Fracking Fracking for for Shale Gas & Shale Oil Worldwide - - PowerPoint PPT Presentation

Fracking Fracking for for Shale Gas & Shale Oil Worldwide Shale Gas & Shale Oil Worldwide

Vasili Nicoletopoulos Vasili Nicoletopoulos Natural Resources GP Natural Resources GP

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

Natural Resources GP

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Occurrences Occurrences

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Unconventional Gas Unconventional 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
• r 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 in shale formations Reserve estimates: Uncertainty, differences, revisions some ?? in our following slides

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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

• il, natural gas [conventional
• r not], geothermal energy, &

water

Hydraulic Fracturing [ Hydraulic Fracturing [Fracking Fracking] ]

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Techniques in Techniques in Fracking Fracking

Ceramic Proppants: higher flow capacity than similar sizes of sand, including resin-coated grades, greater strength & thermal stability Foam 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 rocks Guar gum: key component in mix of sand, water & chemicals used in hydraulic fracturing LPG: waterless, propane-based form of fracking. Uses mixture of propane [& occasionally some butane] pressurized to the consistency

• f a gel

PermStimSM: ‘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

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World Shale Gas Resources World Shale Gas Resources

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Technically Recoverable SG Technically Recoverable SG Resources Resources by Country

by Country [EIA]

[EIA]

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Recoverable SG Recoverable SG Resources Resources in Europe in Europe [fm EU] [fm EU]

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US Shale Deposits US Shale Deposits… …. .

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… …. . US Shale Deposits US 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

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Shale Basins in Europe Shale Basins in Europe… …

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Shale Gas Projects in Europe Shale 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

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Shale in China Shale in China… …

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… … Shale in China Shale 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

Natural Resources GP

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Central North Africa Central 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’

Natural Resources GP

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

[EIA]

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Environmental, Health Issues Environmental, 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’

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Policies Policies

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

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Geopolitics Geopolitics… …

• 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
• f 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’.

Natural Resources GP

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… …Geopolitics Geopolitics

• 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

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References References

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 ’12 Forthcoming: ‘Hydraulic fracturing’, a working paper submitted to IENE, Aug ’12 Forthcoming: ‘Fracking in Europe’, for Industrial Minerals Magazine, Sept ’12

Other

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

Natural Resources GP

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Thank you very much! Vasili Nicoletopoulos www.naturalresources.gr

Natural Resources GP