Study reports non-US global shale gas recoverable resources of 5,760 Tcf; global shale gas boosts total recoverable natural gas resources by 40%
06 April 2011
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| Map of 48 major shale gas basins in 32 countries. Source: EIA. Click to enlarge. |
Initial assessments of 48 shale gas basins containing almost 70 shale gas formations in 32 countries suggest that shale gas resources, which have recently provided a major boost to US natural gas production, are also available in other world regions. A new EIA-sponsored study by Advanced Resources International, Inc. reports initial assessments of 5,760 trillion cubic feet (Tcf) of technically recoverable shale gas resources in 32 foreign countries.
Adding the estimated US shale gas technically recoverable resources (862 Tcf) to the assessments in the study gives a total of 6,622 Tcf. For comparison, most current estimates of world technically recoverable natural gas resources include few if any of the resources assessed in this study and total about 16,000 Tcf.
Adding identified shale gas resources to current estimates of other gas resources increases total world technically recoverable resources by over 40 percent, to more than 22,000 trillion cubic feet.
—EIA Administrator Richard Newell.
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| Estimated recoverable shale gas resources by country. Data: EIA. Click to enlarge. |
The technically recoverable resource estimate for shale gas in the report is established by multiplying the risked gas in-place by a shale gas recovery factor, which incorporates a number of geological inputs and analogs that are appropriate to each shale gas basin and formation. The risked gas in-place estimate is derived by first estimating the amount of ‘gas in-place’ resource for a prospective area within the basin, and then de-rating that gas in-place by factors that account for the current level of knowledge of the resource and the capability of the technology to eventually tap into the resource.
The basic recovery factors used in this report generally ranged from 20% to 30%, with some outliers of 15% and 35% being applied in exceptional cases. The consultant selected the recovery factor based on prior experience in how production occurs, on average, given a range of factors including mineralogy, geologic complexity, and a number of other factors that affect the response of the geologic formation to the application of best practice shale gas recovery technology.
Estimates of shale gas resources in other parts of the world are highly uncertain, the EIA notes. The practicality of using such resources has only recently become apparent, and many countries are just now beginning to understand how to conduct assessments of how much shale gas they may have. Nonetheless, the aggregate estimate is probably quite conservative, the EIA says, since the study excluded several major types of potential shale gas resources:
- Nations outside the 32 countries studied. These include Russia and the Middle East, which have very large resources of conventional gas.
- Some shale basins in the countries studied. In many cases, no estimates are possible yet for these basins.
- Offshore resources.
Of the countries covered in the EIA-sponsored study, World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States, two groups may find shale gas development most attractive.
The first is those countries that currently depend heavily on natural gas imports but that also have significant shale gas resources. These include France, Poland, Turkey, Ukraine, South Africa, Morocco, and Chile. The second group is those countries that already produce substantial amounts of natural gas and also have large shale resources. In addition to the United States, this group includes Canada, Mexico, China, Australia, Libya, Algeria, Argentina, and Brazil.
In terms of recoverable shale gas resources, China takes the top spot, with an estimated 1,275 Tcf. The US is second, with 862 Tcf, followed by Argentina with 774 Tcf and Mexico with 681 Tcf.
Background. The use of horizontal drilling in conjunction with hydraulic fracturing has greatly expanded the ability of producers to profitably produce natural gas from low permeability geologic formations, particularly shale formations. In 2010, US shale gas production reached 4.87 Tcf (23% of total US natural gas production), compared with 0.39 Tcf in 2000. This shows both the rapid growth and absolute importance of the shale gas resource to the United States. Rising production from shale gas resources has been credited with both lower natural gas prices and declining dependence on imported natural gas.
