Shale Gas 101

North American Shale Gas Deposits

Shale gas is natural gas that is typically produced from “continuous” gas accumulations where thick shale rock formations extend over a large area and are characterized by high levels of organic carbon or kerogen, the source of the gas. Shale plays can hold an enormous amount of natural gas and are capable of producing gas at a steady
rate for decades.

Although shale is a very common sedimentary rock and is known as a source for unconventional natural gas reservoirs, the energy industry has not pursued widespread commercial development of shale plays until quite recently. As an unconventional resource, shale gas has traditionally been difficult to extract economically. Shale gas plays are characterized by low permeability which causes gas to flow more slowly than conventional gas resources and generally requires fracturing to allow gas to flow
to well bores.

As the price of natural gas climbed due to increasing demand and the flow rates significantly improved due to improved and cost-effective hydraulic fracturing technology, shale gas production became economically viable in the 1990s and led to the development of successful shale gas plays such as the Barnett and Fayetteville Shales in the United States. Significant shale plays, such as the Montney and Horn River in Western Canada, and the Utica in Quebec, are now also being developed in Canada.

In order for a shale play to produce, the rock must have geochemical attributes that indicate that the organic content (kerogen) has been sufficiently heated to produce natural gas in the formation. If the shale does not reach a high enough temperature over the millions of years that it was buried, then it is not prospective for thermogenic gas generation. Conversely, if the rock reaches too high a temperature, the natural gas (methane) that is produced can break down into non-combustible gases such
as carbon dioxide.

To understand the geochemical (maturity, organic content), mechanical (stress, brittleness) and in-situ rock properties (permeability, porosity, water saturation, reservoir pressure, gas content), wells are drilled, and rock samples from core and cuttings are recovered and sent to specialized laboratories. Traditional logging tools do not provide sufficient information for evaluating shale prospectivity, and can be misleading unless calibrated to lab results from actual rock samples.

Because shale has such low permeability, gas will generally not flow unless the rock has been fractured. This involves injecting high volumes of water, mixed with sand, at high pressure into the targeted shales. This fractures and props open the rock, thus allowing the gas trapped in the reservoir rock to flow to the wellbore.

Generally, vertical wells are used to explore the shale resource and determine the best places for development, then horizontal wells are drilled for commercial production.

Horizontal well drilling and multi-stage fracture stimulations have been the key to obtaining economic productivity in most shale reservoirs. Horizontal wells can be drilled over 1000 meters laterally through the productive shale and then 5-10 individual intervals are fracture stimulated. This technique connects larger volumes of the resource into a single wellbore, resulting in higher rates and reserves, and ultimately, a commercially
viable project.

Triangle management believes that shale gas production in North America will continue to grow for many years to come. The long-life nature of shale gas plays, the substantial advances in technology in recent years and the economics of shale gas have improved significantly over the last few years.