Published on Mon, Aug 23, 2010 at 09:38 | Source : Reuters
Updated at Mon, Aug 23, 2010 at 10:52
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Big bets on US oil bonanza after shale gas boom
As the US shale gas revolution enters its third year, companies are making big bets to try to recreate that success with the billions of barrels of oil locked in the sedimentary rock even though geologists doubt the actual production potential.
Still, geologists aren't convinced that these new hot spots can replicate Bakken's success.
"The Niobrara play is very similar to the Bakken in many respects, but it's too early to tell how productive it is going to be," said Vince Matthews, director of Colorado Geological Survey. "I doubt that it's as good or better. We won't even see it as a blip on the decline in production for the whole nation."
The geology of the Eagle Ford and Barnett plays has even less resemblance to Bakken's, although the Texan plays have substantial proven good gas reserves.
"We've only seen sporadic well-testing in the newer plays so we don't know if they'll be successful. The rocks in these formations are different and we're not sure if the technology can be applied wholesale," said Phani Gadde, an analyst at Wood Mackenzie.
There are other variables at play. In Texas, oil production from the shale plays in Eagle Ford and Barnett have been negligible as the infrastructure to bring crude to market has is still in the works.
"There was no build up. These are places where nothing is going on so there weren't pipelines or other infrastructure," Michael Kay, an equities analyst at S&P said. "The companies will start production in the second half of the year and we will see the numbers ramp up next year."
