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Unsung Heroes of the Shale Gas Revolution

world shale gas reserves usa china australia russiaFigure 1: EIA studied 14 regions of the world. Source: Oilfield Review, autumn 2011. Source: Schlumberger

Over the last five years, the rise of shale gas has been the single major event in the world of energy which will have a lasting impression for years to come. While shale production efforts have been around for decades in the United States, in recent years new studies and discoveries in other parts of the world have been changing the global energy landscape.

To look at this changing global energy landscape, a comprehensive report was published by the US Energy of Information (EIA) in 2011 which assessed 48 gas shale basins in 32 countries and reviewed the current state of shale development. This report that was called a “key development in the natural gas arena” by Forbes and had been cited in economic reports by prominent firms such as PwC and Ernst & Young. The EIA report was also referenced by the Energy and Climate Change Committee appointed by the House of Commons of the UK Parliament.

However, the report was incomplete. The EIA report studied only 14 regions for shale gas potential while vast land masses in the Middle-East, Africa and South Asia were not studied due to scarcity of exploration data in the public domain. Since 2011, there have been many new developments in shale gas exploration around the world.

The Middle-East is home to important conventional gas reserves. But recent gas exploration and appraisal activities indicate that the region has considerable potential for unconventional tight and shale gas reserves as well. Despite highly productive conventional gas reserves already existing in this region, several countries have picked up the pace to identify the shale gas potentials for now.

Algeria has been at the forefront of unconventional gas. The Algerian Energy Minister Youcef Yousfi believes that his country’s reserves of shale gas are equal to that of the United States. Algeria’s state energy company, Sonatrach, has signed a cooperation agreement with Italian company Eni SpA, for the development of unconventional gas in Algeria, with a particular focus on shale gas.

What makes this development important in the broader European picture is that Algeria currently supplies 30% of the EU’s natural gas imports, only behind Russia who supplies 40% of the EU market. In the last webinar on the Energy Collective, Mark Caine had touched on this topic and mentioned that Europe is importing one-third of its gas consumption from Russia. Algeria benefits from the trans-mediterranean pipelines: the ‘Enrico Mattei’ and the ‘Pedro Duran Farell’ which links to Italy and Spain. Thus a boost in gas production in Algeria will give the EU an alternative to Russia’s Gazprom who charges its customers three times the US gas price.

Nearby, Morocco has recently given the green light to five international companies to drill wells for better estimation of shale gas. However Morocco has fewer natural gas reserves, unlike its neighbours, and so has to rely on imports for internal energy needs. The Tindouf and Tadla basin are targets for exploration. These are Silurian-age shale deposits and they contain an estimated 266 Tcf and 1.5 Tcf of technically recoverable gas reserves.1

In Saudi Arabia, the U.S. oilfield services company, Baker Hughes estimates shale gas reserves to be at 645 Tcf, the fifth largest of such reserve in the world.2 The country’s conventional gas reserves are estimated to be around 279 Tcf. Saudi Aramco has asked Halliburton and Schlumberger to begin carrying out feasibility studies for the production of shale gas. Seismic surveys are currently being carried out in the northern desert area close to borders of Iraq and Jordan. The Saudi Oil Minister, Al-Naimi has announced a few weeks ago that they will drill seven test wells for shale gas this year.

However, Saudi Arabia’s goal is very different. The country wants its shale gas to replace crude oil being burned by the kingdom’s power plants. Crude oil is a very expensive fuel for the domestic power market. Saudi Arabia burned 766,000 b/d of crude oil to generate electricity in the period between June and August 2012.

Oman is also investigating exploration for shale gas, as the Sultanate looks to alleviate the gas consumption holding back its industrial and petrochemical sectors. A lack of additional natural gas resources has impeded progress in economic diversification, especially in the industrial sector. Although Oman is a net exporter of oil and natural gas, it also imports small volumes of natural gas from Qatar via UAE. The Dolphin Pipeline provides Oman’s only natural gas imports, providing approximately 200 Mcf/d. BP is considering a $20 billion project to produce tight gas reservoirs deep under the Khazzan and Makarem fields in the north-central region. Earlier this month, Dr. Al-Rumhi, Minister of Oil and Gas of Oman, said that the decision will be taken in the coming few weeks.

