The fracking revolution has opened up much debate over the impact of shale gas. Paul Taylor reports.
The exploration, drilling and technological development of shale gas are fiercely contested topics over their economic and environmental viability. However, the growing need for new energy sources remains a key concern for many countries.
The British Geological Survey estimates 1,300 trillion cubic feet of natural gas is stored within rock beneath Northern England. Estimates suggest that if just 10 per cent of these resources were exploited, it would meet the UK's current gas demand for more than 40 years. In a statement, the UK Government's Department of Energy and Climate Change said: "Though it is early days for shale in the UK, it has the potential to contribute to the UK's energy security, increase inward investment and growth."
On the back of these estimates, British shale gas driller, Cuadrilla has now announced plans to step up exploration and hydraulic fracturing work at its main sites in Lancashire. Chief executive, Francis Egan, said: "According to a recent report from the Institute of Directors, natural gas from Lancashire could lead to thousands of new jobs and higher tax revenues. We are assessing this possibility safely and sensibly."
The UK's upsurge in interest for shale gas is reflected in many other parts of the world. In the United States, shale gas is already well on the way to re-defining the energy and chemicals markets.
According to the investment firm, PricewaterhouseCoopers (PwC), shale oil production could add as much as US$2.7 trillion to the world's economy. Consequently, if shale gas and shale oil production continues to expand across the globe over the next decade, this could boost the economies of European and Asian markets, potentially creating cheaper feedstock for refiners and chemical producers.
In the Middle East (ME), the petrochemical industry has been booming for decades on the back of cheap gas and ethane feedstock (priced at $75c/mmbtu versus the historic $6-10 range in the last decade in the US and Europe). However, the growing local demand for gas by electricity producers and the limited supplies available has led to a diversification into propane/butane and naphtha-based cracking plants in the ME where the price advantage is far smaller. In fact, there is so much 'stranded' excess propane in the US now as a result of the shale gas explosion that the price has dropped to around $500/ton, meaning that for the first time in a generation it is cheaper in the US than the Middle East by about 23 per cent. The potential effect of this on the ME producers could be very significant as their margins are squeezed and new capacity shifts to these new feedstock sources. The US shale gas/shale oil industry is already putting tremendous pressures on operators in Europe as they are now caught in between cheap chemical imports from the US and the ME.
However, the impact of fracking on the environment is a major concern for many governments and regulatory organisations. Fracking has attracted huge public controversy in the UK, ever since a minor earthquake was allegedly caused when the method was used near Blackpool in 2011. Europe does not have a universal policy or guideline regarding production of unconventional gas and until the European Union (EU) sets a clear standard, it will be difficult to see how European regions will be able to gain the same level of success as seen in the US. We are already seeing some dissenting voices being raised in the EU.
On a continued theme, technology is a crucial factor in the development of shale gas. In the US, there have been many international energy companies investing in North American shale production assets in order to learn how to translate unconventional development and technology. Knowledge gained from working with proven technologies, including process industry software, has meant that the US is one of the most economic regions for petrochemical production and has helped to lower US natural gas prices making it is amongst the cheapest in the world.
Many companies have turned to AspenTech to leverage process modelling to optimise the design and operation of their facilities from the gas gathering, compression to the processing, lowering costs and maximising profitability. Solutions for gas processing of conventional and unconventional hydrocarbons, including shale gas, are now widely available. aspenONE Engineering, for example, provides integrated solutions for engineering, monitoring and operational decision support of midstream assets, from gathering networks and pipelines to compressors and processing facilities.
The debate over the benefits of shale gas and its effect on midstream gas processing will continue to rage over the coming years. For many regions and energy companies, the ultimate test of compliance, accessibility and robust technology will be the key measures for its success to achieve operational sustainability and profitability.
Paul Taylor is Senior Vice President for Europe, Russia and Africa at AspenTech, Reading, Berkshire. UK. www.aspentech.com