1. Shale
Gas
Threat
or
Opportunity?
Ron
Oxburgh
Smart Grids & Cleanpower
Cambridge 14 June 2012
www.cir-strategy.com/events
2. 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
3. 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
5. 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
6. 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
7. Some
Shale
Gas
Reserves
40
World
Reserves
35
increased
by
>
x
10
SHALE
GAS
30
Widely
distributed
25
10^9
m3
20
15
Still Great SG
Uncertainty!
10
ConvenBonal
5
gas
in
yellow
0
US
China
ArgenBna
Mexico
S
Africa
BP
2009,
FT
2011
8. 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)
9. 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
10. Blackpool
Frequency
of
BriBsh
Earthquakes
British Geological Survey 2012
11. 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?
14. 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
15. 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
16. Energy
&
Emissions
China
&
Developed
Countries
8.00
7.00
Tonne oil equiv./cap. yr
6.00 Developed
Countries
5.00 Emissions
of
2020
Today
4.00 Developed
Countries
3.00
2010
2.00
2015
China
Emissions
China
1965
today
1.00 Current
China
Emissions
2000
CHINA
WITH
CCS
0.00
0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60
Population billions
18. 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
19. Underground
Coal
GasificaBon
Syngas
to
Steam
&
Process-‐ ProducBon
Well
O2
ing/Use
InjecBon
well
Cultural
problem!!
A1er
Ingenia,2010