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What is the Shale gas boom all about?

Shale gas is natural gas contained within a commonly occurring rock called shale. Shale rocks are characterised by low permeability, so gas flows through them with more difficulty than through a conventional gas reservoir. Shale gas resources are also less concentrated. Compared to conventional gas, shale wells have short lives and developing a shale field requires drilling many holes over a short period. Shale gas is part of unconventional gas resources that have traditionally been considered difficult or costly to produce. These resources were known for decades but it is only due to recent technological developments, mainly horizontal drilling and hydraulic fracturing, that they are now being recognised as an important source of energy.

How is it produced?
After a patch of land is cleared, a hole, some 2000-3000 m deep, is dug vertically till it reaches the shale rocks. Steel tubes called casings are inserted and cemented in the hole to isolate the well from the surrounding rocks and aquifers. Now horizontal holes ranging from 1,000-3,000 m are dug to access the rocks at various points. Next step is to fracture the rocks to free the gas trapped within. For this water mixed with sand and chemicals is pumped into the ground at high pressure to force it through the perforations. This creates cracks in underground rocks. Hydraulic fracturing of rocks is also called fracking. Sand holds the cracks open, allowing the gas to flow into the bore well.
Given the length of horizontal wells, hydraulic fracturing is often conducted in 10-20 stages, where each stage focuses on a limited linear section and may be repeated numerous times. This multi-stage fracturing requires large volumes of water. A standard single-stage hydraulic fracturing may pump down several hundred cubic metres of water together with proppant and a mixture of chemical additives. In multi-stages the total volume of water used might reach up to 20,000 cubic metres per well and the amount of proppant up to 4,000 tonnes.

Some of the fracturing fluid injected into the well will return to the surface along with water that occurs naturally in the rocks. This is brought to the surface, collected, treated and reused or disposed of. Along with this, natural gas is also released, which is collected and treated. 

Where is it found and how much?
International Energy Agency estimates that the remaining technically recoverable resources of unconventional gas worldwide are similar in size to the remaining conventional gas resources. Advanced Resources International, Inc. (ARI), a consultancy firm, did the most comprehensive assessment of shale gas for the US Energy Information Administration (EIA).

It estimated the shale gas and shale oil resource in 26 regions consisting of 41 countries. According to the assessment, 7,795 trillion cubic feet of technically recoverable shale gas resources exist. Two-thirds of these are concentrated in six countries–USA, China, Argentina, Algeria, Canada and Mexico. The top 10 countries account for over 80 per cent of the currently assessed resources. 

Why the interest in shale gas?
The global energy mix, in the absence of a strong climate policy, is likely to remain highly fossil fuel-dependent. According to the International Energy Agency (IEA), even in 2035 about 75 per cent of the energy demand will be met by fossil fuels. But within the fossil fuels, IEA predicts, the share of coal and oil will reduce and that of gas, which is comparatively cleaner, will increase in the next 20 years under the pressure to curb local pollution and greenhouse gases. The global demand for gas can increase by 50 per cent by 2035 compared to the 2010 level. The increase in gas demand will make many large countries increasingly import-dependent. China’s dependence on imported gas is likely to increase to 40 per cent by 2035; India’s to 45 per cent and the European Union’s to more than 80 per cent.

Much of the shale resource exists in countries with limited endowments of conventional oil and gas supplies, such as South Africa, Jordan and Chile; or in the countries which are net gas importers and face increasing import dependency, such as the US and China; or in regions where conventional hydrocarbon resources have largely been depleted, such as Europe. The exploitation of shale gas is, therefore, likely to reduce prices and import dependencies of countries for natural gas.

Shale gas export: economics and politics
Today the US is ready to export gas, thanks to the shale gas revolution. The industry is eager, but the Congress has put a moratorium on exports. The price of gas in the US is about $3.0 per million British thermal units (MMBtu). At this price, US companies will not be able to sustain their business. They are, therefore, looking for exports to Asia where the prices are high. For comparison, India buys LNG from Qatar at $13.0/MMBtu. US companies have also signed long-term contracts with Japan and India. 

Many experts believe that US companies have a window of opportunity to export gas to Asia till 2020 at $12/MMBtu. After 2020, Australia, Papua New Guinea and East Africa will start supplying gas and compete with the US. Countries like China and India will also drill for gas. Besides, in India and China, coal will compete with gas in the electricity sector. The only way the imported LNG will remain viable is if a carbon tax is put on coal. The question, one is forced to ask is: does the US anti-coal campaign in Asia has something to do with exporting shale gas? DOWN TO EARTH
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