Shale Gas. Short overview of market
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Shale Gas. Short overview of market

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My presentation about Shale Gas for Global Business Context and Development lecture at ISM University of Management and Economics.

My presentation about Shale Gas for Global Business Context and Development lecture at ISM University of Management and Economics.

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Shale Gas. Short overview of market Shale Gas. Short overview of market Presentation Transcript

  • Shale Gas –Revolution or evolution of global gasmarket?
  • Agenda:• Importance• History• USA story• Rest of the world• Main players• Eco issues
  • Why we are talking about shale gas? Source: IEA
  • 2010 - 77 billions dollarswere added to USA GDPby shale gas 2015 – 111,2 billions dollars expected
  • When it began?
  • 1821 – First US commercial natural gas well inFredonia, NY, produces natural gas from shale;
  • 1821 – First US commercial natural gas well inFredonia, NY, produces natural gas from shale;After 160 years of development and experiments1980s – Department of Energy spearheadsresearch in micro seismic and other 3-dimensional mapping techniques that provedcritical to shale gas recovery;
  • 1821 – First US commercial natural gas well inFredonia, NY, produces natural gas from shale;After 160 years of development and experiments1980s – Department of Energy spearheadsresearch in micro seismic and other 3-dimensional mapping techniques that provedcritical to shale gas recovery; 2000s – natural gas holds steady in United States with the highest annual increase in production of any energy technology – modern natural gas boom
  • Development of technology
  • How it works? 443 m Source: Visual Capitalist – www.visualcapitalist.com
  • Shale formation are fine-grainedsedimentary rocks with gastrapped in them. Shale has lowpermeability and gas does notflow through it easily. 443 m Source: Visual Capitalist – www.visualcapitalist.com
  • Producers drill down to thelevel of shale,And then drills then turnhorizontal togo along shale 443 m Source: Visual Capitalist – www.visualcapitalist.com
  • Producers drill down to the level of shale, And then drills then turn horizontal to go along shaleWater, proppants and chemicaladditives are injected into theshale at a high pressure tocreate fracture pathways thatincrease flow of the well. 443 m Source: Visual Capitalist – www.visualcapitalist.com
  • Producers drill down to the level of shale, And then drills then turn horizontal to go along shaleWater, proppants and chemicaladditives are injected into theshale at a high pressure tocreate fracture pathways thatincrease flow of the well. Gas and wastewater flows 443 m back to surface. Wastewater it stored in steel tanks until it can be stored log-term by deep injection into oil and gas waste well Source: Visual Capitalist – www.visualcapitalist.com
  • The shale gasrevolution in USA
  • Shale development has made US gas reserves the largest inthe world
  • $77 $926 $23,16 600,000billion in savings per hourly 2010 jobs household wage rate
  • The shale gas impact to petrochemical market Source: American Chemistry Council
  • The shale gas impact to petrochemical market Source: American Chemistry Council
  • The shale gas impact to petrochemical market Source: American Chemistry Council
  • Expected impact for US economy More than 1.6 Million Jobs
  • Expected impact for US economy More than 1.6 Million Jobs $231 Billion in Total Value Added
  • Expected impact for US economy More than 1.6 Million Jobs $231 Billion in Total Value Added $933 Billion in Tax Revenues
  • Who’s next?
  • China – preparing for opportunityChinese policymakers and state behemoths are laying the groundwork to beginextracting the country’s apparently mighty shale gas resources.China has set itself an ambitious target of producing 229.5 billion cubic feet of shale gas a yearby 2015.
  • China activities for shale gas production Before 2004 - Study foreign shale gas exploration technology From 2005 to 2007: Shale gas resource exploitation. In 2008: Exploitation of the Upper Yangtze region and planning shale gas project. In 2009: Evaluating shale gas resource potential and defining favorable exploration targets in key areas. In 2011: Defining areas of probable shale gas reserves in China June 2011, China conducted the first round of shale gas exploration competitive bidding and invited six state-owned enterprises to participate in bidding.
