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voda 11 februari 2012 15:54

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Economies of Shale
905 words
11 February 2012
The Spectator
SPECTR
3
English
(c) The Spectator (1828) Limited 2012
The weather conditions of the past week could not have been better conceived to show up the inadequacies of Britain's - and the rest of Europe's - energy policy. A vast anticyclone extending from Siberia to eastern England has brought snow as far south as Rome and temperatures of minus 40C to Eastern Europe. With North Sea gas production in sharp decline, never has Europe's position on the end of a long gas pipeline originating in Russia been so exposed.
As that country's demand for energy has spiked, so the quantity of gas which it is prepared to export to the rest of Europe - also gagging for extra energy - has slumped. The wholesale price of gas has soared by more than a third in a week. Were electricity companies not still able to substitute some gas generating capacity with coal-fired power - from plants due to be closed in 2016 to meet carbon-reduction targets - we could well find ourselves struggling to keep the lights on. Try as we might, we are not going to achieve national energy security with any presently known renewable technologies, as they are too expensive and unreliable. It is conceivable that we could achieve it, however, by means of a vast but hitherto unexploited resource: shale gas.
The vast reserves of gas concealed in shale have long been known about, but until recently there was no economic means to extract them. Over the past five years, however, the situation has changed dramatically, thanks to a method of hydraulically fracturing rock along its seams - or 'fracking' for short. While Britain and Europe have been throwing hundreds of billions in subsidies at renewable energy, the US shale gas industry has expanded to account for one quarter of all the country's gas production - all without subsidies. In doing so it has caught many environmentalists completely unawares. The energy-scarce world of their dreams has been put off for a couple of centuries at least;
instead we are staring at a future of potential energy abundance.
Moreover, exploitation of shale gas is not at odds with carbon reduction policies: kilo - watt for kilowatt, energy generated from shale gas emits only half as much carbon as coal - the energy source which it is already beginning to replace in many American states. It is estimated that
4 spent on shale delivers the same energy as
25 spent on oil Even Barack Obama has belatedly started to extol the virtues of shale: little wonder, given that a shale-driven glut of natural gas has halved US electricity prices. Over the last three years, more than 4,000 wells have been drilled in the Marcellus shale formation in Pennsylvania.
Early indications are that Europe may be no less fortunate in its reserves than the US.
Current estimates are that the Continent has 630 trillion cubic feet of shale; not far behind the US's potential of 862 trillion cubic feet.
Britain's recoverable reserves are estimated at 20 trillion cubic feet, which will produce perhaps enough energy for the next 100 years.
This is, to put it mildly, a claim that cannot be made about Britain's wind farms. And this is what infuriates the environmental lobby: the discovery of shale threatens to make redundant their carefully planned, heavily subsidised plans for renewable energy. There may be no energy crisis after all.
Fracking is not a pretty process: it involves drilling a large well and then pumping large quantities of water and sand down it in order to fracture the appropriate strata of rock.
Once the rock is fractured, gas can seep into the well and be forced to the surface. But it isn't anything like as hazardous as environmentalists - in a repeat of the fantasy and exaggeration which characterised the campaign against GM foods a decade ago - like to claim.
Another fear is that fracking causes earth tremors. True, a couple of very minor tremors - of the sort that occur in Britain hundreds of times a year - do appear to have been caused by test-drilling near Blackpool, the epicentre of an embryonic British fracking industry which is now temporarily stalled as a result. But then coal-mining also causes minor earth tremors. It is a problem to be managed, not to be used as a reason to close down an entire industry. Mike Stephenson, head of energy science at the British Geological Survey, said that 'most geologists think this is a pretty safe activity' because 'the risk is pretty low and we have the scientific tools to tell if there is a problem'.
In the 1990s, Britain allowed environmentalist propaganda to obliterate Britain's foothold in the GM food industry. Far from keeping Britain GM-free, as the environmental lobby fantasised, we ended up eating GM soya imported from the US - and nobody has suffered as a result. All that the campaign achieved was to ensure that Britain will not profit from the technology.
The same must not be allowed to happen with shale gas. At present, more people die from the cold in Britain - because they are unable to afford to heat their houses - than are killed on the roads. This is an appalling state of affairs for a supposedly rich country. Britain could be on the cusp of a new era of clean, cheap shale energy - but only if we seize the opportunity, as the Americans have.
The Spectator

voda 14 februari 2012 17:18

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China Looks to Shale Gas for Energy Strategy
169 words
13 February 2012
The China Perspective - Daily Briefing
CHIPDB
English
Copyright 2012. The China Perspective. All rights reserved.

Daily Beiefing @ The China PerspectiveChina has categorized shale gas as an independent source of energy and plans to boost its annual output to 100 billion cubic meters by 2020, close to the current level of natural gas output, according to a national geological prospecting conference.
Recoverable reserves of shale gas in China are projected to total 31 trillion cubic meters, similar to the amount of natural gas reserves, official data show.
Rapid development of shale gas, a nascent industry in China, will help ease the nation's stained energy supply and restructure the makeup of its energy consumption to reduce dependence on polluting resources.
The United States is leading the way in extracting shale gas – it rolled out 180 billion cubic meters last year.
It is estimated by PetroChina that China's production and consumption of natural gas grew 6.9% and 20.6% to ¥101 billion cubic meters and 129 billion cubic meters respectively in 2011.
All Effort Limited

voda 20 februari 2012 16:27

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Corporate News: Gazprom Sits Out Shale Race
By Tatyana Shumsky and Ryan Dezember

