Economics of Global Shale Gas Development Essay

1537 Words Mar 3rd, 2014 7 Pages
Economics of Global Shale Gas Development

Shale gas is considered as a “game changer” for the US and global gas markets. Gas production from shale gas in the US has significantly reduced US gas imports in the last five years. Shale gas has become a common discussion topic in the industry as nobody wants to miss the opportunities that are related to the exploitation of gas from these resources.

Policymakers in many countries with shale gas resources are seeking to replicate the success of shale gas in the US. This short write-up provides:

(a) Summary of the global shale gas resources
(b) Estimated economics of shale gas development

Some useful rules of thumb are provided that can be used to quickly assess the estimated
…show more content…
Figure 1. Breakdown of Global Shale Gas Resources1

The US Energy Information Administration (EIA) is forecasting US dependence on imported gas to reduce to 1% by 2035 from the current 11% of the US’s annual gas consumption. As shown in Figure 2, the US shale gas production is estimated to increase from 8.13 trillion cubic feet in 2012 to 15.33 trillion cubic feet by 2035.3

Figure 2. US Gas Production Forecast3

If it is assumed that the current developed shale gas production will decline by about 5% per year then 0.87 TSCF of incremental shale gas has to be developed in 2013 and this incremental requirement will reach 12.83 TSCF in 2035.

Based on the average shale gas production per well as shown in Figure 3, and the planned EIA’s forecast, more than 121,600 wells (average of about 5,300 wells per year) will have to be drilled between 2013 and 2035.

Figure 3. Typical Average Shale Gas Well’s Production

China has also released its first five-year plan for the development of shale gas, setting ambitious production targets and emphasising the need for foreign co-operation and better technology in developing the sector. Companies including

Related Documents