Board of Directors addresses evolution of global shale gas industry
The Gazprom Board of Directors took notice of the information about the results of monitoring the shale gas industry evolution around the world.
It was pointed out that nowadays the proven shale gas reserves across the globe were estimated at about five trillion cubic meters, which was less than three per cent of the world's aggregate proven gas reserves. Besides, the proven shale gas reserves are concentrated mostly in the USA as well as in Canada and China to a much lesser degree.
A drop in oil and gas prices undermines the shale industry development. Particularly, in the USA the number of operating drilling rigs was cut down by over 60 per cent over the last year amid the declined hydrocarbon prices. Not long ago the US shale gas production was sometimes supported through the implementation of high-profit projects for oil and other liquid hydrocarbons production from shale deposits. However, because of the drop in oil prices this mechanism has become moot.
An increase in shale gas production is not expected in Canada in the mid-term perspective. The shale gas industry development in China lags behind the targets set out by the Government, too. It is highly unlikely that commercial shale gas production will start in Europe soon.
Under the existing circumstances, the interest in shale gas has declined around the world. Thus, many global petroleum majors announced the reduction of investments or total rejection of shale projects, particularly, in China, Australia and Eastern Europe. Predictably, the shale gas production outlook in Ukraine and Poland was considerably overrated, and by now all the international operators have withdrawn from shale projects in these countries.
The meeting participants have once again touched upon the issue of environmental risks related to commercial shale gas production. It was pointed out that in 2014 and 2015 several US states had imposed restrictions for the shale gas industry due to the cases of water pollution, intensified seismic activity, greenhouse gas emissions and detection of radioactive elements in shale industry wastes.
The Board of Directors stressed that the drop in oil prices had further increased the competitiveness of conventional gas supplies to Europe and Asia-Pacific, which had regarded domestic production of shale gas as an alternative to natural gas import. Gazprom will go on monitoring the shale gas industry evolution globally.
Shale gas production envisages drilling a large amount of wells and applying a hydraulic fracturing technology, according to which significant amounts of water mixed with sand and chemicals (many of which are highly-toxic) should be injected into a formation. This poses a risk of land and groundwater contamination. In addition, the cases of increase in seismic activity have been registered. Currently, all-round or local moratoria on hydraulic fracturing are in force in the majority of Western European countries, including Germany, France and the Netherlands as well as a number of Australian states. In addition, the moratorium is in effect in some US states, such as Vermont, Maryland and New York.