17 February 2012
The Wall Street Journal
(Copyright (c) 2012, Dow Jones & Company, Inc.)

NEW YORK -- As many of the world's biggest energy companies vie for shale-gas assets, a top executive at Russia's OAO Gazprom said it doesn't plan to join the frenzy.
"Our traditional reserves are tenfold more efficient than shale resources" to develop, Gazprom Deputy Chief Executive Alexander Medvedev said in an interview Thursday. "In Russia, we put [shale] on a long shelf and maybe in 50 to 70 years we will look at it again." He said the state-controlled company, the world's largest producer of natural gas, has "plenty" of its own shale resources.
Gazprom has said that shale drilling, which requires a process called hydraulic fracturing to break apart underground rock, poses "significant environmental risks, particularly the hazard of surface and underground water contamination with chemicals applied in the process." The company also said services and pipelines in Europe are insufficient to enable the sort of drilling boom that has flooded the U.S. and Canada with inexpensive natural gas.
Gazprom's reluctance to pursue shale drilling comes as peak gas demand has outstripped supply in Europe, primarily because of unusually cold weather that has killed more than 600 people on the Continent.
Some of Gazprom's European customers reported lower deliveries from Gazprom this winter as natural gas was diverted to Russia. The reduced supply underscored Europe's reliance on its eastern neighbor. Russian exports account for about a quarter of the European Union's natural-gas needs.
"Nobody cut supply," Mr.Medvedev said. "Gazprom increased production to historical highs." Gazprom reported that its production rose 8% last year as it spent an estimated $50 billion. Its capital expenditures are expected to approach $35 billion this year.
EU officials have kept a close watch on Russian gas deliveries since a series of energy crises. Most recently, Russia cut off natural-gas supplies to Europe for three weeks amid a price dispute with Ukraine in January 2009.
Several European nations sit atop shale deposits.
The U.S. Energy Information Administration, or EIA, estimates that Poland has the Continent's largest reserves. Poland has been keen to tap its deposits to end the country's dependence on Russia for energy. U.S. oil companies Chevron Corp., Exxon Mobil Corp. and ConocoPhillips have begun drilling projects in Poland.
Gazprom has sufficient reserves to meet growing natural-gas demand at home, in Europe and China, a market that the company long has coveted, Mr. Medvedev said.
China also has substantial shale-gas reserves, which Mr. Medvedev said has probably delayed China's commitment to a long-term natural-gas supply deal with the Russian company. The EIA estimates that China has the world's largest shale reserves, with 1,275 trillion cubic feet of gas -- more than the U.S. and Canada combined.
Mr. Medvedev, who was in New York to meet with Gazprom investors, said China is likely waiting on the results of its domestic shale drilling before committing to a long-term pact. An agreement has been reached on the last outstanding details of that pact, which will peg the price of natural gas to that of oil, he said. "The ball is in the Chinese court as to when they want our gas," Mr. Medvedev said.
Chinese companies have been among the most active investors in U.S. and Canadian shale fields and have begun cracking open their own deposits with the help of Western oil-field-service companies such as Baker Hughes Inc.
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voda 21 februari 2012 16:48

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Exxon tempers European shale gas enthusiasm
By Tom Bergin
rds
20 February 2012
Reuters News
(c) 2012 Reuters Limited

LONDON, Feb 20 (Reuters) - U.S. oil group Exxon Mobil
sought to cool predictions of a European shale gas revolution, saying commercial production was at least five years away and dismissed forecasts offered by other industry players as "highly speculative".
Kevin Biddle, Exxon's exploration director for Europe, also downplayed the prospects for Poland -- believed by many to have the continent's largest reserves -- leading the shale gas charge, saying on Monday that Germany was more likely to be the first shale gas producer.
"Five years is possible for some areas -- we have to be working at a pretty good clip to get any significant production online in that time," he told the International Petroleum Week conference in London.
Exxon, the largest oil company in the world by market capitalisation, is one of the most active drillers for shale gas on the continent, and is exploring in Poland and Germany.
Yet it has tended to make less noise about its operations than some smaller groups, which have boosted talk that Europe could experience the "shale gale" that rocked the United States.
"The high resource numbers that some people quote are highly speculative," Biddle said.
Within half a decade, an explosion of shale gas production has sent the U.S. market from shortage to glut and led to plans to export gas as liquefied natural gas.
In the past year, some companies have spurred talk of a European shale gale.
In September, Cuadrilla Resources said it had found 200 trillion cubic feet (tcf) of gas in Northern England -- enough to feed UK needs for many years -- despite only drilling three wells on its acreage.
Experts questioned how such a large find was ascertained on such limited drilling.
Last month, Canada's Tamboran Resources said it had found 4.4 tcf of shale gas in Northern Ireland, without drilling a single exploration well.
Also speaking at the IP Week conference, John Manzoni, Chief Executive of Talisman Energy, which is also exploring for shale gas in Poland, echoed Biddle's caution.
He said his company had completed two wells in the country and planned to commence drilling on another soon.
The most recent had discovered gas and liquids -- which are even more valuable than gas -- but said two wells were not enough to determine whether the finds were commercial.
"People get very excited about it but this is early days, it's going to take a while," Manzoni said.
The risks to the viability of shale gas are not only geological.
Poland needs to develop a fiscal structure which will encourage shale gas production, Manzoni said, while Biddle said his prediction about Germany hinged on the country not banning the controversial production process known as "fracking".
Germany's parliament has been holding hearings on hydraulic fracturing, or fracking, which involves shooting water and chemicals into rock to allow the gas inside to escape.
Environmentalists say the process risks contaminating ground water, leaks methane into the atmosphere and can cause tremors.
Exxon last month said its two shale wells in Poland had not found commercial quantities of gas, prompting Gazprom Europe's largest gas supplier, to say European shale was an "illusion".
(Editing by David Hulmes)
EXXON-SHALE/EUROPE

Reuters Limited

voda 21 februari 2012 16:48

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China shale delay to boost LNG imports
RAKTEEM KATAKEY, DINAKAR SETHURAMAN and GUO AIBING Bloomberg News

19 February 2012
The Wilkes-Barre Times Leader
Copyright 2012, NewsBank. All Rights Reserved.

China's ambitions to unlock the natural gas trapped in shale rocks are likely to take longer than planned, boosting the nation's reliance on overseas suppliers from Exxon Mobil to Royal Dutch Shell.
Shale gas output will rise to 23 billion cubic meters in 2020, or 29 percent of the government's 80 billion target, below the average estimate of seven analysts surveyed by Bloomberg. The shortfall, stemming in part from tougher geology, should boost liquefied natural gas imports from about $5.8 billion in 2011 while curbing speculation that the nation can duplicate the U.S. shale boom that has upended global energy markets.
Drillers in China, the world's biggest holder of shale reserves, have yet to produce shale gas commercially, with Shell helping China National Petroleum Corp. to sink the nation's first horizontal well. Explorers such as Cnooc and China Petrochemical, which have invested more than $5.7 billion in so-called unconventional oil and gas assets overseas, have found their technology lacking at home.
"There are resources in China but the geology is different and more challenging than in the U.S.," Liu Zhenwu, a vice president at state-run CNPC's advisory center, said in a Feb. 7 interview in Bangkok. "Technical issues need to be solved first. It may take a few years, maybe a decade, maybe more, before large quantities of shale gas are produced in China."
Until then, China will need to boost purchases of LNG from providers such as Exxon, Chevron and Woodside Petroleum to meet demand. The nation imported 12.2 million metric tons of LNG in 2011, worth $5.8 billion at last year's average price, customs data show. Paris-based GDF Suez estimated shipments may almost quadruple to 44 million tons in 2020.
The global LNG market last year was valued at about $123 billion, based on an average price of $10 for a million British thermal units and 336 billion cubic meters of shipments.
Grieder forecasts China will produce 20 billion cubic meters of shale gas in 2020. "The government's target is ambitious," he said. "It reflects their confidence about the resource base and about strong domestic and foreign investor interest in the sector."
The U.S. produced 96 billion cubic meters in 2009, overtaking Russia as the world's biggest natural gas provider. Output surged to 142 billion cubic meters in 2010, causing prices to slump.
Natural gas prices in New York were close to $10 per million British thermal units end of 2000 and rose a record of $15.38 per million British thermal units in December 2005, spurring drilling investments. Prices on the New York Mercantile Exchange have dropped this year to around $2.50.
Chinese shale may hold 1,275 trillion cubic feet (36 trillion cubic meters) of technically recoverable gas, 12 times the country's conventional gas deposits, an April report by the U.S. Energy Information Administration said.
That's almost triple the 482 trillion cubic feet in the U.S., according to a Jan. 23 estimate by the EIA. "On average the shale deposits in China are deeper than in the U.S. and more difficult to get to," Neil Beveridge, an energy analyst at Sanford C. Bernstein in Hong Kong, said Feb. 10. "The mineralogy of the shale rocks in China is also primarily what is called non-marine, which means their productivity could be lower. The U.S. has marine shales which have much lower clay content and are more easily fractured."
Teams that unlock gas with hydraulic fracturing, or fracking, in the U.S. found success mostly from 2 kilometers (1.2 miles) to 4 kilometers deep, while in China some key deposits are found 6 kilometers down, according to Beveridge.</
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voda 28 februari 2012 16:41

