Posts Tagged ‘gas glut’

Total to enter fracking in the UK

January 12, 2014

The shale boom (gas and oil) in the US has changed the energy landscape not only in the US but also in the export of cheap oil and now even coal from the US.

us petroleum production boom

us petroleum production boom

But so far only the US has seen significant production of gas and oil from shale. In Europe the Green lobby is desperately trying to stop the advent of fracking even though their misguided policies  have – so far – only led to an increased use of coal and an increased price of electricity to the consumer. But the UK, Poland and other countries have huge reserves of shale and the exploitation of these reserves is both necessary and inevitable. Russia, China, South America and India also have shale reserves which will – in time – be recovered. Russia is going slow with fracking because they have large amounts of natural gas to be sold first to recover the investment in their gas pipelines to Western Europe. China is forging steadily ahead and will soon produce shale gas in earnest. India has not even finished mapping its reserves. Both China and India have some technology transfer to be achieved. Japan is spending real development money to be able eventually to use under-sea methane hydrates since they have no shale.

Fox Business: Russia is estimated to have the largest shale oil reserves of 75 billion barrels, according to the Energy Information Administration. The U.S. is No. 2 with 58 billion barrels, followed at a distance by China, Argentina and Libya.

China is believed to have 1,115 trillion cubic feet of recoverable shale gas. The EIA estimates that Argentina has 802 trillion cubic feet, while the U.S. is fourth at 665 trillion. Algeria likely has the third-largest shale gas reserves.

While the U.S. energy industry has roared ahead, shale reserves overseas face several development hurdles such as a lack of drilling resources, land ownership issues and government regulations.

In Europe, the UK will probably lead the way – even though the “politically correct” opposition in Europe will continue to live in their dream worlds. The French oil majors – stopped in their own country by Francois Hollande – are moving in.

BBCFrench oil and gas company Total is to invest in the UK’s shale gas industry, it is to be announced on Monday. Total will be the first of the so-called “oil majors” to invest in shale gas in the UK, the BBC has confirmed. The British Geological Survey estimates there may be 1,300 trillion cubic feet of shale gas present in the north of England.

…. Total is to spend tens of millions of pounds buying substantial stakes in firms with drilling licences in the north of England, where other large energy firms such as Centrica and Gaz de France have already invested.

It comes as the government is expected to introduce more incentives to encourage local authorities to allow drilling for shale gas …… Under the measures, local authorities would keep all income from business rates paid by companies drilling for shale gas, instead of giving it to the UK treasury.

In December, a report commissioned by the Department of Energy and Climate Change (DECC), said more than half of the UK could be suitable for fracking.

In his analysis, Joe Lynam writes:

That Total is now getting involved in the UK shale gas industry is not insignificant. The oil majors (BP, Shell, Total, Exxon, and Chevron) waited in the wings for five years in the US while smaller exploration companies drilled for shale gas.

When it became clear there were major commercial flows in America, then the majors piled in. Now it looks like the majors are getting interested in Britain at a very early stage – thanks in no small part to the confident reserve estimates from the British Geological Survey and the open arms of the UK government. The large energy players bring deep pockets and serious expertise with them and will be able to extract, sell and distribute any found gas quicker than smaller companies.

The advantage for the consumer could also be mouth watering – US energy costs are now a third of those in Europe. If Britain can extract 10% of the estimated reserves it could supply the entire country for almost 50 years.

UK Shale Regions

UK Shale Regions

Related Posts.

The Age of Gas: China has enough shale gas for 200 years

March 2, 2012

The Age of Gas is not just dawning  but is well and truly underway with China revealing reserves sufficient for 200 years. At 25 trillion cubic meters (875 trillion cubic feet) of recoverable reserves these could be almost twice the recoverable reserves in the US.

As shale gas comes into play all over the globe there is going to be a run on large gas turbines for power generation. Gas turbine manufacturers (and the big 4 are GE, Siemens, Alstom and MHI) can expect a sellers market within 2 or 3 years as the economic recovery pressurises generation capacity.

File:GasDepositDiagram.jpg

from Wikipedia

The Telegraph: 

China is planning an investment blitz to unlock its vast reserves of shale gas, convinced it can match the energy revolution under way in the US and meet a significant part of its fast-growing fuel needs.

