2/21/2013: U.K. shale gas may not lead to decline in prices seen in U.S.; an estimated 15.4 billion barrels of shale crude oil lie underneath California

U.K. Shale Gas Will Fail to Unleash U.S.-Style Collapse in Price - "The U.K.’s efforts to build a shale gas industry will fail to unleash the decline in prices that has benefited U.S. fuel consumers as its cost of extraction will be too high and output too slow, Bloomberg New Energy Finance said. 'The cost of shale gas extraction in the U.K. is likely to be significantly higher than in the U.S., and the rate of exploitation insufficient to offset the decline in conventional gas production, meaning market prices will continue to be set by imported gas,' the London-based researcher said today. U.K. Chancellor of the Exchequer George Osborne plans tax breaks to spur shale development after a boom in the industry in the U.S. saw the nation become the world’s biggest gas producer. Britain in December lifted a ban on hydraulic fracturing, the technique used to tap fuel from shale rock, and imposed safety controls after drilling triggered minor earthquakes in 2011. Prices in the U.S. fell by more than a quarter to $1.80 per million British thermal units in March 2012 from a record $12 in 2008 and are trading at about $3.40, according to BNEF. U.K. gas costs are about $10 because of reliance on higher-price imports." (Bloomberg)

Pakistan works towards future shale exports - "The Federal Cabinet approved on Wednesday a policy framework for exploitation of Shale Gas deposits, roughly estimated at 51 trillion cubic feet (TCF) and constituted a committee, led by law minister Farooq H. Naik, to prevail upon the Oil and Gas Regulatory Authority (Ogra)...The Ogra informed the Cabinet that under the Ogra act, the regulator was required to allow recovery of only prudent cost of gas supply from consumers and was not bound to implement policy directions inconsistent with the law as also ruled recently by Supreme Court...He [Dr. Hussain - the Prime Minister’s adviser on petroleum] said that according to a study conducted by a group of gas exploration and production companies, shale gas production would become economical at about 80 per cent of Brent Crude but this would have to be brought down to 70 per cent of Brent Crude Oil. He said development of shale gas was initially expected in upper Sindh and Lower Punjab and the government would be offering a few areas through international competitive bidding as pilot projects." (Dawn Pakistan)

California Shale projected at 15.4 million barrels of crude oil - "The federal government believes the Monterey Shale, which lies under more than 1,750 square miles of central and southern California, has far more shale oil than anywhere else in the lower 48 states — nearly four times the amount of the Bakken Shale in North Dakota. But this is California. Nothing is easy. Accessing the oil will require hydraulic fracturing, better known as fracking, and even then it may be too expensive to be economical. Oil companies are quietly buying up mineral rights and drilling holes in the earth northwest of Bakersfield to see if they can get lucky. "It's very different in California," said Gabe Garcia, who is an assistant field officer for the Bureau of Land Management in Bakersfield. He estimated there are 25 to 30 test wells on federal land drilling down as much as 14,000 feet into the Monterey Shale. Unlike North Dakota, the geology in California is impacted by tectonic plates — the rock is folded over — forcing the oil into hidden pockets." (CNBC)

 

Canada's shale faces opposition - "As the third-largest supplier of natural gas in the world, Canada wants its piece of the pie, and we have an abundant supply, says Geoff Morrison, manager of B.C. operations for the Canadian Association of Petroleum Producers. Canada has about 98 trillion cubic feet of marketable shale gas, with British Columbia holding more than 90 per cent of that, the National Energy Board estimates. Abundance is only part of the equation, explains Mr. Morrison. “Diversification of markets is critical for Canada and British Columbia in particular,” he said... But Canada must deal with a host of logistical issues, and several competing countries appear further along in this process. Consequently, Canada is feeling pressure – even from its former natural gas customer right next door. Traditionally an importer of Canadian gas, the United States has been working at converting its import facilities to be export-capable as it taps into its own large shale gas supply. These facilities are expected to be ready by 2015. As a result U.S. imports of Canadian liquid natural gas (LNG) have fallen by 10 per cent to 15 per cent over the past five years, Mr. Morrison said." “Our largest customer is now our largest competitor,” he said." (Globe and Mail)