Shale gas | markets
Shale gas production has had a huge impact on the US energy market. Nicholas Newman explores the global challenges and potential opportunities for pipeline companies in this developing market
Exploring the future for shale
America’s shale gas revolution – based on close to two decades of R&D and test drilling and fi nanced by exuberant fi nancial markets – has seen shale gas production grow from virtually zero in 2000 to some 1.4 tcf (trillion cubic feet) in 2007. Production is expected to grow further to reach 4.8 tcf by 2020, according to the American Petroleum Institute. The International Energy Agency (IEA) views the shale gas bonanza as inaugurating a “golden age of gas” in the US. Meanwhile, a recent Citigroup report (North America, the New Middle East?) estimated the region could become the world’s largest producer of crude and natural gas liquids such as propane by 2020. This explosive expansion in shale gas stimulated the construction of hundreds of kilometres of new pipelines. The US holds large reserves of shale gas. Data from
more than 24,000 recently drilled wells show that the country has 890 tcf equivalent of recoverable natural gas, according to Canadian consultancy ITG. The country also benefi ts from the advanced exploration and production technologies derived from its oil industry, from the thousands of entrepreneurial individual explorers, and its supply of oil service companies offering drilling rigs and expertise. The shale gas exploration and development phase also coincided with the biggest fi nancial boom in history. Currently, signifi cant commercial shale gas produc- tion occurs in the south, in the Barnett Shale fi eld in the
Fort Worth Basin and the Lewis shale fi eld in the San Juan Basin, and in the north in the Antrim shale fi elds of the Michigan Basin. More recently, large scale explora- tory drilling for shale gas has been taking place in the huge Marcellus shale basin, where shale gas is located a mile or more below the surface and is consequently expensive to reach. Drilling costs of $1 million are typical for a traditional vertical well, with costs even higher for a horizontal well with hydraulic fracking. Nevertheless, US geological conditions are favour-
able for shale gas extraction, especially in the Bakken, Eagle Ford and the Marcellus plays. These shale gas fi elds are also all within easy reach of America’s 305,000 miles of pipelines that link the lower 48 States and the 90,000 miles or so of regional grids, says the US Energy Information Agency (EIA). Furthermore, the US is connected to the pipeline
networks of Canada in the north and to Mexico in the south, which has turned the continent into a single market. This huge pipeline infrastructure of local and transit networks is supported by some 1,400 compres- sor stations that help move gas across the country. But this infrastructure is still not suffi cient and shale gas, shale liquids and the renaissance in oil drilling in the US will require more pipelines. The EIA says shale gas exploitation has generated at
least 10 new pipeline schemes which, including the associated processing plants and compressor stations,
November 2012 | PIPELINE COATING 13
Shale gas has transformed the US oil and gas sector and medium term prospects also
look promising in Australia and China
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