FEATURE STORY
Shale
Gas
Boom
Set to Expand
The exploration of shale gas could be the answer to
many prayers. It could also be boon to the satellite
industry, as oil companies will need cutting edge
communications and monitoring solutions in
these drilling environments.
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FEATURE STORY
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The shale gas revolution has seen the United
States turn around its bleak energy position
from a massive importer to a future of selfsufficiency within the next two decades. This
revolution was achieved on the back of the right
set of conditions above ground, enabling the
development of the resources below ground.
And the boom is set to continue. North America
is forecasted to dominate the field for years
to come before other nations finally start to
produce shale gas and the emerging shale oil
resources – also known as tight oil.
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FEATURE STORY
Customers are demanding a seamless transition of
communications systems when making the move
from exploration drilling to production activity.
This international growth will also offer oppor tunities to transfer
knowledge and technology developed in the United States to foreign markets. Many of the companies expanding in Nor th Ameri ca and globally require satellite ser vices to deliver masses of data
to central headquar ters from where decisions can be made. Satellite is needed to streamline drilling operations and speed up decision-making, which helps to control costs and improve efficiency.
State of Market
“Shale has been a strong growth segment in the whole oil and gas industry. It constitutes a paradigm shift in the industry,” says Dennis Smith,
director of corporate development at Nabors Drilling. The use of shale
drilling techniques has now also been adapted for shale oil plays; both
reserves will hold potential for operators, drillers and contractors alike,
says Smith.
Companies such as Nabors can benefit from the experience they have
gained in the shale sector and be part of the transfer of techniques and
technology to other regions of the world. Since this resource is found in
all geological basins around the planet, if the shale layers contain oil and
gas – given the right geology – there is potential for commercial production anywhere with the appropriate above-ground conditions.
Don Happel, Shell’s field telecommunications manager, says that the
shale sector remains important to his company, as does communication
between multiple sites. “The shale sector continues to grow presently.
I would of course expect there would be demands across the full spec60 MARCH 2013
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FEATURE STORY
trum of oil and gas field services,” Happel notes about Shell’s needs in
the market. “Both high and low resolution video transmission continues
to be one of our growth demands. Enterprise-wide universal collaboration tools are particularly seen as having considerable growth potential
in our networks.”
For Keith Johnson, president of Global Energy Solutions, Harris CapRock, shale is “definitely a growth area” for the company; “and we’ve got
quite a few things underway,” he says. Johnson sees this growth as an
opportunity to expand geographically in North America and beyond. In fact,
Harris CapRock has already recently expanded into domestic markets in
South Texas, North Dakota and parts of Pennsylvania. This growth in the
North American shale sector has seen the company move much more into
onshore drilling from a previous position of mostly offshore work.
As Harris CapRock establishes its shale services, it is also looking to
expand into new markets. “There is a lot going into setting up in Brazil,”
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FEATURE STORY
Johnson says. The company is hoping to apply its products and services
directly to Brazilian plays, which are in remote locations. For this, bases
will need to be set up to maximize the offering and control costs of constantly transporting employees and equipment to and from less remote
areas. In many places, this will be facilitated by satellite communications.
Real-Time Drilling
The vast number of wells that are needed to be drilled for shale plays
means real-time drilling centers are an essential tool for companies, as
they allow operators to gather the high volume of data produced from
many locations around the world in one place. From this information hub,
the data can be evaluated by a team of specialists who can decide on the
best plan of action for numerous wells without the need for travel – this
saves both time and money and makes drilling operations more efficient
and cost effective.
“Real-time drilling telemetry is assumed to be a standard application at all
of our drilling locations these days. The back-office management and accessibility of collected data has grown exponentially as well,” says Happel.
Bandwidth Needs
Johnson says that shale customers, like many others, want more bandwidth
for turnkey requirements, such as video, which he believes is a growing
need for onshore shale bases. Video use will increase due to safety
requirements, such as spills and leaks monitoring, cameras on drilling
floors and the growing demand for video monitoring of instruments and
gauges at bases and drilling floors.
Johnson notes that the gauge monitoring niche market could continue to
grow significantly. Harris CapRock is looking at ways to use bandwidth more
efficiently such as automation and enhancing video services. “It all depends on
the customer, but the target of between 15 percent and 20 percent in increased
efficiency could be achieved if we use applications better,” says Johnson.
VSAT Challenges
“The inherent delays in geosynchronous satellite communications are a
challenge for interactive applications, in addition to the high cost.” Happel
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says. “I have seen favorable price differentials in bands, such as Ka- and
C-bands, which can provide higher bandwidths as an alternative to the
already congested Ku band.”
For Johnson, “it comes down to the continuing need for increased
bandwidth at a reasonable price.” He adds that usually satellite bandwidth
costs more onshore than other sources. While satellite can be the only
choice in many cases, the growing use of fiber optic cables means
that price control must remain a strong focus for satellite suppliers.
LTE Competition
Harris CapRock now provides an auto roaming LTE offering to its customers. The system works by automatically using LTE when the coverage exists and operating on satellite when LTE is not available. Until
recently most land drilling locations were accessed by satellite only,
which is more expensive than LTE. The option of automatically switching to LTE once it is detected can
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Customers are demanding a
seamless transition of commuDecimator D3
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Digital Spectrum Analyzer
the move from exploration drilling to production activity. While
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width demands and sometimes a
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But given that many shale drilling
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FEATURE STORY
and production sites are often remote, it is likely that in a variety of terrains
satellite will continue to be the default bandwidth supplier. This will be
true for the United States in the coming years and also many international
plays that are forecasted to start developing reserves around 2020 and
beyond. For example, China and Russia cover vast areas with a variety of
remote locations offering many different hostile environments in a diverse
range of topographies. This can provide challenges to communication
and the satellite industry comes into play to provide the bandwidth that
is required to cope with the large volume of data that needs to be sent
to from these locations.