  • Main players in China shale market Sinopec Group, Chinas second largest oil and gas producer, has launched its first shale gas project and plans to develop production capacity of 300-500 million cubic meters a year by the end of this yeard In January 2010, Sinopec and BP cooperated to develop a shale gas block in Guizhou. Yanchang Petroleum has drilled 12 exploration wells and evaluation wells, strives to produce 20 million cu m/year of gas by 2012, and aims to produce 500 million cu m/year by 2015. CNPC started shale gas exploration and development in 2006, becoming the first Chinese company to begin work in the sector. CNPC has obtained North Yunnan-Guizhou mineral rights and drilled a shale gas data well in the Sichuan basin in 2009. In March 2010, CNPC and Schlumberger signed a 2010-12 cooperation agreement on logging services. In April 2011, CNPC and Total SA agreed to invest $2 billion in Inner Mongolia Province to develop unconventional gas.
  • India – Shale of the century?Excitement about a potential Indian shale gas boom is building. As yet, there is notenough evidence to justify the hype.
  • India – Shale of the century?In January 2011 India’sstate-owned Oil and NaturalGas Corporation (ONGC)found the country’s firstshale gas at an exploratorysite near the city ofDurgapur in West Bengal.
  • India – Shale of the century? Oil and Natural GasIn January 2011 India’s Corporation (ONGC) hasstate-owned Oil and Natural called in internationalGas Corporation (ONGC) expertise to help withfound the country’s first exploration by partneringshale gas at an exploratory the world’s biggest oilsite near the city of servicesDurgapur in West Bengal. company, Schlumberger
  • India – Shale of the century? Oil and Natural GasIn January 2011 India’s Corporation (ONGC) hasstate-owned Oil and Natural called in international The Indian government isGas Corporation (ONGC) expertise to help with finalizing its shale gasfound the country’s first exploration by partnering exploration policy andshale gas at an exploratory the world’s biggest oil expects to launch its firstsite near the city of services auction of shale gas blocksDurgapur in West Bengal. company, Schlumberger by December 2013
  • Poland – The next Norway?Shale gas gives Poland a chance to bypass Russia—maybe.
  • Poland – The next Norway?Oil and gas investment isflooding into the region inamounts not seen since thefall of the Berlin Wall.Anglo-Dutch giant RoyalDutch Shell, Frances Totaland ConocoPhillips of theU.S. have acquiredexploration rights in Poland
  • Poland – The next Norway?Oil and gas investment is Poland has granted 112flooding into the region in shale exploration licenseesamounts not seen since the to international firms suchfall of the Berlin Wall. as Chevron, ConocoPhillipsAnglo-Dutch giant Royal and Marathon Oil.Dutch Shell, Frances Totaland ConocoPhillips of the Exxon Mobil decided to quitU.S. have acquired Poland market.exploration rights in Poland
  • Poland – The next Norway?Oil and gas investment is Poland has granted 112flooding into the region in shale exploration licenseesamounts not seen since the The country’s government is to international firms suchfall of the Berlin Wall. preparing draft legislation as Chevron, ConocoPhillipsAnglo-Dutch giant Royal for development of shale and Marathon Oil.Dutch Shell, Frances Total gas resources, expecting toand ConocoPhillips of the start natural gas production Exxon Mobil decided to quitU.S. have acquired in late 2014 Poland market.exploration rights in Poland
  • Argetina – untapped potential Unconventional hydrocarbons meet familiar problems in Argentina as in USA
  • Argetina – untapped potential In May 2011 Argentinaannounced that it wouldbecome the site of the firstlarge-scale development ofoil froman unconventional reservoiroutside of the US andCanada.
  • Argetina – untapped potential Repsol, a Spanish oil major, In May 2011 Argentina announced that itsannounced that it would Argentinian subsidiary,become the site of the first Yacimientoslarge-scale development of Petrolíferos Fiscales (YPF),oil from will drill 17 new wells andan unconventional reservoir fracture 14 existing onesoutside of the US and this year in the VacaCanada. Muerta
  • Argetina – untapped potential Companies worldwide are showing interest in Argentina shale gas Repsol, a Spanish oil major, In May 2011 Argentina projects, and investment in announced that itsannounced that it would shale gas production is Argentinian subsidiary,become the site of the first expected to reach US $1 Yacimientoslarge-scale development of billion in 2012. Joint Petrolíferos Fiscales (YPF),oil from ventures are currently the will drill 17 new wells andan unconventional reservoir preferred model for fracture 14 existing onesoutside of the US and financing development this year in the VacaCanada. activities. Muerta
  • South Africa – Game changer?Shell and other shale gas contenders meet stiff resistance in South Africa, which hasthe continent’s most promising reserves of the gas.
