Shale Gas Prospecting Moves to UK

photo : Shaun Dunmall (Flickr)

The race for shale gas continues to gather pace, with  reports of UK being one of the newest sites for exploration.

For the British, Blackpool is a traditional seaside town, with its iconic tower, donkey rides and amusement arcades on the famous 'Golden Mile'.

That reputation may be set to change however, if the company Cuadrilla Resources is able extract gas from the nearby Bowland shale. Cuadrilla is a new name in the industry but apparently is significantly backed by private equity.

There are some concerns about the extraction of shale gas. The US Environmental Protection Agency is currently investigating the potential problems associated with hydraulic fracturing and in particular the need for high volumes of water, together with the risk of contamination by the chemicals used in the fracking process.

For the UK, with a dwindling supply of gas coming from the North Sea and an increasing reliance on imports from countries such as Russia, the possible availability of shale gas is is potentially very good news. Apparently suitable geological conditions exist in much of the North West of England, North Wales and in the area around Oxford. If Cuadrilla achieve success, we may very well see many more companies joining the hunt.
_______________________________________________________________________
Update - thanks to the reader for the following comment on shale gas prospects in the UK

"Boring Rock" - Prospects for Shale Gas in Britain provides the comments of Mike Stephenson of the British Geological Survey. The article can be read at http://www.naturalgasforeurope.com/

ACC Calls For End of Moratorium on Deepwater Drilling

photo : www.offshore-technology.com

The American Chemistry Council (ACC) has called for a solution to be found to end the drilling moratorium in the Gulf of Mexico.

The ACC President and CEO, Cal Dooley, made these remarks in The Hill's Congress Blog. Dooley noted the potential harm to US Manufacturing, including chemicals manufacturing, of policies that will reduce the availability and increase the price of energy in the future.

Whilst the moratorium is understandable, as a reaction to events in the Gulf of Mexico, the issue needs to be considered in its wider context. Whilst this blog has long argued for a policy of sustainability and energy efficiency, the world is still highly dependent on fossil fuels and we are very far away from having an energy future based entirely on renewables.

Peak Oil is a major subject by itself, but all experts agree that we are well past the peak of oil discovery and that we are approaching, in the short-to-medium term, the peak of oil production. This means that oil and gas production from unconventional sources, such as shale gas, is increasingly important and we must also continue to find and safely and efficiently produce oil and gas from all conventional sources.

This does not mean that we should take unnecessary risks in doing so but instead should find engineered solutions to our issues and operate under a regime of thorough oversight and regulation. The Gulf of Mexico incident was a tragedy and steps must be taken to prevent this from happening in the future but we cannot afford to call a halt to deepwater production at this time.

Reliance Industries Joins Shale Gas Rush

photo : energy.alberta.ca

A regular theme on this blog has been the development of the shale gas industry. Now Indian major, Reliance Industries, has joined the party, investing a total of $1.36billion to acquire and develop a share in Texan shale gas assets.


Reliance has paid Pioneer Natural Resources some $236M for a 45% stake in the Eagle Ford shale assets in southern Texas for $236M and will further invest $1.052B to develop the fields over the next four years.

Back in April, Reliance invested $1.7B to create a venture with Atlas Energy, a deal which gave Reliance a 40% in the Marcellus shale fields in the USA.

This move again shows the growing importance of unconventional oil and gas to the IOCs and the petrochemical majors such as Reliance. With discoveries of conventional oil and gas reserves having peaked some time ago and with control firmly in the hands of the National Oil Companies, we can expect more and more activity in the development of unconventional resources. This will also increasingly shape the future of petrochemicals, now that the peak of investment in crackers based on conventional sources of feedstock appears to have passed.

Shale Gas Discovered in Poland

photo : Energy Tribune

According to Polskie Radio's website,  PKN Orlen, the Polish refining and petrochemicals group, has discovered large quantities of shale gas in the Lublin area in the East of Poland.

The find is significant, as experts have estimated that Poland may have up to 3 trillion m3 of shale gas. Currently, Poland is reliant on Russian imports for much of its gas.

The news will also be a major boost for Poland's chemical industries, with fertiliser producers and petrochemicals manufacturers potentially set to benefit from this new gas source.

This blog has watched the development of the shale gas business with interest. There have already been significant developments in North America. It has been suggested for some time that Europe could be a rich source of shale gas. Discoveries such as that in Poland, show that the future of energy and chemical feedstock supply in Europe could be set to take a new course.

