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The uncertainty of future commercial shale gas availability
KTH, School of Architecture and the Built Environment (ABE), Transport Science, System analysis and economics.
2014 (English)In: Society of Petroleum Engineers - European Unconventional Resources Conference and Exhibition 2014: Unlocking European Potential, 2014, 254-264 p.Conference paper (Refereed)
Abstract [en]

Numerous top-down resource estimates have indicated that shale deposits hold enormous volumes of methane globally. Until recently detailed delineations of shale gas resources and their production have occurred exclusively in North America. The driving forces and enabling conditions behind the rapid exploitation of shale gas resources in North America are assessed to determine if these are transferable to the rest of world. No two shale deposits are created equal and the mere existence of shale does not guarantee success of future gas production. A formation may hold too little oil or gas - or it may not be brittle enough for fracking to work effectively. The challenge is to find so-called 'sweet spots', i.e., plays with high flow rates, once stimulated. The amount of shale gas that can be commercially produced under current and future market conditions is determined by the quantity and thermal maturity of shale's organic content, by regional technology cost, access to transmission pipelines and regional gas price levels. The shale gas rush in North America has caused a precipitous drop in natural gas wellhead prices - from some $11/GJ in 2008 to less than $3/GJ in 2012. A review of the economics of shale gas production indicates that (a) the resource appraisal process for conventional gas resources is unsuitable for unconventional gas resources; (b) field development requires continuous (on-the-go) investment in fracking to stimulate well pressure, and (c) depressed US gas prices currently fail to cover full finding and development costs. Unless well technology improves and completion cost declines rapidly, the maturation process of technically recoverable shale gas resources to proved reserves will be delayed. Time value of money effects undermine the commercial availability of shale gas, particularly in regions where ineffective permitting procedures and slow societal acceptance tend to put additional negative pressure on shale field development speed.

Place, publisher, year, edition, pages
2014. 254-264 p.
Keyword [en]
Costs, Deposits, Economics, Energy resources, Gases, Hydraulic fracturing, Methane, Petroleum deposits, Resource valuation, Shale, Commercial availability, Development costs, Field development, Negative pressures, Thermal maturity, Time value of money, Transmission pipelines, Unconventional gas, Shale gas
National Category
Economics and Business
URN: urn:nbn:se:kth:diva-167888ScopusID: 2-s2.0-84905992837ISBN: 9781632660817OAI: diva2:821188
European Unconventional Resources Conference and Exhibition 2014: Unlocking European Potential, 25 February 2014 through 27 February 2014, Vienna

QC 20150615

Available from: 2015-06-15 Created: 2015-05-22 Last updated: 2015-06-15Bibliographically approved

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