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Will Russia frack for oil?
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Shale oil is poised to go international, Grealy writes. It’s already happening in Argentina, Australia and China, but the big prize is in Russia’s Bazhenov shale in Western Siberia.
One of my stranger speaker invitations recently was earlier this month in Moscow to an Adam Smith conference on Russia EOR (enhanced oil recovery), where I found myself in the ironic position of giving a presentation to reassure the audience that fracking,for oil was safe.
Fracking is fracking and there is little or no difference between the methods used for gas or oil. Oil fracking in it’s modern form of horizontal drilling and hydraulic fracturing using less chemicals than before was introduced by Harold Hamm in the North Dakota Bakken about ten years ago and the impact on US oil is now well known. The Bakken turned around the idea that US oil had peaked, and the technology rippled out to the Eagle Ford, Permian and Niobrara formations. One of the nails in the Peak Oil coffin has been the realisation by even the conventional wisdom this year that shale oil can go international. It’s already happening in Argentina, Australia and China, but the big prize is in Russia’s Bazhenov shale in Western Siberia.
Geologists can argue about tight oil or shale oil, in the same way they do about tight gas and shale gas, but just as gas is gas, oil is oil. Similarly, as in the Permian, tight-oil techniques have spread from shale to a wide range of lower-quality conventional plays. It’s for the geologists to decide what to call them, to you and me it simply means there is a lot of oil. This also means that the oil industry is going to be transformed world wide sooner than OPEC might think.
This slide from Russian independent RusPetro gives some context as to the size of of the Bazhenov.
Because I had been at the Spectator Shale Debate the night before, I couldn’t make the first day of the conference, where Thane Gustafson of IHS and Christof Ruehl of BP presented on the oil context, in presentations that I can’t reproduce here. I would have dearly liked to discuss what this all meant for gas. On the second day, there was a fascinating presentation by Professor Lyudmila Plakitkina, Deputy Director at the Energy Research Institute of the Russian Academy of Sciences, which isn’t available either, but it was in Russian anyway.
Professor Plakitkina’s presentation had some fascinating slides which discussed the Bakken in detail. I though it very ironic that 30 years ago, detailed Russian language maps of North Dakota would have highlighted ICBMs, not oil pads. However, she also was the only one who discussed shale gas, and very interestingly pointed out the Western European implications of shale. She specifically mentioned high gas concentrations in Germany, France and especially the UK Bowland Shale.
This is yet another ironic twist: The shale doubters of Europe constantly tell us how European gas is some distant far off topic, but here was a top Russian geologist at the state policy level who understood the implications for Russia completely.
Let’s remind ourselves that Russia has always appeared in threatened in public by shale. But could this be more of a Gazprom reaction as opposed to a state energy strategic level. There are many who see Gazprom pawprints, or even money, over anti shale propaganda in Europe. I’m not that paranoid, but it may well be the case in Eastern European markets. Significant “green” opposition in Czech Republic, Bulgaria and Romania is directly linked to former Communist Parties who still have far more votes in the East than Greens have in the West. Recently, the Barton Moss Northern Gas Gala in the UK emphasizes their solidarity with the Pungesti shale gas protestors in Romania, as they remain silent about the far larger Ukrainian demonstrations of people power.
I’ve stressed to Gazprom executives on the conference circuit that Gazprom needs to face reality over shale, while pointing out the other reality that Russia will always be influential in gas the same way that Saudi will be about oil. I believe the message is clear at the Russian state level and among independents such as Rosneft, Lukoil and Novatek, eager to bypass the Gazprom export monopoly.
Gazprom has their own oil company, owning 94% of Gazprom Neft which is a significant Bazhenov player, with a joint venture with Shell. But the message about fracking for gas is still confused. The only media interest of any note about the Northern Gas Gala comes from RT TV or RT Russian Radio. There, gas glasnost has yet to happen, this being only one of several examples:
More smoke than fire’: Fracking’s economic benefits are overblown
Texan anti-fracking activist Sharon Wilson described to RT the consequences of fracking she had to face, including being forced to move home due to air pollution, a lack of clean water and toxic chemicals.
Afshin Rattansi goes underground on the fracking frenzy in the UK, talking to the leader of the Green Party, Natalie Bennett.
It’s significant that RT gives such prominence to minor fringe groups on fracking dangers, as back in the former USSR, fracking is welcomed with open arms in the Bazhenov. An oil service provider at the conference told me that there are up to 80 frack fleets in Russia, far more than in Western Europe.
Sooner or later, the new party line will come down from Moscow to both Gazprom and RT, and the Barton Moss protestors won’t even be able to depend on that media outlet anymore.
