International shale gas resources

To gain a better understanding of potential international shale gas resources, EIA sponsored a study by Advanced Resources International, Inc. (ARI) to assess 48 shale gas basins in 32 foreign countries, containing almost 70 shale gas formations. The effort culminated in the report, World Shale Gas Resources: An Initial Assessment of 14 Regions Outside the United States [87], which examined prospective shale gas resources in basins with relatively near-term promise and sufficient available geologic data for resource analysis.

Although the shale gas resource estimates are likely to change over time as additional information becomes available, the international resource base for shale gas appears to be extensive. The initial estimate of technically recoverable shale gas resources in the 32 countries examined is 5,760 trillion cubic feet. Adding the estimate of 862 trillion cubic feet for technically recoverable U.S. shale gas resources results in a total estimated shale resource base of 6,622 trillion cubic feet in the United States and the other 32 countries assessed. To put that estimate in perspective, Oil & Gas Journal has estimated world proven reserves of natural gas as of January 1, 2011, at about 6,647 trillion cubic feet and world technically recoverable natural gas resources—largely excluding shale gas—at roughly 16,000 trillion cubic feet [88].

Estimates of shale gas resources outside the United States are relatively uncertain, given that the available data are relatively sparse. At present, many nations have efforts underway to develop more detailed assessments of shale gas resources, some of which are supported by U.S. Government agencies under the auspices of the Global Shale Gas Initiative (GSGI) launched in April 2010 [89]. As the assessments are completed, estimates of shale gas resources are likely to be revised upward.

Two groups of countries appear to have the best prospects for shale gas development. The first group consists of countries that currently are highly dependent on natural gas imports, have some exisiting gas production infrastructure, and are estimated to have substantial shale gas resources relative to their current natural gas consumption. They include France, Poland, Turkey, Ukraine, South Africa, Morocco, and Chile, among others. For these countries, shale gas development could significantly alter their future gas balances, which may motivate development. South Africa's shale gas resource may be of particular interest, because it could be used as a feedstock in existing gas-to-liquids (GTL) and coal-to-liquids (CTL) plants.

The second group consists of countries that also are estimated to have considerable shale gas resources (more than 200 trillion cubic feet) and extensive infrastructure for the production of natural gas for domestic consumption, export, or both. In addition to the United States, this group includes Canada, Mexico, China, Australia, Libya, Algeria, Argentina, and Brazil. Existing infrastructure could facilitate timely conversion to shale gas production in these countries, but it could also lead to competition with other sources of natural gas supply.

Clearly, the United States has had the greatest success in developing its shale gas resources to date, with production increasing from 1.0 trillion cubic feet in 2006 to 4.8 trillion cubic feet—23 percent of total U.S. natural gas production—in 2010. However, several of the countries represented in the ARI report also have started developing their shale gas resources. Canada already has produced and marketed shale gas, mainly from the Horn River basin in British Colombia, beginning in 2008, with production in early 2011 approaching 200 million cubic feet per day. Production will likely increase, and companies have recently received regulatory approval for additional gas processing and transport infrastructure that would also help them access other North American markets [90].

Countries in Europe, Asia, and other parts of the world are also exploring development of their shale gas resources. In Poland, for instance, local and foreign energy companies have conducted more than seven shale gas test drillings and have pledged to carry out an additional 120 tests [91]. In May 2011, China selected six companies in its first shale gas exploration tender, the first of its kind held in China, which is set to involve eight blocks, covering 7,000 square miles [92]. Worldwide, the amount of interest and investment made in preliminary shale gas leasing activity over the past few years suggest the growing potential for international shale gas, a fuel that could play increasingly important role in global natural gas markets in the future.