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Global shale gas resource estimates soar by 10%

The US Energy Information Administration has increased its estimates for global shale gas resources by 10%

The US Energy Information Administration (EIA) has increased its estimates for global shale gas resources by 10% to almost 7,300 trillion cubic feet (cf).

The (EIA) has increased its estimates for global shale gas resources by 10% to almost 7,300 trillion cubic feet (cf).

According to the EIA's new report, which studied 137 shale formations in 95 basins worldwide, there is 7,299 trillion cf of technically recoverable shale gas globally across 42 countries.

China has the highest technically recoverable shale gas reserves in the world at 1,115 trillion cf, the EIA said. Argentina and Algeria follow with 802 trillion cf and 707 trillion cf, respectively. The US has the fourth highest reserves in the world at 665 trillion cf.

"As shale oil and shale gas production has grown in the United States to become 30% of oil and 40% of natural gas total production, interest in the oil and natural gas resource potential of shale formations outside the US has grown," EIA administrator Adam Sieminski said.

Sieminski added that although the report showed there is significant potential for developing shale oil and shale gas globally, it is not yet clear how much of the resource can be extracted economically.

The report, Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States, said 32% of total global natural gas resources are in shale formations, while 10% of total estimated oil resources are in shale or tight formations.

More than half of the non-US shale gas resources are concentrated in China, Argentina, Algeria, Canada, and Mexico.

The new shale gas resource estimates add almost 50% to the 7,360 trillion cf of conventional natural gas resources worldwide, according to Cedigaz figures.

In 2011, the EIA said there were more than 6,622 trillion cf of technically recoverable shale-gas reserves globally.

The new report expands on the 2011 report, which studied 69 shale formations studied across 32 countries.

Shale oil

The EIA commissioned Advanced Resources International consultancy to conduct the study because of the rise in US shale oil production in recent years. last year, the International Energy Agency (IEA) said  US tight oil production could reach 4m barrels a day (b/d) by 2020, up from 1.5m b/d in 2012. This would enable the US to become the largest crude oil producer in the world, overtaking Saudi Arabia, the IEA said.

The EIA's 2011 report did not include assessments of global shale-oil reserves. However, in its 2011 Annual Energy Outlook the EIA said the US had re 32bn barrels of shale oil reserves. In the new report, it pegs shale-oil reserves across 42 countries at 345bn barrels.

The EIA said Russia has the highest shale oil reserves, at 75 billion barrels, followed by the US (58bn barrels) and China (32bn barrels). More than half of the identified shale-oil resources outside the US are located in Russia, China, Argentina and Libya alone.

Tight oil and shale gas accounted for 29% of total US crude oil production and 40% total US natural gas production in 2012, the EIA said. The EIA said US crude oil production increased by 847,000 barrels per day in 2012, year-on-year, driven by a boom in shale production.

But whether this can be repeated outside the US will depend on market conditions and whether the resources can be extracted economically, the EIA said.

The report used data gathered from wells in the US to base its estimates for how much of the unconventional resources could be recoverable globally. The EIA said shale oil and shale gas resource estimates are "highly uncertain and will remain so" until basins have been extensively tested with production wells.

Lower estimates

The EIA also lowered some shale-gas resource estimates, including those for Norway's Alum Shale, Poland's Lublin basin and The portion of the Eagle Ford Shale stretching into Mexico's Burgos basin.

Norway's shale gas resource assessment fell from 83 trillion cf in 2011 to zero in the current report because of disappointing results obtained from three Alum Shale wells drilled by Shell in 2011. Shell's exploration wells were drilled in the less geologically complex portion of the Alum Shale in Sweden. This significantly reduced the prospects for successful shale wells in the more geologically complex portion of the Alum Shale that exists in Norway, the EIA said.

Poland's Lublin Basin shale gas resource estimate was also reduced from 44 trillion cf in the 2011 report to 9 trillion cf in the new one. This was because of more rigorous requirements for classifying shale formations, the EIA said. This meant for Poland as a whole, the shale gas resource estimate was reduced from 187 trillion cf in the 2011 report to 148 trillion cf in this year's report.

In South Africa, the prospective area for the three shale formations in the Karoo basin was reduced by 15% to 60,180 square miles because of geological complexity, the IEA said. This reduced South Africa's shale-gas resource potential as a whole from 485 trillion cf in the 2011 report to 390 trillion cf.

Estimates for China were also reduced. The EIA's gas resource estimate for the Qiongzhusi formation, in the Sichuan basin, was reduced from 349 trillion cf in the 2011 report to 125 trillion cf in this report. For China as a whole, the shale-gas resource estimate was reduced from 1,275 trillion cf in the 2011 report to 1,115 trillion cf.

Exclusions

The report does not include many prospective shale formations, such as those underlying large oilfields in the Middle East and the Caspian region.

The EIA said that it had also excluded tight oil produced from low permeability formations, coal-bed methane and tight natural gas. This was to simplify how the assessments were carried out.

The US and Canada are the only countries in the world which are producing shale oil and shale gas in commercial quantities.

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