SHALE GAS AND FRACKING:

A CASE STUDY

Understanding a polemical technology using scientific, technological and financial data

M. Becue, V. Bouaroudj, J.M. Careil, A. Meunié, D. Virapin

IISDV, Nice, April 15th 2014

d.v. 25/03/2014

Outline

➔Context : the case of shale gas

➔First insights: global situation

➔Questioning: environmental issues

➔Conclusion and perspectives

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014 2

Shale gas: a brief introduction (1/2)

➔Unconventional source of natural gas found trapped within shale formations

➔Low permeability of shale formations: absence of significant wellbores, low concentration of gas

➔Hydraulic fracturing or fracking: reproduction of existing natural fractures, permitting to access commercial quantities of shale gas

› Horizontal drilling

› Use of water, sand and chemicals

3 15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Shale gas: a brief introduction (2/2)

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source: US Energy Information Administration

4

Shale oil and gas reserves (1/3)

➔Technically recoverable resources: 752 billion cubic meters of gas, of which 28% from shale gas (ever-changing estimations)

➔More homogeneous spread of resources: geo-political issues at stake

➔North America concentrates most of the commercial production of shale gas (US: 1/3 of national gas production)

5 15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Shale oil and gas reserves (2/3)

6 15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source: US Energy Information Administration

Shale oil and gas reserves (3/3)

0

5

10

15

20

25

30

Eurasia Middle-East Pacific Asia Alena Africa Latin America OECD Europe

National share in the world gas resources National share in the world shale gas resources

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source: US Energy Information Administration

Global distribution of world gas and shale gas resources

7

Methodological steps

8

Step 1 Input: IPC codes – Database: Orbit (Questel) –

Output: 9300+ Patents

Step 2 Input: Key-words – Database: Web of Sciences –

Output: 800+ Publications

Step 3 Input: Key-words – Database: Zephyr –

Output: 2500+ Financial deals

Step 4 Portfolio treatment, using Intellixir

Step 5 (1st level of analysis) Portfolio segmentation : identification of techniques of fracturing

Step 6 (2nd level of analysis) Portfolio segmentation : evidence of safety-driven technologies

DATA COLLECTION

DATA ANALYSIS

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Perimeter under study: Set of techniques developed for the purpose of shale gas extraction

Patents : E21B-043/26 OR C09K-008/6+ E21B-043/26 : Methods or apparatus for

obtaining oil, gas, water, soluble or meltable materials or a slurry of minerals from wells by forming crevices or fractures

C09K-008/6+ : Compositions for stimulating production by acting on the underground formation

-> 9304 families

Publications : shale gas AND frac*

-> 849 articles

Financial deals : “shale gas”

-> 2518 deals

Data Collection

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014 9

Dynamics of patent applications Number of patent families

180 156

187 218

284 315

372 392

372 378 364

468

373

0

100

200

300

400

500

2000 2002 2004 2006 2008 2010 2012

Total Hydraulic fracturing Alternative fracturing

6 11 15 15 5 7 9 8 10

22 26

49

85

127

0

20

40

60

80

100

120

140

2000 2002 2004 2006 2008 2010 2012

Dynamics of scientific publications Number of articles

Source : Orbit, WoS, Zephyr (data), Intellixir (treatment)

Global statistics

10

Patents – priority country

US : 740

RU: 666

CN : 1207

FR : 223

UK : 245

Publications – main author country

22% of patents have an international extension

15% of patents have a European extension

World : 2030

Europe : 1408

Financial deals – acquirer country

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source : Orbit,WoS,Zephyr (data), Intellixir (treatment)

A mature technology ?

11

0

100

200

300

400

500

600

0 50 100 150 200 250 300

Nu

mb

er

of

pat

en

t fa

mili

es

app

licat

ion

s

Number of applicants

1936

1971

1998

2007

1989

1990

2011

2009

2012

1993 1940

Case of fracturing

Source : Introduction to Patent Map Analysis, Japan Patent Office Asia-Pacific Industrial Property Center, JIII

Reference map of maturity

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source : Orbit(data), Intellixir (treatment)

Forces in presence (1/2)

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014 12

Source : Orbit (data), Intellixir (treatment)

publication

patent

Forces in presence (2/2)

13

MARATHON OIL SINOPEC CN

UNION OIL BP GB

SHELL NL CHINA NAT PETROLEUM CN

CONOCOPHILLIPS US

CHEVRON TEXACO US

EXXON MOBIL US

BAKER HUGUES US

SCHLUMBERGER US

HALLIBURTON US AE

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

0 4 8 12 16 20 24 28 32

Number of patent families

Mean age of portfolio

Major active applicants

Small active applicants

Major inactive applicants

Small inactive applicants

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source : Orbit (data), Intellixir (treatment)

