Boston College Financial
the united states shale gas revolution By Debashis Das and Tracy To
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he United States is sitting on large oil and natural gas reserves. These reserves have been further increased by the newly discovered Bakken Shale and Utica Shale formations. Coupled with the new technology of horizontal drilling and hydraulic fracturing (also known as “fracking”), this opens up new potential for companies in this industry and for the country. The supply glut has helped push natural gas prices down, which is beneficial for a host of secondary industries including electric power generation utilities, chemical companies, steel companies, etc. The shale revolution in the United States is creating many jobs in places like North Dakota, where, due to the Bakken Shale formation, the unemployment rate is lower than in the rest of the country. This article looks at the different shale regions, how natural gas is extracted from the shale formations, what drives the price of natural gas (i.e., the different aspects of supply and demand), and also the environmental aspects of horizontal drilling.
u.s. shale regions The major oil and gas shale formations in the continental U.S. include the Bakken Shale, Barnett Shale, Eagle Ford
Shale, Haynesville Shale, Marcellus Shale, and Utica Shale formations. The Bakken Shale formation, located in Montana and North Dakota, is estimated to hold 4.3 billion barrels of oil and is the largest oil find in U.S. history. The estimates may grow as more companies drill and find oil in that region. The formation ranges in depth from 4,500 to 7,500 feet, with an average thickness of 22 feet. In 2009, Bakken Shale in North Dakota produced eighty million barrels of oil, making it the fourth largest oil producing state after Texas, California, and Alaska. In Texas, Barnett Shale, the nation’s most developed shale gas play, is estimated to hold 43.4 trillion cubic feet (Tcf) of natural gas and has already produced more than 4.8 Tcf. It stretches across 6,500 square miles, and its natural gas reserves are enough to power all of Texas’s homes for almost 200 years. Also in Texas, the Eagle Ford Shale formation, which did not become productive until 2008, has an estimated 21 Tcf of natural gas and 3.35 billion barrels of oil reserves. This shale formation ranges in depth from 5,700 to around 10,200 feet and covers about 3,000 square miles. Surpassing the Barnett Shale formation, the Haynesville
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