Exxon: Fracking Failure in China, Europe Shale
Pittsburgh Tribune-Review
9 March 2012
By Bloomberg News
Some shale formations in Europe and China are impervious to
drilling techniques that have opened vast reserves of natural gas
and oil from Texas to Pennsylvania, said Rex Tillerson, chief
executive officer of Exxon Mobil Corp.
New methods and tools must be invented to tap many of the shale
fields, which energy companies and governments expect eventually
to yield a bonanza of fuel, Tillerson said during a meeting on
Thursday with analysts in New York.
Exxon, the largest U.S. gas producer after its 2010 acquisition of
shale driller XTO Energy, failed in its first two efforts to crack
gas-rich shale fields in Poland. Gas discovered in a pair of
wells, completed during the final three months of last year,
didn't flow -- even after the company used high-pressured jets of
water and sand to create fissures in the rocks.
"Some of the shales don't respond as well to hydraulic
fracturing," Tillerson said during a meeting with reporters after
his presentation to analysts. "It's going to take research and
time in the lab to understand that."
Some parts of U.S. shale formations also have proven impervious to
hydraulic fracturing, or fracking, he said. The company is
studying whether using different fluids, proppants or pumping
techniques will be successful, Tillerson said. Proppants are tiny
granules of sand or ceramic used to hold open fissures that allow
oil and gas to flow through rock.
"Parts of some of these well-known shale ... everyone's all
excited about don't work," Tillerson said. The geologic obstacles
may stem from the depositional history of the formations as well
as factors such as high temperatures deep under ground.
Yet-to-be developed fields in shale rock and under deep seas are
expected to contribute 1 million barrels a day of new oil
production by 2025, said Yves-Louis Darricarrere, president of
exploration and production for Paris-based Total SA. He spoke on
Tuesday at the CERAWeek conference in Houston.
Exxon's U.S. shale holdings include 400,000 acres in the Bakken
region of North Dakota and Montana, 800,000 acres in the Permian
Basin in west Texas and New Mexico, and 170,000 acres in the
Oklahoma's Woodford Shale, Tillerson said.
Despite the setback in Poland, Tillerson said shale and other
so-called unconventional geologic formations will become a "cash
cow" for Exxon.
Exxon agreed last year to explore shale fields in China with China
Petrochemical Corp. Exxon also has shale projects under way in
Argentina's Vaca Muerta formation.
Tillerson said Exxon is spending $37 billion this year to find and
produce oil, gas, chemicals and motor fuels. Spending on capital
projects will continue at that pace through 2016.