13 Comments on "Will Russia frack for oil?"
rockman on Fri, 27th Dec 2013 1:32 pm
Nothing terribly new about the Bazhenov shale. Nothing new about horizontally drilling and frac’ng shales. What’s new is $100/bbl oil. Its oil potential was discovered 45 years ago. And it certainly has huge INPLACE reserves. How that translate to a future production rate will take years if not decades to be seen IMHO. The logistical problems of operating in such a hostile environment are obvious so I’ll pass. But there are two equally challenging problems. First, Russia does not have the independent oil company base that has driven shale development in the US. Their system is dominated by just a few very large companies that are dominated by the govt. The other road block is the oil taxing structure in Russia. If the same system existed in the US there would be little or no oil production from out shales. The Russian govt is trying to modify those rules now but are encountering difficulties.
Even the optimistic Russian geologists estimate a sustained rate of just 1 to 2 million bopd which would take many years to reach. And taking just the very low end estimate of 20 billion bbls of oil it would take 30 years of continuous drilling to reach even that minimum recovery. And the high end 1 trillion bbls of oil? That would take a continuous drilling program of over 1,300 years. Some folks still like to amaze the public with those huge recoverable reserves numbers while completely ignoring the time factor.
Bob Inget on Fri, 27th Dec 2013 2:23 pm
Soon, maybe already, H drilling, fracking it all its configurations, will be lumped in with so called ‘conventional oil’ just as
ultra deep water production is today.
How many civilians believe conventional crude sits around in underground pools?
We make little or no distinction between source rocks filling up our Porche Cayennes.
With number one and two OPEC nations arming to the teeth for that ‘final solution’. Post civil war strife in Libya spreading into Egypt, DRC, Mali, Sudan.
Mideast, North African, oil could soon become scarce indeed.
China is doing great work corralling South American and West African crude for itself.
Russian oil men intend to be in there if and when the killing stops.
BTW, because of a serious assassination in Lebanon, WTI just topped $100.
forbin on Fri, 27th Dec 2013 2:42 pm
agree with rockman
read this ” One of the nails in the Peak Oil coffin …. ” and that killed the credability for this article
the supply of 1-2 million will help , even more supply will help even more
And Bob is on the ball there – this will be lumped in with the rest of the oil ….
Joe public cares not so long as the footy is on and he has a beer 😉
just remember folks – you can’t kill something that isn’t alive – peak oil is a mathimatical concept , not a living thing , it cares not who you are or what you think , it will just happen .
in the mean time load up with popcorn and watch the show…..
Forbin
rockman on Fri, 27th Dec 2013 2:49 pm
Bill – Don’t take this as though I’m correcting you. It’s just the geonerd in me that must speak out. The world can talk about “conventional” and ‘unconventional” oil as it wishes. But in the oil patch they do not exist. But it’s easy to see how the confusion has come about. For us there are conventional and unconventional “reservoirs”. A reservoir with intergranular porosity (pore spaces filled with hydrocarbons existing between the grains), like a sandstone rock or limestone reef, would be considered conventional. A fractured reservoir, be it shale, sandstone or limestone, would be considered unconventional if it produces primarily from fractures. Even for us it isn’t a formal definition but just a convention developed over the years.
But this is where the confusion comes in between our two groups: the DW GOM oil fields are as conventional reservoirs as the come for the oil patch. For the rest of the public they may seem “extreme” or “exotic” but they aren’t really unconventional. If porous sandstone or limestone reservoirs are discovered in the Arctic they’ll also be classified by us as conventional.
Again, just a distinction for us rockheads to concern ourselves over.
mike on Fri, 27th Dec 2013 3:34 pm
Rockman – can you tell me precisely how cruce is stored in shale. I can understand porous sandstones/chalky limestones acting like sponges retaining large amounts of oil easi8ly enough, but shales and clays? You talk of fractures in the shale as being the locations where the oil is stored. These fractures – are they faultlines, joints, bedding planes. I had always understood the clays/shales consisted of such small platelike crystals sotightly bonded together that there would surely have been no space between them for accomodating oil. And I assumed the clays are so plastic and easily deformed that they tend not to develop joints and faults. My guess is that the contrast between gettinbg oil from “conventional” oil sources, and extracting oil from shgales, is like comparing squeezing the juice from an orange and trying to get the liquids from an almond or brazil nut. So perhaps you could give us some idea on all this. I’d Be grateful.
rockman on Fri, 27th Dec 2013 5:18 pm
Mike – A shale can actually have a relatively high porosity. Porosity being that portion of the rock not made of rock. But those pores in a shale are extremely tiny which explains why the permeability (the ability for fluids to move thru those pores) can be extremely low. So low that the ability to flow oil/NG thru those pores is meaningless from a human time scale. So when you see number estimating how much oil/NG exists in the rock you need to remember that much of that volume can’t physically be produced…ever. So your nut analogy is right on.