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Eagle Ford Shale play is creating infrastructure boom
Sanford Nowlin
24 February 2012
San Antonio Business Journal

© 2012 American City Business Journals, Inc. All rights reserved.

The Eagle Ford Shale is generating more jobs and investment in the San Antonio area as companies piece together the pipelines that will ship product to market from the massive petroleum formation.
A nationwide surge in construction of so-called "midstream" infrastructure — oil and gas pipelines, holding and processing facilities — will generate more than $229 billion in capital investment and average yearly employment of 125,000 people over the next 25 years, according to a Black & Veatch study released last week.
A good share of that growth, experts say, is headed to the Eagle Ford, which curves through 24-counties south of the Alamo City.
"The shales are an absolute game changer in terms of what’s required for midstream," says Roger Ihne, Mid-American energy client portfolio leader for Deloitte Services LP. "I think the activity we’re starting to see now we’ll see continue for the next two to three years, maybe the next three to four years."
Researchers predict the Eagle Ford will create billions of dollars in economic impact across South Texas, but so far the majority of jobs have been on the drilling side of the business. That, according to industry officials, is about to change.
"Last year, we saw a lot of midstream developing from a planning standpoint," says Mike Howard, CEO of San Antonio-based Howard Energy Partners LLC. "We look at 2012 and 2013 as the building years for major infrastructure across the Eagle Ford."
Spreading out
Howard Energy operates 280 miles of gathering pipelines across the Eagle Ford shale play and is preparing to announce more projects over the coming months, according to Howard. Formed last summer, the company expects to end the year with $130 million to $140 million in revenues.
Howard Energy already employs 800 people and plans to add another 300 by yearend. A substantial share are hires from the Alamo City area, Howard adds, but some have relocated from Houston, long a pipeline-industry hotbed.
"As these companies grow, San Antonio becomes a more important presence for midstream activity," Howard says. "We’re not just creating jobs in the field."
Dallas-based Energy Transfer Partners LP also is adding Eagle Ford jobs.
The company currently has 60 positions open between the Alamo City and other South Texas locations. It already has a 300-employee corporate office in San Antonio and employs nearly 120 workers across the shale.
ETP plans to spend $3 billion on pipelines, processing plants and other facilities inside and serving the Eagle Ford. It will complete about 267 miles of shale pipeline by yearend.
Last week, the company said its Lone Star NGL LLC joint venture with Regency Energy Partners LP will construct a 100,000-barrel-per-day natural gas liquids fractionation facility East of Houston to process shale product.
"If the Eagle Ford isn’t the most active place in the United States (for midstream construction), it’s certainly one of the most active," says Mackie McCrea, ETP’s president and chief operating officer. "I’d put it up against anything."
Unlike shale plays such as North Texas’ Barnett, the Eagle Ford is rich not only in natural gas but oil and natural gas liquids. All three require different types of transport and processing facilities. And that, McCrea says, means South Texas will see more robust construction.

voda 28 februari 2012 16:41

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Merger driver

For its part, San Antonio’s publicly traded pipeline firm NuStar Energy LP has unveiled a string of South Texas projects including a new 12-inch line from Corpus Christi to Valero Energy Corp.’s Three Rivers refinery and the reversal of an existing 16-inch line from Three Rivers to Corpus.
Now, the company is preparing to revamp an unused 12-inch line from Corpus Christi to Houston so it can deliver shale product to refiners and shippers there, says Jim Siciliano, vice president of business development. The line will go into service early next year.
NuStar also is mulling two new-construction projects in the shale, which Siciliano declined to detail.
"I think you’ll see a lot of shuffling of the deck, expanding existing infrastructure," he says. "I haven’t seen much like this. People haven’t built a lot of new pipelines like this in 20 years."
Siciliano says he expects a flurry of merger and acquisition activity as companies work to piece together Eagle Ford infrastructure. NuStar, he adds, probably will be among them.
"Our long-term goal is to grow in South Texas and some of that growth is likely to be through acquisition," he adds.
Indeed, fueled by shale growth, the industry already is in a merger frenzy, experts say.
Houston’s Kinder Morgan Energy Partners LP in October announced a $38 billion deal to buy rival El Paso Corp., 2011’s largest corporate takeover. Earlier in the year, Energy Transfer Equity — ETP’s general partner — said it’s acquiring Southern Union Co. for $4.2 billion.
"We’re seeing a unique expansion," Deloitte’s Ihne says. "Two of the three largest (petroleum industry) M&A deals last year were in the midstream area. I’ve never seen that before."
Although pipeline expansion is a job creator, it’s not without controversy. The State Department last month denied TransCanada’s application to build the $7 billion Keystone XL pipeline after determining that a deadline imposed recently by Congress would not let it complete a thorough environmental review.
The Nature Conservancy also issued a recent report warning pipeline expansion in Pennsylvania’s Marcellus shale could threaten wildlife there.
But Siciliano says he doesn’t expect regulators and South Texas residents to balk at the construction, especially since the pipelines will cut down on tanker traffic and road congestion.
"As long as we’re doing it safely, it will go forward," he adds.
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voda 28 februari 2012 16:42

