SHALE GAS IN EUROPE Where do we stand? Where do we go?
JAH 2014
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•Gas to become the second-largest energy
source by 2030
•Fossil energies to represent 76% of energy
supply in 2030
Source : Total estimates
COAL
LNG
Pipeline (from outside Europe)
Pipeline (from Europe)
Shale gas (from Europe)
• When used to produce electricity, all sources of natural gas have lower GHG emissions than coal
Source: e.g. AEA report for the European Commission DG CLIMA (2012)
Shale Gas will be part of the Energy transition to more renewable Climate impact will depend on the usage made of shale gas
ENERGY MIX & ENERGETIC TRANSITION : room for Shale Gas Gas growth 2010-2030: +2.0%
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US: Shale gas boom since 2005: who can deny the revolution
Break-even @15% source ARI
0,0
50,0
100,0
150,0
200,0
250,0
300,0
350,0
400,0
450,0Gm3/an
Production de Shale Gas aux US
Eagle Ford
Woodford
Fayeteville
Marcellus
Haynesville
Barnett
Shale gas production US
France : consumption = 50 Gm3/an (1,8 tpc/an)
Marcellus basin production close to Qatar production in only 4 years…
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US: A revolution with multiple impacts
0
1000
2000
3000
4000
5000
6000
7000
2000 2002 2004 2006 2008 2010
oil
gas
coal
JAPAN
EUROPE
US
Source World Data bank
Low price> impact on energy price >impact on industry competitiveness
Source EIA
Reduction of 4% of the CO2 emissions (Gas replacing coal) >> GHG
Importations d’huile aux US
0 2000 4000 6000 8000
10000 12000 14000 16000
janv
.-200
0 ja
nv.-2
001
janv
.-200
2 ja
nv.-2
003
janv
.-200
4 ja
nv.-2
005
janv
.-200
6 ja
nv.-2
007
janv
.-200
8 ja
nv.-2
009
janv
.-201
0 ja
nv.-2
011
janv
.-201
2 ja
nv.-2
013
Kb/d
Reduction of imports Creation of more than 600000 direct employement (+1M indirect)
Source: EIA
Source: WM
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Europe needs gas…and affordable gas
Decreasing domestic production
Shift away from nuclear power
Objectives of GHG emissions limitation favoring gas over coal
Political will to limit dependency on imports
Industry competitiveness
Source: CEDIGAZ (2009)
05 10(e) 15(e) 20(e)
Mdpc/j
(demand 2010-20(e) : +1,8% per year)
écart
Conventional gas
Imports
Known LNG contracts
Demand
60
30
Europe
Source : TOTAL
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Europe shale gas potential : dream or reality?
Studies suggest huge resources but yet to be proven
Less than 100 wells drilled in Europe with Shale gas objective
Results are not significant so far
136
26
26
17
10 32
145
23
XX Ressources technically recoverable (TCF) Source EIA2013
Shale Gas resources in Europe are yet to be proven
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8
UK Zoom – Slide 3
Poland – Zoom Slide 2
France
Danemark
Lithuania
Romania
Kaliningrad
Switerzland
Spain
Shale oil Wells: 2 shale oil, no info Blocks awarded to LL Investicijos, former Chevron blocks
Shale Gas-Tight Gas Wells: 1 tight gas, no gas Blocks awarded to Shell (East) and Chevron (West)
Gas Shale Blocks awarded to Chevron 1 well, no info strong Protest
Shale Gas Moratorium on fracking until 2021 Blocks awarded to BNK, Exxon mobil
Shale Gas Blocks awarded to Tamboran 1 well planned: Q4 2014 Rathlin Energy
Shale Gas Blocks awarded to PEOS –SEAG, Celtique energie Ban fracking in Bern region
Shale Gas Moratorium on E&P in Flandres (Netherland and Belgium)
Shale Gas Ban fracking in Cantabria and Catalogna regions Blocks awarded to SHESA, Frontera, Cuadrilla
Bulgaria
Netherland Germany
Ukraine
Ireland
74/16 Wells drilled / tested 2009-2014
3/0
8/2
1/0
52/13 9/1
1/0
Protest from Activists
European Shale Gas activity : update 2014
Presentation title - Place and Country - Date Month Day Year 9
2012 – Concession map
Baltic basin 30 wells drilled / 10 tested Activity concentrated in the northern part of the Baltic Basin Lebien-2H (Hz) stabilized flow rate 250-500 mscf/d Lublewo LEP-1ST1H, multi stage fracc, oil prod: 350bbl/d to be confirmed, low gas
Lublin basin 6 wells drilled / 1 tested: disapointing results Chevron still present
Poldasie basin 16 wells drilled / 2 tested No information on test
Poland Shale Gas activity : update 2014
Presentation title - Place and Country - Date Month Day Year 10
Bowland basin – Cuadrilla 3 wells drilled / 1 tested Preese Hall 1: tested vertical well – 4 frac - Initial pick flowrate > 1 mm scfd (4 stages) - env 150 mscfd/stage 2 wells planned: Roseacre Wood Q4-2014, Preston New Road
Weald basin Cuadrilla, 1 well drilled / 0 test Balcombe 1, conv. & unconv. Obj. no info
Cheshire basin – Igas / Dart 2 wells drilled / 0 tested Irlam 1 & Ince Marshes 1
Other basins (Cleveland / Humber) 3 wells drilled / 0 tested Conventional objectives with explo in Unconventional play
13th round (2008) mainly focused on conventional & CBM. 1 company applied for Shale gas (Cuadrilla) 14th round (2014) Focused on shale gas
Gainsborough basin Igas, 1 well planned in 2015
