Formation, Extraction and Transportation of Shale Oil - Assignment Example

Formation, Extraction and Transportation of Shale Oil Introduction Cuadrilla Resources Ltd is a drilling company operating in Staffordshire, United Kingdom (UK). The company is founded in the year 2007. It is a privately owned company operating with the purpose of producing as well as exploring natural resources. The management team of Cuadrilla has been playing a leading role in hydraulic as well as drilling operations in over 3,000 oil wells along with natural gas on a global context. Presently, the company has planned to function as a model company in the UK with the aim of exploring unconventional resources. The company is also identified to conduct business operations in socially responsible manner by placing due concern towards environment protection, safety as well as community welfare (Cuadrilla 2014). The UK is seemed to be in infancy stage in the field of exploration of shale natural gas. Shale natural gas exploration operation is expected to assist the country in enhancing self-sufficiency in the energy sector. In addition, shale gas exploration operation is anticipated to benefit the economy by securing investment as well as jobs within the country. In the UK, Cuadrilla has been operating as an important company in relation to exploration and recovery of shale natural gas. The company has been operating in different drilling sites that include Lancashire and Bowland among others in the UK. The working procedures of the company have been regulated by various agencies that include ‘the Department for Energy and Climate Change’ (DECC), ‘the Health and Safety Executive’, ‘the Environment Agency’ and the local authority. In the UK, the company employs around 70 staff comprising directly employed and contracted employees. It is a registered company and funded by two major investors which include Riverstone LLC and AJ Lucas (Cuadrilla 2014). General Principles and Processes of Oil and Gas Formation and Extraction Shale gas is identified as natural gas of unconventional sources, which is extracted from the formations of shale rock. In the UK, oil and gas industry has used different exploration along with extraction techniques which include hydraulic fracture stimulation as well as directional drilling among others. Oil and gas industry is required to comply with health as well as safety provisions with the aim of ascertaining that drilling operations in relation to shale gas are conducted in an appropriate manner with minimum impact to environment and the local community. In this regard, different principles and regulatory provisions should be followed with the aim of ensuring that drilling operations are performed with adequate health as well as safety measures (Crown 2013). In the UK, DECC is entitled with the responsibility of ensuring that exploration as well as development activity engaged with the operations of exploiting energy resources should be safe. In this respect, operators associated with exploration as well as producing operations of shale gas are required to bid for license. Additionally, the operators should obtain planning permission and landowner permission in extraction projects, which require an assessment on environmental impact. Operators are also needed to acquire environmental permits from concerned authorities such as ‘the Environmental Agency’, ‘the Scottish Environment Protection Agency’ and ‘the Natural Resources Wales’. Moreover, the operators should notify 21 days prior the commencement of the drilling operations about the operational plans as along with well design to ‘the Health and Safety Executive’ (Crown 2014). Principle and Process of Shale Gas Extraction Source: (Eawag 2013) The formation as well as extraction operations are based on certain operations in accordance with which drilling operations should be conducted, as shale gas is found in rock strata. The process involved in the extraction of shale gas from the rock strata requires drilling the rock. The rock is needed to be fractured under pressure, which is identified as fracking. Fracking procedure aids in opening the pores through which shale gas is extracted. Contextually, certain procedures are followed based on which initially a vertical borehole of around 1 to 3 km in made. The borehole on reaching near the target formation of around 150 metre above it, a horizontal drilling is commenced. The horizontal drilling is made to a distance exceeding 600 m to 1.2 km. After the fracking process, the drilling process starts. In the drilling process, steel pipes casing is made for lining the borehole. After the successful completion of these processes, the installation procedure of the wellhead in accomplished (Eawag 2013). Fracturing fluids are injected under pressure measuring to around 345 to 690 bar or around 1000 bar with the aim of extracting shale gas. The fracturing fluids comprise 98 per cent of water as well as sand and other chemical additives which include acids constituting around 2 per cent. Fracturing fluids play an important role in the extraction process, as the sand assists in opening the fractured pores in order to release shale gas. Additionally, chemical additives are used for penetrating sand in the fractures and also to minimise bacteria growth in pipes. The fracturing operations are executed for around 8 to 13 times for recovering shale gas completely in the horizontal shaft. The shale gas is extracted from the fracturing liquid, which are collected in the wellhead. After the extraction of the shale gas, the fluid is then stored in surface ponds for treatment (Eawag 2013). The principles and processes of extracting shale gas require drilling operations to be performed systematically. Additionally, the principles and processes associated with shale gas extraction assist in ensuring that shale gas is extracted appropriately and minimum wastage. In this respect, it can be identified that the process of extracting shale gas in segregated into different stages, which are depicted in the picture below. Process of Extracting Shale Gas Source: (AEA 2012) Research on Shale Gas Exploration and Production in Lancashire, UK by Cuadrilla The Geographical Characteristics of the Shale Gas Field and the Procedure of Shale Gas Formation as well as Reservoir Creation In the UK, shale gas is an unconventional resource develops