fracking for shale gas & shale oil worldwide · • 20 shale gas wells have been drilled by...

FrackingFrackingforfor

Shale Gas & Shale Oil WorldwideShale Gas & Shale Oil Worldwide

Vasili NicoletopoulosVasili NicoletopoulosNatural Resources GPNatural Resources GP

2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, HammametHammamet, Sept 22, '12, Sept 22, '12

Natural Resources GP

2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12Hammamet, Sept 22, '12 22

OccurrencesOccurrencesNatural Resources GP


Unconventional GasUnconventional Gas

• Coal--bed methane [CBM]: Trapped in coal seams, adsorbed in the solid matrix of the coal

• Tight gas: Trapped in relatively impermeable hard rock, limestone or sandstone, sometimes w/ quantified permeability limits

• Shale gas: Trapped in fine grained sedimentary rock called shale, which has a characteristic ‘flaky’ quality

Fracking in combination with horizontal drilling → access to natural gas reserves previously considered uneconomical, particularly inshale formations

Reserve estimates: Uncertainty, differences, revisions some ?? in our following slides



Well-stimulation process: millions of gallons of chemically treated water & sand pumped into the ground @ extremely high pressure to generate fractures or cracks in rocks & release trapped oil, natural gas [conventional or not], geothermal energy, & water

Hydraulic Fracturing [Hydraulic Fracturing [FrackingFracking]]Natural Resources GP


Techniques in Techniques in FrackingFracking

Ceramic Proppants: higher flow capacity than similar sizes of sand, including resin-coated grades, greater strength & thermal stabilityFoam fracking: uses CO2 foam, rather than water, to create fissures in rock pores up to 20,000X narrower than human hair trapped or ‘tight’ gas molecules released from rocksGuar gum: key component in mix of sand, water & chemicals used in hydraulic fracturingLPG: waterless, propane-based form of fracking. Uses mixture of propane [& occasionally some butane] pressurized to the consistency of a gelPermStimSM: ‘fracturing service to replace guar-based systems by providing a cleaner, more robust system; more cost-effective treatments & improved well performance’Slickwater fracking: to forego guar gum, and use much thinner liquid to transport the proppant. Involves adding chemicals [‘friction reducers’] to water to allow for more efficient gas extraction



World Shale Gas ResourcesWorld Shale Gas ResourcesNatural Resources GP


Technically Recoverable SGTechnically Recoverable SG Resources Resources by Countryby Country [EIA][EIA]Natural Resources GP


Recoverable SGRecoverable SG Resources Resources in Europein Europe [fm EU][fm EU]Natural Resources GP


US Shale DepositsUS Shale Deposits……..Natural Resources GP


……. . US Shale DepositsUS Shale Deposits

• 860 trillion cubic feet [cf] of shale gas resources • 20 trillion cf of inferred reserves, 56 trillion cf of undiscovered

resources estimated by the USGS. Of that amount, 41.4 trillion cf is located in Southern California and 14.6 trillion cf in the Rocky Mountain region…but uncertainty, USGS revisions

• The play average expected ultimate recoveries [EUR] 0.12-3.6 billion cf / well

• Largest concentrations of shale gas in Northeast region which contains the Marcellus Shale & the Gulf Coast region containing the Haynesville Shale

• The importance of US service companies



Shale Basins in EuropeShale Basins in Europe……Natural Resources GP


Shale Gas Projects in EuropeShale Gas Projects in Europe……

• US: now >25% shale gas. Russia: Largest NG supplier in Europe• Bulgaria: SG, tight gas available, banned shale gas drilling w/

'fracking' this year• France: drilling suspended since Feb ’11…, Sept ’12 Hollande stops

7 projects• Germany: ‘Govt should ban fracking near drinking water reservoirs

& mineral springs and require developers to conduct EIA, German Environment Ministry report Sep 6, ’12

• Poland: most favorable market in CE Europe for SG production• Turkey: Sept 4 ’12 Shell started SG exploration in Diyarbakir, SE• UK: govt go-ahead May ’11…but May 22, ’12, ‘shale gas appeal in

decline’; offshore [eg N. Sea]: profitable @ oil price >>$200/barrel• Ukraine: US Energy Information Administration estimates ~ 42tn cf

shale gas reserves



Shale in ChinaShale in China……Natural Resources GP


…… Shale in ChinaShale in China

• Reserves: uncertainty, revisions • 20 shale gas wells have been drilled by Chinese companies• Shale oil to reduce dependence on imports• ‘U.S.-China Shale Gas Resource Initiative’: to promote shale gas

investment in China through ‘U.S.-China Oil & Gas Industry Forum’, study tours and workshops focused on shale gas development