UK Shale Gas activity : update 2014
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Is there an “european” development business case ? 1/2
Some Boom Some Boom Some Boom
2035 0,3 0,7 20 50 400 900
2050 0,6 1 40 70 650 1200
Macroeconomic indicators
Additional growth (%/yr)
Increase in taxes (Geuros/yr)
Employment (thousands jobs)
EUR 3,3 Bcf over 30 yrs
Barnett typical well decline
23000 wells for some shale gas
52000 wells for shale gas boom
Gas ($/MBTU)
Well cost (M$)
4 57 1010 1513 20
Breakeven gas price
Some Boom Some Boom Some Boom
2035 -10 -20 -5 -10 -22 -28
2050 -17 -22 -10 -13 -25 -30
Impact on energy markets
Gas price reduction (%)
Electricity price reduction (%)
Energy import dependency (%)
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Prod
uctio
n 10 years 20 years 30 years
Exploration Appraisal
FID : Project sanction
First gas Plateau decline
Is there an “european” development business case ? 2/2
The notion of « planning » will be critical >>FLEXIBILITY will be the key Conventional development scheme cannot apply as many parameters can influence the planning of the development : •Limited number of rigs working in the same basin (5 rigs?)
•Drilling will be influenced by a lot of parameters (gas price, land access, presence of sweet spots…)
•Environmental conditions, access to water will also influence and probably create local bottlenecks
Shale Gas development business case will definitevely differ from conventional development >>need to adapt
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In Danemark as elsewhere, making acceptance the top priority: it’s our responsibility
Water Local communities Aquifer zones
Protection of aquifer zones during drilling, fracking and production Safety and reliability of wells and installations Reduction in the quantity and impact of additives Use of seismic data to localize and control the intervals to be fracked
Reduction in water use Reduction in water use during fracking operations Research into solutions aimed at avoiding the use of public-domain and fresh water Optimized water reuse after appropriate treatment
Reduction in the impact of industrial activities Reduction in the number of industrial drilling sites in favor of horizontal production wells in each cluster Cluster installation near existing infrastructure Fluids transported by pipeline Site rehabilitation
Impact of operations Consultation and exhanges with local communities Taking appropriate account of the questions relative to local biodiversity, the countryside, heritage, dwellings and traffic relative to the planning of installations Oversight and respect for commitments
Legitimate questions that require appropriate reponses and measures.
Landscape
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1- Measure, disclose & engage
2- Watch where you drill
3- Isolate well and prevent leaks
4- Treat water responsibly
5- Eliminate venting, minimize flaring & other emissions
6- Be ready to think big
7- Ensure a consistently high level of environmental performance
http://www.ngsfacts.org
http://www.ogp.org
What can the industry do ?
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What is the EU position ?
The EU Commission sees the interest for shale gas
o Could represent a significant part of European gas production by 2035
o Could help the EU limit the increase in gas imports
The EU Commission has released three external studies in 2012
o Unconventional Gas: Potential Energy Markets in the EU
o Climate impact of potential shale gas production in the EU
o Potential risks for the environment and human health arising from
hydrocarbons operations involving hydraulic fracturing in Europe
The European Parliament has voted several resolutions
o Call for involvement of civil society and for full transparency of the
industry - 2012
o Rejection of a moratorium proposed by the Green party - 2012
o Recommendation to include unconventional HC projects at HF stage
into EIA Directive - 2013
Vendsyssel-1 (assembly) Exploration well
Airborne gravimetry
16 16
Denmark : Total’s showcase of Shale Gas operations in Europe
Bio-methane
Public meetings
Air monitoring
Water monitoring
H2S Radioactive
… Noise
monitoring
Flora & fauna monitoring
seismometer
Seismicity monitoring
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Conclusions
Still huge uncertainties on the resources
and on the development business case
Environmental and societal challenges exist, especially in Europe
which are well-identified which can (technically) be addressed in a safe way And addressed through adequate regulations and
industry practices
Shale gas will only be developed if Public & community are convinced that the risks are limited and that the benefits are there
If present and done properly , there is room for shale gas in the European energy mix
If developed, it will be with a different model compared to the U.S.
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