Market analysis | global shale
Left: Construction of a shale pipeline in Texas
access to more and better quality production data from cheap, robust wireless-connected sensors that enable collection of data such as pressures, temperatures and vibrations. Learning-by-doing has also incrementally improved the logistics of moving rigs, pumps and trucks while the industry has near perfected the art of just-in-time delivery of sand and water for hydraulic fracturing. The shale gas production industry reacted to the
collapse in oil prices by focusing on the best acreage, tapping drilled but incomplete wells, increasing the length of wells, and increasing yield by pushing more sand and proppant down them. These cost reductions and efficiency gains are likely to be replicable else- where and to be permanent, unlike the reduction in prices charged by field service companies and drillers.
Continued exploration Applying horizontal drilling and hydraulic fracturing in the Anadarko Basin of Oklahoma has revived the state’s oil and gas production. Two oil and gas- rich plays - the previously mentioned STACK and the SCOOP ( South Central Oklahoma Oil Province) - have rewarded pioneering fracking. The rapid growth of shale oil well drilling since 2011 saw Oklahoma’s crude oil output near double by 2015 to 157.8m barrels, according to data from the State Chamber of Oklahoma Research Foundation. Meanwhile, in September of this year, Apache
Corporation announced the discovery of 3bn barrels of oil and 75 Tcf (trillion cubic feet) of gas in the Alpine High Region of Texas, a previously neglected part of the Permian play. According to the company, this find could support up to 3,000 wells at an oil price of $50 a barrel and natural gas price of around $3 per mcft (million cubic feet). Finding new customers and markets has pre-occu- pied both producers and pipeline developers, who have found a significant customer in power generation. Since 2006, shale gas used by power plants increased by 55%,
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largely to the detriment of coal. Cheap gas has boosted factories and especially energy intensive industries, such as fertilisers, chemicals and plastics. New pipelines have also brought cheap gas to residential homes in the north east, Ohio, and Maryland.
Export opportunities Rising production from the Marcellus and Utica formations has enabled pipeline exports of shale gas and ethane to Canada. More recently US shale gas has been reaching further still, with liquefied tanker exports to Norway commencing in March 2016 and in Septem- ber to Grangemouth in Scotland. Similarly, producers of shale gas in Texas have found a ready market in neighbouring Mexico. Exports reached 70.9 bcf in April last year and are forecast by Bloomberg to more than double to 150 bcf a month by 2020. Rising exports have necessitated the construction of new pipelines across the border to reach power generation plants, factories and Mexico City. The abundance of shale gas has turned the US into
an exporter of liquid natural gas. Cheniere Energy’s Sabine Pass export plant, which opened in February,
Left: The Nova Chemicals plant at
Corunna in
Canada pipes in shale-based ethane from the US
December 2016 | PIPELINE COATING 13
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