New entrants

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CHENGDU HONGTIAN TELEX ENGINEERING

CHINA UNIV OF MINING TECHNOLOGY

ALBERTA UNIV

UNIVs CHENGDU CN

ACAD SCI RU

UNIV OF TEXAS

DALIAN BITEOMICS

ANTON OILFIELD SERVICES

SOANE ENERGY

DONGYING SHENGSHI PETROLEUM

GENERAL ELECTRIC US

0

5

10

15

20

25

30

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Nu

mb

er

of

pa

ten

t fa

mil

ies

Years

New entrants since 2005: 40%

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source : Orbit (data), Intellixir (treatment)

➔ Local environmental issues: non-acceptation

› Harmful fluids used: fear of water contamination

› Water intensive process: usage issues

› Emission of volatile gas: air pollution

› High density of wells and large-scale production required:

landscape deterioration

› Geologic formations disturbed: seismic risks

➔ Global environmental issues

› Impact on the global energetic mix

› Impact on climate change

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

A highly polemical context: environmental issues

Are these environmental issues addressed in inventive activities, and if yes, in which way ?

15

Identification of alternative techniques

16

Number of patent families

Number of publications

Electrical fraturing 203 3

Propane-based fracturing 633 34

Carbon dioxide fracturing 155 66

Thermal fracturing 101 12

Hydraulic fracturing 7033 362

Non classified 1179 372

Total documents 9304 849

Share of alternative 12 % 13 %

Share of hydraulic 76% 43 %

A major share of patents relate to hydraulic fracturing specifically: main focus of inventive efforts

Lower share of publications related to hydraulic fracturing specifically. Publications are more generally related to transversal issues associated with fracturing.

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Share of documents relative to identified alternative techniques of fracturing

17

Source : Orbit (data), Intellixir (treatment), Gephi (mapping), Sigma.js (visualization)

Competitive positioning through the lens of patents (1/2)

Thermal: 101

CO2: 155

Electrical: 203

Hydraulic: 7033

Focus on alternative techniques only

Major focus: pure hydraulic fracturing (83% of applicants)

Propane-based: 633

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Nodes: number of patents owned Links: number of patent applications filed

Competitive positioning through the lens of patents (2/2)

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014 18

Source : Orbit (data), Intellixir (treatment)

Financial strategies

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014 19

Acquerors

Targets

Source : Zephyr (data), Intellixir (treatment)

Affiliations

Deal Types

Positioning through the lens of publications

20

Title Affiliation Date

ExxonMobil’s Electrofrac™ Process for In Situ Oil Shale Conversion

ExxonMobil 2009

Title Affiliation Date

Study on carbon dioxide thermodynamic behaviour for the purpose of shale rock fracturing

Warsaw University

2013

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source : WoS (data), Intellixir (treatment)

Evidence of environmental concerns ?

21

Nb of Docs

Electrical fracturing 28

Propane-based fracturing 121

Carbon dioxide fracturing 30

Thermal fracturing 16

Hydraulic fracturing 1131

Non classified 101

Total documents 1427

Share of sub-query 14 %

Relative share of alternative 14 %

Relative share of hydraulic 79 %

Sub-query used

Patents : E21B-043/26 OR C09K-008/6+

Publications : shale gas AND frac*

AND

Damage OR environmental*

Most documents addressing environmental concerns are relative to hydraulic fracturing

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source : Orbit,WoS (data), Intellixir (treatment)

Citations

22 15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Source : Orbit (data), Intellixir (treatment), Gephi (mapping), Sigma.js (visualization)

Nodes: number of forward citations Links: number of times cited

➔ Technology, scientific and financial data: a relevant source of strategic information

➔ Fracturing is still an immature technology

➔ Implication of Chinese actors sharply increasing

➔ Environmental concerns are weakly being addressed and concern mainly hydraulic fracturing rather than alternative techniques not based on hydraulic tools

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Conclusion and perspectives (1/2)

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➔ Economic issues

› Diversification of sources of energy and greater independence

› Increased attractivity for gas intensive industries

› Local job creation

› Increased competitivity

› Real rentability under question

➔ Further work

› Detailed analysis on specific time periods

› Refined query relative to environment

› In-depth citation analyses

➔ Any questions or suggestions are more than welcome !

15th of April 2014 Shale gas and fracking: a case study – IISDV Conference 2014

Conclusion and perspectives (2/2)

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THANK YOU FOR YOUR ATTENTION !