GTI WHITE PAPER

Global Gas Shales and

Unconventional Gas

Unlocking Your Potential

Gas Technology Institute

1700 S. Mount Prospect Rd.
Des Plaines, Illinois 60018
847-768-0500
www.gastechnology.org

March 2010
Table of Contents
Introduction
What is Unconventional Gas?
Technology and the Role of GTI
A World of Abundant Supply
What Abundant Gas Makes Possible
Unlocking Your Unconventional Gas
GTI is Your Trusted Development Partner
Why GTI?
Global Gas Shales and Unconventional Gas
Unlocking Your Potential
Introduction
2 In a world demanding secure, abundant,
3 and affordable energy that combats
climate change, natural gas from
3
unconventional sources has a vital role
4 to play. As declared by President
6 Obama recently in China: “The
7 potential for natural gas production in
8
the U.S. from hydrocarbon-rich shale
formations, known as “shale gas,” has
10
grown dramatically in recent years due
to technological advances. The
development of shale gas is expected to
significantly increase U.S. energy
security and help reduce greenhouse
gas pollution. The United States is not
alone in having significant shale gas
resources.”(White House 2009) The
team at the Gas Technology Institute
(GTI) agrees fully with President
Obama and is absolutely committed to
helping bring the technologies and
capabilities developed and successfully
deployed in the U.S. to the rest of the
world.
Page 2
What is Unconventional Gas?
Unconventional gas provides a source of abundant,
affordable, and cleaner-burning energy to a world
demanding stable energy prices, energy security and
solutions to the climate change challenge.
Unconventional gas is comprised primarily of three
natural gas sources — tight gas sands, coalbed methane
(CBM) and gas shales. Methane hydrates is another
unconventional gas resource of the future, but not yet
ready for economic extraction.
There are four characteristics that distinguish
unconventional gas from what is commonly understood
as conventional gas:
Unconventional gas formations are deposited
over large continuous areas rather than in discrete
geologic traps.
The geologic setting of unconventional gas is
significantly more complex and challenging than
for conventional gas.
For coalbed methane and gas shales — the gas
source, trap and reservoir are the same, not three
distinct elements as for conventional gas.
All three unconventional sources require some
type of stimulation (e.g., hydraulic fracturing) for
economic production.
In simple words, conventional gas is generally harder to
find, easier to produce while unconventional gas is
easier to find, harder to produce.
Advanced technology has enabled unconventional
resources to be developed economically in the United
States. Technological enhancements still to come will
be crucial to continue to reduce the cost and
environmental footprint.
The geologic settings of unconventional gas resources
are uniquely different from one play to the next. It is
the transfer of existing knowledge combined with new
technology tailored to the specific characteristics of
resource plays that will be essential to developing
unconventional gas in other countries around the world.
Technology and the Role of GTI
Development of unconventional gas in the United
States was launched with the help of a collaborative
research program led by GTI. That effort became a
catalyst for experimentation and new technology
Global Gas Shales and Unconventional Gas Page 3
Unlocking Your Potential
The Wall Street Journal calls unconventional gas “the
biggest energy innovation of the decade.”(WSJ 2009) Others
are calling it a “revolution,””a paradigm shift,” and a
“game changer.” No matter how you describe it, it is not the
resource itself that is new. What is new is the realization of
what unconventional gas makes possible locally and globally
as a result of advanced technology that can now unlock the
potential of this abundant resource.
Guy Lewis
Managing Director E&P Sector, GTI
development that unlocked the potential of America’s
―new‖ natural gas.
Other organizations, notably the U.S. Department of
Energy, also played a critical role in the economical
development of unconventional gas in the U.S.
Breakthrough: GTI’s Coalbed Methane
Research Program
In 1982, GTI (as the Gas Research Institute) led the
world’s first effort to develop unconventional gas
resources with a research program targeting coalbed
methane. GTI managed a collaborative team of
experts from industry and academia and developed
the technologies that have enabled CBM to grow
from nothing to now making up fully 12% of total
U.S. gas supply.
Building on this experience, GTI managed parallel
programs for gas shale and tight sands production.
These three programs led to the development of
hydraulic fracturing technology and a fundamental
understanding of gas adsorption/desorption in rock
formations. Hydraulic fracturing and recent advances
in horizontal drilling are two key technologies critical
to unlocking unconventional gas resources.
Research Partnership to Secure Energy for
America (RPSEA)
In 2007, RPSEA was awarded the contract to manage
the ―Ultra-deepwater and Unconventional Natural Gas
and Other Petroleum Resources Research and
Development Program‖ created by the United States
Energy Policy Act of 2005. GTI played a pivotal role
in the start-up of RPSEA, a non-profit corporation
