Fossil fuels and the North American energy transformation
Geologists had long known about oil and natural gas resources in North American shale, which is found in more than 30 states, and about the unconventional petroleum deposits in the Canadian oil sands. But these resources were almost impossible to access. The oil and gas found in U.S. shale reservoirs is trapped in tiny pores in layers of shale rock thousands of feet below the earth’s surface. In the Canadian oil sands, the oil (bitumen or crude bitumen), is found immersed in sand, and is so thick and viscous it has to be heated or diluted with water to make it separate from individual grains of sand and become liquid enough to flow. None of these resources, while vast, were commercially viable to produce. However, advances in drilling technology and oil sands processing have now enabled producers to access and retrieve these trapped resources. Today, drilling activity is driven by the combination of two processes used safely for many years — hydraulic fracturing (pioneered in the 1940s) and horizontal drilling (first practically applied in the 1980s), a newer technique that enabled drillers greater access to resource-rich areas. Combining the two processes and technological improvements have increased their economic efficiency and are now enabling producers to access and retrieve these trapped resources.
The earliest work around hydraulic fracturing combined with horizontal drilling took place in the Barnett shale in North Texas and was the effort of one company in particular – Mitchell Energy, owned by George Mitchell, later dubbed “the father of the Barnett.” Mitchell Energy had produced gas from a shallow formation that had first been tapped in the 1950s using traditional oil well methods. But by 1982, production was slowing as the previously easily accessible supply was waning. Operating on the belief that the shale contained abundant gas reserves that were locked into smaller pores of the source rock – in part because drillers had noticed “kicks of gas” while drilling through the formation – Mitchell Energy began experimenting with unconventional production that paired horizontal drilling with hydraulic fracturing.
Traditionally, oil wells were dug vertically to a point directly below the drill site, pipes were inserted to stabilize the well hole (or wellbore), and oil that flowed into the well pipe would naturally rise to the surface or be mechanically pumped out. Horizontal or directional drilling came along later, enabling drillers to direct the drill bit to areas not directly beneath the drilling site, and often to much greater areas of resource-rich rock. Horizontal drilling in conjunction with hydraulic fracturing involves injecting pressurized water and sand into a well to fracture oil and gas-containing rock. The sand (also called proppant) that was pumped into the well holds the fractures open so oil, gas and water can flow from the rock into the wellbore and up to the surface. Pumps are used to extract oil and gas that don't come to the surface naturally.
Early results were mixed, but Mitchell Energy persisted, trying different methods, fine-tuning drilling techniques and investing hundreds of millions of dollars in the process before becoming successful. By 2003, Mitchell’s success in the Barnett shale had become well known, and the combination of horizontal drilling with hydraulic fracturing gained momentum as independent energy companies increasingly applied the winning combination method in oil and gas basins across North America. By 2008, major integrated oil and gas production companies began to embrace the approach, and the North American energy transformation was underway.