Unconventional Natural Gas: A Primer on Shale Gas and Coalbed Methane

Years of drilling have depleted the United States and other nations of conventional gas resources. New technologies have allowed oil and natural gas producers to produce unconventional gas from difficult-to-reach, low-permeability rock.

Shale gas and coalbed methane (CBM) are both sources of unconventional natural gas. Shale is a clastic sedimentary rock composed of clay and minerals. Shale gas is an unconventional natural gas that is extracted from shale rock formations through a process called hydraulic fracturing or fracking.

cbmrecoveryImage source: serc.carlton.edu

In this drilling method, horizontal veins are made off a vertical well deep in the earth. The veins are then injected with a fluid mixture of water and additives at an extremely high pressure to hold them open, creating paths for the shale gas to escape and travel to the wellbore where it is collected.

Coal is also a sedimentary rock that naturally occurs in layers or veins called coal beds. Coalbed methane (CBM) is an unconventional natural gas that is extracted from coal beds using a technique similar to that utilized in obtaining shale gas, although slightly more complicated. A well is drilled at 1,000 to 1,500 feet. Highly-pressurized “fracking fluid” is injected into the coal seam to fracture it. The fracking fluid and groundwater is drawn from the well to reduce pressure in a process called “dewatering.” Once pressure is reduced, the methane gas is released and flows to the surface, where it is collected, compressed, and placed into an underground piping system.

The U.S. also produces more shale gas than CBM, which accounts for 7.3 percent of annual total dry gas production in 2011. Shale gas accounted for 47 percent of total dry gas production in 2013.

shutterstock_116006950Image source: shalegas-europe.eu

In addition, despite the differences in extraction, both CBM and shale gas are composed of mostly methane, and both types are suitable for meeting residential, commercial, and industrial energy needs.

Brian Alfaro is the founder of Primera Energy LLC, an oil and natural gas firm headquarted in San Antonio, Texas. Follow this Twitter account for more discussions on the differences between CBM and shale gas.

Combating the Glut: How the Energy Industry Can Survive the Oversupply

The world’s oil supply continues to far outpace demand. While refineries are increasing their output of processed petroleum products, increased production has done little to curb the vast supplies of crude still in storage. Likewise, even consumption generated by the summer driving season has been insufficient to make a dent on supply.

oil-pricesImage source: constructionweekonline.com

Moreover, uncertain events such as the recent loosening of economic sanctions for Iran could further contribute to the global supply of petroleum as Iranian crude supplies fully penetrate the market in the months to come.

If these trends continue, there might be significant repercussions to the economic viability of the energy industry. Oil prices could drop. Prices, however, may eventually rise again as demand picks up. In the meantime, the major and minor players in the oil industry must adapt to the changing conditions, sometimes having to make tough decisions in doing so.

One of these measures is to veer away from investing in high risk, low return projects when prices and production would not justify the costs. Another is to delve into the costs of individual operations to increase their efficiency, which may sufficiently lower expenses to continue production at least at break-even prices.

oil_3089282bImage source: telegraph.co.uk

Finally, the industry can continue to play the waiting game. The consumers are the primary winners of the glut and could hold the key to the industry’s salvation. Motivated by the drop in prices, they begin to slowly but surely create more demand for petroleum products.

Brian Alfaro is the founder and president of Primera Energy, LLC, which owns significant petroleum operations in the Eagle Ford Shale and Barnett Shale in Texas. Visit this website for more on the company and its commitment to investor returns.