Oil Shale's Future: Resources Aplenty, But Challenges Loom

“We’re in the first inning of a nine-inning game on the shale revolution in the United States,” Lance said, adding that technology can “improve the outlook over the years. This is a layer that is going to last for some time.”

Lance’s comments were driven by the fact that shale formations have quickly made the U.S. a major player in the natural gas sector in recent years.

More recently, Apache Corp.’s Chairman and Chief Executive Officer Steve Farris, in the annual Energy of Energy Conference held by Gardere Wynne Sewell LLP, told attendees that while there was still a significant amount of unrecovered fossil fuel in shale formations, there were a number of challenges confronting the industry that must be overcome if production from unconventional methods is to remain a major contributor of oil and gas for the United States.

Challenges in Maintaining Unconventional Oil Production

The issue of capital comes up quickly in any issue of the challenges facing the oil and gas industry. To maintain growth rates seen in production in recent years, the industry will have to have to be more efficient with capital. Simply put, the industry needs to get more bang for the buck just to keep production values in shale formations at existing levels, which are known for having steep decline rates. And for production to grow, considerably more capital will be required, Farris said. The costs per well using unconventional methods must be pushed lower, and production and reserves must be maximized.

Also, new shale formations will need to be discovered. Nearly 70 percent of oil production retrieved using unconventional methods is from just two shale formations, the Eagle Ford in South Texas – which contributed 47 percent of unconventional oil production in the United States in 2013 – and the Bakken in North Dakota, according to Apache.

Source: Apache Corp.