in the similar geological processes based on which conventional gas is produced. Shale gas is produced in low permeability cemented clay or sandstone, which obstruct the shale gas to be collected in reservoir. It has been identified that in the south-east region of the UK, the rocks are younger than that found in the north-west. In the north-west region, the rocks are recognised to be old and respectively, might not possess hydrocarbons. The region possesses adequate terrestrial life capable of developing organic-rich sediments. In the south-east region, the rocks are young to form deposits of gas. Thus, the regions amid the north-west region and the south-east region are ascertained to be appropriate for the extraction as well as production of shale gas. In this regard, Cuadrilla has identified that Lancashire is an appropriate location for extraction of shale gas, as the rock strata primarily composed of mudstones and black shale (Mobbs 2012). Geoseismic Cross Section Source: (DECC 2011) The above geoseismic diagram represents that the rock structure from the area Wytch Farm till western Lancashire Basin. From the diagram, it can be comprehended that shale gas can be majorly extracted from the Bowland Shale Basin located in Lancashire, UK (DECC 2011). Principal Hydrocarbon Provinces in the UK Source: (DECC 2011) The above presented diagram provides important information about the areas in the UK regions where hydrocarbon can be extracted with adequate quantity. Respectively, drilling and well fields are developed in areas, which are identified to provide positive exploration traces in relation to conventional hydrocarbons. In this regard, during the year 2011, Cuadrilla estimated to trace shale gas of around 200 trillion cubic feet in the region of Lancashire. Cuadrilla has acquired license to drill in the Basin of West Lancashire. The company under the license terms is facilitated with the opportunity of ensuring that wells developed in the area will be kept confidential from the completion date of the well to a period of around four years (DECC 2011). Cuadrilla procuring license from the UK government has commenced exploration operations in Bowland Basin located in Lancashire from the period 2008. The license area in relation to shale gas extraction is identified to be around 500 square miles. The western part of Lancashire is mainly covered under the license area of the drilling company named Cuadrilla. In the western part of the drilling site, there are towns which include Preston, Southport and Blackpool. In Elswick, the extraction of shale gas is already in progress since 1996. The shale gas well has been extracting gas from sandstone reservoir used for generating electricity within the area (Regeneris Consulting Ltd 2011). In Lancashire, shale gas is explored to be available in large quantity owing to the fact that the region is rich in organic shale. Shale gas is identified as unconventional reservoirs, as the gas in formed under low permeability rock formation. In this regard, in order to extract shale gas, the reservoir is required to be stimulated by developing a fracture network for adequate extraction as well as production (Green n.d.). Procedure in Extracting Shale Gas by Cuadrilla in Lancashire In Lancashire, Cuadrilla has been making use of certain techniques and procedures to extract shale gas with the aim of effective extraction and production of shale gas. The company has been following sophisticated process for extracting shale gas. Additionally, the company has employed experience and skilled labour as well as it has implemented equipment and specialist suppliers in order to conduct the extraction process successfully (Regeneris Consulting Ltd 2011). The extraction process followed by Cuadrilla in Lancashire is presented hereunder. Process of Extracting Shale Gas in Lancashire Source: (Regeneris Consulting Ltd 2011) Preparing the Pad Initially, the site where the well is to be drilled is termed as well pad. Cuadrilla in order to ensure that shale gas is extracted appropriately has made adequate planning for the preparation of the site. The company has made ample planning as well as investigation for developing better supporting infrastructure. In this regard, the company has ensured that the infrastructure is developed with better facilitates in related to transport facilities, drilling rigs, gas storage as well as processing facilities along with well pad, pipelines for transporting gas to off-site and water storage, and treatment facilities (Regeneris Consulting Ltd 2011). Drilling the Well Bowland Shale Well Schematic Source: (Regeneris Consulting Ltd 2011) Cuadrilla with the aim of extracting shale gas has made vertical drilling. Vertical drilling is made to reach the shale gas rock strata. During the drilling process, casing is done with cement in order to prevent water sources contamination. Additionally, casing process also help in the drilling operation to reach the required depth. Hi-Tech drills are used with the intention of developing angle curve, so that the bore hole is stretched in the shale area. To finish, production casing is done throughout the well length, which assists in preventing release of hydrocarbons and other harmful fluids to seep to the surface (Regeneris Consulting Ltd 2011). Perforation, Fracturing and Testing It is the most important stage in the extraction process of shale gas. The perforation stage commence after 3 to 4 weeks on the completion of the drilling. In the well, perforating gun is dropped through which electrical current is discharged for perforation of cement as well as casing. The next step involves hydraulically fracturing the shale rock formation with the aim of releasing shale gas. The shale rock formation is hydraulically fractured through mixture of sand, chemical additives and water. The mixture is pumped into the bore well as well as casing with high pressure. In this respect, pumping of the mixture through perforation and surrounding rocks aids in developing fracture in the shale. The process is continued for several times until the fractures in the shale rock formation widens the pathways. Widening the pathways assist in ensuring in easy flow shale gas. On the completion of the fracturing process, the well is monitored as well as tested after a period of around 8 weeks. Contextually, the next step involves inserting plugs