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Home , Afren, BG Group, BP, Energy Institute, Hess Corporation, MOL (company)

An introduction to &

Philippe Charlez, IOGP

Shale drilling site in - Photo Helge Hansen - Statoil IOGP members produce half of the world’s oil and a third of the

Our main objective: promote safe, responsible and sustainable operations

North America Anadarko IADC plc NOGEPA RWE Dea AG API IAGC ASSOMMINERARIA Fairfield Norwegian Oil & Gas BG Group Oil Gas Shell CAPP BP GdF Suez Oil & Gas UK Statoil Chevron Nexen Inc. IOOA OMV Total CNR International DONG Energy IPIECA Holdings ConocoPhillips Pemex E.ON AS Maersk Oil WEG MOL plc ExxonMobil Suncor 43 members active in region

36 members active in region & Caspian region JSOC Bashneft NCOC 21 members active in region Sonangol 41 members active in region ARPEL IBP PLUSPETROL Pan American 31 members active in region ADNOC Energy RasGas & Dragon Oil LNG APPEA Oil BHPBilliton Papuan Oil Search Cairn 33 members active in region CNOOC PTTEP INPEX Woodside

32 members active in region

1. The US shale revolution

Bakken

In the 1990s and , the US is increasingly dependent on oil & gas imports. are on an upward trend. It’s the trigger of an energy revolution: Marcellus Entrepreneurial experimentation in the proves economic viability and triggers an energy revolution and Barnett Haynesville renaissance. Eagle-Ford The shale revolution turns the US into one of the top global oil & gas producers First oil Second oil Oil counter crisis crisis shock Oil production peaks: import: The US becomes the from now on, US the US has never largest gas producer in the production falls imported as world and the second much oil largest oil producer 1970 1973 1979 1986 2006 2014

Energy dependency (%) Oil dependency (%) Gas dependency (%) 75% 70% 20% Dependency = import/consumption

15% Oil 50% 60%

Oil 10% Gas 25% Gas 50% 5%

0% 40% 0% 1 9 17 25 33 1 3 5 7 9 11 13 BP outlook 2014 BP outlook 2014 Shale drives down , giving the US economy a competitive edge

20 Gas prices ($/MBTU) Energy-intensive industries benefit most:

15

Europe 10 Cement

Costs in the chemical drop, 5 US boosting production

0 Operating costs (US$/pound) Source: IFRI 1 3 5 7 9 11 13 1.0 BP outlook 2014 Europe 2012 Jobs are created (direct, indirect, induced) 2006 Source: IHS CERA

0.6 US Europe

US

0.2 100 200 Production (Bn Pounds) US power moves to gas from , lowering GHG emissions

Renewables have continued to grow, not Meanwhile, the EU moves in the opposite direction: crowded out by gas

GHG (Bn tons/year) Coal consumption (Mn tons/year) 6.6 600 40%

Coal 550 30% 6.2 GHG -13% Gas and coal in the Gas and coal European power mix in the US power mix 500 20% Gas

5.8 10% 450

Coal -21% Source: Pétrole et gaz informations N° 1831 5.4 400 1 3 5 7 9 11 13 1990 2012 BP outlook 2014

See also http://rhg.com/notes/neck-and-neck-us-and-european-ghg-emissions-trends 2. Some science about and gas

Shale oil and gas are exactly the same products as oil and natural gas from conventional extraction. How oil & gas are formed

Oil and gas are chemicals made just of two elements: and .

The microscopic and animals that lived in the ocean millions of years ago sank to the bottom of the .

Buried deeper and deeper under the surface of the , transformed them into . is natural gas!

Shale oil and gas are exactly the same product as oil Land surface and natural gas from conventional extraction.

The difference is the source: conventional exploits Overburden , shale exploits source

Trap Conventional hydrocarbons are found in : Reservoir 1. Coarse grains Seal 2. High permeability 3. Limited extension (at most as large as Greater )

Hydrocarbons migrate from and are sometimes trapped in a reservoir Source rock

Shale is found in the source rock: 1. Very fine grains 2. Very low permeability 3. Very large extension (it could be as large as half of ) Technology made shale oil & gas economically viable

Economic production Conventional have known about gas from shale Economic permeability for decades, but for Non economic production many years development was not economically viable. Shale oil & gas Economic production

Uneconomic In the late 1990s, a permeability combination of two Non economic production proven technologies – horizontal drilling and – and advanced IT made The first hydraulic fracturing happened in in 1947. gas from shale commercially viable. More than two million have been carried out by now in the US. 9 Eiffel towers deeper than fresh Shalenormally is least at 1,000 11 Eiffel towers

3,000 2,500 2,000 1,500 1,000

0 m 500 600 m 600

Depth(m) 4000 3000 2000 1000 Multipleand concrete layers steel of isolate Hydraulic A the wellfrom the freshwater fracture’s After After Warpinski fracturing metres Depth maximum maximum et al et 6000 600 Fracture tops Fracture Fracture profiles Fracture of of underground. underground. fracturation stages fracturation fracturing metres. happens of potable water potable of diameter stages Fracture Fracture thousands aquifers is bottoms about of of

Life-cycle water usage and radioactivity

Compared with conventional gas, shale gas requires only 1.7% additional water. Forbidden (>20) Industry can use fresh water, but also brackish and sea water. Full body scanner (10) Energy M3/MWh

