cubic feet of shale gas per day on a 24/64-inch choke with 7,300 pounds per square inch wellhead pressure.

Pioneer Natural Resources said it was drilled to a true vertical depth of around 14,000 feet and completed in a 5,400-foot lateral section with a 16-stage fracture stimulation (frac).

This new well is located approximately three miles south of the company's liquids-rich Sinor Number Five discovery well, although the Eagle Ford shale gas formation at the Crawley field is 1,000 feet deeper and has a 30 percent thicker pay zone.

"As a continuation of our multi-well programme to assess our acreage position, the objective of the Crawley Number One was to test productivity towards the dry gas window in a deeper, thicker Eagle Ford Shale section with a longer lateral and additional frac stages," explained Scott Sheffield, chairman and chief executive of the company.

"With the highest gas rate reported to date in the play, the Crawley Number One exceeded our expectations and confirms that dry gas wells provide strong economics at today's prices," he added.

Sheffield went on to say that the company was confident the Eagle Ford shale formation would be "very prolific."

Capital Budgets

Talisman Energy is another company that intends to boost its shale gas efforts.

The company has set aside $5.2 billion (£3.2 billion) in capital spending for a major increase in North American shale drilling this year. This represents a 10 percent budget rise compared to 2009.

It expects development drilling to more than double in the Pennsylvania Marcellus and Montney shale gas plays.

"Our main priority in 2010 will be continuing the portfolio transition, in particular ramping up development of the Marcellus and Montney shale plays," said John Manzoni, president and chief executive of Talisman Energy.

Similarly, Rex Energy Corporation is looking to step up development of shale gas assets. The company's 2010 capital budget stands at $100.1 million, of which 46.7 percent will be spent on drilling and exploration.

"Our 2010 capital budget reflects our continued confidence in the potential of our Marcellus Shale acreage due to the successful horizontal wells we have drilled in each of our three major projects areas," said Benjamin Hulburt, Rex Energy's president and chief executive.

"In 2010, we plan to accelerate our Marcellus Shale drilling activities significantly, as well as commence operations on our first alkali-surfactant-polymer unit in the Illinois Basin," he added.

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