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Marcellus shale drilling expands in Pennsylvania
Richard Gazarik
684 words
26 February 2012
Pittsburgh Tribune-Review
PBTR
English
Copyright 2012, Tribune-Review Publishing Co., All Rights Reserved.
Companies drilled 2,755 Marcellus shale gas wells in Pennsylvania in 2011, up from 1,386 in 2010, according to the state Department of Environmental Protection.
These companies are major players in the shale gas industry, based on earnings and production. Leasing, employee and production figures are for Pennsylvania only. Mcf stands for 1,000 cubic feet, a unit of measure for natural gas; 1,000 mcf is enough natural gas to heat an average home for four days, according to the American Gas Association, which put average daily home usage at 193 cubic feet in 2009, the latest figure available.
1. Chesapeake Appalachia (Chesapeake Energy)
Local office: Bradford
Corporate headquarters: Oklahoma City, Okla.
CEO: Aubrey Mclendon
Acres under lease: 401,000
Employees: 2,199
2011 Production: 3,329 mcf per day
2011 Earnings (by December): $879 million
2010 Earnings: $1.7 billion
Marcellus shale gas production July 1, 2009-June 30, 2011: 162,971,890 mcf
2 Talisman Energy USA
Local office: Cranberry
Corporate headquarters: Horseheads, N.Y.
President: Rob Broen
Acres under lease: 233,000
Employees: 140
2011 Production: 315 mcf per day
2011 Earnings (by December): $165 million
2010 Earnings: $347 million
Marcellus shale gas production July 1, 2009-June 30, 2011: 147,971,631 mcf
3. Cabot Gas & Oil
Local office: Susquehanna, Susquehanna County
Corporate headquarters: Houston, Texas
CEO: Dan Dinges
Acres under lease: 253,000
Employees: 400
2011 Production: 100 mcf per day
2011 Earnings (by December): $106.6 million
2010 Earnings: $100 million
Marcellus shale gas production July 1, 2009-June 30, 2011: 120,445,695 mcf
4. Range Resources Appalachia LLC
Local office: Canonsburg
Corporate headquarters: Fort Worth, Texas
COO: Jeff Ventura
Acres under lease: 1.1 million
Employees: 400
2011 Production: 400 mcf per day
2011 Earnings (by December): $221 million
2010 Earnings: $89.3 million
Marcellus shale gas production July 1, 2009-June 30, 2011: 109,562,831 mcf
5. EQT Production
Local office: Pittsburgh
Corporate headquarters: Pittsburgh
CEO: David Porges
Acres under lease: 530,000
Employees: 1,800
2011 Production: 558 mcf per day
2011 Earnings (by December): $178.9 million
2010 Earnings: $470.5 million
Marcellus shale gas production July 1, 2009-June 30, 2011: 48,918,016 mcf
6. Chevron Appalachia (Atlas Energy)
Local office: Moon
Corporate headquarters: San Ramon, Calif.
COO: Bruce Niemeyer, vice president
Acres under lease: 228,000
Employees: 350
2011 Production: 244 mcf per day
2011 Earnings (by December): $94.3 million
2010 Earnings: $278.6 million
Marcellus shale gas production July 1, 2009-June 30, 2011: 30,164,456 mcf
7. Shell Appalachia
Local office: Warrendale
Corporate office: Houston, Texas
CEO: Marvin Odum
Acres under lease: 700,000
Employees: 185
2011 Production: 50 mcf per day
Earnings: Information not available for Shell Appalachia; earnings listed under Shell, a global group of energy and petrochemical companies.
Marcellus shale gas production July 1, 2009-June 30, 2011: 40,398,211 mcf
8. Seneca Resources (National Fuel Gas Co.)
Local offices: Oil City and Erie
Corporate headquarters: Houston, Texas
President: Matthew D. Cabell
Acres under lease: 745,000
2011 Production: 50.4 mcf per day
2011 Earnings (by December): $258.4 million
2010 Earnings: $225.9 million
Marcellus shale gas production July 1, 2009-June 30, 2011: 28,554,724 mcf
9. CNX Gas (Consol Energy)
Local office: Cecil
Corporate headquarters: Cecil
CEO: J. Brett Harvey
Acres under lease: 633,000
Employees: 2,476
2011 Production: 500 mcf per day
2011 Earnings (by December): $167 million
2010 earnings: $239.1 million
Marcellus shale gas production July 1, 2009-June 30, 2011: 21.415.752 mcf
10. Anadarko E & P Co.
Local office: Renovo, Clinton County
Corporate headquarters: The Woodlands, Texas
CEO: James T. Hackett
Acres under lease: 330,000
Employees: 2,200
2011 Production: 556 mcf per day
2011 Earnings (by December): $274 million
2010 Earnings: $1.6 billion
Total Marcellus shale production July 1, 2009-June 30, 2011: 20,459,645 mcf
Sources: Pennsylvania Department of Environmental Resources; company reports and filings with U.S. Securities and Exchange Commission
The Tribune-Review Publishing Co

voda 29 februari 2012 16:51

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Permian Basin of West Texas seeing oil boom

26 February 2012
Associated Press Newswires
(c) 2012. The Associated Press. All Rights Reserved.

DALLAS (AP) - The Permian Basin of West Texas is experiencing an oil boom, leading some of the region's top oilmen to predict that Texas oil production will double within five to seven years.
Oil drillers over the last eight years have found that the dense oil rock of the basin surrounding Midland and Odessa responds well to hydraulic fracturing, releasing lush yields. Total oil production last year in Texas averaged more than 1 million barrels per day for the first time since 2001.
"Right in the basin, we could get up to 2 million barrels a day," Jim Henry of Midland-based Henry Resources told The Dallas Morning News (http://dallasne.ws/zthJvS ) for an article in its Sunday's edition.
"I've been totally surprised by the amount of oil we're finding out in the shale zones," Scott Sheffield, chairman and chief executive of Irving-based Pioneer Natural Resources Co., told the newspaper.
"We have 30 billion barrels of new oil discoveries," said Tim Leach, chairman and CEO of Midland-based Concho Resources. "It can be hard to get your mind around that.
The cloud on the horizon is the persistent drought that has gripped the region. Hydraulic fracturing, or "fracking," requires massive amounts of water to pump into the ground under high pressure.
Drillers also worry about the prospect of tax increases and limits placed on land use by the presence of such endangered species as the dunes sagebrush lizard.
But as long as crude oil prices remain high, around $100 per barrel, drilling will remain profitable.
Similar booms are under way in the Eagle Ford Shale of South Texas and the Bakken Shale of North Dakota and Montana. Production also is climbing rapidly in western Alberta Canada, which is now the largest source of U.S. oil imports.
"I could paint a scenario for you where we are producing 3 million more barrels per day by 2016, which would almost get us to the point where we could eliminate 60 to 70 percent of our OPEC imports," Texas Railroad Commissioner Barry Smitherman told The News. "With that greater control over our own energy security, we could care less about what happens in the Strait of Hormuz."
The narrow straight between the United Arab Emirates and Iran is considered strategically vulnerable to blockade by Iran's revolutionary regime.
The United States still imports 45 percent of the 19 million barrels of petroleum that it consumes, but that is a sharp reduction, according to the U.S. Energy Information Administration. In 2005, about two-thirds of all liquid fuels the United States consumed was imported.
------
Information from: The Dallas Morning News, www.dallasnews.com

voda 29 februari 2012 16:52

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Study tags 65,000 jobs, $4.9B boost to Ohio shale
By JULIE CARR SMYTH
Associated Press
28 February 2012

Associated Press Newswires
(c) 2012. The Associated Press. All Rights Reserved.

