Although the technologies involved in shale gas are decades old, their combination in a productive manner for source rock exploitation began major success only circa 2005, and it is still rapidly evolving. The enormously successful results are well known, including the plays known as the Bartlett, the Marcellus, the Bakken, the Eagle Ford, and the Woodford, areas in which one of our founders, Marlan Downey, was deeply involved as an explorer, developer, and investor. New successes seem to be added virtually every year.
Shale gas explorers need more than optimism; they need to understand and be able to calculate the percentages, the resources, and the expected cost of recovery. Plays can be insufficiently mature, overly mature, too deep, or too complex. Many sites have been overinvested, and that led to unprofitability. It is critical to avoid overly-expensive technology where it is not needed, yet to take the time and expense that is often necessary to maximize return. Shale gas investors, explorers and developers need to be familiar not only with the notable successes, but also with the less widely known failures. Plays which have been drilled but so far have not been developed include the Caney (Oklahoma), Conesauga (Alabama), Pierre (South Dakota), Mancos (New Mexico), Kreyenhagen (California), Mowry (Wyoming), Mesaverde (Wyoming), Chainman Shale (Nevada), and the Mississippian of Black Warrior Basin. Unless we learn from the history of these failed attempts, we are in danger of repeating their history.
Our approach beings with a detailed study of a large region in which the shale might contain large resources of natural gas and/or oil (UK, Mexico, North Africa, regions of the EU). We can make a business evaluation based on geology (organic richness, vitrinite reflectance, water content, matrix brittleness, gas pressure, depth, etc.), infrastructure cost (nearby water including subsurface brines; pipeline availability; local markets; availability of services including rigs and workers), environmental concerns (including regulations and political issues), the projected value of produced gas and oil, and careful inclusion of the ongoing development of the technology (e.g. the fact that with smarter staging, extraction rates and efficiency can be doubled). Based on the proprietary knowledge gained in such an evaluation, investors can purchase leases or enter partnerships at relatively low cost and low risk, normally before test wells are drilled.
Global Shale can take then take the lead in managing the exploration and development of the test wells. If, based on success, a decision is made to move ahead, Global Shale can continue the development, or other oil and gas companies could be brought in as partners. If the leases are sold, the investors would likely want keep small but significant overriding royalty interests.
This business approach has proven successful with our prior work in the Marcellus and other plays developed by our team members in the US. We can also offer consulting services to organizations that wish to develop a similar approach themselves.