Will Russia Frack For Oil?
Shale oil is poised to go international. It’s already happening in Argentina, Australia and China, but the big prize is in Russia’s Bazhenov shale in Western Siberia.
One of my stranger speaker invitations recently was earlier this month in Moscow to an Adam Smith conference on Russia EOR (enhanced oil recovery), where I found myself in the ironic position of giving a presentation to reassure the audience that fracking,for oil was safe.
Fracking is fracking and there is little or no difference between the methods used for gas or oil. Oil fracking in it’s modern form of horizontal drilling and hydraulic fracturing using less chemicals than before was introduced by Harold Hamm in the North Dakota Bakken about ten years ago and the impact on US oil is now well known. The Bakken turned around the idea that US oil had peaked, and the technology rippled out to the Eagle Ford, Permian and Niobrara formations. One of the nails in the Peak Oil coffin has been the realisation by even the conventional wisdom this year that shale oil can go international. It’s already happening in Argentina, Australia and China, but the big prize is in Russia’s Bazhenov shale in Western Siberia.
Geologists can argue about tight oil or shale oil, in the same way they do about tight gas and shale gas, but just as gas is gas, oil is oil. Similarly, as in the Permian, tight-oil techniques have spread from shale to a wide range of lower-quality conventional plays. It’s for the geologists to decide what to call them, to you and me it simply means there is a lot of oil. This also means that the oil industry is going to be transformed world wide sooner than OPEC might think.
This slide from Russian independent RusPetro gives some context as to the size of of the Bazhenov.
Because I had been at the Spectator Shale Debate the night before, I couldn’t make the first day of the conference, where Thane Gustafson of IHS and Christof Ruehl of BP presented on the oil context, in presentations that I can’t reproduce here. I would have dearly liked to discuss what this all meant for gas. On the second day, there was a fascinating presentation by Professor Lyudmila Plakitkina, Deputy Director at the Energy Research Institute of the Russian Academy of Sciences, which isn’t available either, but it was in Russian anyway.
Professor Plakitkina’s presentation had some fascinating slides which discussed the Bakken in detail. I though it very ironic that 30 years ago, detailed Russian language maps of North Dakota would have highlighted ICBMs, not oil pads. However, she also was the only one who discussed shale gas, and very interestingly pointed out the Western European implications of shale. She specifically mentioned high gas concentrations in Germany, France and especially the UK Bowland Shale.
This is yet another ironic twist: The shale doubters of Europe constantly tell us how European gas is some distant far off topic, but here was a top Russian geologist at the state policy level who understood the implications for Russia completely.