COLUMBUS, Ohio (AP) - An academic team enlisted by Ohio's business sector released a study Tuesday that finds oil and gas drilling will mean more than 65,000 jobs and an almost $4.9 billion investment in the state's economy by 2014.
Findings of the eight-month study were released to the media and members of the Ohio Shale Coalition, a partnership of energy interests spearheaded by the Ohio Chamber of Commerce.
The group commissioned the study in hopes of displaying the benefits to Ohio's ailing economy of a boom in shale drilling, including the controversial practice of hydraulic fracturing, or fracking.
A team of economics, energy and geology experts from Cleveland State University, Ohio State University and Marietta College's Department of Petroleum put together the report.
It found that by 2014, about $4.9 billion would be invested in Ohio's economy by the industry; almost 66,000 jobs would be created or "supported" by industry growth; $433 million in local and state taxes would be generated; and energy companies would be paying wages and benefits totaling $3.3 billion.
Altogether, the industry will generate $1.7 billion for Ohio's economy this year, $5.8 billion next year, and nearly $10 billion in 2014, the research found. Gross state product could grow by 1 percent, a significant increase from the 0.6 percent average for the past 13 years.
"This really has the potential of being transformational," said Ned Hill, dean of the urban affairs college at Cleveland State University and one of the researchers.
State Rep. Robert Hagan, a Youngstown Democrat, said he is hopeful for the benefits that will come to his northeast Ohio region from the new industry -- but the industry is moving too fast, and without checks and balances.
He announced Tuesday that he has gathered 1,500 signatures from his constituents -- whose area has been struck by a series of 11 earthquakes potentially linked to high-pressure injection of fracking wastewater into the earth. The petitions seek legislative hearings on fracking. The practice stimulates gas production by blasting millions of gallons of chemically treated water into a well drilled horizontally through shale about a mile underground.
"We admit that it's moving, but we will not say that we are going to ignore the safety factors, the environmental factors," he said.
Ohio Department of Natural Resources spokesman Carlo LoParo said the state is tripling the budget of its oil and gas division this year, due to increased drilling activity.
"We will have more than 110 inspectors and field staff in our oil and gas division to make sure all laws and environmental regulations are observed and enforced," he said. Money for that endeavor comes from fees assessed on the oil and gas industry, he said.
Employment projections contained in the report include both new and "supported" jobs, 16,000 in the service sector. That sector includes hotels, restaurants, doctors and other personal services. It anticipates 1,000 environmental compliance officers, construction jobs
Douglas Southgate, co-director of the Subsurface Energy Resource Center at Ohio State University, said the shale industry plays to Ohio's economic strengths, in the areas of manufacturing, plastics, and R&D.
Hagan, and fellow Democratic Reps. Mike Foley and Kenny Yuko are backing a proposal raising the state severance tax on recovery gas wells to 7 percent. The new rate would eventually raise proceeds from $2.6 million to $500 million. Some of that would be earmarked for local communities and alternative energy development.
Gov. John Kasich has called a moratorium within a 5-mile radius of a deep-injection well shut down after the Youngstown quakes, awaiting results of a state investigation into the cause. Deep-injection wells are for wastewater, and are not the same as wells for exploring or extracting oil and natural gas.
------
Online:
Ohio Shale Coalition Study: tinyurl.com/6pq2kvk

voda 7 maart 2012 17:47

0

IEA wijst op belang boren naar schaliegas voor de toekomst

LONDEN (Dow Jones)--Hoewel veel Europese landen tegen het boren naar schaliegas zijn, benadrukt het Internationaal Energie Agentschap (IEA) het belang van deze nieuwe vorm van gasproductie voor de toekomst van gaswinning.

In een telefonisch interview met Dow Jones Newswires, verklaart Fatih Birol, hoofd-econoom bij het IEA, dat veel Europese landen vanwege mogelijke milieu- en drinkwatervervuiling niks zien in het winnen van schaliegas en dat deze publieke oppositie een groot probleem vormt voor een nieuwe vorm van gaswinning die mogelijk veel potentie heeft in de toekomst.

"In veel landen is er een publieke oppositie en in sommige landen is het al verboden", zegt Birol. Zorgen over de impact van schaliegas-productie op het drinkwater zijn legitiem, maar kunnen worden opgelost met behulp van de beste technologie en de juiste regelgeving, verklaart hij verder.

Schaliegas wordt gewonnen door middel van het zogenaamde hydraulische fracturing, waarbij een mix van water, zand en chemicaliën onder de grond onder hoge druk wordt geinjecteerd. Tegenstanders van de gasboringen zijn van mening dat deze chemische stoffen of het gas zelf het drinkwater kunnen besmetten.

In Frankrijk en Bulgarije is het boren naar schaliegas daarom verboden en in het Verenigd Koninkrijk is er meerdere malen geprotesteerd naar aanleiding van een mogelijk grote vondst van schaliegas.

In de Verenigde Staten wordt het gas al wel veelvuldig gewonnen, waardoor de binnenlandse gasprijzen zijn gedaald en het land dusdanig minder importeert en zelfs kan overwegen gas te gaan exporteren.

Het IEA verwacht dat in 2035 de productie van schaliegas zo'n 428 miljard kubieke meter aan natuurlijk gas op kan leveren, hetgeen een omvang betreft die momenteel even groot is als het totaal aan natuurlijke gasproductie in het Midden-Oosten.

Omdat de huidige regelgeving niet adequaat zou zijn, is het IEA woensdag bijeen in Warschau, Polen om te overleggen met mensen uit de industrie en beleidsmakers over de mogelijkheden op milieugebied ten opzichte van de gaswinning. Het agentschap presenteert op 29 mei een rapport met bevindingen en aanbevelingen.

Door James Herron. Vertaald en bewerkt door Marleen Groen; Dow Jones Nieuwsdienst; +31 20 5715 200; marleen.groen@dowjones.com

voda 7 maart 2012 17:52

0

CHINA NEEDS TO INVEST UP TO US$95B IN SHALE GAS BY 2020: EXPERT
5 March 2012
(c) 2012 Asia Pulse Pty Limited

BEIJING, March 5 Asia Pulse - China needed 400 to 600 billion yuan (US$63-$95 billion) of investment in the exploration and development of shale gas to achieve 100 billion cubic meters of shale gas output by 2020, said Zhang Dawei, vice-director of the Research Center of the Oil and Gas Resources of the Ministry of Land and Resources (MLR).
China is aiming for leapfrog development of shale gas in 2011-2015, said Zhang at a recent press conference.
The government would give a high priority to the level of capital, technology, and other qualifications in the process of selecting bidders for the exploration and development of shale gas blocks, said Yu Haifeng, vice-director of the Department of Geological Perambulation of the MLR.
Besides existing oil and gas players, various companies interested include Xinjiang Guanghui Industry Investment (Group), some coalminers, housing developers, and others, according to Zhang.
Other players include PetroChina (SSE:601857; SEHK:0857), Sinopec (SSE:600028; SEHK:0386) and CNOOC Ltd. (SEHK:0883).
China has already conducted the first-round auction of shale gas exploration rights in 2011 and approved shale gas as an independent type of mining in the same year.
The government is expected to announce its national plan for shale gas for 2011-2015 soon, with possible government subsidies for the development of the alternative energy.
(XIC) cg

