U.S. to Get Half of Gas From ‘Tight’ Fields by 2020, Shell Says

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By Eduard Gismatullin

June 9 (Bloomberg) -- The U.S. will get more than half of its natural gas supplies from so-called tight reservoirs by 2020, Royal Dutch Shell Plc estimates.

New technology will allow tapping 500 trillion cubic feet of unconventional gas resources in North America, enough to supply the U.S. for two decades, said Malcolm Brinded, executive director for the upstream business at Europe’s biggest oil company. Shell expects to more than triple tight gas output to more than 300,000 barrels of oil equivalent a day in 2020.

“Having picked much of the low-hanging fruit, our industry is now focused on more difficult resources, tight reservoirs, fractured carbonates, oil shales, oil sands, and ultra-heavy oil,” Brinded said in a speech posted on the Hague-based company’s Web site today. “Tight gas in North America has rapidly developed into a real game-changer.”

The world holds 3,000 trillion to 10,000 trillion cubic feet of technically recoverable tight gas, according to Shell. It competes with StatoilHydro ASA and BP Plc, which are also developing unconventional gas projects in North America.

Tight gas is methane locked in impermeable sandstone rock, which prevents the gas from flowing to well.

Shell is targeting 6 billion cubic feet of Canadian tight gas resources, which are difficult to access, after it acquired Duvernay Oil Corp. and bought nearby additional acreage in the Montney gas play for a combined $6.2 billion, Chief Executive Officer Jeroen van der Veer said in October.

Shell and EnCana Corp., Canada’s largest gas producer, are already developing a project in northern Louisiana called Haynesville, which targets gas trapped in shale formations.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net