Shale Gas Again in the News

photo : Energy Tribune

The subject of shale gas has been very much in the news in recent days.

According to reports, Shell and PetroChina have offered $2.96BN for Australian unconventional gas producer Arrow Energy.

This deal would help meet China's energy needs and would provide additional feedstock for Shell’s proposed 16m t/y LNG production plant at Gladstone port in Queensland.

In the USA, the subject of Shale gas has dominated the CERA Week 2010 Energy Conference in Houston. Keynote speakers from both BP and Chevron have stressed the importance of shale gas to US energy supply, whilst the Energy Secretary, Stephen Chu, asserted his view that natural gas should be seen as a transition fuel, helping the world to achieve a shift towards green forms of energy.

This blog's view is that energy supply and energy security will rise up the agenda in the not too distant future. Many countries (such as the UK) potentially face significant energy shortfalls related to proposed closures of existing generating capacity. A move towards green and sustainable forms of energy will help the energy mix but gas will play an essential part in a secure energy future, both in the transition and in the longer term. The fact that so much activity is taking place in relation to shale gas shows that much of industry shares this view.

Total Makes Strategic Move Into US Shale Gas Business

photo : Energy Tribune

Total has made a major move into the US shale gas market. Total and Chesapeake Energy Corporation have agreed a $2.25 billion joint venture related to Chesapeake's Barnett Shale assets

The Barnett Shale is currently the largest natural gas producing field in the U.S. and is producing approximately 50-60% of all shale gas in the U.S.

The move is highly significant for Total, with the company stressing the strategic nature of the investment, which will allow it enter the US shale gas business and to develop its expertise in unconventional hydrocarbons.

The latter point is very significant. As the attractiveness of natural gas grows, we can expect a significant increase in shale gas exploration and production activity wherever opportunities may exist. Watch this space for further news.

Weekly News Round Up

This week's round-up of news and updates on previous stories

• The Thai Government has formally ordered construction work to stop at the Map ta Phut petrochemical complex. There is no clear information regarding a likely restart date at this time.

• The new Boeing 787 Dreamliner made its first test flight on Tuesday. Each 787 contains carbon fibre and adhesives to the value of $1M, with the carbon fibre coming from polyacrylonitrile. Boeing has already received 840 orders for the new aircraft.

• Following recent shale gas discoveries, the American Natural Gas Alliance (ANGA) now believes that the US now has approximately 100 years of natural gas reserves. If correct, this could significantly impact future petrochemical investment in the USA. This news follows the recent announcement of ExxonMobil's acquisition of  major US natural gas producer XTO Energy.

• According to reports, the bankruptcy court in New York has adjourned the hearing to consider the LyondellBasell's proposed reorganisation plan, until January 12th. The outcome of the hearing is of much interest for Reliance Industries which has made a preliminary non-binding offer for a controlling interest in LyondellBasell.
  
  
  

ExxonMobil Develops Shale Gas Business With XTO Acquisition

Photo : Energy Tribune

ExxonMobil has clearly signalled its intent to develop a global shale gas business with the acquisition of XTO Energy, the Texas-based 'unconventional' gas producer.

The deal, which cost some $41bn, gives ExxonMobil a strong global position in the fast growing shale gas market, with assets throughout the world.

Shale gas extraction has become increasingly attractive as extraction techniques have improved and costs have fallen. Estimates of the potential gas supply are being revised steadily upwards as new reserves are located. The involvement of the majors such as ExxonMobil will further increase the amount of new exploration and production. It is unlikely that the 'unconventional' tag will last much longer.

Shale Gas - The Next Petrochemical Feedstock?

photo : Energy Tribune

Is shale gas set to become the next major feedstock for the Chemical Industry? Shale gas, oftern referred to as an 'unconvetional' source of natural gas, has become an increasingly more important source of natural gas in the United States over the past decade, and interest has spread to potential gas shales in Canada and Europe.

Some projections suggest that shale gas could supply as much as half the natural gas requirement in North America by 2020 as well as providing a significant proportion of Europe's gas supply.

Recent improvements in extraction techniques have attracted the major players into the arena, with companies such as Shell, ExxonMobil, Statoil and BG Group becoming increasingly involved.

Shale gas currently costs more to produce than gas from conventional sources, due of the expense of extraction process but this is expected to eveolve quickly as more major players become involved.

Given current overcapacity and new investment in plants in the Middle East and Asia, shale gas will not revolutionise petrochemicals manufacture but it is very likely to play some part in shaping it.