Worldwide shale gas revolution?

[admin]

Why the World May Never Experience a Shale Boom

By Energy Burrito | Thu, 31 January 2013 22:56 | 2

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Given the rapid rise of the US shale gas market, it is not surprising that similar opportunities are being explored with gusto across the globe. Given the size of technically recoverable shale gas already identified, it would seem that a global boom is inevitable….or is it?

(Click picture to enlarge.)

Most things in life come with a caveat, from ice cream (calories) to fast cars ($$$). And the caveat for shale gas is that no two shale deposits are created equal. No better place is this exemplified than in the chart below, which spans the spectrum of breakeven costs.

This chart is a stark reminder that North America has the cheapest global breakeven costs by far. It also highlights that even if the price of natural gas is close to $11/MMbtu – such as in the UK – shale gas may still not be a cost effective proposition.

Related article: Betting on Mediterranean Shale: 3 Plays, 1 Winner

The UK is an interesting blueprint for the pursuit of shale gas as it typifies the challenges and the conundrums faced. Fracking got off to the worst possible start in the UK, with the pioneering company, Cuadrilla Resources, causing minor earthquakes in 2011 with initial shale testing. Fracking was banned in the UK for a year and a half, before the government gave approval that testing could resume – with much stricter rules in place.

Given this initial bad press – not wholly unjustified by any means – the UK has been presented with both extremities of the pros and cons of fracking. For Cuadrilla says it has identified 200 Tcf of shale gas reserves (and in the last week an energy major suitor to boot). If only 10% of these reserves could be viably extracted, it would meet over 6 years of total UK natural gas consumption. For a region that has seen its North Sea natural gas production depleting at a rapid rate, this alternative option certainly presents an opportunity.

Related article: Will Gazprom Bully Its Way out of a Monopoly?

But the UK isn’t the only European country facing such dilemmas; France has banned fracking outright whilst having 180 Tcf of reserves, while Poland – the country with the largest shale gas reserves in Europe – has seen Exxon Mobil exit the country after two early gas wells failed to yield high enough quantities of natural gas.

But for other regions of the world, shale gas is considered as the lesser evil….which brings us to China. In its efforts to reduce its dependency on coal, China has targeted a ramp up in shale production to increase natural gas from making  up 4% of its total energy consumption to 10% by 2020.

There is a good deal of skepticism, however, that this can be achieved, despite China having the largest shale gas reserves in the world (hark, 1,275 Tcf). This is because its shale deposits are in remote, mountainous regions, with a lack of infrastructure in place and at deeper levels than in the US. And these challenges exist before even addressing other hurdles such as water scarcity.

But despite the various conundrums faced across the globe, consensus is for shale gas to overcome its challenges to have a much larger influence on global energy in the coming decades. What is still unknown, however, is where these main players will come from.

By. Matt Smith

[Putncalls]

I remember when I was told that super scaler CPUs would never happen and we did it. The thing we agree on is that "frackiing" is expensive.

[Palm]

China does face many challenges with its shale deposits. That's been mentioned before as their formations are much tighter and more remote. And they lack the pipeline infrastructure that N America has. It won't stop them from trying but in the mean time they must pipe gas in as well as LNG. They keep building new regassification terminals as well as hope some of the offshore exploration pays off. They need LNG for the near future and I'd guess they lock up a lot of LNG contracts and foreign upstream assets to be sure. They can always sell them later.

[Tree]

China does face many challenges with its shale deposits. That's been mentioned before as their formations are much tighter and more remote. And they lack the pipeline infrastructure that N America has. It won't stop them from trying but in the mean time they must pipe gas in as well as LNG. They keep building new regassification terminals as well as hope some of the offshore exploration pays off. They need LNG for the near future and I'd guess they lock up a lot of LNG contracts and foreign upstream assets to be sure. They can always sell them later.

January 30, 9:53 am

China's dependency on imported natural gas hits 29 pct

Data released by the National Development and Reform Commission shows that last year China produced 108 billion cubic meters of natural gas, up 6.5 percent year-on-year (YoY). The import volume of natural gas (including liquefied natural gas) in 2012 was 42.5 billion cubic meters, up 31.1 percent YoY. The apparent consumption of natural gas was 147 billion cubic meters, up 13.0 percent YoY.

It is measured that the nation’s dependency on imported natural gas for 2012 amounted to 28.9 percent, higher than the 28 percent for the first seven months of 2012. Data shows that China’s dependency on gas imports was only 2 percent in 2007. The figure rose to 5 percent in 2009, jumped to 11.8 percent in 2010, and surged to 24.3 percent in 2011.
 
One energy official forecasts that coal consumption is likely to account for around 66.4 percent of China’s primary energy consumption in 2012, down 2 percentage points on 2011. The share of natural gas in the total primary energy consumption for 2012 is expected to increase by 0.5 percentage points to 5.5 percent, though it is still far lower than the global average level of 25 percent.