The growing importance of US shale gas resources is also reflected in EIA’s Annual Energy Outlook 2011 (AEO2011) energy projections, with technically recoverable US shale gas resources now estimated at 862 trillion cubic feet. Given a total natural gas resource base of 2,543 trillion cubic feet in the AEO2011 Reference case, shale gas resources constitute 34% of the domestic natural gas resource base represented in the AEO2011 projections and 50% of lower 48 onshore resources. As a result, shale gas is the largest contributor to the projected growth in production, and by 2035 shale gas production accounts for 46% of US natural gas production.
The successful investment of capital and diffusion of shale gas technologies has continued into Canadian shales as well. In response, several other countries have expressed interest in developing their own nascent shale gas resource base, which has lead to questions regarding the broader implications of shale gas for international natural gas markets.
As is often the case with resource development, the EIA notes, shale gas production also has raised local environmental concerns, largely centering on the amount of water used in the fracturing process and the need to handle, recycle, and treat fracturing fluids in a manner that addresses the risk of spills that can potentially affect water quality.
(A hat-tip to John!)
Resources
What make this issue truly important are the scale and the speed by which the US is expanding its natural gas production from shale gas. The numbers for year 2010 are 4.87 Tcf (23% of total US natural gas production), for 2009 it was 3.38 Tcf and for 2008 it was 2.28 Tcf see http://www.eia.gov/dnav/ng/ng_prod_sum_dcu_NUS_a.htm
In other words, in 2010 the US added 4.87 - 3.38 = 1.49 Tcf of natural gas production from shale. This is equivalent to adding the daily production capacity of 721,000 barrels of oil and that is a lot of capacity to add in just 12 months.
Shale gas is changing the geopolitical power balance of energy to the benefit of the western world and it is happening very fast. It can be used for good to end the use of coal globally and natural gas can also be used for international shipping instead of polluting bunker oil. Natural gas could also be a replacement for commercial diesel vehicles although that is going to be more costly and difficult than a change of fuel in the shipping industry.
The commercialization of shale gas and oil by multistage horizontal fracking is about to become the most important innovation that has happened in the oil and gas industry in the past 50 years. I say oil industry as well because the technology can also be used to drill oil out of oil shale as it is done in the US in the Bakken play see http://www.ogj.com/index/article-display/4715529408/articles/oil-gas-journal/drilling-production-2/20100/february-2011/continental_-bakken.html?cmpid=EnlEDFebruary172011
Posted by: Account Deleted | 06 April 2011 at 02:47 PM
The numbers don't add up for a massive shift in powering ships etc.
For my own country, the UK, they are showing 20Tcf.
That is around 7 years consumption, nice but not transformative.
The numbers are better elsewhere, but there are a lot of people in the world to provide power for.
Posted by: Davemart | 06 April 2011 at 04:46 PM
My first reaction to this is: poor Japan--not on the list. They could use a break on energy right about now.
Considering this resource, why anyone is building new coal power plants is beyond me (are you listening, China?).
A downside is that this will depress demand for solar hot water where gas is cheap and long term supplies are guaranteed.
LNG for long-distance semis is going to look very appealing, which will certainly help with the oil import problem. And ditto Henrik, if CH4 can displace bunker fuel in large ships, that's a huge win for reduced CO2, soot, sulfur, etc.
Posted by: Nick Lyons | 06 April 2011 at 08:49 PM
Henrik,
Your statement "It can be used for good to end the use of coal globally" is not corresponding to reality. Natural gas represents tiny fraction of power generation. Even Russia with it's vast natural gas resources is not using natural gas as base load fuel (base load nuclear and coal). Natural gas may replace oil (may be not) for road transportation, but I am very cautious being optimistic, since it would be shift from oil dependency to the natural gas dependency as primary resource with no flexibility. In other words oil usage pattern could be repeated again. Best idea would be start using natural gas for international shipping and rail transport since it would be not costly retain flexibility oil/natural gas and infrastructure could be implemented gradually.
IMO worth to proceed with EV (at least EREV) which would guaranty world primary fuel flexibility (coal, nuclear, wind natural, solar .....).
