US shale production makes drastic shift from gas to oil

07 March 2012 18:16  [Source: ICIS news]

HOUSTON (ICIS)--US shale operators transitioned to oil production because natural gas prices dropped so low that production could not be sustained, an industry official said on Wednesday.

Steven Mueller, the president and CEO of Southwestern Energy, said shale gas production has created a glut of 500bn cubic feet.

“How are we going to meet the balance? Well it’s going to take a long time,” said Mueller.

Charles Stanley, the president and CEO of QEP Resources, said the industry is pulling capital from dry gas plays to plays rich with natural gas liquids and crude oil, which will act as a balancing mechanism by reducing natural gas production.

“There’s a dramatic change going on with gas and liquid activity today,” said Derek Mathieson, the president of Western Hemisphere Operations for Baker Hughes. “The great thing today is that almost everything learned on the gas side can be transferred to the liquid side.”

The multi-stage fracturing process to optimise production flow also transfers to oil production, so the industry does not have to start from the beginning, said Mathieson.

However, there are a few technological changes needed to produce oil from shale.

The well placement requires increased accuracy to reach the sweet spot because the oil molecules do not flow as easily as natural gas, Mathieson said.

“We shouldn’t trick ourselves that this is going to look the same as conventional oil production,” Mathieson said.

By: Sheena Martin
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