India has several basins and the Indian Oil Minister, Verrapa Moily, recently said India plans to unveil its shale gas policy within the next two weeks as it seeks to exploit unconventional resources very soon.

The EIA report takes into consideration only four ‘prospective basins’, as they have indicated in the map in Figure 2. However, the Indian government has a larger estimate. Mr S.K. Srivastava, Director-General of Directorate General of Hydrocarbons, had said, “Six basins have been identified for offering subject to certain legislative changes. The Government is formulating a policy for offering these areas.” These basins are Cambay in Gujarat, Upper Assam-Arakan in the northeast, Godavari in central India, Krishna Godavari onshore in Andhra Pradesh and the Cauvery onshore and the Indo Gangatic basins.

 

potential shale gas natural gas in india 

Figure 2: Potential Shale basins in India. Source: EIA

The Kommugudem Shale in India’s Krishna-Godavari basin appears to have the greatest potential for production followed by the Cambay Shale in the Cambay basin. The Damodar Valley Basin’s Barren Measure Shale ranks as the lowest potential.  Interestingly, the Damodar Valley was where the first shale gas well was drilled in India, the RNSG-1 well, by Oil and National Gas Corporation (ONGC). The EIA report has stated India’s potential as 63 Tcf, however the Indian governments estimates, which include more basins, put the figure at around 496 Tcf of shale gas reserves.

The Southern-Indus basin of Pakistan, from the organic-rich Sembar and Ranikot formations, has been identified with potential for shale gas. The estimates are that of 51 Tcf technically recoverable.

potential shale gas natural gas in indonesia

Figure 3: The Indonesian island of Borneo. Source: American Association of Petroleum Geologists (AAPG)

Another gas rich country which was not considered in the EIA report is Indonesia. The country already has significant coalbed methane resources, located mainly in the sedimentary basins on the islands of Sumatra and Borneo. 

A study by the Asia-Pacific Economic Cooperation, estimated that Indonesia has geologically attractive shale gas resources in the Barito and Kutei basins of Kalimantan (shown above in figure 3) as well as tight gas prospects in the North and South Sumatra basins.

Edy Hermantoro, an upstream oil and gas director at the energy and mineral resources ministry of Indonesia said “Bandung Technology University estimates that Indonesia holds 1,000 tcf of shale gas reserves”. Indonesia is currently opening up the shale blocks for exploration by foreign companies.

Figure 4: Potential shale reserves in the Khorat Basin, Thailand. Source: Earth-Science Reviews

potential shale gas natural gas thailandIn South-East Asia, Thailand is also a lesser known among shale potentials. Thailand has four main onshore sedimentary basins and regions with the potential for unconventional gas resources Khorat Plateau, Northern Inter-Montane Basin, Central Plain and Southern Plains. Based on geological reviews, the shale gas deposits in the Khorat Plateau is said to be the most promising followed by the tight sandstones in the Khorat and Central/Southern Plains and modest size CBM deposits in the Northern Inter-Montane Basin.

In 2011, The Petroleum Authority of Thailand signed a MOU with Statoil to study the unconventional (and conventional) gas resources of Thailand and a small lease block has been awarded for Coal bed Methane exploration in southern Thailand.

So while current media speculation is paying a lot of attention to the US shale revolution; there are many unsung shale-play heroes around the world who are quietly playing their parts in bringing forth a global shale revolution.

 

1: Kuuskraa V, Stevens S, Van Leeuwen T and Moodhe K: “World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States,” Washington, DC, US DOE EIA, April 2011.

2: Deaton. C. “How Unconventional shales are changing the game”. Baker Hughes. 2012

 

Manzoor Roome's picture

Thank Manzoor for the Post!

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Grant McDermott's picture
Grant McDermott on April 6, 2013

Very informative, Manzoor.

