Article: UK’s Shale Gas Could Fuel UK for 9 Years, Says New EIA Report

The potential for the UK to turn to shale gas for energy provision has attracted some exposure in the media in the last few weeks.  The research argues that the UK is second, only to Poland, for European capacity of shale gas.  Best estimates place almost nine years’ worth of the UK gas consumption to be in the country’s reserves.  We’ll eagerly await a new report in July from the British Geological Survey about how much is recoverable.

The US government’s Energy Information Administration revised upward its estimates of UK shale gas resources, reporting that ‘technically recoverable’ shale gas reserves are at 26 trillion cubic feet (tcf). According to the EIA, the annual UK gas consumption of gas is about 3 trillion cubic feet.

The EIA estimates that the Carboniferous Shale Region, which includes the Bowland Sub-basin of Lancashire, accounts for more than 90% of the assessed areas.

“EIA/ARI’s current estimate of the UK’s shale gas resources is about 10% higher than our initial 2011 assessment, while new shale oil potential has been added,” reads the report published on Monday.

The EIA reported for the first time the presence of shale oil in the UK, estimating that 700 million barrels could be technically recoverable.

These figures refer to the amount of shale gas and shale oil that can be extracted with the current technologies. They do not consider that these resources may be not economic viable or that technology could improve.

UK companies recently released estimates about gas in place, which is the total amount of gas in the ground. IGas estimates that the volume of ‘gas initially in place’ (GIIP) associated with shales in the North West could range from 15.1 trillion cubic feet to 172.3 trillion cubic feet. Cuadrilla estimates there could be 200 tcf gas in place in the Bowland shale of Lancashire.

But it is not just a matter of reserves. The UK is also one of the European countries with the best conditions to pursue its shale gas and shale oil potential, writes the US Energy Information Administration.

“Within Europe, the United Kingdom stands next after Poland in pursuing its shale gas and shale oil potential. However, with a small existing onshore conventional oil and gas industry, the UK has limited domestic service sector capability for shale exploration,” reads the report, explaining that political opposition to shale development is greater in the UK than in Poland but less than in France or Germany.

In 2010, the British Geological Survey (BGS) conducted on behalf of the Department of Energy and Climate Change (DECC) a preliminary study. BGS’ initial estimate was 5.3 tcf of recoverable shale gas resources. The BGS is now working on a new report, expected by July 18.

The full article is visible via the link below – Pankaj Oswal

http://www.naturalgaseurope.com/uk-shale-gas-could-fuel-uk-for-9-years-says-new-eia-report

Article: India’s Shale Gas Boom: Dream or Reality?

This article raised some important questions about the future of India’s energy landscape.  The article argues that shale gas has an important role to play but stresses that it faces an uphill task for mainstream adoption.  Hurdles including public policy, community concerns about adverse environmental effects stemming from water use and contamination, land acquisition issues and a dearth of shale experience in India will have to be overcome.

Shale gas has been called a “game changer” for India. But some tough obstacles remain.

As India prepares for the release of its long anticipated shale gas policy, pressure continues to mount on New Delhi. An increase in coal imports over the past 12 months has demonstrated the stress on current energy supply and the negative impacts it has on India’s public health and environment.

In March, Veerappa Moily, India’s Minister for Petroleum and Natural Gas, said that the government’s shale gas policy would be released in early April, yet such a policy, which Moily stated in an interview with Reuters in March would be a “game changer” for India, is still to materialize. Many analysts continue to point to the importance of improving the country’s energy security. Indeed, shale gas production could offer a reprieve for energy-starved India as well as a much needed boost to its economy.

Shale gas is often described as a game changer in energy politics, prompting Daniel Yergin and Robert Ineson to define it as “the biggest energy innovation of the decade.” India is a fast developing country and energy is pivotal to maintain its steady economic growth, stability, and development. As the third-largest energy consumer in the world, according to a 2011 Enerdata report, and a natural gas net importer since 2004, it is easy to see why the South Asian nation is placing high hopes on its own “shale gas revolution.” But is it a realistic prospect that India could relive the American experience of a shale gas boom?