Asia Pulse Pty Limited

voda 15 maart 2012 17:27

0

China 5-Year Shale Gas Plan Sees Modest Output by 2015

14 March 2012
© [2012] RIA OREANDA. All Rights Reserved

Economy. Beijing. OREANDA-NEWS . March 14, 2012. China is targeting relatively modest output for its nascent shale gas sector in a development plan for the five-year period ending in 2015 that it will publish soon, the Beijing Times reported. The government has targeted output of 6.5 billion cubic meters of shale gas output in 2015, the newspaper said, citing unnamed officials at the Ministry of Land and Resources. Although China's potential shale gas reserves are massive, China hasn't launched commercial production of the unconventional energy source. Domestic and foreign energy majors working in China are hoping that they can mirror a rapid gas output increase in the U.S. energy sector over the past decade on the back of new technologies that have unlocked gas from rock formations that were previously inaccessible. China is pushing hard to increase its use of the relatively clean-burning hydrocarbon and cut dependency on coal, which is used to generate 70% of China's electricity.
But large-scale production is still many years off, as targeted output of 6.5 million tons in 2015 would boost China's overall gas output by only slightly over 6% from current levels. PetroChina Co. and Royal Dutch Shell PLC said in December that they had found gas after drilling their first shale gas evaluation well in a block in Sichuan province, while companies including Total SA and Chevron Corp. have also been actively searching for shale reserves in China. On Monday, China Huadian Corp., one of the country's largest power companies, inked a framework agreement with Hunan province's authorities to tap shale deposits there. The U.S. Energy Information Administration said last year that China has an estimated 1,275 trillion cubic feet of technically recoverable shale gas reserves, making it the largest repository of shale gas in the world.
Information Agency Oreanda News, LLC

voda 19 maart 2012 16:45

0

UPDATE: China: Shale Gas Output To Reach 6.5 Bln Cubic Meters A Year By 2015
(c) 2012 Dow Jones & Company, Inc.

-- China's annual shale gas output to reach 6.5 billion cubic meters in 2015, the government says
-- Shale gas output to reach 60 billion-100 billion cubic meters annually by 2020, it says
-- China's exploitable shale gas reserves to reach 200 billion cubic meters by 2015, it says
-- Government encourages cooperation with foreign companies, research institutes
(Adds 2020 output projection, estimated reserves, cooperation with foreign companies, impact on emissions, Statoil talks with Shenhua, US technological advancements)

BEIJING (Dow Jones)--China's annual output of shale gas is expected to skyrocket from virtually zero now to 6.5 billion cubic meters in 2015, and to at least 10 times that amount just five years later, helping the country reduce its reliance on dirtier coal and cut its carbon emissions, the government said in a shale gas development plan released Friday.
China is expected to have identified total exploitable gas reserves of 200 billion cubic meters by 2015 and total proven reserves of 600 billion cubic meters, it said.
Shale gas output is also forecast to rise dramatically from 2015, to 60 billion-100 billion cubic meters annually by 2020, due to more intensive exploration in the 19 designated exploration areas, the plan said.
The five-year plan was drafted by the National Energy Administration and issued by the National Development Reform Commission.
The targeted 2015 output of 6.5 billion cubic meters would boost China's overall natural gas output by more than 6% from current levels.
In the plan, the government urges Chinese companies to work with foreign companies and research institutes with expertise in exploring for and exploiting unconventional natural gas resources.
It also stressed the environmental benefits of exploiting such resources. Using just 6.5 billion cubic meters of gas to generate electricity instead of the coal needed to generate an equivalent amount would cut annual emissions of carbon dioxide by 14 million metric tons, sulfur dioxide by 115,000 tons and nitrogen oxides by 43,000 tons.
China is pushing hard to increase its use of natural gas and reduce its dependency on coal, which it currently uses to generate around 70% of its electricity. But large-scale exploitation of shale gas reserves has yet to begin.
China has an estimated 25.08 trillion cubic meters of potentially recoverable shale gas reserves, domestic media reported this month, citing the Ministry of Land and Resources.
The U.S. Energy Information Administration last year said that China has an estimated 1,275 trillion cubic feet of technically recoverable shale gas reserves, which would make it the largest repository of shale gas in the world.
Domestic and foreign energy majors working in China hope to replicate the huge increase in shale gas output seen in the U.S. over the past decade. U.S. companies pioneered the technique known as hydraulic fracturing, or "fracking," enabling them to extract previously inaccessible gas from rock formations. The result was a massive increase in recoverable natural gas reserves, sharply higher output and tumbling gas prices.
PetroChina Co. (PTR) and Royal Dutch Shell PLC (RDSB) said in December that they had found gas after drilling their first shale gas evaluation well at a block in Sichuan province. Other companies, including Total SA (TOT) and Chevron Corp. (CVX), are also seeking shale gas reserves in China.
Norway's state-owned Statoil ASA (STO) is in initial talks with Chinese company Shenhua Geological Exploration about jointly developing shale gas projects in China, industry news portal Upstream reported Friday.
China Huadian Corp., one of the country's largest power companies, this month signed a framework agreement with authorities in Hunan province to tap shale deposits there.
-Sarah Chen contributed to this article, Dow Jones Newswires; (8610) 8400 7719; sarah.chen@dowjones.com [ 16-03-12 0548GMT ]

voda 20 maart 2012 17:01

0

Poland may have 1 trillion cubic metres of shale gas - report

(c) 2012 Reuters Limited

WARSAW, March 16 (Reuters) - Poland's first official shale gas estimate due next week will show deposits at 1 trillion cubic metres, a fifth of what had been floated earlier, the country's public TVP television broadcaster said in its Friday evening news bulletin.
Warsaw has developed high expectations for shale gas to reduce Poland's overwhelming reliance on the highly-polluting coal and Russian gas deliveries since a U.S. energy agency said the country may have 5.3 trillion cubic metres of the commodity.
Poland's centrist cabinet of Prime Minister Donald Tusk granted more than a 100 shale gas exploration licenses so far, including to global majors, such as Chevron or Exxon Mobil, as it tries to develop a new market on its soil.
"Even if it's less, it will be enough to satisfy demand of the Polish market for several decades ahead," Poland's Treasury Minister Mikolaj Budzanowski also told TVP.
Budzanowski has recently made shale gas exploration a key priority for state-owned companies as Warsaw also hopes for future budget revenues from production it aims to start at the turn of 2014 and 2015.
But environmental concerns have already lead to a complete ban or temporary suspension on hydraulic fracturing, or fracking, in some other EU member states, while Brussels discusses risks stemming from the production.
Exxon also said its two shale wells in Poland had not found commercial quantities of gas, prompting Gazprom Europe's largest gas supplier, to say European shale was an "illusion."
(Reporting by Gabriela Baczynska; Editing by Marguerita Choy)

voda 20 maart 2012 17:02

0

Shale Is a Long Game at Chevron

Copyright 2012 Intelligence Press, Inc. All Rights Reserved.

