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A number of leading analysts provided an inside look to some of the world’s best opportunities for unconventional resource development. "Unconventional gas is currently a tight gas and a shale gas story," said Robert Clarke, head of unconventional gas services, Wood Mackenzie. "And the shale story is certainly focused on North America," Clarke added.
The panel, "Treasure of the Shales: International Panel" took place as part of Hart Energy’s 6th Annual Developing Unconventional Gas Conference (DUG) in Ft. Worth, Texas. The group of panelists included analysts from several firms including Wood Mackenzie and Hart Energy Upstream Research, as well as from companies such as Advanced Resources and Schlumberger.
Clarke, who focused on Indonesia’s coalbed methane reserves (CBM) said, "Any challenge in facing unconventional development in North America is amplified abroad." Namely: reserves certification, resources such as technology transfer, labor, and plant facilities; market pricing (in areas lacking historical hydrocarbon development to support revenue); management fatigue for new operations; and access to land, water, and environmental compliance are each areas that will extend the time necessary to ramp up production in international regions boasting ample potential reserves of unconventional resources.
"The massive success in the North American shale market is driving international interest," said Clarke. He added, "Where unconventional gas has been commercial it has turned other markets on their head." Looking at several success factors in North American shale development, Clarke cited equipment availability, operational efficiency, and a wide array of infrastructure possibilities as underlying factors that have contributed to vast growth in North American shale.
"Infrastructure is critical to developing unconventional gas," Clarke said. The building of roads, adding midstream resources, and providing operational facilities will provide additional capital challenges for areas lacking these features.
For the Indonesian CBM example, relationships between government and industrial partners were cited as the major challenge to ramping up production. "New bridges must be built between governments and industry," Clarke said. He added, "This is the big thing holding back Indonesian CBM." The region shows a clear demand growth, which is expected to rapidly increase after 2017.
"Getting gas to market has not been easy in Indonesia," Clarke said. He added, "Some projects have taken 17 years from discovery to production." This has been attributed to the Indonesian government’s history of flip-flopping on its policies. In the end, Clarke pointed out that Indonesia has a vast potential and a good market for developing its CBM resources, but will take time to develop a market that is economically viable.
Vello Kuuskraa, president, Advanced Resources, said, "The shale gas story in North America has been an overnight revolution that has taken 30 years to develop." Now the dominant source of natural gas in the United States, shale gas is proving its viability in world markets. Citing the EIA’s recent international shale report, Kuuskraa said, “International shale potential now stands at 25,300 Tcf gas-in-place risked reserves with 6,580 Tcf representing technically recoverable reserves.”
Brian Forbes, Schlumberger, provided a service company perspective. "Companies can keep risks in check through the life cycle of international shale development by keeping their options open." Forbes added, "Technology evolves in response to market needs."
The consensus of the panel was that international development of unconventional resources will exist as a chicken-and-egg scenario for quite some time. Capital expenditures will be necessary to develop a substantial footprint in high-risk areas before a full run of services can be made available. Forbes closed out the panel stating, "Unconventional gas is here to stay, but the international experience will not be the same as the North American experience."
Contact the author, Tayvis Dunnahoe, at tdunnahoe@hartenergy.com.
