Coatings World - March 2015

Strategies & Analysis

by John D. Jacquin, Chemark Consulting

Over 460 million years ago the first jawless fish swam in shallow seas of what was to become the Appalachian basin of North America. Over the next several million years, the central portions of the North American plate teemed with evolving life below shallow seas and eventually flourished in coastal forests, subject to inundation by fluctuating ocean level. The process of burying organic material, devoid of oxygen and under great sedimentary pressure continued through Cretaceous era, the last age of the dinosaurs, ending 65 million years ago. This long-term evolutionary process has produced the natural energy sources of the industrial age . . . oil and gas reserves.

Growth & Sustainable Profitability

The theme of last month’s Business Corner was growth and sustainable profitability. Two important elements required to achieve growth are developing new markets and leveraging loyalty to capitalize on the opportunities. True loyalty affects profitable growth, both directly and indirectly. In a direct sense, customer facing engagement resources can accurately measure true loyalty, and provide the supplier with opportunity to gain new business as the customer grows. However, when market resources are “downsized” to manage short term goals, it lessens inter-company communication and thereby the relationship. This will negatively impact loyalty as well as performance, especially critical during periods of change, either planned, as when introducing a new product or business merger, or even an un-planned and unforeseen quality problem, during a consolidation.

Yet indirectly, “intense loyalty” reaches deeply into the growth cycle, by exposing the value chain to new opportunities. A loyal customer will invite a trustworthy supplier to understand, participate, and contribute value to help develop a new market – a growth area that the supplier might have little knowledge of without the connection of a loyal relationship. Developing new markets is a key to sustaining profitability, and loyalty fuels the opportunity access. So loyalty is the “bridge” we all must build as the basis for sustainable profitable growth.

Growth in Today’s Economy

Where can we find “fuel” for sustainable growth in today’s
economy? Consider the past . . . That buried organic debris
was compressed under shale and limestone into the resources
that fuel our modern world. The Appalachian basin contains
two layers of buried energy – Utica shale from the middle
Ordovician period and Marcellus shale from Devonian yield gas
from Pennsylvanian and surrounding area wells. The Bakken
formation, centered in western North Dakota, yields light oils
extracted from within shale deposited in late Devonian and
early Mississippian times.

The early Mississippian era also yields gas and light oils from Barnett shale in North Texas. Further south, oil and gas is extracted from Eagle Ford shale deposits originating from Cretaceous life. Growth from TIGHT Places . . . “Tight gas and tight oil” (a light crude petroleum product) are extracted from formations of low permeability, such as shale. The common element of these shale formations is that until recently, it was difficult to economically extract the gas and oil from these reservoirs.

The Influence of Hydraulic Fractionating Over the last decade, the process of hydraulic fractionating (fracking) and horizontal drilling (figure 1) has been perfected in North America, recovering formerly unattainable reserves of crude oil and natural gas. The growth in known reserves and substantial increase in petroleum production levels in the U.S.

Growth from “Tight” Places

(Part 1 of a 2-Part series)

Three well bores with lateral drilling (one dual) and multiple fracking zones along the horizontal bore are diagramed. Small fractures are created with controlled explosive charges and an injection fluid (water mixed with sand and chemicals) is forced into the formation under pressure to further fracture the shale and extend the reach of the well. Extracted tight gas or oil is conducted through the low porosity shale formations of the fracture stations. Hydraulic fracturing is estimated to have increased U.S. oil reserves by 50% and gas reserves by 90%.