It's early days in Chevron Corp.'s shale natural gas and oil program, but it is "an area of significant long-term growth" with opportunities in the United States, Canada, Argentina, China and Europe -- in liquids and dry gas -- an executive said during the company's analyst day last week.
"Just like we do for deepwater and heavy oil, we'll take a global approach to unconventional resources," Gary Luquette, president of Chevron North America Exploration and Production Co., told financial analysts. "This is consistent with our strategy to get into the right plays early and to focus on organic growth. This asset class is early in life and our production today is relatively small. We see it as an area of significant long-term growth."
Chevron Corp. CEO John Watson said the "return-driven" company sees shale gas as "a long-term play in our portfolio."
The company holds more than eight million acres of leases around the world that have unconventional potential, he said. "We also have a leading position in some of the key liquids-rich shales. With our legacy acreage, we're able to make selective investments to improve our understanding of sweet spot. And in the case of our North American dry gas assets, we're able to preserve our options for better market conditions."
Last year Chevron closed on its $5 billion acquisition of Pittsburgh-based Atlas Energy Inc., giving it 486,000 net acres in the Marcellus Shale and 623,000 in the Utica Shale as just part of the package. Last year it also acquired another 228,000 net acres in the Marcellus from privately held Chief Oil & Gas LLC and Tug Hill Inc. for an undisclosed amount (see NGI, May 9, 2011).
"...[W]e've built a strong position in the Marcellus and Utica shales," Luquette said. "After an active Marcellus drilling program in the past year, our early well results indicate a high-quality resource, and reservoir outcomes are exceeding our expectations.
"With natural gas prices where they stand today, we're investing at a measured pace. Our objectives are to drill our leases where justified, to use our remaining $1.3 billion [drilling] carry and to grow our execution capability. We're positioned to further ramp up drilling and production once the gas market improves."
In the Utica Shale Chevron is "executing our exploration and appraisal activities in 2012, including drilling wells, acquiring seismic and thoroughly analyzing nearby competitor activity," Luquette said. "Our objective is to increase our understanding of the Utica's potential and be in position to accelerate development when appropriate.
"As companies buy into shale plays like these, they make headlines. What doesn't make headlines is that we've held acreage in multiple shales for decades."
In the Lower 48 alone, Chevron has more than three million acres in unconventional plays, he said, mostly shale. "In contrast to some of our competition, much of this acreage is either held by production or fee, allowing us to pursue the most attractive projects instead of drilling to earn leases. Our positions are also well placed with many of the plays located in wet gas and liquids trends."
In Texas Chevron has had "noteworthy success" in the Midland Basin Wolfcamp play, Luquette said. "We recognized significant resources in 2011, and we plan to participate in more than 200 wells this year as we continue to develop our acreage.
"In the Delaware Basin [of Texas and New Mexico] we also have a significant position: more than half a million net acres of Wolfcamp Shale and more than 100,000 acres of Avalon Shale, both of which are wet gas plays and part of our legacy leasehold," he said. "This year we plan to drill up to six operated wells. We'll also continue to leverage our nonoperated positions with an additional 16 wells planned to accelerate evaluation of this play."
In the international shale arena, as is true for other companies, things aren't nearly as far along.
However, since entering Poland in 2009, Chevron has built a position of more than four million acres across central Europe. "In Poland, we finished drilling our first well in February and also completed our initial 2D seismic acquisition program," Luquette said. The company plans to spud its second Poland exploration well soon.
In Romania Chevron has acquired 2D seismic and expects to start its drilling program late this year. Like other companies, it is awaiting the resolution of a moratorium on hydraulic fracturing in Bulgaria. "We're engaging with the government and believe that industry will be able to successfully allay their concerns," Luquette said. "However, in the unlikely event we're not successful, we have minimal financial exposure in Bulgaria."
Chevron is also ramping up its activity in Alberta's Duvernay Shale formation. "In 2011 we increased our position to about 250,000 acres. This is another shale with significant liquids potential," Luquette said. "Early results from our drilling program have been encouraging and we plan to drill and complete additional wells as part of our continued evaluation of this play."
In Argentina Chevron has about 110,000 shale acres below a currently producing field. "Our leases there are well positioned with liquids potential," he said. "We recently extended our lease to 2032 and our plans are to begin initial exploratory drilling this year."
And in China the company is participating in a joint study agreement with Sinopec covering about 940,000 acres. "We've already completed acquisition of 2D seismic and spud our first well earlier this year," Luquette said.
Intelligence Press, Inc.

voda 21 maart 2012 16:13

0

Shell schaliegasproject China interessant - ING

AMSTERDAM (Dow Jones)-- Shell (RDSA) heeft een overeenkomst getekend voor de exploratie, ontwikkeling en productie van schaliegas in China. De overeenkomst is volgens analist Quirijn Mulder van ING interessant om te volgen, aangezien schaliegas in de VS aan momentum verliest, vanwege de daling van de gasprijs. Mulder stelt dat gas een essentieel onderdeel is van de groeimogelijkheden van het concern, waarbij het Verre Oosten aantrekkelijke investeringsmogelijkheden biedt. Mulder hanteert een koersdoel van EUR33,00 en buy-advies. Omstreeks 10.50 uur noteert het aandeel 0,3% lager op EUR26,81, terwijl de AEX met 0,1% stijgt. (PBU)

Dow Jones Nieuwsdienst: +31-20-5715200; amsterdam@dowjones.com

voda 22 maart 2012 16:12

0

China's volgende schaliegas-veiling binnen enkele maanden

BEIJING (Dow Jones)--China zal binnen enkele maanden opnieuw gebieden veilen waar schaliegas gewonnen kan worden, waarbij zowel private- als staatsbedrijven mogen bieden. Dit heeft het ministerie van Land and Resources donderdag verklaard tijdens een energie-conferentie in Beijing. In juni 2011 veilde China voor het eerst schaliegas-exploratieblokken.

Volgens Zhang Dawei, adjunct-directeur van olie en gasonderzoek bij het ministerie, veilt de Chinese regering later dit jaar 20 blokken waar schaliegas voorkomt, verdeeld over 10 regio's, en kunnen bedrijven met een bepaalde hoeveelheid kapitaal en een licentie om naar gas te boren, deelnemen.