Nuclear 2.1 Admitted (<20) Coal 1.9 Gas 1

Shale gas 1.017 Advised (<1/yr)

Water in storage before use Barnett (0.1/yr) RT New-York (0.08)

Living in a shale gas basin like the Barnett in the US exposes a person to as much radiation as flying a round trip from Paris to . One medical scanner is equivalent to living for 100 years in the Barnett basin. Fracturing fluids are 90% water, 9% sand, 1% chemicals

Sand 9% - 1,500 to 2,000 tons - Chemicals 0.5-1% keeps the fissures in the rocks open - used to viscosify The industry and allows the gas to flow to the well the fluid, remove voluntarily discloses and the chemicals it prevent corrosion uses for hydraulic fracturing in the EU: www.ngsfacts.org

Additional information on chemical disclosure for Polish wells can be found at www.opppw.pl Water 90% - 10,000 to 20,000 m3/well (5 to 10 pools) - no need of high quality water: sea water or water from salted aquifers also works is handled carefully and can be reused

1. The water flowing back from the well to the surface is treated and it can be fully reused. 2. Treatment captures the mixed in the water, avoiding GHG

Drilling + fracturing emissions. Fugitive + logistics emissions 7% 4% 3. The reduction of methane flaring and venting further Flaring Electrical 53% reduces GHG emissions. 36% & venting generation

JA Costa (2011) Total , T. Stephenson (2012) IPIECA J. Broderick, et al (2012) University of Manchester Allen T et al (2013)

Low footprint: a shale gas pad has the extension of two football fields Pad = 2 x 100 m

Horizontal multifractured

Dep Pad during drilling (lasts about 1 year) Solar panels Wind mills Source: Lane Energy,

To produce an equivalent amount of energy with wind mills or Pad in production (lasts about 20 years) solar panels, we would need 10 to 30 times the surface Source: Chesapeake http://zebu.uoregon.edu/disted/ph162/l4.html

Earthquakes: less than the vibrations from a truck Source: International Gas Union

Truck vibration Industrial activities induce low- intensity seismic events: • , dams • Blackpool* = 2.3 • Oil & gas extraction Hydraulic fracturing In shale gas, vibrations are * In 2011 there were small tremors at Preese Hall near Blackpool, UK, where hydraulic fracturing operations were taking place. generally lower than a truck passing by.

The Paris metro vibrations are equivalent to 7 times Blackpool Shale is a global phenomenon! Shale gas Shale oil Notional additional Country Gas Oil Gboe Gboe Poland 25 3,3 Gboe Gbbl France 23 4,7 Conventional 1100 1650 9 0,3 Shale oil & gas 1200 350 Denmark 5 0 Additional (%) 110 20 UK 4 0,7

97 76 4 2,9 49 Others 9 1 Total 80 12,9 190 9 Source : EIA 2013 96 120 Russia Europe 58

93 6

US 32 5,661 7,140

13

Mexico ? 42 74 2,587 Gas 136 5 18 Mature stage 66 314 Oil Australia Pilot stage 0 27 1,381 South Non-mature stage Africa

Argentina The EU has potentially significant shale resources

Europe’s shale gas resources are Main shale gas areas in Europe within the Top 10 worldwide

Sources EIA 2014 Production could contribute to EU security of supply, employment, growth Benefits could be significant, even without being revolutionary Production (bcf/day) 20

4 daily French consumption 15 Shale gas boom In 2035, the EU is expected to import 10 2 daily French consumption 89% of its gas. Shale gas can cut that to as little as 62% 5 Some shale gas It could mean up to 1.1 million new 0 jobs created by 2050. 1 11 21 31 41 51

50 years production It could also mean up to 3.8 trillion Source: Poyry/IOGP 2013 euros added to the economy between 2020 and 2050. A 30-year development would require: • 23,000 to 50,000 wells Lower energy prices compared • 450 mln m3 to 1 bln m3 water* with a no-shale gas scenario: higher 2 2 available income for households and a • 230 km to 500 km more competitive industry.

* in 2012, France used 33 Gm3 Source: Poyry/IOGP 2013 IOGP activities on shale gas

• NGS Facts (chemicals disclosure website): http://www.ngsfacts.org • IPIECA/IOGP Good Practice Guidelines, Dec. 2013: http://www.iogp.org/pubs/489.pdf • IOGP Fact Sheets: Chemicals, Seismicity, Emissions, Water: http://www.iogp.org/PapersPDF/v2_Shale_FAQs_1.2_high.pdf • Studies: • Poyry/Cambridge Econometrics – Estimating the macroeconomic potential of shale gas in Europe: http://www.iogp.org/PapersPDF/poyry_public_report_ogp__v5_0(1).pdf

• ERM – Recovered water management study in shale wells: http://www.iogp.org/PapersPDF/water-mgmt_OGP_Final_Report_2(2).pdf Registered Office Level 5 209-215 Blackfriars Rd London SE1 8NL For more information please contact: T +44 (0)20 3763 9700 Alessandro Torello F +44 (0)20 3763 9701 [email protected] Communications Manager, IOGP [email protected] Brussels Office Bd du Souverain,165 4th Floor B-1160 Brussels Belgium T +32 (0)2 566 9150 www.iogp.org F +32 (0)2 566 9159