Hydraulic Fracturing: The Fuss, The Facts, The Future

Abstract

Hydraulic Fracturing While precise statistics on the hydraulic fracturing industry are not kept, there is little doubt its use has grown precipitously over the past decade. Despite low gas prices, North American fracturing activity is at an all-time high, with competition between fracturing companies fierce, margins slim, and volumes huge. With an estimated 4 million hhp of equipment being built in the US, there are waiting lists for services and supplies, and delays of up to 9 months are common. China and India are investigating the potential of unconventional-gas resources that demand the use of hydraulic fracturing to produce at commercial flow rates, and also are stepping up investment in North American and Australian shale acreage. European countries like Hungary, Poland, Germany, and France—keen on easing dependence on Russian energy—are also looking to exploit their tight resources. But it is not all about shale. With 2007 estimated service-company hydraulic fracturing revenues representing a global market of USD 13 billion (Fig. 1), up from approximately USD 2.8 billion in 1999, the technique is now more than ever a vital practice enabling continued economic exploitation of hydrocarbons throughout the world—from high-permeability oil fields in Alaska, the North Sea, and Russia, to unconsolidated formations in the Gulf of Mexico, Santos Basin, and offshore West Africa (Fig. 2), to unconventional resources such as shale and coalbed methane (CBM) developments (Fig. 3). What Is Driving the Rise in Hydraulic Fracturing? It is not surprising to find that North America is home to an estimated 85% of the total number of hydraulic fracturing spreads (Fig. 4) (according to Michael Economides, a spread is the equivalent of four fracturing units, a blender, and ancillary equipment)—including land (Fig. 5) and offshore equipment. This stems from its mature, reliable infrastructure, fueled by the dependence of a population long used to creating demand. The phenomenal increase in US proved reserves of natural gas—from a 20-year low in 1994 of 162.42 Tcf to its 2009 estimated 244.66 Tcf—is the direct result of advances in hydraulic fracturing and horizontal drilling. The scramble for this resource, however, giving rise to what an IHS CERA report calls the “shale gale,” is the result in North America to avert what was predicted earlier in the century to be the need to import vast quantities of natural gas in the form of liquefied natural gas (LNG) from farflung locations. Although shale and CBM are also widely prevalent outside the US, the need in most countries—with the possible exception of the European Economic Union—to turn to them, remains less urgent, as conventional resources remain far from depleted. Indeed, the top three countries in terms of estimated proved natural-gas reserves—Russia, Iran, and Qatar—held a combined total 14.5 times that in the US, at 3,563.55 Tcf year-end 2009, 57% of the world’s 2009 total estimated proved reserves of 6,261.29 Tcf. So, while hydraulic fracturing and natural gas—and to a certain extent oil—extraction have been linked in the recent focus on unconventional shale resources within the US, the long-term future lies well outside that country.