Rick Gordon, president of consulting firm Gordon Energy Solutions, advises steel tube makers planning to sell OCTG to shale gas producers to watch the product mix and shale play development. “Shale plays all share some common characteristics that drive demand for your product…However, every play is unique in very fundamental ways.” Gordon informed attendees Monday at Steel Business Briefing’s Shale Play Tubulars 2011 conference in Pittsburgh.
When producers evaluate their OCTG needs, they must consider the routine differences such as depth-to-shale and the length of the lateral portion of horizontal wells, as well as ground chemistry and pressure.
For example, some shale wells don’t require intermediate casing, which typically lines the well down to the beginning of the lateral portion, Gordon said. Others, like the Bakken shale in the midwestern US, require substantial amounts of heavy-gauge, large-diameter surface casing to seal off deep potable water aquifers.
Gordon also says that shale development age can influence producers’ buying patterns. Producers will usually drill quickly after initial exploration and testing phase until they reach a target production plateau, which can remain the same for quite some time.
“Cyclical factors drive this business just as much as secular trends do,” Gordon said. “They are driven from bubble to bubble. So previous indicators of future demand for tubular products may not work too well going forward. Tubular demand growth and shale gas production growth are not going to have a 1:1 relationship.”