composed of a consortium of over 150 top U.S.
related entities dedicated to increasing America’s
supply of energy. This role included establishing the
technology road-map for the Unconventional Gas
R&D program. GTI manages this RPSEA program
that is now the largest Unconventional Gas
technology program in the world.
Hydraulic Fracturing
Credit for economically extracting gas from shale
generally goes to George Mitchell, former head of
Mitchell Energy and Development Corp. In the early
1980s Mitchell and his geologists experimented with
―hydraulic fracturing‖ – the process of pumping a
mixture of water, chemicals and sand under high
pressure into underground layers of shale to crack the
rock and allow gas to flow freely from the formation.
Technology developed by GTI including micro seismic
for measuring fracture performance and fracture
modeling software were leveraged by Mitchell and
dramatically improved their production results. Today,
these technologies are key components in the operations
of all fracturing service companies.
Completion engineers at Mitchell Energy took a chance and
started experimenting with water fracs that proved successful.
At the same time, Mitchell scientists using techniques
developed by the Gas Technology Institute did a new core
study using state of the art technology that proved the gas in
place figures were actually four times more than previously
believed.
Source: AAPG Explorer
Horizontal Drilling
In 2000, Devon Energy Corp. acquired Mitchell and
combined hydraulic fracturing with horizontal drilling
to make shale gas wells more productive. Horizontal
drilling enables a Horizontal Drilling
single vertical well to
turn horizontally and
follow a seam of
shale for up to two
miles. Devon’s
success freed the gas
to flow in greater
volumes and at a
much lower unit cost
than previously
thought possible.
GTI: Continuing to Provide Leadership and
Innovation
GTI is where industry and government looks first for
bringing together the right partners and technology-
based solutions to make unconventional resources
productive. Our focus today is on developing and
deploying technologies that enhance the economic
Global Gas Shales and Unconventional Gas
Unlocking Your Potential
efficiency and reduce the environmental footprint of
field production activities.
Global Unconventional Gas
Interest is high around the world in the natural gas
potential from unconventional resources. GTI and its
partners have been centrally involved in the
technology and growth of this resource base in North
America.
To support the dissemination of this experience, GTI
with the cooperation of RPSEA and the International
Gas Union (IGU) is organizing Global
Unconventional Gas 2010: Unlocking Your
Potential to bring together organizations interested in
this growing energy resource. This premier event will
be held in Amsterdam June 15-17, 2010, and is
anticipated to attract several hundred attendees and
provide an ideal opportunity to highlight the potential
and technologies associated with unconventional gas.
A World of Abundant Supply
North American Gas Shale and
Unconventional Gas
In the United States unconventional gas contributed
about 10% of total production in 1990. Today it is
over 40% and by 2020 it is expected to supply well
over 50%. Gas shales are driving this growth.
North American gas shales already contribute over 9
billion cubic feet per day (Bcfd) or 250 million cubic
meters per day (Mcmd) and are projected to grow
rapidly (Kuuskraa, et. al. 2009). In ten years, gas
shales alone are expected to account for a third of
North American natural gas production. The gas shale
resource of North America is enormous.
The resource endowment (the gas in-place) in the
―Magnificent Seven‖ gas shales of the U.S. and
Canada equals 5,146 Tcf (146 trillion cubic meters
Page 4
(Tcm)), with an estimated 715 Tcf (20 Tcm) technically
recoverable. Mexico may also have significant resources
and is just beginning to explore their potential.
Coalbed Methane provides an additional 5 Bcfd (150
Mcmd) in North America. Tight Gas Sands provides
nearly 18 Bcfd (500 Mcmd) in the U.S. Adding
coalbed methane and tight gas to the expectations from
gas shales, by year 2020 unconventional gas will have
the capacity to provide 52 Bcfd (1,470 Mcmd) and
account for nearly two-thirds of total North American
natural gas production.
Source: H.H. Rogner 1997
World Gas Shale and Unconventional Gas
The worldwide pursuit of gas shale and unconventional equates to a gas shale recoverable resource of 6,350
gas has not only just begun. All currently published Tcf (180 Tcm).
resource estimates for world supplies start with H.H.
Rogner’s 1997 ―top-down‖ study of world hydrocarbon If the experience in North America holds for other
resources. Rogner estimated the world gas shale plays around the world, Rogner’s resource
resource endowment to be 16,110 Tcf (456 Tcm). endowment estimate for gas shales will prove to be
very conservative. Projections of U.S. technically
The International Energy Agency ―World Energy recoverable gas have increased dramatically since
Outlook (2009)‖ assumed that about 40% of Rogner’s 1985 as a result of new discoveries and continued
resource endowment would become recoverable, which technological advances, setting new records in 2008.
Global Gas Shales and Unconventional Gas Page 5
Unlocking Your Potential

