Impact of U.S. Shale Gas on Europe
U.S. shale gas has turned the global gas market on its head, postponing major European investments in liquefied natural gas (LNG) projects intended to supply the U.S.
Russia's Gazprom may scrap the LNG project at Shtokman gas field after delaying the project for three years. Norway's Statoil may also limit investment in the Snoehvit LNG project in light of the gas glut created by U.S. shale gas.
Around 40 firms are hunting for shale gas in Europe, including most oil majors.
The first European extraction, in Poland, is due to begin in mid-2010, but there are some concerns over the long term environmental damage caused by unconventional drilling which uses chemicals and minerals to fracture shale formation. Earlier this decade, U.S. producers struggled to find more gas to meet growing demand as conventional wells rapidly depleted. Companies scrambled to build liquefied natural gas import terminals that would bring in chilled gas via tankers from overseas.
But higher gas prices and new technologies opened the door to massive increases in unconventional domestic gas production in recent years, leaving the U.S. with comfortable supply now and into the future.
Further facts on unconventional gas:
* There are three main unconventional gas resources; shale gas found in very fine-grained sedimentary rock, tight gas or gas that is stuck in a very tight formation underground, and coalbed methane as a by-product of coal production. Shale gas is the fastest growing of the unconventional plays.
* U.S. natural gas reserves are up by a third since 2006, thanks to increases in unconventional gas development. In 2007, unconventional production made up 48 percent of total marketed U.S. gas production.
* The United States has an estimated 2,000 trillion cubic feet of technically recoverable natural gas reserves, enough to supply it at current rates for over 90 years. Shale accounts for more than 30 percent of that total.
* Advances in technologies such as horizontal drilling has allowed unconventional gas producers to drill multiple wells for from one well pad.
* Rock fracturing, or fracking, techniques have also made production of shale deposits more viable. Fracking involves blasting rock with a mixture of water, sand and chemicals.
* There are environmental concerns about the potential contaminating effects of fracking on drinking water, given the chemicals involved.
* The major U.S. shale reserves are in the Marcellus Shale in Appalachia, Haynesville, on the border of Louisiana and Texas, and the Barnett Shale in Texas.
Reporting by Kwok W. Wan and Edward McAllister for Reuters
Source: Forexyard.com