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After attending a couple of conferences recently, and reading through several studies, the thought has crossed my mind—Is it time to come up with a new term for “unconventional resources?” The term seemed perfectly appropriate in days gone by, before the myriad technical advances of the last 10 years made these resources much more accessible. For purposes of this discussion, “unconventional” can refer to the following items—tight gas, CBM, shale gas, shale oil, heavy oil/tar sands, and methane hydrates.
Definitions. According to the dictionary, “unconventional” is defined as “not bound by, or in accordance with, convention” and “being out of the ordinary.” Certainly, before the wave of technical advances hit the industry, exploiting these resources, particlarly tight gas and the shales, was difficult at best (and sometimes not possible at all), and required “unconventional” methods to make headway. Yet, now that we have made these technical advances, and the resulting equipment and methods have made it possible to take what are still difficult tasks and do them “routinely,” the word “unconventional” no longer seems appropriate.
In addition, conventional resources make up only about one-third of global reserves, whereas unconventionals account for the remaining two-thirds. So, in terms of numbers, the conventionals, easy as they may be to exploit, are actually the “exception,” while the unconventionals could be described as the “norm.” And from these descriptions, we could derive the following new terms—“exceptional resources” and “normal resources.” Okay, maybe they’re not perfect, but if anyone out there has better ideas, send them to me.
Game-changing effects. The need to harness these resources while consistently reducing the cost, has jump-started technical innovation within the service/supply sector over the last 10 years. This has been a boon to service/supply companies, creating new wealth and serving as a giant creator of jobs. As World Oil columnist and Contributing Editor David Blackmon noted at our annual ShaleTech Conference last month, “From July 2009 through June 2011, Texas created 49% of all new U.S. jobs.”
The 10 years of innovation that we just experienced are likely to be matched by at least another decade of advancements, according to two speakers at the new Unconventional Resources Technology Conference (URTeC), staged jointly by SPE, AAPG and SEG in Denver last month. Doug Valleau, director of Unconventional Technology at Hess, outlined eight technologies that he believes will make a difference in the future. Among these are fully coupled reservoir simulation, effective stimulated volume, IOR/EOR for nano-perm reservoirs, and nanotechnology applications.
Greg Leveille, the G.M. for Unconventional Resources at ConocoPhillips, had his own list of technologies that will have an impact. Principal among these are “sweet spot identification from minimal data,” “rapid determination of optimal completion design and development plans,” and “data acquisition in horizontal wells during fracing and production.”
The impact of unconventional resource technology gains, as they benefit the country, is staggering. Texas Railroad Commissioner David Porter told the ShaleTech crowd, “We have enough natural gas discoveries in the U.S. to last at least 100 years, maybe 200 years.” Porter noted what many analysts believe, that the U.S. is on track to be the world’s largest oil producer by 2020, “and some say by even 2017. In May, Texas produced 2.5 MMbopd, the state’s highest average in nearly 30 years.” Porter also pointed out that unconventional production gains have improved the U.S. balance of trade greatly.
David Blackmon expanded on the effects of unconventionals on Texas. “In just over two years, Texas oil production has doubled, thanks to the Eagle Ford shale. In mid-2009, Texas produced less than 20% of U.S. total crude. Today, Texas produces 34% of U.S. oil, and 30% of U.S. natural gas.”
Too much time on their hands. Sometimes, a group comes along and does something so unnecessary, that one can only ask, “Why?” So it is with the newly launched Equitable Origin (EO), which describes itself as “the first stakeholder-based, independent social and environmental certification for the oil and gas industry.” By all appearances, this is a group of dilettantes and “do-gooders,” virtually all of whom have no oil and gas experience, who have the temerity to suggest that they can sit in judgment of whether industry operations “are responsible, significantly reduce harm to ecosystems, and create a positive experience for local communities.”
EO’s Technical Committee is “comprised of experts in governance, transparency, human rights, social responsibility, and environmental issues related to the oil and gas sector.” But again, there is a distinct lack of oil and gas experience. To combat that, EO has added Stephen Newton, a former executive with Occidental Petroleum, as its CEO. Yet, EO’s founder and co-president, David Poritz, is a public policy specialist, who claims “extensive knowledge of industry practices gained while living with indigenous communities, and through engaging NGOs and oil and gas companies throughout Latin America for over a decade.”
Meanwhile, EO’s website trumpets that “over 60% of the world’s proven oil reserves are located in emerging economies—countries that lack national standards for responsible production or the incentives to enforce them. This reality reaffirms the need for a global certification system.” Well, now, can’t you just see dictators in these emerging economies ushering the EO people out of their offices at gunpoint, after being told how to run their oil and gas sectors? 
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