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Unconventional Research Focus of New Shell Collaboration

The Houston arm of Royal Dutch Shell plc and the University of Texas at Austin (UT) are teaming up to work on new and better ways to extract natural gas and oil from unconventional rock formations.

The Shell-UT Program on Unconventional Resources, funded by a $7.5 million grant from Shell Oil Co., would be managed by the school's Bureau of Economic Geology with participation from UT researchers with expertise in geoscience, engineering, economics, business, and environmental and regulatory affairs.

"The pursuit of unconventional energy resources is a complex, integrated problem that requires uniting the scientific and engineering efforts below ground with above-ground efforts in water, regulation and public awareness," said UT President William Powers.

The five-year program's primary goal is to enhance the understanding of the subsurface characteristics of shales, coalbed methane (CBM) and other tight, complex formations so that energy resources may be extracted more efficiently and economically, as well as in a more environmentally sensitive way, said UT's Scott Tinker, who directs the Bureau of Economic Geology.

"At the end of the day, everyone wants to know what the best answers are," Tinker said. Tinker is to be part of a four-person board, with two members from UT and two from Shell, that would decide how funds are spent.

Unconventional resources accounted for about half of U.S. gas production in 2009 and may account for 75% of domestic output by 2035, according to the Energy Information Administration. However, techniques used to extract gas and oil -- in particular hydraulic fracturing -- have drawn criticism in some quarters because of environmental concerns.

Shell Oil President Marvin Odum called the UT agreement an "important milestone" in the oil major's efforts to bring more energy to market through innovation. The UT partnership also is one of the largest university collaborations ever undertaken by Shell.

At a company meeting last week in New York City Odum noted that Shell had built a large portfolio of tight gas positions in North America that now total around 40 Tcfe of potential resources.

"Actually, we've been producing tight gas in this region since the 1950s in Texas, but we've really built up our portfolio in the last five years or so here," he said. "Today we produce some 1.2 Bcf/d with strong growth potential. We've been pursuing tight gas and coalbed methane opportunities worldwide, and outside of North America our main positions today are in Australia CBM, and in China tight gas, with business development opportunities in these regions and elsewhere.

"Our industry has moved quickly to grow in this low cost and clean form of hydrocarbon energy. The rapid pace of production growth and technology development has contributed to public concerns on the impact all of this could have, in themes like land use, water and air quality. In many areas, the tight gas resources are in areas where there is little history of drilling activities. All of this has been complicated by conflicting reports on the basic science."

The Bureau of Economic Geology works on oil and gas research with dozens of energy companies. Numerous sponsored-research projects are funded by the State of Texas, the U.S. Department of Energy, and individual companies or groups of companies.

"We chose to collaborate with UT because it brings together an extraordinary amount of talent from both organizations that will push the technological envelope in the field of developing even the most challenging hydrocarbons safely and responsibly," said Odum.

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