Posted by: Darius | 06 April 2011 at 11:45 PM
LNG for semis would require cryogenic tanks, larger tanks than usual because the volumetric energy density of LNG is 60% that of diesel, plus the insulation needed.. It should not be a issue for ocean shipping since ships have more room. The energy density for mass is higher for LNG than diesel. LNG for airliners could be interesting, if they can make light tanks.
The volumetric energy density of LNG is similar to ethanol. I could get interested in methanol used in semis, it would require tanks twice the size.. cheap to make from NG, perhaps down to $0.50 a gallon.
Posted by: Herm | 07 April 2011 at 12:18 AM
Darius and Davemart you have some good points of critique.
My answer is organized in terms of 1) adequate quantity and 2) adequate price for natural gas to replace coal and oil on a global scale.
1) Adequate quantity.
This study is a preliminary and therefore a conservative estimate of the natural gas resources yet it estimates some 6,622 Tcf in shale gas reserves which is equivalent to 1170 billion barrels of oil or nearly as much as the total global oil reserves. According to BP Statistical Review of World Energy June 2010 global oil reserves where 1333 billion barrels in 2009 not including many other and often more important alternative oil sources, such as, oil shale and oil sand. However, if you include shale gas reserves from the countries beyond the 32 countries in the study and also look at off-shore reserves and recognize this is a conservative and preliminary estimate the 6622 Tcf could easily be 10 times as much. In other words, in all likelihood there is enough natural gas in shale formations to replace both oil and coal on a global scale.
Moreover, the US added production capacity for shale gas equivalent to 721,000 barrels per day in 2010 yet it has currently “only” 862 Tcf of shale gas reserves to dig in. When other countries learn this fracking technology they should also be able to add production capacity at this speed. A simple extrapolation would suggest that the 6622 Tcf could provide the basis for adding the equivalent of (6622/862)*721 = 5.5 million barrels of oil per day. Do that for just 10 years and production of shale gas will add the equivalent of 55 million barrels of oil per day or enough to replace all coal use globally. Bunker oil for global shipping is only about 4 million barrels per day not even 1/10 of the 55 million barrels per day of potential shale gas production within the foreseeable future possible within 20 years from today.
2) Adequate price.
This is more difficult I admit. Currently natural gas costs about 4 USD per million BTU in the US futures market, the Henry Hub index. Its price was 12 USD in its peak in 2008 but the global credit crises prompted it to drop to 4 USD and even the global recovery (or the Japanese earthquake and subsequent need to import more natural gas) has not changed that. In my opinion the price of natural gas has stayed at 4 USD because of rapidly expanding shale gas production in the US since 2008 and this is new. Note that the oil price has gone up after the global recession so it is quite remarkable that natural gas prices have been unable to rise as well.
Is 4 USD per million BTU of natural gas enough to replace oil or coal as a source of energy? Well this price is much cheaper than oil that cost the equivalent of 19 USD per million BTU when oil cost 110 USD per barrel. This is why I think the shipping industry and the commercial diesel fleets will do a lot of change in the coming years to shift towards using natural gas instead of oil. However, coal at 72 USD per ton of steam coal actually cost the equivalent of 2.88 USD per million BTU so in this sense it is still cheaper than natural gas at 4 USD per million BTU. However, combined cycle natural gas power plants are 60% efficient whereas coal power plants are 40% efficient so the fuel costs of producing 1 kWh of electricity is still the same at these prices and as low as 2.3 cents per kWh.
In the US coal only cost 40 to 50 USD per ton at the doorstep of the coal mine so if the power plant can be build on top of a coal mine it will be cheaper to use coal than natural gas for electricity production when natural gas cost 4 USD per mBTU. However, countries like Japan, Europe and many states in the US that has no coal to dig will need to import the coal and that adds up to 50 USD per ton of coal in transportation costs. That is coal at about 100 USD a ton and for these countries natural gas at 4 USD per million BTU will be cheaper than burning coal.
