New technologies and high
prices have generated sudden surge in oil and gas production in the
US that can easily shake up world’s energy market. A huge rebound
in oil and gas production in the US has given good surprise to the
policymakers and ultimately making the market more dynamic. The surge
in the production is mostly the results of the new capacity of the
producers to extract more oils and gas. However, the revolution in
the production took place first in natural gas and rather recently in
oil.
Oil and gas have mostly
been produced by ‘conventional’ sources. Wells are drilled and
with the help of technologies and pressure mechanism that oil is
extracted out with the help of the pumps.
There are of course other
geological resources available in the US such as tight sand formation
and shale rocks – that contain oil and gas. In these formations,
fuels are trapped and can’t be extracted in the same way as it’s
done for conventional sources. In such situations, producers employ
combination of hydraulic fracturing and horizontal drilling during
which some fluids are inserted under high pressure to smash the
formation and discharge trapped fossil fuels. Although both the
technologies exist around for over half century, but till the date,
using them cost pretty much than the actual price of natural gas and
crude oil.
All these charged when
prices started off to hike penetratingly during recent years.
Producers could advantageously extract oil and gas from these
formations. Simultaneously, with the help of technological
advancements, improvements in horizontal drilling and fracking
technologies have mitigated the cost of using them.
This shale revolution has
been aided by some of the factors implemented by the U.S. Firstly,
there private rights to below-ground minerals and landowners can
lease these rights, that made it quite easier for average,
independent gas and oil investing industries aspiring to take
the risk—and to drive more improvements in the technologies.
Secondly, a cutthroat natural gas market with easy accessibility to
distribution set of connections by all producers helps shale gas
producers to market their product.
However, the future of
the unconventional revolution largely depends upon two factors: how
much extra gas and oil will be cost-effectively extractable and the
long-term effect on prices and markets.
Moreover gas and oil
sector will remain as one of the most significant sources of
employment as well as investment in the US economy.
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