Shale gas, natural gas produced from shale formations, has the potential to dramatically impact global energy markets, according to a recent study by industrial research firm SBI Energy.
“Declining production from depleting conventional gas resources in many parts of the world, combined with rising global demand for energy and natural gas has caused dramatic increases in the price of crude oil and natural gas over the better part of the decade. This has both driven demand for shale gas and improved the economic viability of shale gas developments,” says Shannon Shuflat, SBI Energy analyst and co-author of the report Global Shale Gas Technologies and Markets along with Akash Shah.
According to Shuflat and the report, the response to these factors has been an astounding twelve-fold increase in the recorded global production of shale gas from 2000 to 2010. SBI Energy estimates that global shale gas production grew at a compound annual average rate (CAGR) of nearly 50% per year from 1,002 billion cubic feet in 2006 to 5,042 billion cubic feet in 2010.
Presently, the success of shale gas production in North America, and particularly in the United States, has triggered the exploration of shale gas resources around the world. Shale gas exploration is occurring in China, India, Poland, Germany, Spain, France, the United Kingdom, the Netherlands, Australia, Austria, Sweden, Switzerland, Italy, Hungary, Romania, Ukraine, and Argentina, among other nations seeking to lower-carbon fuels while also ensuring energy security and economic development. An earlier start and aggressive action to date indicate China, Poland, and India will likely emerge as the first producers of shale gas outside of North America.
“The confluence of growing natural gas demand and breakthrough technological advancements has made investments in shale plays attractive in recent years. Advancements in horizontal drilling and hydraulic fracturing technologies have enabled the achievement of high rates of gas production from deep, low permeability shale formations. These breakthroughs have facilitated access to some of the largest undeveloped gas resources in the world,” says Shah.
Despite the severe global economic recession over the past two years, growth in shale gas production volume has continued unabated. However, the wellhead production value of global shale gas has not kept pace with production volume growth because natural gas prices have declined steeply since the recession hit in the latter half of 2008.
Lower realised wellhead prices notwithstanding, the global value of shale gas production grew by nearly 35% per year from US$6.4 billion in 2006 to over $21 billion in 2010. The global value of shale gas production is expected to grow by 12% annually to ultimately exceed $37 billion in 2015 and further by 9% annually to more than $56 billion in 2020.
