Oil-field services outfit Halliburton (NYSE: HAL) estimates that unconventional oil and gas fields located onshore require three times to five times as much work as traditional wells.
Although the shale oil and gas revolution has taken the domestic energy market by storm from seemingly nowhere, geologists and oilmen long knew of the hydrocarbons trapped in these formations. However, the technology and economic incentive to exploit these resources didn’t exist until somewhat recently.
The reservoir rock in conventional fields exhibits enough porosity and permeability for the hydrocarbons to flow into the well. Shale formations, on the other hand, lack these pathways and must undergo hydraulic fracturing, a process that produces a network of cracks through which the oil and gas can flow. Hydraulic fracturing involves pumping large quantities of water and some chemicals into the formation until the reservoir rock cracks. The inclusion of a proppant–usually sand or ceramic material–ensures that these fissures remain open.
Hydraulic fracturing greatly increases production costs relative to traditional onshore wells.
In the offshore market, even shallow-water developments–the source of 45 percent of all oil reserves booked in the last decade–require five times the services content as a conventional onshore field. Deepwater fields can require between 11 and 13 times this service intensity.
Your complete guide to energy investing, from growth stocks to high-yielders.
In October 2012, renowned energy expert Elliott Gue launched the Energy & Income Advisor, a twice-monthly investment advisory that's dedicated to unearthing the most profitable opportunities in the sector, from growth stocks to high-yielding utilities, royalty trusts and master limited partnerships.
Elliott and Roger on Sep. 26, 2017
Balanced portfolios of energy stocks for aggressive and conservative investors.
Our take on more than 50 energy-related equities, from upstream to downstream and everything in between.
Our assessment of every energy-related master limited partnership.
Roger Conrad’s coverage of more than 70 dividend-paying energy names.