Unconventional sources promise rich natural gas harvest

By Sheila McNulty in Houston
Published: June 10 2009 03:00

Global natural gas resources could be more than quadrupled, helping tackle climate change, if the world adopted US technology and expertise to tap unconventional sources, according to a report by PFC Energy, a consultancy.
For Europe, which geological surveys show has vast unconventional shale gas, coal bed methane and hard to access gas, this could ultimately lead to reduced dependence on Russia.
Globally, it could ease the transition from high carbon coal to cleaner burning natural gas in electricity production. "This is a game changer,'' said Robin West, PFC chairman.
PFC says that global unconventional natural gas resources, based on 1997 geological estimates that could rise with new technologies, total 3,250,000bn cubic feet. To contrast, the world's conventional natural gas reserves are 620,000bn cubic feet.
PFC does not put a timetable on how quickly these resources could be developed - indeed, some may be left in the ground forever. There are political, economic and bureaucratic obstacles to recovering this natural gas. But the technology is available and for the first time companies are considering the potential.
"You're talking about massive new resources,'' said Nikos Tsafos, PFC's upstream and gas group senior analyst. "Even if you only got 10 per cent of that, given the need for economic viability at each formation, you would increase the reserve base globally by 50 per cent.''
The growth in unconventional gas in the US underlines the potential. Richard Ranger, analyst at the American Petroleum Institute trade association, said accessing US shale had increased domestic natural gas supply estimates from 90 years' worth to 116 years.
"Unconventional gas has already transformed the supply picture in the US,'' Mr West of PFC said.
US unconventional gas supplies have doubled from 2000 to 2008, to 8,000bn cubic feet, PFC says, which is about two-thirds the gas volume that Europe imports from Russia.
Michael Steinhacker, project manager for Unconventional Gas Service at Wood Mackenzie consulting, said Europe's higher population density created problems in terms of the transportation of rigs and other equipment.
Supporting infrastructure, which is already in place in the US, would also have to be built.
The development of technologies to recover gas from shale - such as fracturing it with high-pressure water - has been led by independent natural gas company Devon Energy. Devon has formed a joint venture with Total, which is attempting to get a concession in France for 1.4m acres to produce shale gas.
While there is no active shale development project outside the US, testing is continuing on the commercial viability of some shales, said Bill Van Wie, Devon's senior vice-president of exploration.
Copyright The Financial Times Limited 2009