Hydraulic fracturing, employed in combination with directional drilling, has been a game changer for U.S. energy security. The U.S. has already surpassed Saudi Arabia and Russia as the world’s No. 1 producer of natural gas and crude oil.1 This technology holds the promise of fulfilling another goal thought to be unachievable just a few years ago: U.S. energy independence.
This is an American success story. The technology and techniques were invented in the U.S. Because of this success, the U.S. is the undisputed global leader in all things fracking, and hydraulic fracturing (frac) pumps are essential to the process. Without this fundamental link in the supply chain, economic recovery of shale oil and gas would not be possible.
Nature has been kind to North America in the form of numerous tight, unconventional formations containing vast quantities of oil and natural gas. However, nature has been kind to other basins on foreign shores as well.
Unconventional basins are abundantly distributed throughout the Northern Hemisphere and South America. For economic, political and security reasons, the fortunate nations with these basins are increasingly seeking to develop these resources, presenting tremendous new opportunities for American fracking equipment and expertise. However, taking advantage of this unprecedented growth opportunity is not simply a matter of manufacturing equipment and sending it abroad, accompanied by teams of seasoned service operators.
Every country is unique in terms of geology, culture, climate, infrastructure, economy and politics. Tapping into international shale and unconventional oil and gas opportunities successfully requires developing technological solutions to address these unique operational challenges and ensuring that the infrastructure can support the activity. This article explores some examples.
The United Kingdom
With its North Sea assets largely developed, the U.K. is looking toward the next frontier in petroleum resources, and shale gas offers tremendous potential. The Bowland Basin runs across middle England and is estimated to contain 1,300 trillion cubic feet (tcf) of shale gas reserves. Exactly how much of this is technically recoverable remains to be determined. A number of challenges must be overcome before successful development is achieved.
The main political parties in the U.K. recognize shale’s potential and are putting in place the incentives and regulatory framework required for development. Despite support at the national level, local authorities retain the power to block drilling and fracturing operations onshore. Therefore, the industry must work closely with local communities to emphasize the safety record and considerable benefits of shale gas development.
By the year 2032, shale gas development could create a new onshore supply chain in the U.K. worth an estimated $55 billion, creating 64,000 jobs in the process.2 Establishing this new infrastructure—encompassing drilling rigs, hydraulic fracturing and completion equipment and local service bases—represents a significant challenge. However, the experience of developing the North Sea’s resources can be leveraged to establish a similarly successful supply chain and
Another challenge is the shortage of experienced personnel in the oil and gas industry. The industry needs to work with government and academia to improve education in math, science and engineering and to create tailored training programs that will develop the workforce required to exploit shale gas in the U.K. Other areas require attention, including transportation and midstream infrastructure, water resources and treatment, and improved electric grid connections.
The Chinese frac market has existed for about 20 years but has been small in scale and limited to much older technology in vertical wells. Only recently, with outside help, have the Chinese begun horizontal drilling. As of the second quarter 2014, China was estimated to have more than 150 active wells, most in search of natural gas and oil and employing fracking technology.3
The biggest challenge in China and across Southeast Asia is the relative infancy of the technology. Small, private groups and large, government-owned companies alike are still
attempting to fully understand the geology, equipment and technology required for efficient exploration and development of the oil and gas plays available to them. Slowly, they are looking to the West and the Middle East for guidance and support. This additional knowledge improves development in China. The potential is enormous, and—with the right conditions—China stands to reap substantial benefits from its domestic resources.
Specific challenges have been encountered in high mountains with shale or other formations located far deeper than those in North America. Arid areas also have limited water
resources. The movement of equipment and other resources from site to site is problematic because of tight road restrictions and a lack of direct routes to and from potentially productive areas.
With the Chinese deep well market in mind, frac equipment manufacturers are developing a new line of flow equipment rated to handle pressures of up to 20,000 pounds per square inch (psi), far higher than the 8,000 to 12,000 psi typically used in North American operations.
The mountainous terrain in prospective areas poses obstacles for moving and setting up large trains of equipment. To offset this, pressure pumping manufacturers have been working with Chinese original equipment manufacturers to design and build their equipment around high-horsepower trucks to reduce the number of vehicles and still allow for the continuation of high-horsepower frac jobs.
The Middle East & North Africa
Some of the major pressure pumping service companies have been active in Saudi Arabia, Oman, Abu Dhabi, Qatar, Algeria and other countries in the Middle East and North Africa for more than 25 years.
Until recently, frac activity has mainly targeted conventional gas. However, the region has abundant untapped tight gas reserves (an estimated 600 tcf in Saudi Arabia alone), which governments intend to develop, mainly for domestic consumption, to free oil and conventional gas for export.
The major pressure pumping service providers typically transfer frac equipment to the Middle East from other areas to maximize the use of assets. Most frac pump units and auxiliary equipment are manufactured and packaged outside the region.
Saudi Arabia, Oman and Abu Dhabi are planning to develop their unconventional hydrocarbon reserves. Work already under way in Oman has increased demand for flow control products, pump parts and inspection services. In Saudi Arabia, momentum is building behind the development of non-associated gas reserves, with unconventional gas
exploration and development projects expected to be fully established by the end of the decade.
To ensure that frac equipment is readily available to meet this anticipated demand growth, manufacturers have been focusing on establishing more efficient supply chains located closer to field sites and positioning local inventories of spare parts and equipment to mitigate transit delays. Inspection and refurbishment services are similarly being structured to reduce downtime.
The Global Shale Revolution
These three examples show how the American shale revolution is spreading globally, offering hope for energy security, economic development and prosperity to billions of people while creating tremendous opportunity for U.S. companies at the forefront of hydraulic fracturing and horizontal drilling technology. The speed with which this transfer of technology will occur—and it will occur—largely depends on manufacturers’ and service providers’ abilities to adapt to local conditions and challenges.
- "Shale gas supply chain could be worth $55 bn to UK," World Oil website, April 24, 2014.
- BOMCO, a division of the Chinese National Petroleum Company (CNPC)