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The Dawning of the Age of Gas

February 22, 2012

If the 19th century was the dawn of the Age of Coal and the 20th century was the Age of Oil, the 21st century seems to be well on the way to being the Age of Gas.

Gas shales are being found all over the globe. The US has reserves of 860 trillion cubic feet of shale gas. In many countries gas-bearing shales have not yet been fully explored but known reserves include; in China (1,275tn cubic feet), Argentina (774tn), Mexico (681tn) South Africa (485tn), Canada (388tn), Libya (290tn), Algeria (231tn),  Brazil (226tn), UK (200tn), Poland (187tn) and France (180tn). Exploration is still under-way in Russia, central Asia, India, the Middle East, south- east Asia and central Africa. New finds of Natural gas are being discovered off the coast of East Africa. Exploration is now extending to deposits of  methane hydrates in the deep sea (>500m) and under permafrost. For electricity generation and large scale heating (district heating) gas is likely to be the preferred alternative. By 2030, gas will probably overtake coal and oil as an energy source. Compressed gas for transport is already in use. Wind and solar energy will not be insignificant but will remain expensive and just a minor contributor. Even where the renewables are used for political ends, gas will have to provide the necessary back-up.

The IEA called it in their special report: Are we entering a golden age of gas.

Reuters reports that new finds are converting East Africa into a gas hub: Statoil find adds to East Africa gas hopes

Martin Wolf writes in the Financial Times: Prepare for a Golden Age of Natural Gas

… the EIA notes that “the advent of large-scale shale gas production did not occur until Mitchell Energy and Development Corporation experimented during the 1980s and 1990s to make deep shale gas production a commercial reality in the Barnett Shale in North-Central Texas.” But, by now, it adds, “[t]he development of shale gas has become a ‘game changer’ for the US natural gas market.”

Benefits of shale gas are real and measurable

January 18, 2012

The advent of shale gas has moved the peak of “peak-gas” into the future by some 250 years. This together with the fact that gas-fired power plant have the shortest construction times and the lowest investment costs of any form of power generation  provides the possibility to hold down electricity generation costs. The increase in generation costs in recent times has been the natural consequence of the subsidy regimes for wind and solar power plants and the opportunistic rush to renewable power. Huge fortunes have been made by “green” developers as the subsidies have been milked – but consumers have only seen rising electricity prices.

Bloomberg  reports:

A shale-driven glut of natural gas has cut electricity prices for the U.S. power industry by 50 percent and reduced investment in costlier sources of energy. With abundant new supplies of gas making it the cheapest option for new power generation, the largest U.S. wind-energy producer, NextEra Energy Inc. (NEE), has shelved plans for new U.S. wind projects next year and Exelon Corp. (EXC) called off plans to expand two nuclear plants. Michigan utility CMS Energy Corp. (CMS) canceled a $2 billion coal plant after deciding it wasn’t financially viable in a time of “low natural-gas prices linked to expanded shale-gas supplies,” according to a company statement.

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And now the UK reports a huge shale gas find – but WWF wants to ban it

September 22, 2011

“Peak-gas” moves further into the future as recoverable reserves of shale-gas are found in more countries. The coming gas glut is getting ever more real. Now the UK – which was thought to have little shale gas – has found reserves of about 5,700 billion cubic metres of shale gas in Lancashire. Poland -which was thought to be the richest in shale gas resources in Europe has recoverable reserves of about 5,400 billion cubic metres. Till now the British Geological Survey had thought the country possessed only about 150 billion cubic metres.

The map of the world’s shale gas reserves is changing rapidly as exploration for this previously ignored resource intensifies. The gas glut is going to provide relatively cheap options for the use of gas based electricity generation into the foreseeable future. In fact the increase in the cost of electricity which has been driven by the use of renewables and misplaced penalties for fossil fuel could finally be reversed. Needless to say the “environmental” industry – instead of welcoming the finding of new resources – is in a state of denial – and looking for every possible objection to the use of shale gas. The use of intermittent wind and solar power – apart from being so expensive when deployed – always needs back-up capacity and gas fired power generation is the only real option. The gas glut comes just in time for the recovery of the world economy which is now badly needed.