China heeft zichzelf ten doel gesteld om per 2015 6,5 miljard kubieke meter per jaar aan schaliegas te winnen. Het land hoopt in 2020 60 miljard tot 100 miljard kubieke meter per jaar te produceren. Dit jaar wordt er nog nauwelijks schaliegas geproduceerd. Sommige analisten zijn sceptisch over het bereiken van deze doelstellingen.

Verder heeft China volgens het ministerie een geschatte 25,08 biljoen kubieke meter aan schaliegasreserves. Het land zou mogelijk in de toekomst de grootste verbruiker van schaliegas kunnen worden.

Woensdag werd al bekend dat het Brits-Nederlands gas- en olieconcern Royal Dutch Shell PLC (RDSA) een overeenkomst heeft getekend met het Chinese staatsbedrijf China National Petroleum Corp, 's lands grootste energieproducent, om in het Fushun -Yongchuan blok in de Sichuan Basin schaliegas te winnen.

Het contract, waarvan geen details zijn prijsgegeven, is een mijlpaal in de schaliegasontwikkeling in China, omdat er geen precedent bestaat voor zogenaamde 'production sharing' contracten tussen buitenlandse en lokale bedrijven in China.

Shell werkt al wel meerdere jaren met de beursgenoteerde divisie van PetroChina Co (PTR) aan diverse schaliegasprojecten en stemde vorige maand in met de verkoop van een 20%-belang in een Canadees schaliegasproject aan PetroChina.

Door Sarah Chen; vertaald en bewerkt door Marleen Groen; Dow Jones Nieuwsdienst; +31 20 5715 200; marleen.groen@dowjones.com

voda 26 maart 2012 16:44

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Royal Dutch Shell signs China first shale gas deal

The News reported that Royal Dutch Shell signed a production sharing contract with China National Petroleum Corporation to develop a shale gas block in China the first deal of its kind in the country.

China is in the very early stages of tapping its potentially large shale gas resources and the government wants to identify the right technology to unlock them in the next few years aiming for a leap in shale production by 2020.

Mr Peter Voser CEO of Shell said that “China has huge shale gas potential and we are committed to making a contribution in bringing that potential into reality.”

Mr Zhang Yuqing head of NEA’s Oil and Gas Department said that foreign firms can enter product sharing contracts with Chinese firms or provide engineering services.

Shell has already conducted some exploration work on the Fushun Yongchuan block covering 3,500 square kilometers in the southwestern province of Sichuan.

Mr Xiong Bingqi an official with the Ministry of Land and Resources said that China is likely to tender its second batch of shale gas blocks in April or May after awarding two out of four blocks in its first auction in July last year.

China started the shale push in late 2009, inspired by a shale boom in the United States. Its state energy firms have since then entered multi billion dollar US shale deals with Chesapeake Energy and Devon Energy Corporation.

At home companies have drilled several dozen wells and brought in firms such as Shell, Chevron Corp and Hess Corporation for joint studies. However China has yet to start commercial shale production, though it is widely believed to hold the world’s largest shale resources.

Source - The News.com.pk

voda 13 april 2012 15:30

0

Extracting shale gas has a 'very long road to go'

12 April 2012
Shanghai Daily
Copyright © 2012 Shanghai Daily Company. All Rights Reserved

CHINA'S careful step-by-step approach to developing what it says are the world's largest shale gas reserves will give Chinese energy companies time to prepare their own plans for exploration and production.
According to a shale gas industry plan released last month, China aims to produce 6.5 billion cubic meters of shale gas annually by 2015, rising to an ambitious 60-100 billion cubic meters by 2020. That would equal last year's natural gas production in China.
Geological, technical and commercial challenges are all hurdles facing the domestic industry, which is at an early stage of exploring for the fuel, analysts and experts said.
"We have much preparatory work to do, and a very long road to go," Zeng Xingqiu, the former chief geologist of Sinochem Group, China's largest chemical supplier, wrote in Monday's China Business News.
The unconventional fuel, which has helped the US end its dependence on natural gas imports, has been flagged by the Chinese government as a key part of its strategy to use more cleaner-burning fuel and to reduce reliance on foreign oil.
China currently has no commercial production of shale gas, which is extracted from oil-bearing rock formations.
Many analysts said the 2015 production target is reasonable and in keeping with the country's status in technology development, but they say they are skeptical about the more ambitious target for the five years beyond that.
At the higher end, the 2020 goal would comprise about a third of China's total gas use.
The timetable for production shows that the government is in no rush to extricate the fuel because it first has to study exploration expertise by cooperating with foreign partners in projects both home and abroad. But technology is not the only concern.
Geological risks like pollution and earthquake are factors the industry needs to consider, said Sinolink Securities analyst Liu Bo, citing the experience in France, where the government last year cancelled its only three shale gas exploration contracts because of concerns about the negative impact of the hydraulic fracturing needed to release gas from rocks.
The French fields are considered some of the most promising in Europe.
Shale gas is tightly trapped in rock formations, thereby preventing high production rates. In order to achieve commercially viable flow rates, a technique known as hydraulic fracturing, or "fracking," is used. This process requires the injection of chemical-laced water to reduce viscosity and sand to hold the fractures open. Critics say the drilling liquids, which can contain carcinogens, could potentially contaminate groundwater.
France's ban on hydraulic fracturing forced Total SA and US-based Schuepbach Energy LLC to abandon exploration permits because they said they needed to employ that extraction technology.
Because most shale blocks overlap with traditional gas fields, Sinochem's Zeng said the entry of private-sector companies - something the government has promised - could trigger disputes with existing field operators, such as state oil majors Sinopec Corp and PetroChina Co.
The possibility of disputes needs to be addressed by standardizing the threshold for market entry and good planning, he noted.
State oil majors, which have been investing heavily in shale projects in the US to gain expertise, also are focusing on shale gas as a key element in their growth strategies. However, they have said the strategies rely on advances in technology.
Huang Wensheng, a Sinopec spokesman, said the company has made faster-than-expected progress in hydraulic fracturing over the past two years. In some areas, the company is already at the leading edge, he added.
PetroChina President Zhou Jiping said the company plans to produce 1 billion cubic meters of shale gas by 2015.
Sinopec's Huang said it's too early for his company to forecast output targets.
Foreign companies appear to be accelerating their efforts to grab a slice of the shale-gas business in China.
Last month, Royal Dutch Shell said it signed a production-sharing contract with China National Petroleum Corp, PetroChina's state parent, for developing a shale gas block in Sichuan Province, the first such deal in China. The announcement came just days after China released its shale gas development plan.
Total, the French energy giant, also has just sealed a deal with Sinopec to explore for shale gas in Anhui Province. But Bertrand de La Noue, chairman of Total China, said the lack of a "legal framework" in China prevents foreign firms from participating in shale-gas production.
Shanghai Daily

AEX 860,01 -5,35 -0,62% 19 apr


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