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Hugoton Royalty Trust Message Board

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  • ousaouparis ousaouparis Aug 18, 2010 4:11 AM Flag

    shale NG trust

    Lisa, my investigation of shale NG is as fallow:
    The extraction of NG is done by drilling in the shale gas formation horizontally. The Horizontal production pipe is made of 2 pipes which are perforated. While in the drilling configuration the perforations are not lined up. Once the depth and length of the production pipe is set, balls are lowered from the surface that slide the inner pipe perforations to line up with the outer pipe perforations. At that time NG can flow to the surface. The shale gas is locked in the shale formation. Water under high pressure is used to unlock the shale gas. Therefore some wells are used to inject water and others to produce shale gas.
    By design the shale gas must be unlocked, water pressure used as a limited efficiency. First, water is used in large quantity and must be treated on the surface for discharge in an environmental friendly way. The shale gas wells production life is very much shorter than standard NG wells, such as the Texas or New Mexico.
    I know that some NG gas reservoir can produce for years, 15, 20 years of more. The Qatar NG field is one, and the Algerian gas fields are the other. These NG field do not need more new wells every so often. Injection of water is introduced and keep the reservoir under pressure, the reservoir is made of sand or material equivalent. Shale gas will require many more wells as the injection of existing wells cannot unlock the gas locked in the shale formation. Spacing of wells must be optimized for efficiency.
    This mean shale gas will be more expensive to produce than standard gas. Yes the US has 100 years of shale gas, but its production is a new technology that does not have a track record yet. Can units at $19 or $22 produce a good royalty, compared to standard gas, need to be shown. My understanding is that the water usage seeping and polluting the natural potable water is a concern. Also the returned water disposal is another problem. I understand that water treatment plants are in shortage near the drilling area. Water is trucked to exiting water treatment plant, adding to the production cost. Yes shale gas is interesting but cautious must take place.

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