Recoverable Shale Oil and Shale Gas Resources

Recoverable Shale Oil and Shale Gas Resources

EIA estimates global technically recoverable shale oil resources of 345 billion barrels
In the recently released report on Technically Recoverable Shale Oil and Shale Gas Resources, covering 42 countries, including the United States, EIA estimates that there are 345 billion barrels of technically recoverable shale oil resources in the covered formations. The assessed resources represent 10 percent of the world’s technically recoverable crude oil resources, which are resources that can be produced using current technology without reference to economic profitability.
Top 10 countries with technically recoverable shale oil resources Rank Country Shale oil
———————(billion barrels)
1 Russia —————75
2 U.S. *—————– 58 (48)
3 China—————- 32
4 Argentina————27
5 Libya—————– 26
6 Australia———— 18
7 Venezuela———- 13
8 Mexico————— 13
9 Pakistan————– 9
10 Canada————- 9
World Total——— 345 (335) * EIA estimates used for ranking order. ARI estimates in parenthese
Turning to oil prices, it is important to distinguish between short-term and long-term effects. The increase in U.S. crude oil production in 2012 of 847,000 barrels per day over 2011 was largely attributable to increased production from shales and other tight resources. That increase is likely to have had an effect on prices in 2012. Even with that increase, global spare production capacity was low in 2012 relative to recent historical standards – without it, global spare capacity would have been considerably lower, raising the specter of significantly higher oil prices.
However, the situation is somewhat different in a longer-run setting, in which both global supply and demand forces are likely to substantially reduce the sensitivity of world oil market prices to a rise in production from any particular country or resource outside of the Organization of the Petroleum Exporting Countries (OPEC). Undoubtedly, significant volumes of oil production from shale resources that are economically recoverable at prices below those desired by OPEC decision-makers would add to the challenge facing OPEC as it seeks to manage oil prices. However, the magnitude of this challenge is probably smaller than the challenges associated with the possible success of some of its own member countries in overcoming barriers stemming from internal discord or external constraints that have kept their recent production well below levels that would be preferred by national governments and would be readily supported by their ample resources. Ultimately, the possibility of significant price impacts in response to either of these potential challenges will depend on the ability and willingness of other OPEC member countries to offset the impact of higher production on prices by reducing their output or their investment in additional production capacity. Efforts to limit the price effect of higher production could also be supported by the demand side of the market over the long term since any persistent period of lower prices would encourage a demand response that would tend to soften any long-term price-lowering effects of increased production.
Notable changes in shale gas estimates from the 2011 report
Shale gas resource estimates for some formations were revised lower in the current report, including those for Norway’s Alum Shale, Poland’s Lubin Basin, Mexico’s Eagle Ford Shale in the Burgos Basin, South Africa’s Karoo Basin, and China’s Qiongzhusi Shale in the Sichuan Basin and the Lower Cambrian shales in the Tarim Basin. As discussed below, these adjustments, based on new information in some cases, reflect a reduced estimate of total hydrocarbon resources, while in others they reflect a reclassification of resources previously identified as natural gas to the category of crude oil or condensates. This discussion is not meant to be exhaustive but rather illustrative of why some of the shale resource estimates were reduced.
Norway’s shale gas assessment dropped from 83 trillion cubic feet in 2011 to zero in the current report because of the disappointing results obtained from three Alum Shale wells drilled by Shell Oil Company in 2011. The Shell wells were drilled in the less geologically complex portion of the Alum Shale that exists in Sweden, which significantly reduced the prospects for successful shale wells in the more geologically complex portion of the Alum Shale that exists in Norway.
Poland’s Lubin Basin shale gas resource estimate was reduced from 44 trillion cubic feet in the 2011 report to 9 trillion cubic feet in this report. The resource reduction was due to the more rigorous application of the requirement that a shale formation have at least a 2 percent minimum total organic content (TOC). The more rigorous application of the TOC minimum requirement, along with better control on structural complexity, reduced the prospective area from 11,660 square miles to 2,390 square miles. For Poland as a whole, the shale gas resource estimate was reduced from 187 trillion cubic feet in the 2011 report to 148 trillion cubic feet in this report.
In Mexico, the Eagle Ford Shale gas resource estimate in Burgos Basin was reduced from 454 trillion cubic feet in the 2011 report to 343 trillion cubic feet in this report. Based on better geologic data regarding the areal extent of the formation, the prospective shale area was reduced from 18,100 square miles in the 2011 report to 17,300 square miles. A portion of the 17,300 square miles is prospective for oil, which reduced the area prospective for natural gas. Cumulatively, these changes resulted in a lower shale gas resource estimate for the Burgos Basin’s Eagle Ford formation, while adding oil resources.
In South Africa, the prospective area for the three shale formations in the Karoo Basin was reduced by 15 percent from 70,800 square miles to 60,180 square miles. This reduction in the prospective area was largely responsible for the lower South African shale gas resource estimate shown in this report. The Whitehill Shale’s recovery rate and resource estimate were also reduced because of the geologic complexity caused by igneous intrusions into that formation. For South Africa as a whole, the shale gas resource estimate was reduced from 485 trillion cubic feet in the 2011 report to 390 trillion cubic feet in this report.
In China, better information regarding the total organic content and geologic complexity resulted in a reduction of the shale gas resource in the Qiongzhusi formation in the Sichuan Basin and Lower Cambrian shales in the Tarim Basin. The Qiongzhusi Shale gas resource estimate was reduced from 349 trillion cubic feet in the 2011 report to 125 trillion cubic feet in this report. The lower estimate resulted from the prospective area being reduced from 56,875 square miles to 6,500 square miles. Similarly, the prospective area of the Lower Cambrian shales was reduced from 53,560 square miles in 2011 to 6,520 square miles in the current report, resulting in a reduction in the shale gas estimate from 359 trillion cubic feet in 2011 to 44 trillion cubic feet now. For China as a whole, the shale gas resource estimate was reduced from 1,275 trillion cubic feet in the 2011 report to 1,115 trillion cubic feet in this report.
Full report: Shale Oil and Shale Gas Resources
Source: EIA
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