Your post reminded me of a point that Paul Collier makes very effectively in his book, The Plundered Planet: The average value of known sub-soil assets (fossil fuels, minerals, etc) in Europe is five times that of Africa. This huge disparity is not due to fundamental differences in geology, but rather the simple lack of prospecting activity that has taken place in Africa up until now. (See: http://www.social-europe.eu/2010/06/africas-window-of-opportunity/)

Alonside the geological nature of these reserves, the remaining question is whether the insitutional features of these countries are as favourably predisposed towards supporting a shale boom as in the U.S.. I’m referring to who controls the property rights of these underground resources, etc… Blake Clayton had good post on these issues recently: http://blogs.cfr.org/levi/2013/03/15/could-the-north-american-shale-boom-happen-elsewhere/

Two other very interesting implications are related to the knock-on effects of shale gas development in these “unsung” regions. 1) As you point out, Europe potentially stands to gain from Algeria’s investment even if they don’t pursue shale extraction themselves. 2) Saudi Arabia’s ability to meet their increasing domestic energy demands through gas (rather than oil) will clearly have implications for the global oil market. Indeed, this may resolve the so-named “Call on OPEC” (e.g. see here).

Sage Radachowsky's picture
Sage Radachowsky on April 11, 2013

COMPLETELY left out of the story?  The global warming emissions that are embodied in the shale gas.

Heroes?  No, more like profiteering global pirates of the environment, well-paid exploiters of the Earth.

 

Please, we do not need this hagiography.

Sid Abma's picture
Sid Abma on April 11, 2013

There is further education to be enforced to the owneers and operaters of commercial buildings and industries that consume natural gas, and even the utility companies that are scheduling the shut down of these very old coal fired power plants with the plans of converting these locations to natural gas.

Natural gas can be consumed so much more efficiently than is being done today. If the residential market has mid 90% energy efficient natural gas appliances, this is the proof that natural gas can be consumed to mid 90% energy efficient or better. These residential appliances vent Cool exhaust out of the wall through PVC pipe.

These larger commercial and industrial natural gas appliances all have chimneys, much bigger than home chimneys. These big natural gas appliances blow a lot of HOT exhaust into the atmosphere.  Why? The technology of Condensing Flue Gas Heat Recovery is designed to recover most of the heat energy from these commercial and industrial waste exhaust gases. When the heat energy is recovered, it can then be used in the building or facility where it was combusted. Being vented into the atmosphere will be COOL exhaust.

Increased natural gas energy efficiency = Reduced utility bills = Profit
Increased natural gas energy efficiency = Reduced global warming
Increased natural gas energy efficiency = Reduced CO2 emissions
Increased natural gas energy efficiency = Water conservation

What natural gas is not wasted today will be there to be used another day, or used for something else.

Chris Walker's picture
Chris Walker on June 20, 2013

I like your work here. Now there’s even more current data out the US EIA on Technically Recoverable Shale Oil and Shale Gas… as of June 10.

South Africa, where Shell has had exploration rights in the Karoo Basin before preceeding and following a fracking moratorium is a case in point.

Preliminary information says it may have the world’s 5th largest reserves at 485 trillion cubic feet which is enough to planet-wide power generation for 5 years and 4 months by my math. Nevertheless, it’s opponents have a big megaphone at the moment, and are led by Deal, who received the 2013 Goldman Prize — or as it’s sometimes known, “the Nobel” of the environment.

Further, South Africa’s government is in a public comment period in finalizing new Gas Bill amendments that will bring the industry under tighter regulation to safeguard the environment.

Shell has fracturing expertise in its plus column, but my sense is that all around the world, the contentiousness of fracking will live or die with best practices. Companies will either mind their reputations as they are want to do, or regulators may find issue with allowing their continued operations. So in one sense, the unsung heros you lay out at tabula rasa upon which the industry will broadly write it’s own tagline in public perception based on performance in minding water supplies, tending waste-water, and mitigating methane seepage.

But beyond all that, China, India, South Africa and others have a gigantic opportunity to wean themselves off of coal a bit, improve their international images, and aid in the stewardship of public health by bringing online, more gas-fired power generation as a matter of expediency. (50% or less of coal’s CO2, 33% or less of coal’s nitrogen oxides, 1% of the sulfur oxides, negligible mercury, no particulates, and no solid waste.) People argue about this no matter what you tell them, but there is a growing chorus of people who think that you can’t really get serious about environment without developing shale resources. That’s a loaded way to put it, but whether I’m right will come down to well and water management. 

 

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