• September ’12: Beijing invited foreign joint ventures to bid for shale gas exploration licences in S. China



Central North AfricaCentral North Africa

• Two major shale gas basins: [1] Ghadames Basin, in eastern Algeria, southern Tunisia and north western Libya; [2] Sirt Basin, in north-central Libya. 1,861 Tcf of risked gas in-place [EIA, 4/11]

Tunisia – to be confirmed during this conference• ‘Attracted many international E&P countries’• ‘Only country in North Central Africa where unconventional natural gas

potential being actively explored’• ‘61 Tcf of risked shale gas in-place, w/ 43 Tcf in the Silurian Tannezuft

shale & 18 Tcf in the Frasnian “Hot Shales” of the Ghadames Basin’ [EIA, 4/11]

• Jun 10, 2012: ‘Royal Dutch Shell Plc [RDSA] discussing possibility of exploring for shale-gas deposits in Algeria, Tunisia’

• Sept 17: Winstar Resources Ltd., Calgary external study: ‘vast gas potential in Silurian Tannezuft hot shale in Ghadames basin, S. Tunisia’



Shale Gas Basins, Pipelines: Central N. Africa Shale Gas Basins, Pipelines: Central N. Africa [EIA][EIA]Natural Resources GP


Environmental, Health IssuesEnvironmental, Health Issues

Environmental • Water contamination – depletion: efforts to recycle, reduce well

cement cracking ‘food-quality liquids’ in 5 yrs? Nationwide Mutual 1st

major insurer to not cover gas fracking damage July ’12• Seismic risks• Impacts on landscape and land use • Air pollutant emissions and soil contamination• GHG emissions [methane etc]• Cost of dairy up• Radioactivity?• Risks to various species?Health: ‘Bleeding, Oozing legions covering people’s faces, wounds,

severe inflammation, phenol & hippuric acid in urine’



PoliciesPolicies

Public Policies• Environmental and licensing • Protection of public health and safety in general• Enhancing & protecting natural resources• Price volatility• Investment uncertainty• Tax policy

In the specific field of unconventional oil and gas extraction through hydraulic fracturing, two other important issues at play:

• Securing energy independence• Cartelization of gas markets



GeopoliticsGeopolitics……

• Fracking caused US NG price to fall to < 3 $/mmBtu…while in Europe > 10!!

• European fracking bans/opposition slowed devt…• …Bans & moratoria could delay by > a decade replacement of much

of high-priced Russian and N. African gas w/ cheaper domestic production

• SG devt can reduce a country’s dependency on imported gas, increasing domestic energy security: eg. UK fm Norway/Qatar

• Russia, Qatar et al to lose competitive advantage as suppliers of [non-conventional] oil & gas…but Gazprom Sept 6, ’12: ‘It remains to be seen whether the shale gas boom will revolutionise the European gas market’.



……GeopoliticsGeopolitics

• Oil & gas affects current account deficits and prices/inflation in importing countries

• International nuclear energy [and renewables?] could be heavily affected by lower-priced non-conventional oil & gas

• US [shale] gas crucial: Japan applying• US technology crucial: China getting it• As shale-derived US NG becomes cheaper in past few years, power

companies opting to use it, rather than thermal coal, to generate electricity



ReferencesReferences

Work by Vasili Nicoletopoulos, Natural Resources GP‘Hydraulic Fracturing and the Growth of Shale Gas and Shale Oil

Internationally’, A Study by Natural Resources GP, July ’12‘Rare Earths and Shale Oil & Gas: Technology, Environment and Politics’,

Sustainable Mining Development in Europe, Plovdiv, Bulgaria, Sept ’12Forthcoming: ‘Hydraulic fracturing’, a working paper submitted to IENE, Aug

’12Forthcoming: ‘Fracking in Europe’, for Industrial Minerals Magazine, Sept

’12

OtherStudies and reports by EIA, EPA, EC, EP, IEA



Thank you very much!Vasili Nicoletopoulos

www.naturalresources.gr


fracking for shale gas & shale oil worldwide · • 20 shale gas wells have been drilled by...

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