Source: Modified from Bill Fisher, Bureau of Economic
Geology
Europe
Europe’s gas shale resource endowment and supply
potential are large and production holds promise.
Exploration is underway in several European basins
including the Alum Shale of Sweden, the Silurian Shale
of Poland, the Posidonia Shale in Germany, the
Carboniferous sediments in The Netherlands and
Germany, and the Mikulov Shale of Austria. Several
companies are also seeking permits for shale gas prospects
in southeast France in Languedoc Roussillon, the
Cevennes mountains region, and the Savoie area near
the Swiss border. Other significant efforts are underway in
Hungary’s Mako Trough to understand the potential of
its tight sand resources.
Europe’s gas shale geology is challenging. Therefore
the development and deployment of technology tailored
to each play is crucial for making Europe’s gas shale
resources economically productive.
China and India
China and India have numerous gas shale basins that
are only now starting to be evaluated. Recently, Shell
and PetroChina announced plans to jointly evaluate and
develop the gas shales in Sichuan Province.
South America
There are initial efforts underway in Venezuela,
Argentina, and Chile to understand the resource
potential of tight sands and gas shale.
Other Countries
Gas shale exploration is underway in many other parts
of the world, including Australia, New Zealand and
Southern Africa where Statoil, Chesapeake and Sasol
recently announced joint plans.
Global Gas Shales and Unconventional Gas Page 6
Unlocking Your Potential
What Abundant Gas Makes Possible
The ―discovery‖ of unconventional gas has
transformed the conversation around natural gas in
the U.S. from one of depleting reserves, high prices
and a future reliance on LNG imports to one of
abundance, affordability and domestic energy
security. As development occurs throughout the
world, it opens up tremendous opportunities for
energy security, reducing climate change risk, and
creating wealth and high paying jobs.
Provides Energy Security
An abundant supply of ―home-grown‖ gas has the
potential to change the energy trade balance between
nations. It may be that those countries around the
world who have traditionally imported the bulk of
their energy from elsewhere may instead become
self-reliant or even energy exporters.
Reduces Climate Change Risk
Abundant supplies of unconventional gas transform
global debates over climate change abatement
strategies. With a carbon footprint at least 30% lower
per BTU than oil and 45% cleaner-burning than coal,
natural gas is highly desirable bridge fuel to a low-
carbon, sustainable energy future and will play a
prominent role in the energy mix for decades to
come.
We are no longer in a conversation about whether to use
natural gas for “this or that.” Abundant supplies of
unconventional gas make it possible to have a conversation of
“this and that.”
Guy Lewis
Managing Director E&P Sector, GTI
New climate regulations that place a price on carbon
emissions will shift relative economics in favor of
more natural gas consumption rather than coal in
electric power generation. Natural gas power plants
can also be built more quickly than coal-fired plants.
Gas facilitates the development of renewable energy.
Because gas plants can be switched on and off
quickly (unlike coal and nuclear) natural gas can
better supplement wind and solar power facilities,
whose output varies with the weather. New gas
supplies leading to more stable prices could also
support more transportation fleets being converted to
natural gas without requiring major infrastructure
improvements. Additional technology developments
could also make the economics of passenger car
utilization more attractive over time.
Creates Wealth, Jobs and Investment
Energy development means economic development.
Penn State University recently estimated that the
Marcellus Shale gas industry in the Commonwealth of
Pennsylvania will generate $9 billion of economic
output, $800 million in state and local tax revenues and
create 110,000 new jobs in that state alone in 2010. By
2020, the study estimates the gas industry will generate
$13.5 billion in added value, $12 billion in state and
local tax revenues (cumulative) and create 175,000 new
jobs. The PSU study captures job creation in just one
state and from just one resource!
In addition, energy-intensive manufacturing companies
often relocate in search of cheaper energy in order to
remain globally competitive. Regions with abundant
supplies of natural gas will be more successful at
attracting and retaining direct capital investment and
the high paying jobs that come with it.
Unlocking Your Unconventional Gas
Developing new gas resources requires a collaborative
effort between a broad and diverse group of participants.
Some bring new ideas while others perform basic
research. Others test concepts in the field and many
participate in the dissemination and transfer of new
concepts to the gas industry.
Program participants might typically include personnel
from E&P Operators and Service Companies, Universities,
Consulting Firms, Private Research Organizations, Oil
and Gas Associations, National Labs and Public
Geological Surveys.
Whether in the U.S. or elsewhere around the globe,
developing your unconventional gas endowment
requires characterizing the resource, applying the
appropriate well drilling and completion techniques,
ensuring the required infrastructure is in place, and
managing the reservoir over time (Perry, 2001). Of
course, good environmental stewardship must be in
place to earn the right to develop the resources.
Resource Characterization
Most unconventional gas resources around the world