Wall Street Journal:  An area in northwest England may contain 200 trillion cubic feet of shale gas, putting it in the same league as some of the vast shale-gas plays that have transformed the U.S. energy industry. The figure for the area near Blackpool, released Wednesday by Cuadrilla Resources, a small oil-and-gas company with operations in England’s Bowland Shale, highlights the U.K.’s emerging position as a new frontier for unconventional gas exploration. But it inflamed environmental groups who say the technology used to extract shale gas is environmentally damaging.

The discovery of such vast resources—200 trillion cubic feet would be enough to meet U.K. gas demand for 64 years—comes at a time when the U.K.’s conventional gas fields are in steep decline and as it is becoming increasingly dependent on imports such as liquefied natural gas from Qatar and piped gas from Norway.

The response from the World Wildlife Fund was predictably alarmist.

In response to Cuadrilla’s announcement, the environmental group WWF called Wednesday for a moratorium on shale-gas production in the U.K. and said the country should be more focused on investing in renewables than increasing its reliance on fossil fuels. “The government should at the very least halt shale gas exploration in Britain until more research can be undertaken on both the climate-change impacts and contamination risks associated with shale gas,” said Jenny Banks, WWF-UK’s energy- and climate-change policy officer.

The coming gas glut: Shale gas gets going in Poland

September 19, 2011

An estimate of the world’s recoverable shale gas reserves in 32 countries is as at least as much again as the world’s proven natural gas reserves as of 2010. This does not include large parts of Africa and Russia, the Middle East and SE Asia. It does not include known resources within the 32 countries but which have not yet been assessed. Fears of any kind of “peak” gas scenario being attained are rapidly disappearing into the future.

US EIA: The initial estimate of technically recoverable shale gas resources in the 32 countries examined is 5,760 trillion cubic feet. Adding the U.S. estimate of the shale gas technically recoverable resources of 862 trillion cubic feet results in a total shale resource base estimate of 6,622 trillion cubic feet for the United States and the other 32 countries assessed. To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of January 1, 2010 are about 6,609 trillion cubic feet, and world technically recoverable gas resources are roughly 16,000 trillion cubic feet, largely excluding shale gas. Thus, adding the identified shale gas resources to other gas resources increases total world technically recoverable gas resources by over 40 percent to 22,600 trillion cubic feet.

Outside of the US the recovery of shale gas is being planned in many countries. In Europe the rush to recover and use shale gas is being led by Poland which has been dependant upon its own coal and on Russian gas. The shale is not very deep down and is mainly in thinly populated areas. And now the recovery has started and commercial production should start within 10 – 20 months.

Shale gas is abundant in Poland: map via Wikipedia

Wall Street Journal: Shale gas is burning in Poland after gas firm PGNiG SA torched a flare on one of its rigs. Poland wants to become one of the major players in the European gas market within the next two decades, with the state-controlled natural gas firm starting commercial production in 2014.

PGNiG has begun technical production of natural gas from its shale gas concession in Lubocino, a village in northern Poland, and plans successive drilling as the company hopes to tap the country’s potentially vast unconventional hydrocarbon reserves.

Outside the U.S., Poland is the first country where companies are making a serious effort to develop shale gas, which Polish Prime Minister Donald Tusk has called the country’s “great chance,” as it could reduce Poland’s dependence on Russia for gas, create tens of thousands of jobs and fill state coffers.

PGNiG now plans to drill horizontally and conduct further fracturing procedures on this concession, which may be completed in 10-20 months and will enable commercial extraction. …….

Prime Minister Tusk Sunday said he was “moderately optimistic” commercial shale gas production would begin in 2014, which would by 2035 free it from its overreliance on Russia’s OAO Gazprom for natural gas supplies and allow it to be a major player in Europe’s gas.

“After years of dependence on our large neighbor, today we can say that my generation will see the day when we will be independent in the area of natural gas and we will be setting terms,” Mr. Tusk said. Poland’s domestically produced shale gas should be competitively priced compared to gas imported from Russia, a government official said earlier. Exploration in Poland won’t pose a danger to the environment, he added.

China and India have not yet even fully mapped all the shale gas reserves they have but plans for commercial gas production from the reserves already known to exist are being prepared. With the slow-down expected in building nuclear plant the gas “glut” comes just in time for the gas based power production that will be needed when the economic recovery is established. Moreover all intermittent, subsidised renewable energy (solar and wind) need capacity back-up and the only viable option is gas based power plants.


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