January 2011

Trends and Resources

HP Impact: Growth in shale gas production to play role in shaping demand for Middle East LNG

Investment in the development of shale gas in the US and Europe could present Middle East markets with a reduction in demand according to Euro-Petroleum Consultants’ (EPC) President Colin Chapman..

Thinnes, Billy, Hydrocarbon Processing Staff

Investment in the development of shale gas in the US and Europe could present Middle East markets with a reduction in demand according to Euro-Petroleum Consultants’ (EPC) President Colin Chapman.

“Over the last several years, technologies for extracting unconventional natural gas from shale formations have been implemented with greater precisions resulting in lower costs,” said Mr. Chapman. “So much so that costs for these types of gas projects have been, in some cases, lower than those of more conventional projects.”

In Europe, shale and other unconventional gas resources have been identified in France, Germany, Hungary, Italy, The Netherlands, Poland, Romania, Spain, Sweden, Switzerland and the UK. As a result, LNG-rich nations, such as Qatar and the UAE, have already begun reevaluating options of exporting gas to some of their gas-strapped neighboring countries.

“Looking at the regional LNG market, the fact we are currently in the middle of a global economic downturn coupled with the emergence of the unconventional gas supply and new LNG capacity coming onstream, it is likely that there will be a reduction in project activity in the LNG sector over the coming year,” Mr. Chapman said.

North America has been the leader in developing and producing shale gas and the great economic success of the Barnett shale field in Texas has spurred the search for other sources of shale gas across both the US and Canada. Within the Middle East region, shale reserves exist in Jordan and Syria, but the extent to which the deposits will have on the overall gas balance will largely depend on the speed at which exploration efforts advance.

The processing of shale gas has turned around the decline of US gas reserves and significantly changed the gas supply outlook for the US. According to recent reports, estimated US reserves of natural gas were 35% higher than those estimated only two years ago.  HP

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