are not well understood and therefore need
characterization. Accurate mapping of the resource and
determination of the total size, volume, distribution and
Global Gas Shales and Unconventional Gas Page 7
Unlocking Your Potential
nature of the gas must be performed. Production
mechanisms tailored to the characteristics of the
formation must be studied and verified, leading to the
development of an appropriate technology roadmap
for resource development.
Well Drilling and Completion
Conventional drilling practices can often be readily
adapted to the new unconventional plays. However,
completion and stimulation practices must be
modified to address issues specific to characteristics
of the formations. Some formations are likely to
require new approaches and advanced technology for
both drilling and completion of new wells. For
instance, the approaches that have enabled the
development of the Barnett Shale resource in Texas
have been found to be ineffective when applied to the
New Albany Shale resource in Illinois, Indiana, and
Kentucky.
Well-costs need to be reduced considerably to
produce gas in economically marginal areas and fit-
for-purpose equipment may be required to access
certain resources in challenging terrain. Coiled
tubing drilling (CTD) is one approach that continues
to be developed with this objective.
Environmental Stewardship
The responsible stewardship of the environment is
crucial for the sustainable development of
unconventional gas resources. In fact, it is a license
to operate.
Environmental impacts such as surface footprint,
emissions, water usage, waste disposal, or habitat
fragmentation can be mitigated with careful planning
and the deployment of innovative processes, fit-for-
purpose technologies and techniques that maximize
efficiency. In places where energy development
occurs near populated communities, extra measures
can be put in place to minimize traffic, noise, any
impacts on views, and general intrusion.
Gas Production and Processing
Infrastructure
Gas produced from unconventional gas resources are
typically marketed through the existing natural gas
gathering and pipeline systems. Once produced the
gas typically does not require any special handling as
compared to the conventional gas resources being
produced.
However, there may be instances where new infrastructure
and new technology is required to process the gas and
condition it to pipeline quality standards.
Reservoir Management
Unconventional gas reservoirs may perform contrary to
conventional understanding of gas reservoirs. For
example, efforts to produce gas from coal seams often
began by producing only water until reservoirs were
lowered in pressure allowing gas to desorb from the
coal. At this point gas began to flow and be produced
in ever increasing quantities while the water production
declined. This was opposite to gas production from
conventional reservoirs where gas production occurred
at the greatest volume initially and then declined over
time. Water production was normally minimal at the
outset of production and increased over time.
Technology Dissemination
A significant part of any research program is technology
dissemination. Developing any new resource that is
technology dependent will need a focused effort to
transfer results.
Unconventional gas involves a wide spectrum of
stakeholders, from small and mid size gas producing
companies to the majors and those service companies
that support them. As such, dissemination programs
must be designed for the intended audience and must
effectively reduce the risk associated with applying
new technology and processes.
GTI is Your Trusted Development Partner
GTI is committed to being a catalyst for new technology
development and commercialization to expand your
supply of affordable, abundant and clean-burning energy.
Our approach is based on 25 years of working with
the global industry, academia, and government policy
makers to develop solutions for converting shale gas
and other unconventional gas resource potential into
productive energy resources. In doing so, GTI has
helped make the unconventional conventional.
Today, GTI is a market driven organization,
responsive to the competitive needs of
unconventional gas owners, operators, and service
companies. We are an active partner with industry,
RPSEA, other researchers, and government in
continuing to generate the innovations required to
reduce the production cost and environmental
footprint of developing these vital resources.
Examples include:
1) Better methods for drilling and completing
wells with increased gas production and
decreased environmental impact.
2) Methods for handling and affording beneficial
use and recycling of water produced along with
gas.
3) Approaches for enhancing coalbed methane
production while sequestering the greenhouse
gas CO2 in the depleted coalbed and other
geologic formations.
GTI also has experience and concepts related to
methane hydrate development. We are ready to
support the development of these vital resources in
the longer-term.
GTI is the only unconventional gas partner with the
experience the industry trusts to be an unbiased,
reliable voice of science and reason. We have the
qualified staff, deep network of technology providers
and producers, and organizational expertise to
coordinate and focus the activities of a number of
research providers on a specific resource target. We
will work with gas producers and service companies
to ensure that the research results are effectively
applied in production operations to increase gas
supply. The GTI coalbed methane development
program and work in a number of gas shale plays
provide examples of the impact of such activities.

