The potential for the oil and gas industry to capitalise on what could be a “game changer” for UK and world energy supplies was outlined yesterday at a major conference in Aberdeen.
Almost 300 delegates from the UK, North and South America, Australia and Europe gathered in the city for its inaugural unconventional-gas conference.
It is hoped the gathering, organised by Aberdeen City Council and chaired by Simon Seaton, Halliburton’s UK vice-president, will help to kickstart efforts to meet the challenges which have to be overcome to create a thriving unconventional-gas industry.
Unconventional reserves – shale gas, coalbed methane gas and tight gas – are more difficult to extract than conventional gas and require unorthodox solutions to allow their exploitation.
China, India and Poland are among those countries investing heavily in the sector, having been inspired by the “shale revolution” in the US where gas from shale now supplies more than 10% of its energy needs.
Mr Seaton told the event at the Aberdeen Exhibition and Conference Centre: “The stakes are high. The potential for shale-gas production in Europe alone is huge, with reserves which could potentially rival those found in the United States, but harnessing this potential will not be easy.
“Every unconventional reservoir has different characteristics and operators are likely to face numerous challenges. This makes it more important than ever to share our expertise and partner with internationally renowned experts to help solve brand new challenges.”
He said there was a considerable prize, adding: “Successfully tackling unconventional-energy challenges will ultimately strengthen UK energy security by helping our country to cope with the seasonality of gas usage and volatile energy prices.
“Our success has the potential to unlock economical, environmentally friendly energy sources to power us towards a low-carbon economy.”
Andrew Reid, Aberdeen-based managing director of energy consultant Douglas-Westwood, unveiled the full findings of its new study: The World Unconventional Gas Market Report 2011-2020.
He said global energy demand would continue rising over 20 years, creating greater competition for conventional resources.
While unconventional-gas resources are abundant around the world, only the US has been significant in its production over the past decade and it had taken 20 years to develop the required technologies and business model.
The UK is estimated to have underground coal gas reserves totalling about 17 years’ worth of domestic gas consumption, while European countries such as Poland have up to 48trillion cubic feet of shale gas by some estimates: the equivalent of 100 years’ supply for the UK. Although this might enable supply diversification and reduce overseas imports, huge investment is needed in the oilfield service sector to develop the resources.
Unconventional gas is changing the shape of the industry globally but, within Europe, investment and increased expenditure is needed over the next decade.
Mr Reid said: “This investment will provide largescale business-development opportunities for UK and European companies in the coming years.”
Bill Tinapple, executive director of the petroleum division of Western Australia’s department of mines and petroleum, said the Australian government was looking to the UK to fill some of its supply-chain gaps.
He said that, while coalbed methane was already fairly developed in Australia’s eastern states with more than 2,700 wells drilled in Queensland, tight and shale gas were still in their infancy.
He added: “Exploration for unconventional gas is still new, but initial research points to large reserves of tight gas and shale gas. Offshore Western Australia has all the benefits of available technology and equipment, but it does not have enough onshore equipment, such as drilling rigs, fraccing units and associated technology.”
Mr Tinapple said his government was considering the business case for paying for the mobilisation of rigs and fraccing (fracturing) units from the UK.
He added: “Anytime there is new technology and booms in the making, there are opportunities to be had.”
Today’s speakers include Lord Browne, the former chief executive of BP.