“All of our rigs around the world have satellite capabilities and offer
real-time monitoring of equipment and downhole parameters,” says
Smith. He notes that around the clock monitoring of all equipment and
activity on the drilling floor, including downhole conditions, is vital in
today’s industry.
Nabors uses a great deal of video for its monitoring and requires a
lot of bandwidth, with its needs set to grow. Smith says that the move
to one centralized hub is commonplace now. Whereas it used to be the
telephone that operators relied upon, now it is the computer and video
screen, with the use of video forecast to increase, as it is the best way
to improve efficiency and provide security and safety services. He says
that the main technical challenges to the shale drilling sector right now
are reservoir evaluation and completion tools, which are used to finish
the well and ensure it achieves optimum production rates. The satellite industry can help with these challenges by providing enough bandwidth to transfer data that can be used to improve tools and techniques.
Importance
Christof Rühl, group chief economist at BP, said during a presentation of
the company’s Energy Outlook 2030 in London in January, that shale gas,
as well as the upcoming tight oil which is found in similar places, will be
the resources that make North America energy independent by 2030.
He said the shale gas revolution in the United States came about because
of “the never ending story of finding new technologies and new supplies,
which were not accessible before.” Satellite communications have been
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essential in fuelling this boom and will help to maintain it too.
“Production increases will more or less remain concentrated in North
America, even though the resource base is global. Why is it concentrated in North America? Not because the resources are concentrated
there but because the above ground conditions in North America are
right to develop new technologies and to produce these resources,”
Rühl says. “It is competition; it is a place which has free entry. Everybody can go and invest there, and that breeds competition, which in
turn breeds those technologies which gave us shale gas and now gives
us tight oil.”
The United States also has a vast oil field service market that supplies
operators with rigs, tools, and services that enable drilling to continue
at the rates required. For instance, the United States has around 1,800
land rigs and drilled approximately 10,000 shale wells in 2012 alone.
International Growth
Rühl said the next
countries most likely
to join the boom in
shale gas and tight oil
are China and Russia,
although 73 percent
of shale production in
2030 is still expected
to come from the United States.
Russia and China
have strong oil service
sectors that can provide
the rigs needed to drill
the vast number of wells
needed to kick-star t
their shale industries.
Russia is expected to
be producing around
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1.5 million barrels per day of tight oil by 2030, with China set to achieve
a rate of around 500,000 barrels per day.
According to BP’s report, through 2020, the United States will see
supply of tight oil grow by approximately 4 percent a year and tail off
between 2020 and 2030 to nearer 1 percent as other countries move
into the sector during this decade. Additionally, shale gas supplies are
expected to meet 37 percent of the world’s growth in gas demand and
account for 16 percent of world gas and 53 percent of U.S. gas production by 2030.
The next two countries tipped to follow the shale path are Canada and Mexico – both close to the United States and a good fit for companies to transfer their services directly to these plays. Europe and the rest of Eurasia are
forecast to be the next areas to build their shale gas and tight oil markets.
The next two countries tipped to follow the shale
path are Canada and Mexico – both close to the
United States and a good fit for companies to
transfer their services directly to these plays.
Fracking
In the United Kingdom, one company is ahead of the curve and looking
to start production of shale gas within two years. In December 2012,
the U.K. government gave Cuadrilla Resources the green light to resume
fracking in Lancashire, northwest England, following a suspension of
operations in 2011 after minor tremors were caused by early fracking
work undertaken by the operator.
“Currently, Cuadrilla is planning to conduct test drilling on a couple of
wells in 2013 in the Lancashire area,” says Cuadrilla spokesman Andy
Holdsworth. “Any test drilling is unlikely to occur until the middle of this
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year. Ideally, we’d like to start commercial extraction of shale gas in Lancashire by 2015. However, there’s a lot of work to do beforehand.”
The challenges of fracking in a new play will mean gaining data and
learning quickly from experiences – just as happened in the United
States. “Shale gas represents a promising new potential energy resource
for the United Kingdom,” says the U.K.’s Energy and Climate Change
Secretary Edward Davey. “It could contribute significantly to our energy
security, reducing our reliance on imported gas.”
On the back of its progress in the U.K. shale market, Cuadrilla has been
reported to be in talks with British utility Centrica to sell a significant
stake of its equity to the big hitter.
However, some European nations remain unconvinced about fracking.
France and Bulgaria, which hold some of the continent’s largest shale gas
reserves, have total bans on fracking. This could mean that Europe as
a whole could be slower to join the shale revolution than other regions.
The Future is Bright
The world remains reliant on oil and gas to fuel economic growth. Up
until recently forecasts over the last decade or so were of dwindling
global supplies, causing great concerns for many countries. While
emerging economies will still require huge energy consumption and
therefore costly imports, the good news is that the projected growth in
world energy supplies, offered in no small part by shale gas and tight
oil, is expected to meet this demand up until 2030 and beyond.
Therefore, the growth of the shale industry will not only remain strong,
it will continue to grow in and beyond the United States. This will create
a larger global market for the transfer of data around the world that will
enable drilling bases, drilling decks, real-time drilling room and headquarters to remain in contact at all times.
Satellite communications will
play a significant role in moving
Steven Hamlen has
this data to and from customers,
covered the international oil and
with improved efficiency as the key
gas industry for 15 years.
to offering increased broadband at
competitive prices.
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