  • South Africa – Game changer?In August 2011 the SouthAfricangovernment decided toextend a six-monthmoratorium on licensing forshale gas exploration foranother half-year period—adisappointment for thosecircling what are thought tobe the world’sfifth-largest shale gasresources.
  • South Africa – Game changer?In August 2011 the SouthAfricangovernment decided toextend a six-monthmoratorium on licensing for South Africa’s shale gasshale gas exploration for could be a “game changer”.another half-year period—a The country depends ondisappointment for those imports (of oil and somecircling what are thought to gas) and does not generatebe the world’s enough electricity to satisfyfifth-largest shale gas demand.resources.
  • South Africa – Game changer?In August 2011 the SouthAfricangovernment decided toextend a six-monthmoratorium on licensing for South Africa’s shale gasshale gas exploration for could be a “game changer”.another half-year period—a The country depends ondisappointment for those imports (of oil and some 2012 Sep. 7 South Africacircling what are thought to gas) and does not generate has lifted a moratorium onbe the world’s enough electricity to satisfy shale gas exploration in thefifth-largest shale gas demand. Karoo regionresources.
  • Shale gas provides opportunity for countries • Decrease gas prices; • Collect more taxes; • Become more independent from import; • Attract investments; • Create new jobs and new industry;
  • BUT…
  • Source: Visual Capitalist – www.visualcapitalist.com
  • Source: Visual Capitalist – www.visualcapitalist.com
  • Source: Visual Capitalist – www.visualcapitalist.com
  • Communities actively protesting againstfraking because of danger to environment
  • Bulgaria - after a nationwide protest in January2012, the government decided to ban the hydraulicfracturing technology.Denmark - a critical view is reflected in nationalmedia, and national campaigns against shale gashave started.France - Hydraulic fracturing was banned in Francein 2011 after public pressure.UK - Though not officially suspended, the processwas unofficially suspended for nearly a year in theUK from June 2011 over safety concerns, but anexpert report in April 2012 said that it’s safeUS - This method of drilling has becomecontroversial because of the complaints, fromsome residents of the areas, about pollution, andhealth effects, and a sense that their lives and theircommunity have been ruined by the system.
  • Main players in shale gas industry
  • World’s largest producer of shale gas
  • Revolution or evolution…?
  • EUROPE“Europe, with higher populationdensity, higher environmentalhurdles and increased levels ofgovernment coordination, will likelysee a ‘shale evolution’. Europe willrequire more environmentallyfriendly materials and more advancedhorizontal drilling technology.The net effects are:• A flatter geology-specific shale gas learning curve.• Slower aggregate growth in proved reserves and production.• A more R&D focused approach with longer play timelines. “ Delloite.
  • CHINA “China’s lower population density in regions with shale gas potential, less restrictive environmental concerns, centralized government planning and willingness to invest enables replication of the US manufacturing-style shale development. The likely result will be a ‘shale revolution’ as China progresses rapidly along the shale gas learning curve.” Delloite.
  • SOUTH AMERICA‘’Shale reserves in Brazil are estimated tobe one of the biggest in the region, butthere has been little interest or investmentin exploring this resource. Argentina is theonly South American country that seemsset to embark on full-scale shale gasproduction, primarily in the Neuquén Basin.Development of shale gas in Argentina willbe valuable to the country and occur atreasonable prices. Further, given theArgentine governments willingness tosupport these projects, we expect thatshale gas field development will continue tobe allowed.” KPMG
  • Many ways Australia is in a similar emerging positionto where the North American shale industry wasseveral years ago. As the resource in Australiabecomes better defined and clear routes to marketidentified, then the transaction values could increasesignificantly. Norton Rose
  • Questions?