Shale is a form of sedimentary rock and the gas trapped in these deposits has lead to name it as “Shale gas“ .It is an unconventional form of natural gas because of the cost of economics involved in its extraction. Shale deposits were found in the early 18th century but in late 1970s with the advancement of technology and Government inclination towards R&D, it became economically feasible to advance in this field. In the early 2000 United States long insights bear fruits as two innovative applications of technology i.e. horizontal drilling and hydraulic fracturing paved way for commercial feasibility and exploration of the gas. The advancement of US in the shale gas sector completely changed the energy structure of the country. Country which was highest importer of natural gas in the early 2000s has now started exporting the natural gas .We will see the following development which really helped US to become world leader of shale gas
- In the early 2000s USA natural gas production was in slow and steady decline in spite of the increase in the exploration policy. To meet the demand of gas, it used to import the gas and was one of the highest importers in the mentioned era. The demand pressure helped in further advancement of shale gas sector exploration which really changed the gas scenario of the country.
- Advancement in the technology of horizontal drilling and hydraulic fracturing proves super critical in the advancement of US in the shale gas production and exploration.
- Abundant shale reserves also contribute to the development of this sector. USA has the second highest shale reserve after China which also envisaged investors to have faith in this sector.
- US has good infrastructure that includes 305,000 miles of gas pipeline which play substantial part in the accommodating the low cost. If the gas pipeline network would have been weak commercially viability of the shale gas would have received beating and would have not reached such high.
- A good government framework, friendly policy and transparent regime play a critical part in encouraging more private players for investment.
Shale gas impact on environment
Shale gas being an environmental friendly gas plays a key role in lowering the carbon emissions and reducing the dependency of fossil fuels. There have been serious agitations and environmental campaigns against the use of hydraulic fracturing or “fracking” process. It involves drilling a well bore into the reservoir rock formation and then forcing water, sand and chemicals into the well at high pressure to create fractures or fissures in the rock. Once the fracture is open, the released gas flows out of the fractures and into the well bore. This has lead to some serious concerns raised by the environmentalist such as groundwater contamination, alarming high water usage, surface water and soil risk. Due to the environmental factors involved Countries like United Kingdom, Netherlands, Germany, France, Scandinavia and Norway are keeping close watch on the development in this sector. France has banned hydraulic fracturing from 2011 because of environmental safety. There is a hope among the country that technological innovations could bring down the costs of shale gas production which looks pretty dim in the short term.
Changes in the Geo-political context
USA was the huge natural gas importer from Canada but now due to change in US energy scenario courtesy shale gas, Country has the potential to be self sufficient .Canada has to look and invest more in developing the new future markets to compensate the shrink which could be seen in natural gas trade with USA. Argentina relies on the imports of expensive natural gas from Bolivia and Qatar but with their Government support and willingness, shale gas production and exploration could prove critical in meeting their energy demands and reducing imports. European markets are having huge reliance on Russian natural gas. Assuming the production of shale gas in Europe and imports from USA in the coming future, Russia may have to move to the new market but it will exert economical and political pressure before moving to new markets.
Why China lagging behind despite having largest shale reserves?
China relies heaving on oil and gas imports which accounts to 57.9% and 28.2% respectively. There are many factor which projects that China will take time in the development of shale gas sector. The geography and tectonics of shale deposits are buried deeper as compared to USA which really raised doubts whether existing technology will work in tough terrain .Secondly China cannot accommodate the ample amount of water which is required for the production and is perhaps the biggest natural barrier to the country. Thirdly China has weak infrastructure compared to US with around 44000 km of pipeline .The cost of economics plays a crucial part if a country has good infrastructure facilities as the sector demands huge capital .Lastly pricing incentive are not lucrative that encourages players to participate and invest more .
India is still in the progress of preparing energy policy of Shale gas and it may take couple of years to draft it .Shale gas reserves are identified in 7 gas basins and pilot project run by ONGC has kept shale gas perspective on the road map of India. Production of shale gas demands environmental cost which will test India to justify the need of it. There is huge supply demand gap of natural gas, import of LNG is costly and domestic production of KGD6 are on pretty low which may result in the inclination of further study and progress in this sector. There are challenges of technical expertise, natural barrier, environmental constraints, water scarcity and clear energy policy in the shale gas exploration and production. Interestingly Companies like GAIL, ONGC, Reliance and Essar have started investing in other parts of the world. It looks now a distant dream and it will have to keep a close watch on China as how it maneuvers in the production of shale gas.
USA is now in the centre stage and it all depends on how it responds to the future shale gas challenges. Economic viability and Environmental impact play a key role in determining how other countries move in the trapping this form of energy. Certainly a game changer for USA but will it be true for other countries? Only time will let us know.
He is currently pursuing MBA in Energy and Infrastructure from School Of Petroleum Management, Pandit Deendayal Petroleum University Gandhinagar, Gujarat. He has completed B.Tech (I.T.) from Jaypee University of Information Technology, H.P. and was engaged with Infosys as Senior Systems Engineer. He believes India is energy scarce country and it needs personnel who can understand the complexity in this secto. A deep research mindset, voracious reading, and ability to simplify things will prove handy and that is where his contributions incline.
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