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  • From: Tompkins County Relocalization Project <tcrp-news AT lists.ibiblio.org>
  • To: tcrp-news AT lists.ibiblio.org
  • Subject: [tcrp-news] fw: Exxon Shale-Gas Find Looks Big
  • Date: Fri, 10 Jul 2009 09:32:23 -0400

Since the Canadians don't seem to mind tearing up huge expanses of
their country in order to get the fossil fuels out, this
development could augur a significant easing of the post-peak
energy falloff, particularly with regard to nitrogen fertilizer
production. I don't think it changes the mobility picture much,
but it could really help North American food production for a
while and thus aid in effecting a smoother transition to
sustainable agriculture.

A take from the Canadian press can be found at

http://www.theglobeandmail.com/globe-investor/exxon-results-hint-at-bc-gas-bonanza/article1212914/

It will be interesting to see what the peak oil gurus make of
this.

Jon

==================================================================

The Wall Street Journal
BUSINESS
JULY 10, 2009
Exxon Shale-Gas Find Looks Big

Exploration Push in British Columbia's Horn River Basin Produces
Encouraging Results

By RUSSELL GOLD

HOUSTON -- Exxon Mobil Corp. has been scouring the globe for
natural gas locked inside shale formations, and said it thinks it
may have a world-class find in Canada.

In an interview with The Wall Street Journal, Tim Cejka, Exxon's
head of global exploration, said the company has been bullish on
shale-gas exploration since 2003, locating promising gas-bearing
rock formations and snapping up leases on them.

Exxon is most encouraged by the exploration of 250,000 acres it
has leased in the Horn River Basin, in northern British
Columbia. Mr. Cejka said results from the first four wells lead
the company to conclude that each well will produce between 16
million and 18 million cubic feet of gas a day.

That's five times the size of average wells in Texas's Barnett
shale and comparable to big wells in Louisiana's Haynesville
shale, two major shale-gas fields that already have moved the
U.S. natural-gas market from scarcity to abundance.

Though Exxon is better known as the nation's largest oil company,
"We are really interested in shale gas," Mr. Cejka said, detailing
the company's push into the energy-exploration business, which was
once dominated by scrappy independent companies.

Given that the world is awash with natural gas already, the
addition of still more gas from shale fields in Canada and Europe
could further depress prices, especially as industrial demand
continues to stagnate amid the global economic downturn. But Exxon
is taking a longer view.

"The industry is going to have to bring on oil, gas, coal,
nuclear, hydro, wind and solar to meet the world's energy demand,"
Mr. Cejka said. "The economies of the world will come back. Demand
will grow again. We are going to be there for the next 20, 30, 40,
50 years."

Other energy companies also are excited about the Horn River
field. "This may be the best shale play in North America," said
Michael Graham, an executive vice president at EnCana Corp., a
Calgary company that already has a big Horn River
presence. Mr. Graham said EnCana's latest wells are approaching
Exxon's in terms of initial production.

Exxon's Mr. Cejka said that his company also has pieced together
substantial leases in prospective shale-gas formations in Germany,
Hungary and Poland, and is still adding acreage. Tests on two
wells in Hungary, where Exxon and partners hold 400,000 acres, are
expected this year. It will be the first time the shale there has
been tested.

"Depending on how that goes, we'll either be patting ourselves on
the back or walking away," Mr. Cejka said.

The company also plans 10 wells on 750,000 acres it holds in
northern German's Lower Saxony Basin this year to better study the
geology.

Exxon is interested in all these projects because the amount of
gas trapped in shales is enormous. The company estimates there are
one quadrillion cubic feet of shale gas world-wide, equal to about
a decade's worth of global natural-gas demand, though not all of
that is currently recoverable.

Shale gas is one of the "unconventional" gases that are trapped in
dense rocks, rather than in porous rocks that form underground
reservoirs. To reach it, energy companies must crack the rocks
open by injecting them with high-pressure liquids. Improvements
over the past few years in the technology to fracture dense rocks
and drill vertical wells that turn and run horizontally
underground have made it possible to develop unconventional gas.

Before the emergence of the Barnett and other shales, the industry
expected the U.S. to become a big net importer of gas by
2009. Instead, the U.S. faces a glut that has driven natural-gas
prices below $3.50 per million British thermal units, down 39%
this year, and kept imports of liquefied natural gas at anemic
levels.

Earlier this decade, companies such as Devon Energy Corp. and
Chesapeake Energy Corp., both based in Oklahoma City, were among
the first to use the shale-gas extraction technique. Their success
spawned a host of imitators and competition for acreage in
Louisiana, Arkansas, Texas, Pennsylvania and elsewhere.

Rather than compete with these smaller exploration companies,
Exxon began looking for shale formations that were outside the
U.S., but near major energy markets. The strategy set it apart
from its big globe-trotting competitors, which built up
unconventional-gas reserves through acquisition. BP PLC, for
instance, spent $3.65 billion on a pair of deals with
Chesapeake. Royal Dutch Shell PLC spent $6 billion to acquire
Canadian Duvernay Oil Corp. and its acreage in a prospective
unconventional-gas formation.

So far, companies are drilling for shale gas only in North America
and to a lesser extent in eastern Australia, said Rhodri Thomas,
head of consulting firm Wood Mackenzie, in Edinburgh, Scotland.

"Where we've successfully developed these, the volume of the
resource has changed the gas market dramatically," he said. "The
question is: Where else could this happen?"




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