Energy demand in India has been consistently increasing and is expected to rise by 7-8% annually in the coming decade. Indeed, many in India are still waiting for their first electricity connection. Hence, energy security is at the forefront of the Indian government’s agenda, and unconventional resources like shale oil and shale gas have the potential to improve its situation. The U.S. experience with shale gas not only resulted in more advanced knowledge of the extraction process, but has also allowed a decrease in production costs and drilling time, making it both more feasible and competitive. Moreover, for a country like India, where coal still dominates the energy mix – coal imports increased to a record 135 million tons in the last fiscal year – shale gas can represent a promising alternative, both in terms of costs and environmental impact thanks to its potentially lower emissions.

In 2002, Reliance Industries, a leading Indian energy company, discovered 14 trillion cubic feet (tcf) of natural gas in a reservoir in the Krishna-Godavari basin in shale formations, generating high expectations for future production. From that moment onward, the exploration and assessment of India’s shale gas resources became an imperative. Policy, however, has not.

Current research has identified six main basins that could be successfully exploited once the Indian government reveals its national shale oil and gas policy: Cambay (Gujarat), Assam-Arakan (North-East), Gondwana (Central India), Krishna Godawari onshore (East coast), Cauvery onshore, and Indo-Gangetic basins. Although the release of a comprehensive national shale oil and gas policy has been postponed, in 2010 the government signed a Memorandum of Understanding (MoU) with the U.S. in order to cooperate in developing Indian shale gas resources. Exploration and assessment of the potential of shale gas are part of the objectives of the MoU and, under the agreement, in 2012 the U.S. Geological Survey assessed the resources in a number of basins (the Cambay, Cauvery, and Krishna-Godavari basins), estimating the total of recoverable resources to be 6.1 tcf. This figure contrasts with the estimates suggested by the U.S. Energy Information Administration in 2011 of 63 tcf.

Contradictory estimates of the size of India’s resources highlight the need for further exploration and assessment, and represents only one of the many unknowns of the Indian shale gas scenario. Environmental concerns continue to shroud shale gas production worldwide. Such concerns contributed to the postponement of the first shale asset auction in India to 2013, to allow for further environmental analysis to be carried out. Indeed, India cannot escape the global debate on the possible risks posed to water aquifers, ecosystems, and public health, as well as the issue of flowback water disposal. Water, in particular, will represent a major challenge for Indian shale development. The large amount of water required in the process of hydraulic fracturing, or “fracking,” is a considerable obstacle in a water stressed country such as India, which continues to suffer from chronic shortages.

Other problems persist and will inevitably add to the debate. Land acquisition  and the relocation of displaced people will be problematic. Violent protests over land acquisition are common in India in general, and West Bengal in particular where the Oil and Natural Gas Corporation has recently “completed its first shale gas test well.” Further to this, India’s population density could make recovering resources more difficult.

What is more, the energy infrastructure of the country requires extensive development. The pipeline network, which is concentrated in the northwest of the country, and LNG terminals need improvement or further construction. Additionally, the regulatory and pricing framework in India is very complex and represents another issue of concern for investors. Price regimes, in particular, need to be reformulated and deregulated, with the elimination, at least in part, of the heavy subsidies provided by the government, which lead to substantial differences compared to market prices.

Lastly, it has to be noted that Indian companies have less experience and know-how compared to many other countries engaged in shale gas exploration and production, such as the U.S., Australia, or even China. It is therefore not surprising that in the search for such know-how Indian companies like Reliance Industries, Gail, and Bahrat Petro Resources have begun acquiring stakes in shale gas assets in the U.S. and Australia.

Experts agree that India needs a “bridge fuel” and shale gas could be just that. However, infrastructure takes time to develop and viable commercial shale gas production is still a long way off. Worryingly, the current bridge fuel being used is coal, which produces twice as many emissions as natural gas.

In May this year, the U.S. Department of Energy announced that it would grant conditional authorization to export domestically produced LNG to countries without a Free Trade Agreement, such as India. In the short term, U.S. shale gas may be the game changer and bridge fuel for India, yet it may also have the undesirable effect of decreasing pressure on New Delhi to develop its own domestic program.

The challenges posed by the current energy infrastructure, gaps in the regulatory framework, and public environmental concerns, together with the uncertainties over the amount of effectively recoverable gas, will represent real obstacles for New Delhi. However, if they can be overcome, shale gas could certainly have a positive impact on the country’s energy security and on the future competitiveness of India’s economy.

Elliot Brennan is a Project Coordinator and Silvia Pastorelli an Intern at the Institute for Security and Development Policy, Sweden. This article is a revised version of a Policy Brief for ISDP.

