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Shale Gas Threat or Opportunity?
Ron Oxburgh
Smart Grids & Cleanpower Cambridge 14 June 2012 www.cir-strategy.com/events
Shale Gas
• Natural gas (methane) that never escaped from the rock in which it was generated by decomposiBon of organic maCer
• Therefore it is essenBally mined by shaCering the rock and releasing the gas to travel up the borehole to the surface
Shale Gas -‐ Why Now? • Technical Advances have opened up new possibiliBes: – Subsurface acousBc imaging – established methods enormously enhanced by massive compuBng power
– DirecBonal drilling – ability to steer the direcBon of a borehole with high precision
– Hydro-‐fracturing to enhance rock permeability
• Shale gas is one of the resources newly accessible
Shale Gas & DirecBontal Drilling
Shale Gas: an example -‐ US Marcellus Shale
• Reserves > 100T m3
• US gas use 2009 – 0.65T m3
BUT:
• ExtracBon requires abundant water for fracturing
• Water returning to the surface is contaminated and has to be cleaned
• Poor pracBce has serious environmental consequences
• Depth range hundreds to several thousand metres
• Low level seismicity
Shale Gas in the US Today
• Shale gas now >25% US gas producBon (in 2000 zero contribuBon)
• 1700 wells in Pennsylvania 2010
• Water 3 million gal/well
• Return water highly saline and contaminated with drilling compounds
• Poor pracBce has generated significant public opposiBon in some areas
NTEL, E&P Focus summer 2010
Some Shale Gas Reserves
0
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US China ArgenBna Mexico S Africa
10^9 m
3
BP 2009, FT 2011
SHALE GAS
World Reserves increased by > x 10 Widely distributed
Still Great SG Uncertainty! ConvenBonal gas in yellow
Prices • Much convenBonal gas on long term contracts
• Spot prices variable but June 2012, million btu – Houston $2 – UK $10 – SE Asia $18
• Gas most expensive fossil fuel to move; liquefacBon + transport + re-‐gasificaBon < $3
• For holders of exploitable SG reserves: – Increased energy security – Cheap fossil fuel energy – Big export potenBal (but massive capex for plant)
Shale Gas – The Debate • Local environmental hazard?
– Groundwater polluBon – Groundwater use – Earthquakes
• Global environmental hazard? – Emissions during producBon – ProlongaBon of use of fossil fuels
• Beneficial step in transiBon to a low-‐C economy? – Displacing coal ? -‐ half the GHG emissions of coal – Gas fired power staBons cheaper/quicker to build – Probably easier to capture CO2
Frequency of BriBsh Earthquakes
British Geological Survey 2012
Blackpool
Conclusions • Gas GHG emissions about half those of coal; likely that adverse local
environmental effects can be managed, but water demand sBll high
• TradiBonal suppliers less able to control global gas supply
• Gas-‐fired power staBons cheaper and quicker to build; aCracBve backup to intermiCent renewable because flexible
• If priced compeBBvely gas may displace coal for electricity generaBon and bunker fuel for shipping – major emissions saving
• Will cheap gas ease pressure to find C-‐free alternaBves?
• Major economic asset for ‘SG countries’
• US energy scene already transformed – only quesBon ,how many will follow and how fast?
Oil & Gas Prices 1989-2009
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Year
Oil
$. G
as $
*4
Oil $Gas $ *4
Price $/mmBTU $80/T Coal 4
$80 /Barrel Oil 13.79
$3.9/mmbtu Gas 3.9
Shale Gas
• Low Nox & Sox • Well suited to CCS • X2 water consumpBon of convenBonal • LNG for transportaBon • In 2000 SG made no contribuBon in US • Today 25% of gas used • Economics of transport • Blackpool quake 1-‐4-‐11 mag 2.3
The Big Picture – Paradoxical Role of China
• Largest emiCer of CO2 world wide – rapid growth of demand & emissions
• Highest priority to take electricity to the centre & west
• The most technologically-‐literate government in the world – recognises that China is a big loser from climate change
• 1/3 of objecBves in new 5yr plan relate to clean energy/climate change
• Aims to be the main cleantech supplier & climate change leader in the world
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0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
Population billions
Tonne o
il equiv
./cap. yr
2020
2010
2000 1965
Emissions of Developed Countries
Developed Countries Today
Current China Emissions 2015 China Emissions China
today
Energy & Emissions China & Developed Countries
CHINA WITH CCS
Oil & Gas Prices 1989-2009
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100.00
1989
1991
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2009
Year
Oil
$. G
as $
*4
Oil $Gas $ *4
Underground Coal GasificaBon • First experiments 1912 by Sir William Ramsay in Durham (UK)
coalfield
• In 20th century 12 power staBons in FSU; today one in Uzbekistan
• Coal combusted in place underground to give mostly Syngas – CO +H2
• ACracBve today because: – Imaging and direcBonal drilling – Ability to apply carbon capture and storage – High efficiency – Low water use
Underground Coal GasificaBon
ProducBon Well Syngas to Process-‐ing/Use
InjecBon well
Steam & O2
A1er Ingenia,2010
Cultural problem!!
Shale Gas
COAL
• Shale gas is here and giving US a major economic advantage
• Major within country advantage – pipeline transport
• Will reduce coal burn
