HOUSTON — North America may be in the midst of an energy renaissance, but that could be slowed or derailed by several limitations, including nature.
While shale plays and oil sands fields have multiplied North American oil production, a labor shortage, regulations and geology continue to present hurdles for the industry, speakers at the IHS Energy CERAWeek conference said Friday at the Hilton Americas-Houston.
For example, in any given shale play, between 3 percent and 9 percent of the acreage holds the most profitable and productive wells, said Raoul LeBlanc, managing director of onshore oil industry research for IHS.
LeBlanc compared productive underground reserves to nutrient-dense snacks.
“You have PowerBars and popcorn in your pantry,” LeBlanc said. “Right now we’re eating the PowerBars. And at some point, the PowerBars will run out.”
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Since most drilling so far has focused on the best acreage, production growth in some of the hottest plays in the United States, like the Bakken and the Eagle Ford shales, will likely slow, he said.
“At some point we’ll have to go to the second best,” LeBlanc said. “It’s not a catastrophe. It’s not a disaster. It’s just not as good.”
As growth in some plays slows down, however, other emerging plays could pick up steam, LeBlanc said.
He highlighted the Wolfcamp and Bone Spring shale regions as examples of emerging plays that could become prolific producers, depending on oil prices.
“We need a price that will incent us to go get it,” LeBlanc said. “So as long as the price is there, I’m very comfortable about the resource.”
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Although production of oil sands crude from Canada has grown, a shortage of workers threatens to raise costs there, said Diane McQueen, minister of energy for the province of Alberta.
“That’s the challenge that we’re facing in order to keep the costs competitive,” McQueen said.
Finding ways to move oil sands crude to markets continues to be a challenge that Canadians are hoping to address, McQueen said.
The controversial Keystone XL pipeline is part of that effort. If the U.S. government permits Keystone XL to be constructed across the U.S. border, it would allow more Canadian crude to move to U.S. refineries along the Gulf Coast. But Keystone is not the only option that Canadians are hoping to pursue, with plans to move oil to the east and wests coasts in order to reach other markets, McQueen said.
“All of these markets are what we need,” McQueen said. “It’s not one pipeline that we need. we need them all.”
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The potential to export energy products to Asian nations is of particular interest to Canada, making it “really important to get to tide waters to access markets in china in india and throughout Asia, Japan as well,” she said.
Possible federal environmental regulations could slow growth in oil and gas drilling in the United States, particularly if they affect companies’ ability to use modern hydraulic fracturing techniques, said Barry Smitherman, chairman of the Texas Railroad Commission, which regulates oil in the state.
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