The full article is visible below – Pankaj Oswal

https://thediplomat.com/2013/06/18/indias-shale-gas-boom-dream-or-reality/?all=true

Article: GCC petrochem sector posts 5.5% growth in 2012

The recent 2012 Annual Report of the Gulf Petrochemicals and Chemicals Association (GPCA) has reported that the Gulf Cooperation Council’s (GCC) petrochemical production increased by 5.5% in that year.  The GCC, the multilateral body comprising Saudi Arabia, Oman, UAE, Bahrain, Qatar and Kuwait, more than doubled the global 2.6% increase in production.  The relative surge is due, in part, to economic hardships facing European nations, indicating importance of operating in a healthy economic climate – but it is also clear that GCC countries are making the most of the plain sailing.

Petrochemicals production in the GCC increased by 5.5 per cent in 2012, despite a slowdown in global markets due to the recession in Europe, inventory discrepancies and a deterioration in manufacturing, according to the Annual Report 2012 of the Gulf Petrochemicals and Chemicals Association, or GPCA.

Now in its sixth edition, the yearly GPCA report provides a comprehensive overview of the major developments of the GCC petrochemicals industry in each of the six Gulf countries.

The report revealed that the GCC’s petrochemicals production capacity rose to 127.8 million tonnes in 2012, up from 121.1 million tonnes in 2011. In 2012, global petrochemical production grew 2.6 per cent, lower than the 3.8 per cent growth rate in 2011. With 6.1 million tonnes, petrochemicals production in the UAE currently accounts for 4.8 per cent of the total regional capacity.

However, with a capacity of 86.4 million tonnes, Saudi Arabia accounts for over half the GCC’s total petrochemicals capacity. An estimated six million tonnes of capacity came on stream in 2012, cementing the kingdom’s position as the region’s leading petrochemicals producer.

“As a host of major projects come online, along with a collection of significant new agreements, the GCC petrochemicals industry has demonstrated its potential as a market leader over the last year,” said Dr Abdulwahab Al Sadoun, secretary-general of the GPCA. “The GPCA is pleased to witness this market growth and recognise the contribution of every industry player across the region. We are optimistic about the future. Industry growth will transform the petrochemicals sector, into one that is focused on technology, sustainability and enduring partnerships.”

In 2012, the UAE continued its strategic expansion by awarding contracts for several key downstream projects in Abu Dhabi. Takreer, the Abu Dhabi oil refining company, was awarded a contract to build a carbon black and delayed coker plant in Ruwais. When completed in 2015, the plant will have an annual production capacity of 40,000 tonnes of carbon black, 430,000 tonnes of anode-grade coke and 520,000 tonnes of propylene.

Also in the pipeline is Abu Dhabi’s Tacaamol complex, which is being developed under the supervision of ChemaWEyaat. The project will convert over three million tonnes of naphtha a year to produce paraxylene, mixed xylenes and benzene.Petrochemicals production in the GCC increased by 5.5 per cent in 2012, despite a slowdown in global markets due to the recession in Europe, inventory discrepancies and a deterioration in manufacturing, according to the Annual Report 2012 of the Gulf Petrochemicals and Chemicals Association, or GPCA.

Now in its sixth edition, the yearly GPCA report provides a comprehensive overview of the major developments of the GCC petrochemicals industry in each of the six Gulf countries.

The report revealed that the GCC’s petrochemicals production capacity rose to 127.8 million tonnes in 2012, up from 121.1 million tonnes in 2011. In 2012, global petrochemical production grew 2.6 per cent, lower than the 3.8 per cent growth rate in 2011. With 6.1 million tonnes, petrochemicals production in the UAE currently accounts for 4.8 per cent of the total regional capacity.

However, with a capacity of 86.4 million tonnes, Saudi Arabia accounts for over half the GCC’s total petrochemicals capacity. An estimated six million tonnes of capacity came on stream in 2012, cementing the kingdom’s position as the region’s leading petrochemicals producer.

“As a host of major projects come online, along with a collection of significant new agreements, the GCC petrochemicals industry has demonstrated its potential as a market leader over the last year,” said Dr Abdulwahab Al Sadoun, secretary-general of the GPCA. “The GPCA is pleased to witness this market growth and recognise the contribution of every industry player across the region. We are optimistic about the future. Industry growth will transform the petrochemicals sector, into one that is focused on technology, sustainability and enduring partnerships.”