Moreover, I read (although I can’t remember where) that the production cost of shale gas drilling in the US is actually as low as 2 USD per million BTU why it currently is very profitable to make such gas wells as the gas is sold for 4 USD. This high profitability can explain the high growth rates in shale gas in the US. This also implies that the long-term selling price of natural gas from shale rock has the potential to drop global prices to about 3 USD per mBTU and that will mean most coal power plants globally will not be able to compete price wise with the cost of electricity made from natural gas. On the other hand the cost of coal mining and coal transportation could also be lowered in the long term by using bigger ships, trucks, diggers and changing the fuel for mining and transportation from diesel to natural gas so what will happen is still an open question.
Frankly I believe that for coal to be dropped globally as a fuel it has to be decided politically as coal is too cheap and too plentiful to go away naturally by relying on market forces alone. I hope this will happen as the environmental effects of coal burning are simply too large to defend it from a moral point of view.
Natural gas prices
http://markets.ft.com/tearsheets/performance.asp?s=1069936&ss=WSODIssue
See page 32 in the this PB review
http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf
Posted by: Account Deleted | 07 April 2011 at 02:49 AM
Henrik,
Good points. I was thinking that there were two main problems holding back NG at this point:
1) Inertia. But as you point out, the US brought huge NG resources on line in the last 18-24 months so from a production point of view that seems to be an obstacle we can overcome. But then, you also have to get trucks, trains and shipping to start using it which I fear will be a longer battle. The grid...I think we can start converting that to NG at a fair rate.
2) How dirty is fracking really? I've heard wild estimates on both sides and I'm sure both sides exagerate but it certainly doesn't seem very clean especially for water supplies. I have a feeling that all the doom-sayers about the coming shortage of clean water are probably correct. The amount of water needed for the fracking itself and the way it pollutes everything around it, especially water....can't be overlooked.
Posted by: DaveD | 07 April 2011 at 06:32 AM
Henrik,
In short term your consideration is O.K. But my point is that I expect natural gas repeating oil path during recent 50 years. I remember all optimism concerning vastness of oil reserves and confidence on midle East imports just ten years ago. Could this happen to NG? Why not? What happened with NG in North Sea and Norway? Russia still sells NG for $ 12 per milion BTU for some European neighbors linking NG price to HFO price. Are they stupid when saving NG resourcess? Do we like to become captive customers once again?
Posted by: Darius | 07 April 2011 at 12:58 PM
Henrik,
Your argument seems to me to be based on a misunderstanding of what the term 'technically recoverable' means.
It means that it could probably be produced, but without regard to real world economics.
So the assumption that the actual, economically recoverable reserves will be an order of magnitude greater is without foundation.
In addition, the article talks rather blithely of 'undersea resources' not being yet counted.
A shale gas well very rapidly peaks, and the output from it drops to a fraction within 18 months.
It is challenging simply to use on-shore shale gas in the US to replace the fall-off in conventional gas in the US.
With present technology we really have no idea how to economically extract undersea shale gas.
So, as my mother would say, don't count your chickens before they are hatched!
It's an interesting resource which can provide a fair bit of energy, but talk of replacing coal with it is simply speculation of the wildest kind.
Posted by: Davemart | 07 April 2011 at 01:51 PM
I find it amazing that gullible greens are faithfully taught that it cost little to drill wells, fracture the rock, and inject CO2 under very high pressures, as a CO2 sequestering mechanism. All with no leakage, blowouts or deleterious environmental side effects, while the high pressure must be maintained forever lest the CO2 leak out.
Yet they are already being "educated" that drilling a well and injecting sand and water to fracture the rock and release methane which is collected, with little need to maintain the high pressure, has major deleterious side effects.
We certainly don't need more of this green psycho-babble.