The target is the oil/NG contained in the fractures. A fracture is simply a discontinuity, a plane, I the rock. A crack may be an easier way to visualize a fracture. Bedding planes also exist but they’ll essentially be horizontal and thus subject to huge vertical weight forcing them shut. A fracture OTOH may be at something like 60 degrees to the vertical. Which explains why horizontal well bores are critical to the shale plays. A vertical hole might only hit one or two near vertical fractures since the well bore is nearly parallel to the fractures. But a horizontal well bore would run at 90 degrees to the fracture system and could cut dozens of fractures. And the longer the lateral the more fractures penetrated. Which is why wells drilled in poorer areas tend to be drilled longer. Frac jobs accomplish two things. They open up the penetrated fracs and make them more permeable. A frac is essentially another induced permeable plane that might extend out an intersect fractures not penetrated by a lateral. At Devon I once analyzed a core from a hz Haynesville Shale well. There was no permeability at all in that core…zero production potential. But after frac’ng it flowed 6 million cubic feet of NG per day. The frac obviously reached out and connected with something productive.
All of which explains the nature of shale wells. Fractures have the highest permeability found in nature…often several magnitudes greater than a conventional sandstone reservoir. Thus those high flow rates. But even in a shale with a high porosity the volume of porosity contained in the fractures will be just a small percentage. Thus a very high flow rate draining a relatively small tank. And that is the definition of a very high decline rate. Mapping and predicting fracture concentrations (and thus productivity) is more art than science. Which explains the difficulty of projecting recovery in a trend. Two wells might be drilled right next to each other and one might produce many times what the other does because it cut many more fractures.
They say you can’t get blood out of a turnip. That’s true. But you can get turnip juice out of one. But that will be a lot more difficult than getting juice out of an orange. Some areas of a shale play are like an orange…some more like a turnip.
Dave Thompson on Fri, 27th Dec 2013 7:21 pm
Conventional oil is the kind that we got to first, because it was easier to get and refine. Non-conventional is the kind that we are going for now that the above kind has mostly been used up. This is my simple idea of what I know as a layperson on the subject.
mike on Fri, 27th Dec 2013 7:30 pm
Thanks, Rockman. Here where I live in the English Midlands, the lodcal surgace rock is a Jurassic clay, very plastic, little compressed, and quite lacking any lthification planes i.e. crystals all in random directions. It has a high carbon content making it self firing for the local brick industry. I had imagined, when it was announced there would be local exploratory drilling mfor gas to be exploited by fracking, that itwould be from this clay that the hopes were for gas exploitation. However, much deeper is a basement complex of palaeolithic (cambrian?)shales, more compressed, faulted and folded, and highly lithified. Fromn what you say, this would seem a more promising source for gas, and presumably, it is from this that they hope to get gas. Only thing is, surely hydrocarbons originate from organic material, and I would have imagined that there was little organic material being deposited in the Cambrian????? Whatever the case, we are hearing reports, backed by the British Geological Survey no less, of vast resources of gas around the country, enough to last the country a century or more, and releasing us from dependence on Russian gas, and which the government is eager to enbcourage exploitation.. My suspicion is that there will be a lot of very disaappointed people over here when they are confronted by the cost of exploitation and the meagreness of the resource.
J-Gav on Fri, 27th Dec 2013 8:54 pm
I think you’re right on that score, Mike. And I believe Poland will have the same experience: high costs, irreparable environmental damage and a ‘bonanza’ of relatively short duration.
shortonoil on Sat, 28th Dec 2013 2:52 pm
“Will Russia frack for oil?”
I doubt it, mainly because the Russian are not stupid people. As a matter of fact they are very intelligent people. Any Russian with a beat up, rag eared old thermodynamics text can look up a simple equation that can be found in anyone of them: s2 – s1 = ln(T2/T1). That’s all you have to know to answer that question. Only Americans seem interested in chasing Unicorns, sprinkling Fair Dust, and Wishing Upon a Star. The Russian are intelligent enough to realize that the MSM just don’t have the connections to put a hold on the 2’nd Law. American’s haven’t got that smart yet!
Arthur on Sat, 28th Dec 2013 6:08 pm
It is likely Russia will frack, since fossil fuel is their most important source of revenue. And environmental sensitivity hardly exists in Russia.
rockman on Sat, 28th Dec 2013 6:25 pm
Dave – And that’s fine for the lay person. It emphasizes the fact that higher prices allow us to chase those trends. Mine was just a technical point. Those high oil prices allow us to chase that “non-conventional” oil found in those Deep Water conventional reservoirs.
rockman on Sat, 28th Dec 2013 6:36 pm
Mike – One more tidbit about fracture production from shale: our great Eagle Ford Shale formation isn’t the target for our companies…only a portion of it. Early on we found that the brittle portion of the reservoir needed to be targeted to make the economics work. The brittle section stands out like a sore thumb on the logs: the high calcite content, which causes the brittleness, is obvious. Thus they geosteer the wells accordingly. And that brittle section isn’t well developed everywhere in the trend.
Just another reason to not be too dogmatic about how much production any shale will or won’t produce until a lot of wells are drilled, tested and ultimately depleted. From what I know about your shales either side of the debate could be correct. Only time and a lot of holes will reveal the truth.