with the assistance of monitoring the gas levels in relation to estimate the production level. Monitoring process is also conducted with the aim of determining the health as well as the safety levels of employees’ engaged in extraction of shale gas together with environmental protection. After the completion of the testing period, the plugs are unplugged with the intention of ascertaining that the shale gas flows to the surface of the well bore. After the successful completion of the aforementioned processes well head is installed for closing the well outlet till the commencement of the production operations (Regeneris Consulting Ltd 2011). Harvesting the Gas and Ongoing Maintenance The production infrastructure is developed with the aim of ensuring that shale gas is transferred to the energy supply network. In order to supply the gas to the mainstream network, a pipeline is established connecting the well to the ‘UK gas pipeline network’. Additionally, an electricity generation site is developed, so that national grid is connected. In Lancashire, a hybrid solution is installed with the assistance of electricity generation at some drilled wells and in others gas pipelines are used. Subsequently, the extraction as well as production of shale gas is conducted effectively in Lancashire (Regeneris Consulting Ltd 2011). Importance of Shale Gas production in Terms of Volume Contribution and Economic Viability Shale gas extraction as well as production in the UK is identified to be in the explanatory phase but the development in this sector will aid in changing the outlook of the gas-market. The UK with the development of the shale gas industry is anticipated to develop its economic conditions to a large extent. The industry will facilitate in creating better employment opportunities and enhances gas production. In Lancashire, oil gas industry associated with extraction operations can be consider to play important role in creating greater economic impact. In the year 2009, shale oil production in offshore and onshore is recognised to be 1,168,000 tonnes and 61,870,000 tonnes respectively. On the other hand, shale gas production in offshore and onshore is estimated to be around 62,800 million m3 and 93 million m3 respectively. Additionally, increased operations of exploration as well as extraction relating to oil and gas benefitted the economy to efficiently meet the ever increasing demand for energy. The augmented reserves of oil as well as gas assisted in improving the supply chain relating to the availability of services, expertise and products in an extensive manner. Moreover, the report of ‘Mineral Planning Fact Sheet’ in relation to CLG developed by the ‘British Geological Society’ signified that during the year 2008, oil as well as gas production worth to be around £36.2 billion (Regeneris Consulting Ltd 2011). Presently in the year 2013, the oil and gas industry has been an important source of providing employment opportunity in the UK for more than 400 thousand people. The development of the industry has also assisted in improving investment operations in this industry. The industry with adequate reserves of shale oil as well as gas has been able to meet the energy needs of the UK to around one-half per cent of the total energy requirements. The economic conditions of the country have been improved by developing a better balance in relation to payments estimating to around £50 billion. The balance of payments has been boosted for minimised import of oil as well as gas and increased export operations of goods on a global context. Thus, the development of the oil and gas industry in the UK is accountable for developing the economy in different areas that include employment, balance of payments and import as well as export operations among others (Crown 2013). Conclusion It can be comprehended from the foregoing discussion that the development of the oil and gas industry is enhancing with the growth of shale gas sector in the UK. In this regard, the development of shale gas sector has assisted in meeting the enhanced proportion of the energy requirement in the country. The shale gas drilling site in Lancashire, UK has been an important development for extraction as well as production of shale gas. The drilling operations in Lancashire are conducted by Cuadrilla, a renowned drilling company based in UK. The company has been operating drilling with health as well as safety and environment protection measures with the intention of ascertaining that drilling operations are conducted in accordance with UK regulatory measures. The company has obtained required license from mandatory regulatory bodies of the UK that include ‘the Environment Agency’, ‘the Health and Safety Executive’ and the DECC among others. The drilling operations of the company are conducted on the basis of certain process in order to ensure that share gas is extracted as well as produced successfully. Shale gas production has assisted in developing the oil and gas industry immensely, which in return has contributed towards the growth of the UK. UK economy has developed for the growth of different factors that include employment, import as well as export operations and balance of payments. References AEA (2012) Climate Impact of Potential Shale Gas Production in the EU [online] available from [7 June 2014] Crown (2013) Developing Onshore Shale Gas and Oil – Facts about ‘Fracking’ [online] available from [7 June 2014] Crown (2014) Providing Regulation and Licensing of Energy Industries and Infrastructure [online] available from [7 June 2014] Crown (2013) UK Oil and Gas [online] available from [7 June 2014] Cuadrilla (2014) About Us [online] available from < http://www.cuadrillaresources.com/about-us/> [7 June 2014] DECC (2011) The Unconventional Hydrocarbon Resources of Britain’s Onshore Basins - Shale Gas [online] available from [7 June 2014] Eawag (2013) Shale Gas - Information on Hydraulic Fracturing (“Fracking”) [online] available from [7 June 2014] Green, C. (n.d.) Shale Gas Background Note [online] available from [7 June 2014] Mobbs, P. (2012) Shale Gas: An Analysis of UK Policy and Cuadrilla Resources Exploration Activities in Lancashire [online] available from [7 June 2014] Regeneris Consulting Ltd (2011) Economic Impact of Shale Gas Exploration & Production in Lancashire and the UK [online] available from [7 June 2014] Read More