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July 29, 2019 | Energy & Power
Shale gas is natural gas that is trapped in the shale formation. It also is a rich source of energy found at 2500-5000 meters below the earth surface and extracted using a combination of horizontal drilling and hydraulic fracturing. At present, only four countries, i.e., the United States, Canada, Argentina, and China, are producing shale gas at a commercial level. Technological development and advanced drilling methods in oil & gas exploration have encouraged operators to explore shale resources in other prominent countries such as Algeria, Russia, Poland, and Mexico.
However, the extraction process of shale oil & gas is a highly expensive task and its commerciality depends upon the prices of crude oil. Since the crude price downfall in 2014, many shale operators had filed for bankruptcy due to heavy losses in shale based oil & gas extraction. The prices of crude oil were too low to cover their day-to-day expenses, which forced operators to shut down operations to avoid further losses.
"Shale Has Empowered The United States To Become Energy Independent"
In the U.S., shale gas production accounted for more than half of natural gas production in the year 2017. In addition to that, the ever-increasing demand for natural gas from various end-use applications and rising concern over clean source of energy have fuelled the demand, catapulting the U.S. to a strong position. Based on EIA projection, the U.S. shale gas production is likely to reach 79 billion cubic feet per day by 2040.
However, there are lots of criticism raised by environmental agencies over the drawbacks of shale exploration which may restrict the growth of the shale industry. The extraction of shale gas by hydraulic fracturing technique is afflicted by numerous social, environmental, and economic issues. Among these, groundwater contamination while fracking poses one of the primary concerns for environmental agencies. Inefficient extraction and leaking of fracking fluid chemical in drinking water or aquifers may contaminate a large portion of the area which could be the only source for nearby cities.
In the U.S., the production of shale gas was 2,116 Bcf in 2008, which has increased to 18,589 Bcf in the year 2017. Principal exploration activities recorded in Marcellus (PA, WV, OH & NY), Permian (TX & NM) and Utica (OH, PA & WV) basins contribute more than 50% of the shale gas production in the country. With the enormous successes in shale exploration technologies and support from crude oil prices and U.S. dollar exchange rate, the U.S. has become an energy independent country, fulfilling its energy demand through domestic production and has finally entered into the category of net exporter of natural gas.
"Challenges of Sustainable Energy Source"
With the rising awareness on reducing global carbon footprint and increasing adoption of renewable energy, countries across the world are focusing more on clean sources of energy which majorly includes extensive use of natural gas, solar, wind, biogas, geothermal, to cater to the ever-rising demand for energy.
The global demand for natural gas is increasing at a pace of 3-4% yearly with a significant portion (approx. 40%) being consumed by manufacturing & process industries. The residential sector consumes around 30% of the global natural gas production, securing a second-place among major consumers. Amid rising consumption of natural gas and reviving of the oil & gas industry, shale gas have emerged as a possible alternative toward a sustainable energy future.
However, this technology is yet to find its place among the other feasible options such as natural gas, biogas, and others which are dominating the industry. The sustainability of the shale industry highly depends upon the price of crude oil. The extraction of shale reserves is viable only when the price of crude oil is above $55-60 per barrel. So the extraction process of shale gas requires advanced technology in hydraulic fracturing and expertise in the management of fracking fluid, which brings up the total cost per barrel a significantly higher than convention process, which acts as a possible restraint for the future development. In terms of recoverable reserves, China is among the leaders followed by Argentina, Algeria, United States, Canada, Mexico, and so on. But due to the limitation of technological know-how, environmental, economic, and social impact has restricted the entry of the countries having a huge potential of shale reserves.
The major challenge faced by operators in shale gas extraction is the amount of freshwater needed during the drilling process. The most pronounced technology for shale gas extraction is hydraulic fracturing, which uses a mixture of pressurized water, chemicals, and sand to fracture in order to improve the permeability of shale rock allows the oil and gas to move in the upward direction. This process requires 5 to 9 million liters of water per extraction activity, posing a massive threat to freshwater reserves. The amount of water needed in hydraulic fracturing is 5 to 10 times higher than the convention drilling methods.
Environmental Protection Agency (EPA) is an international organization that regulates the environmental hazard caused during the exploration and production of hydrocarbons. EPA and various other regional environmental organizations have issued the guidelines, policies, and acts (ex- Clean Water Act) pertaining to drilling, disposal, and treatment of produced water so that the nearby aquifer won't get contaminated during the extraction process. This has led to an increase in the spending on geophysical surveys and underground monitoring equipment/sensors to avoid any such incidence, which could become a factor of severe losses.
To date, only the U.S., Canada, and China are actively producing shale oil & gas on a commercial level and are able to fulfill their domestic energy demand through unconventional sources. Despite ongoing debate over environmental challenges, shale production is growing at a global level, and new entrant such as Argentina and Algeria are taking a step toward shale production to have a sustainable source of energy.
"Key Countries To Be In Focus In The Next 5 Years"
China has emerged as the primary contributor to global shale gas production. Currently, China is at the third place in the worldwide ranking, however, looking at the target set by the country to produce 30 billion cubic meters of shale gas per year by 2020, the country is all set to acquire second position leaving behind Canada in the global ranking. With the wide application of natural gas-fuelled turbine and engines in most of the applications, the demand for clean fuel has seen a sharp rise in the consumption of different forms of natural gas.
The heavy industry segment is among the major consumer of natural gas, which can be deployed in the way of generators, engines, turbines, etc. The decreasing price trend of global natural price in each region acts as a key factor, supporting the growth of natural gas in the forecast period. Mexico, Algeria, Poland, Russia, and Argentina are among the countries having proven that shale gas reserves that can be commercially extracted. These countries have realized the potential of shale gas, which can give shape to their economy and to maintain balance for a sustainable future.
"Major Stakeholders In Shale Gas Industry"
At present, the U.S. dominates the global shale gas production followed by Canada and China. Some of the key market players are EOG Resources, Pioneer Natural Resources Company, ExxonMobil, Chesapeake Energy, Whiting Petroleum Corporation, PetroChina, Anadarko Petroleum Corporation, BP, Chevron, ConocoPhillips, EQT Corporation, Range Resources, Royal Dutch Shell, SINOPEC, Southwestern Energy, Statoil, and Talisman Energy among others. To get more such detailed and insightful reports on latest and upcoming technologies.