Natural Resources GP 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, Hammamet Hammamet, Sept 22, '12 , Sept 22, '12 2nd Tunisia Oil & Gas Summit,
Natural Resources GP Occurrences Occurrences 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 2 2
Natural Resources GP 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 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 in shale formations Reserve estimates: Uncertainty, differences, revisions � some ?? in our following slides 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 3 3
Natural Resources GP Hydraulic Fracturing [Fracking Fracking] ] Hydraulic Fracturing [ 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 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 4 4
Natural Resources GP Techniques in Fracking Fracking Techniques in � Ceramic Proppants: higher flow capacity than similar sizes of sand, including resin-coated grades, greater strength & thermal stability � Foam fracking : uses CO 2 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 of 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 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 5 5
Natural Resources GP World Shale Gas Resources World Shale Gas Resources 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 6 6
Natural Resources GP Technically Recoverable SG Resources Resources by Country by Country [EIA] [EIA] Technically Recoverable SG 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 7 7
Natural Resources GP Recoverable SG Resources Resources in Europe in Europe [fm EU] [fm EU] Recoverable SG 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 8 8
Natural Resources GP US Shale Deposits… …. . US Shale Deposits 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 9 9
Natural Resources GP …. . 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 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 10 10
Natural Resources GP Shale Basins in Europe… … Shale Basins in Europe 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 11 11
Natural Resources GP 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 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 12 12
Natural Resources GP Shale in China… … Shale in China 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 13 13
Natural Resources GP … 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 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 14 14
Natural Resources GP 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’ 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 15 15
Natural Resources GP Shale Gas Basins, Pipelines: Central N. Africa [EIA] Shale Gas Basins, Pipelines: Central N. Africa [EIA] 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 16 16
Natural Resources GP 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 1 st 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’ 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 17 17
Natural Resources GP 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 2nd Tunisia Oil & Gas Summit, 2nd Tunisia Oil & Gas Summit, Hammamet, Sept 22, '12 Hammamet, Sept 22, '12 18 18
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