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Unconventional Gas Plays Making Industry Fun Again, Say Experts

The emerging natural gas resource plays have "made it fun to be in the energy business again in the United States," a long-time energy executive said last week.

Mark Sexton, who now leads Inflection Energy Resources LLC, said it wasn't too long ago that "the majors were selling off to the independents, there was flight out of the Rockies...flight out of North America. There was no good stuff anymore...Now there's coalbed methane, tight gas and the shales." Sexton spoke at the Rocky Mountain Energy Epicenter in Denver, which is cosponsored by the Colorado Oil & Gas Association and the Rocky Mountain Section of the American Association of Petroleum Geologists.

The news has been positive for many emerging plays across the country. But a lot more natural gas may be hiding in pockets yet to be fractured, said William L. Fisher, who chairs the Department of Geological Studies at the University of Texas at Austin. A "fundamental transition" from conventional to unconventional gas evolved in the past decade, and today unconventional gas makes up about 45% of domestic production, he said.

"The U.S. natural gas resource base is large but challenging," Fisher said. "Shales, tight sands, coalbed methane [CBM], and on and on. It's much more difficult to produce and recover, and it's recovered in smaller increments, and it's more sensitive to technological advances. On the other side of it, they [unconventional plays] expand as they go down. If there's more there, we can really run."

Fisher, as others before him have said, pointed to the development of the Barnett Shale in Texas as the reason for the growth in shale gas. But unconventional gas from other sources -- the Pinedale Field, Jonah Field and Piceance Basin -- also pointed explorers toward nonconventional finds.

"The fortunate thing about the resource base is that it's very widespread," Fisher noted. "There are a lot of evolving gas plays that we are just beginning to touch. There are all kinds of situations getting gas from nonconventional sources," and that has led to a redistribution of production across the country. Technological breakthroughs in drilling and completions "have vastly enlarged our geological understanding of resources."

As technology gets better, the "reserve additions are very, very substantial," said Fisher. "We're actually increasing reserves through intensive drilling, which will probably continue. We're more than offsetting conventional declines, which I think is very important...We'll see how much growth is there."

According to government statistics, gas production has fallen along the Gulf Coast and in the Gulf of Mexico, the Midcontinent, the Permian Basin and California, Fisher said. However, in the Powder River Basin in Colorado, the Green River Basin of Wyoming, in North and East Texas and in parts of the Appalachian Basin, gas output is dramatically rising. The San Juan Basin, "a big important area," had been declining, but it too has stabilized.

"Thirty percent of total gas production in the United States is from tight sands," Fisher noted. Shale now is only producing around 6% of total domestic output "at this point" and "we're adding shale play after shale play." Meanwhile, CBM makes up about 11-12% of total gas output, he said. "The production is changing, and it's still unknown what's ahead."

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