Global Gas Shales and Unconventional Gas
Unlocking Your Potential
Research Consortia
GTI leads field-based research projects focused on
developing techniques and methodologies for
increasing the success rate and productivity of
unconventional gas resources. The New Albany shale
Page 8
gas project, funded by RPSEA, is a current example of
GTI’s intention to enable otherwise noncommercial
wells to become economically viable producers. The
project includes a group of New Albany Shale
producers and several leading edge technology and
service providers making up a collaborative research
team.
Joint Industry Partnerships
GTI serves as managing director of two joint industry
partnerships—the Barnett Shale Water Conservation
and Management Committee and the Appalachian
Shale Water Conservation and Management
Committee—focused on water processing, conservation,
and public outreach. The objective is to develop low-
cost and environmentally sustainable solutions to the
industry’s produced water challenges.
Proprietary Technology Development,
Laboratories and Facilities
GTI has staff expertise and facilities to accelerate
development of proprietary technologies from concept
to commercialization. We offer an exceptional
combination of skill sets from highly scientific to
hands-on field operations.
Laser Drilling and Completion Lab
GTI owns and operates a laser lab employing a 5.34
kW ytterbium-doped multiclad fiber laser. High-power
fiber lasers represent a recent technological breakthrough
upon which a rugged, deployable system for downhole
operations can be based.
Source: Gas Technology Institute
Studies have focused on the interaction of laser energy
with rocks, leading toward concepts for improved
drilling and completion methods for oil and gas and
geothermal applications. A unique capability of the
GTI laser lab are test cells for studying the response of
Global Gas Shales and Unconventional Gas Page 9
Unlocking Your Potential
rock and metal samples to laser energy under
simulated in-situ conditions of pore pressure, fluid
saturation as well as under controlled gas
atmospheres. GTI own the intellectual property
relevant for downhole applications of laser energy.
Coiled Tubing Drilling Technology
Coiled tubing drilling (CTD) technology has the
potential to save billions of dollars in shallow well
construction costs and reduce the environmental
impact of developing vital unconventional energy
resources such as natural gas from shale and
geothermal power. GTI has managed industry
demonstrations documenting 30% cost savings for
drilling with reduced footprint, waste discharge,
emissions, noise and improved safety vs.
conventional drilling.
Produced Water Handling
GTI has laboratory and pilot-scale equipment that
have been applied to testing more economical
approaches for produced water treatment. The GTI
capability in water engineering includes a wide span
of treatment processes to address many challenges in
the processing of water streams for purposes of
surface discharge and beneficial reuse. GTI has the
equipment, laboratory facilities and professional
experience to conduct R&D as well as process
development in technology application areas of ion
exchange, biological treatment, membrane processing
(e.g. nanofiltration, microfiltration, ultrafiltration,
reverse osmosis, etc.), electrodialysis, chemical
oxidation treatment, cutting-edge nanoscale iron
treatment and the use of natural living systems for
contaminant removal.
The Gas Technology Institute (GTI) is currently
developing a collaborative effort that brings
producers, solution providers, and other industry
stakeholders together to produce a comprehensive
guidance document on hydraulic fracturing and
wastewater management. The intent of this document
is to:
Be the industry standard reference on best
practices in water management (BMPs).
Prevent issues associated with water use from
ever becoming an obstacle to the sustainable
development of one of the world’s most
