U.S. ‘over-fracked and over-drilled,’ Shell technology official says – by Yadullah Hussain (Financial Post/Vancouver Sun – October 18, 2013)

http://www.vancouversun.com/index.html

Hype ‘Dangerous’

The United States’ oil and gas industry has “over-fracked and over-drilled”, according to Matthias Bichsel, projects and technology director at Royal Dutch Shell Plc.

“The reservoirs don’t need that many wells. The reservoirs don’t need that many stages of fracks, because not all the pieces of the rocks are as good,” Mr. Bichsel said in a telephone interview from Vancouver last week, where he was speaking at a company event.

The United States is on course to become the world’s largest oil supplier, according to PIRA Energy Group, a New York-based energy consultancy. “The U.S. shale liquids growth of 3.2 million barrels per day over the last four years has been nearly unparalleled in the history of world oil; only Saudi Arabia in 1970-74 raised its production faster,” PIRA said in a statement.

But it has not translated into a boost in profits of all companies, especially as natural gas prices have slid amid a production surge. Shell came late to the U.S. shale boom and has been left disappointed by the performance of its Eagle Ford shale assets. The company recently announced that it’s selling its 106,000 net acres in Dimmit, LaSalle and Webb counties as they did not fit its “global targets for materiality and scale.”

While Mr. Bichsel does not believe the U.S. shale gas is overhyped, he does think that not all fields are created equal.

“We only talk about the Bakken, Eagle Ford, and the Permian in West Texas, and the Marcellus – we never talk about the basins that have not worked,” said Mr. Bichsel, a geologist by training. “We have some areas that are simply not as good as others.”

In Wyoming and Utah, for instance, the industry could not get the Green River basin to really work, Mr. Bichsel said in a speech this year.

“And I’m afraid that some countries may be setting themselves up for dashed expectations. “Take Poland, for instance, where a number of operators have announced that they’re pulling out.”

The shale industry is evoking either over-optimism or excessive negativity, which is not helping the industry, Mr. Bichsel said.

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