Unconventionals: Educating the Future

After spending many years in various technical and leadership assignments at Shell, Dr. Azra Tutuncu, Director of Unconventional Gas & Oil Institute and Campbell Chair at the Colorado School of Mines, figured out a great way to continue in and pass on unconventional oil and gas know-how to future generations.

In an exclusive interview with Natural Gas Europe at the Unconventional Gas Forum in Barcelona, Spain, Prof. Tutuncu recalled that unconventionals were on top of her priority research list as most of her last few assignments at Shell were in oil shale formations of Colorado and heavy oil carbonates, sands and gas shale reservoirs in Canada and the US, respectively.

“Most oil companies have propagated their interests towards unconventional in recent years,” she explained. “In fact, by 2035, 50% of the US natural gas production will come from unconventional resources.

“So this effort is significant in the US, there is going to be a need for a lot of technical expertise in the unconventionals area.”

The curriculum at the Unconventional Gas & Oil Institute at Mines, where she is Director, could help a new generation of unconventional professionals for the industry, she said.

Prof. Tutuncu explained: “Focusing on research in the academic environment has several benefits — we will provide undergraduate and graduate students with specialized skills in unconventionals while also helping industry and government by educating the experts they will need in their research and operations. These experts will be able to contribute out of the box, unique solutions for handling significant problems such as reduction of water use or minimizing the use of chemicals. This will help release part of the public’s very valid concerns regarding groundwater and surface water contamination and air pollution.”

She reported that the Institute had a general curriculum for industry colleagues that mostly covered conventionals. Professor Tutuncu said she was teaching new courses on Unconventional Resource Geomechanics and Reservoir Geomechanics for both graduate and undergraduate students.

“In addition, we are the first university that teaches shale reservoir engineering, coupling the geomechanics with fluid flow and reservoir simulation work. Almost every member of the faculty is involved in the Unconventional Natural Gas and Oil Institute training programs,” she reported.

Because the program was recently announced with ExxonMobil and GE Oil and Gas, Tutuncu said the Institute was designing a very special program for regulators and policy makers. “We expect to have training classes about twice a year that not only emphasize unconventionals but also overall training for petroleum engineering: how a well is drilled; how a well is stimulated (regardless if they are conventional or unconventional reservoirs) and the difference between conventional and unconventional.

“Most regulators don’t have degrees in petroleum engineering, so they may not appreciate the amount of work, or the science and engineering that goes into that process,” she continued.

“By showing regulators what an engineer does and how the process is done, they will have necessary background information and will be equipped with the proper tools. That’s our ultimate goal: to train them in basic engineering and geoscience knowledge so that they can do their job.”

Prof. Tutuncu explained that shale reservoirs were completely different than conventional: “They require special ways of drilling, field development, completions, and stimulation efforts which require special research capabilities. That’s why I’ve taken my research initiative on unconventionals at Colorado School of Mines.”

She offered her assessment of the unconventional gas technology transfer from North America to Europe.

“Everywhere in the world is similar. In the past in the petroleum industry, like everything else, from the induction of the idea to implementing that specific technique in the field with a common methodology as a general technique, takes about 25-30 years. But with unconventionals we are seeing even faster development, because it requires huge investments and there is a lot of population involved because of the greater public concerns and the forthcoming government restrictions, the newer technology transfer into the oil field is faster these days.

“In fact, in the last decade we have seen significant transfer of technology – almost daily. The presence of internet communication – real time communication – makes technology transfer into the field much faster than what we have experienced in the past.”

She said that a 30-year period was being reduced to 10 years or less and could be pared down to a year or so. “As soon as we feel comfortable something will happen, it’s tried out in the field and if it works then it is spread across the world. The world is full of unconventional resources and the more we can make it happen in every country, the greater energy independence will be in each one of them. Energy prices will go down locally and everyone will benefit from that. Every country can get an economic boost if there is a low price for energy and the entire population can benefit.”

But should anything be put higher on the agenda for developing unconventionals in Europe?

“In the US most service companies offer their equipment services locally,” explained Prof. Tutuncu. “If you look at the number of rigs available, the number of hydraulic fracturing trucks available, the equipment shortage can be felt here in Europe, because wide scale exploration has not been conducted in the past. The limited resources and equipment availability make European operations much more expensive. It’s already expensive even in the US, and the transport of equipment here and the time it takes makes it more expensive and less applicable in Europe. So the service companies should be able to establish bigger equipment storage and reserves here in Europe and employ them to other continents via the US and Europe. I think this could reduce the costs and make it more feasible.”

Of course, she explained, because regulations were stricter in Europe and public opinion had a greater sway, there probably was a mandate for only limited equipment storage.

“It’s very closed circle: the less equipment you have, the more restrictions and the higher prices, the less feasible it is. Having more service company capability with lower rates in Europe could make it possible for smaller independents to be able to take over. They initiated the entire unconventional effort in the US, not the major oil companies,” she recalled.

“In the US, you see companies like EOG or Chesapeake which are small independent producers – they made it possible. Major oil companies follow them or take them over and bring the expertise as well as acreage rights. I anticipate that a similar trend will take place in Europe, but service companies need to be able to help them bring the products here at a more affordable rate so they can create the boom here. Then major O&G companies can step in and almost duplicate a similar trend as in the US.”

Now that the glut of natural gas from unconventional sources had driven explorers towards liquids-rich plays in the US, Professor Tutuncu said she believed that more consideration was being taken as to whether or not it was worth it to go for shale gas.

“Should we look for more liquid-rich trends and forget about gas? Or do we pursue that and continue progress with gas? I think simultaneously pursuing oil and gas together can benefit even more, but some companies are not achieving high enough revenues. They need to build up their portfolios enough to be able to create high enough gas rates to recover their costs, so it’s a bit discouraging for small independents because they can’t survive with those low gas prices.”

Having a higher gas price would also be beneficial to Europe, she added.