Posted by: Stan Peterson | 07 April 2011 at 04:31 PM
Regarding how dirty shale gas fracking is. Currently there are about 500,000 gas wells in the US of which about 23% or 115,000 are drilled in shale rock using fracking methods. There are probably less than 10 incidents each year where groundwater is contaminated as a result of fracking. That is an annual incident frequency of 10/115,000 = 0.0087%. Moreover, the incidents are very local and can often be solved by drilling a new groundwater well a few miles away from a contaminated freshwater well. New legislation is on the way that will lower the number of incidents with shale gas drilling even more.
I would be more worried about breathing air polluted from coal power plants that are known to kill hundreds of thousands prematurely worldwide every year. That could be prevented by making a shift to natural gas and banning coal for electricity production. Coal could be phased out in 30 years globally if we wanted without increasing electricity bills notably.
Gas wells in the US
http://www.eia.doe.gov/dnav/ng/ng_prod_wells_s1_a.htm
Posted by: Account Deleted | 08 April 2011 at 12:30 AM
@Henrik,
I note that you are simply not responding to the critique that your estimation of exploitable gas reserves are overblown, and have now moved on the to the definitive statement that they are great enough to allow for the phase out of coal within 30 years.
I repeat you have no foundation at all for that statement and it is simply conjecture and wishful thinking.
Posted by: Davemart | 08 April 2011 at 01:05 AM
Davemart take a hard look at the definition of BP’s global proven reserves of oil given at page 6 in their review see link below. For your convenience I have reproduced it right below.
”Proved reserves of oil – Generally taken to be those quantities that geological and engineering information indicates with reasonable certainty can be recovered in the future from known reservoirs under existing economic and operating conditions.”
>Under existing economic and operating conditions< means under current prices and technological capability. Proven reserves definitions is of cause not made under the assumption that any price will qualify as that would make such reserve statistics meaningless.
If the price increases in the future these reserves statistics will be much bigger and if our technological capabilities improve in the future these reserves will also grow much bigger.
BP’s rewiev
http://www.bp.com/liveassets/bp_internet/globalbp/globalbp_uk_english/reports_and_publications/statistical_energy_review_2008/STAGING/local_assets/2010_downloads/statistical_review_of_world_energy_full_report_2010.pdf
Posted by: Account Deleted | 08 April 2011 at 02:11 AM
You can make coal much cleaner than it is today by starting IGCC process, applying supercritical steam cycle or introducing CO2 turbines. Filters would help as well. I would not scip nuclear option since it is even cleaner than any other fuel taking into account that major accident in Fukushima have not coused any threat to the public health. I would expand NG applications in areas where is no option to oil other than NG like internatinal maritime shipping.
Posted by: Darius | 08 April 2011 at 12:48 PM
It would be good for China and the U.S. to get with Combined Cycle and while we are at it make fuels at the same plants. There are companies that make conversion front ends for existing plants.
http://www.bv.com/Markets/Energy/Combustion_Turbine/Service_CombinedCycleConversion.aspx
Posted by: SJC | 09 April 2011 at 12:27 PM
With the current world wide fossil fuel consumption increasing rate, it will become a rare commodity by the end of this century. Our great great grand children will find ways to produce low cost clean energy to replace fossil fuels for the world 10+ billion people.
By 2100, most clean energy will come directly or indirectly from the sun, a sustainable source for a few more billion years.
Posted by: HarveyD | 10 April 2011 at 09:23 AM
We don't have the time to leave it to the grandkids. If we do not reduce imported oil now, their future is in doubt.
Posted by: SJC | 10 April 2011 at 12:01 PM
Leave no hydrocarbon unburned ;)
Posted by: neptronix | 13 April 2011 at 01:11 AM
Yeah, we seem to be burning it as fast as we can as if it will spoil if we don't. It has been in the ground for millions of years, I do not think it is going anywhere soon.
Posted by: SJC | 13 April 2011 at 11:35 AM