In 2012, the UAE continued its strategic expansion by awarding contracts for several key downstream projects in Abu Dhabi. Takreer, the Abu Dhabi oil refining company, was awarded a contract to build a carbon black and delayed coker plant in Ruwais. When completed in 2015, the plant will have an annual production capacity of 40,000 tonnes of carbon black, 430,000 tonnes of anode-grade coke and 520,000 tonnes of propylene.

Also in the pipeline is Abu Dhabi’s Tacaamol complex, which is being developed under the supervision of ChemaWEyaat. The project will convert over three million tonnes of naphtha a year to produce paraxylene, mixed xylenes and benzene.

The full article is visible via the link below – Pankaj Oswal

http://www.gpca.org.ae/news_details.php?nid=57

Article: Iran Petrochemical Industry Targeted for U.S. Sanctions

Given the highly political nature of trade and the geopolitics associated with the areas of high oil production in the Middle East, petrochemicals have long been a good that has been impacted by foreign policy-making.  The U.S. has just announced measures to distance Iran’s petrochemical industry for political ends.  Treasury also specified similar embargoes of companies in Kyrgyzstan, Ukraine and the UAE.  State intervention is never far away in this line of work and it’s important to be prepared.

The U.S. announced sanctions today aimed at Iran’s petrochemical industry, targeting the Persian Gulf nation’s second-largest source of foreign revenue in an effort further isolate it from the international financial system.

The Treasury Department also cited companies in Kyrgyzstan, Ukraine and the United Arab Emirates, saying they leased aircraft that two Iranian carriers used to move “illicit cargo” to help the Syrian regime fight its opposition.

“We are committed to intensifying the pressure against Iran, not only by adopting new sanctions, but also by actively enforcing our sanctions and preventing sanctions evasion,” Treasury Under Secretary for Terrorism and Financial Intelligence David Cohen said in a statement.

The U.S. is ramping up sanctions in an effort to dissuade Iran from pursuing a nuclear program that the West suspects is meant to produce weapons. Iran insists that it is for civilian purposes.

“It is a losing strategy for companies to assist Iran in evading sanctions and today’s announcement serves as a warning,” said Senator Robert Menendez, the New Jersey Democrat who heads the Senate Foreign Relations Committee. “Cease this illicit activity immediately or face severe consequences.”

‘Economic Hardship’

Iran’s supreme leader, Ayatollah Ali Khamenei, “must understand that every day going forward will result in increased economic hardship unless Iran changes course immediately,” Menendez said in a statement.

The sanctions announcement came a day after an annual State Department report on terrorism said Iran’s sponsorship of terrorism and terrorist activity by Hezbollah, which Iran backs, “have reached a tempo unseen since the 1990s, with attacks plotted in Southeast Asia, Europe, and Africa.”

Kyrgyzstan’s Kyrgyz Trans Avia, Ukraine’s Ukrainian-Mediterranean Air, known as Um Air, and Sirjanco Trading LLC of the United Arab Emirates were all cited for helping Iran’s Mahan Air and Iran Air acquire aircraft that moved people and illicit cargo, according to a Treasury statement.

Petrochemical Sanctions

The petrochemical sanctions, announced by the State and Treasury departments, were the authorized under an executive order President Barack Obama signed last year allowing the U.S. to penalize companies involved in the purchase or acquisition of Iranian petrochemicals.

The Department of State imposed sanctions on Jam Petrochemical Co. and Niksima Food and Beverage JLT for knowingly doing business with Iran’s petrochemical sector, while Treasury designated eight Iranian petrochemical companies as owned or controlled by Iran’s government and subject to sanctions.

Ferland Co., based in Cyprus and Ukraine, was targeted for trying to disguise the source of Iranian oil and evade sanctions by passing it off as Iraqi in origin. To do that, Ferland helped arrange ship-to-ship transfers of oil among three tankers and furnished a falsified certificate of origin, the Treasury said.

The sanctions against Ferland ban visas for corporate officers or loans from U.S. financial institutions, and prohibit financial, property or foreign exchange transactions subject to U.S. jurisdiction.

By Nicole Gaouette – Bloomberg

The full article is visible via the link below – Pankaj Oswal

http://www.bloomberg.com/news/2013-05-31/iran-petrochemical-industry-targeted-for-u-s-sanctions.html