EME 801
Energy Markets, Policy, and Regulation

Summary and Final Tasks

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Summary

Gas and oil extraction from shales has often been called a "game changer," and that may be a vast understatement. The technological ability (and prevailing market conditions) under which unconventional shale energy resources can be profitably extracted and marketed has implications not only for energy consumers, but also for patterns in global energy markets. The U.S. is back to being a leading oil producer and has started to export large quantities of natural gas to Canada and Mexico. Given the energy-importer status of the U.S. just a few years ago, this is a momentous shift. The distribution of shale energy resources is different than conventional energy resources, at least within North America - there are more energy resources closer to major east-coast markets, for example, which facilitates both domestic consumption and exporting. It has also contributed to volatility in energy commodity prices, particularly a precipitous decline in the price of natural gas. Part of the reason for this has to do with differences in extraction patterns between conventional and unconventional wells.  Relative to conventional oil or gas wells, hydraulically fractured oil/gas wells in tight geologic formations tend to have very high initial production rates with very rapid declines, followed by (we believe) a prolonged period of moderated production. Because of the high initial production levels, the thousands of unconventional wells that have been drilled are producing at higher levels than a similar number of conventional wells would.

Reminder - Complete all of the Lesson 4 tasks!

You have reached the end of Lesson 4! Double check the What is Due for Lesson 4? list on the first page of this lesson to make sure you have completed all of the activities listed there before you begin Lesson 5. Note: The Lesson 5 material will open Monday after we finish Lesson 4.

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