abundant, affordable, and clean-burning
sources of energy.
 Identify savings opportunities for producers,
reduce commercial uncertainty for solution
providers, and assure the nation and world that
the industry is committed to sound water
management solutions that are both economic
and demonstrate environmental stewardship.
E&P Technology Testing Center at Catoosa
Located near Tulsa, Oklahoma, this facility has the
capability to run tests and experiments involving all
types of drilling, production, logging and other downhole
equipment. The site includes two drilling rigs and
associated equipment that are designed to allow rapid
and low-cost drilling operations.
The location includes virtually all common subsurface
formation types within a depth of 3000 feet from the
surface, allowing for comprehensive testing in a variety
of downhole environments. The site is used extensively
by leading service companies for the testing and
evaluation of new drilling and production technology.
Source: Gas Technology Institute
Global Gas Shales and Unconventional Gas Page 10
Unlocking Your Potential
Why GTI?
Coordinating large, goal driven development programs
requires full time attention and focus in order to be
successful. The E&P industry has led projects utilizing
the Joint Industry Project (JIP) structure but rarely
manages large consortium programs. Staff who are
assigned to JIP management invariably have additional
duties which divert time and attention from project
management. If the end result is to be the commercial
production of a significant volume of gas from a new
resource, the flexibility of the private sector and the
focus provided by a dedicated organization like GTI
is required.
Dissemination of technology is another important
task. The level of effort and resources required is
often underestimated. To do this efficiently, an entity
that has experience and an ongoing education and
technology transfer program is beneficial.
Overall program management and technical
demonstrations are best performed by an entity that
understands the importance of not placing an unfair
advantage or bias toward one concept versus another
without extensive due diligence. With GTI you have
a trusted partner — one who provides an objective
voice of science and reason.
GTI also has the facilities, capabilities, and experience
to work with partners privately to successfully
develop the new technologies that will continue to
reduce the cost and environmental footprint of
unconventional gas production.
GTI is a private not-for-profit organization whose
primary business is managing large research
programs on behalf of the gas industry. GTI has
successfully managed several large research programs
(e.g., Coalbed Methane) and gained the confidence of
both industry and government. Success was derived
in large part due to the full time focus placed on
management and maintaining strong interaction with
all constituents.
For more Information
To learn more about how GTI can help you
characterize your unconventional gas resources and
develop the technologies to unlock them, please
contact:
Trevor Smith @ 847-768-0795 or
Trevor.Smith@gastechnology.org or visit
www.gastechnology.org.
 References
American Association of Petroleum Geologists.
www.aapg.org.

Energy Information Administration.

www.eia.doe.gov.

Fisher, Bill. Bureau of Economic Geology

Perry, Kent. ―Summary of GTI Coalbed Methane

Research Program and Review of Related Tight
Gas Sands and Devonian Shale Programs.‖ Sept.
12, 2001

Rogner, H. H., ‖An Assessment of World

Hydrocarbon Resources‖, Annual Review of
Energy and Environment, 1997

Vello A. Kuuskraa, et. al., Worldwide Gas Shales and

Unconventional Gas: A Status Report, Dec. 2009.

White House, Office of the Press Secretary,

Statement on U.S.-China shale gas resource
initiative, 17 November 2009

Yergin, Daniel and Robert Ineson. ―America’s Shale

Gas Revolution.‖ Wall Street Journal, Nov. 2009

Global Gas Shales and Unconventional Gas Page 11

Unlocking Your Potential