Shale gas is used for a range of applications which includes industrial, power generation, commercial, residential and transportation. It is basically a natural gas which is extracted from different shales. Some major shales are Marcellus, Eagle Ford, Niobrara, Barnett, Bakken among others. In industries, shale gas is used to produce ethane which is a feed stock for various industries. Shale gas itself is used as feedstock for fertilizer industry to produce ammonia. Shale gas is used in power industry replacing coal. Many countries are converting their coal fired power plants to gas fired power plants to reduce carbon emissions. Commercial and residential sectors use shale gas for space heating or cooling, water heaters, and cooking purposes among others. Shale gas is also used as fuel for vehicles.
Shale gas is widely used in power generation and industrial applications. In 2012, Industrial usage accounted for approximately above 30% and is expected to reach approximately to 33% to 35% by 2019. Power generation also accounts for a major portion of the overall shale gas market share and by 2019 it is expected to decrease. Residential usage is expected to increase by 2019, as other renewable energy sources such as solar energy, biogas, etc. are increasingly preferred because they are eco-friendly. Application in the commercial sector is also expected to increase substantially, by 2019. Use of CNG in transportation is slowly rising due to soaring crude oil prices.
EIA has estimated a total of 7,299.0 tcf of total technically recoverable shale gas reserves in the world. China has the largest reserves and ranks first followed by Argentina, Algeria and the U.S. North America is the only region producing shale gas. Rest of the world’s shale gas reserves are intact and carry a great potential to meet future energy demand. U.S. and Canada were the only two countries known to have produced commercial shale gas in 2012 and which had a major contribution to the shale gas market.
In China, shale gas production is expected to commence in 2015, as this region is still in the nascent stages of development. However, China is expected to become one of the rapidly growing markets in terms of shale gas production. Due to environmental issues and public opposition, the development of shale gas production continues to be slow in Europe. Furthermore, commercialization within the forecast period is not expected that could be a probable cause driving the overall shale gas market.
Big companies like Anadarko Petroleum Corporation installed the SPAR platform in 2013 at the Lucius field in the Gulf of Mexico. Production is expected to commence in the second half of 2014. The company paid USD 1 million to the Texas Tech University to build an Unconventional Technology Center. The center would focus on oil recovery techniques and unconventional natural gas. In February 2014, Anadarko and a subsidiary of Brightoil Petroleum (Holdings) Limited signed a stock purchase agreement. The company would divest its China-based subsidiary for USD 1.075 billion later in the year 2014. Also Anadarko is expanding midstream activities by developing its oil gathering pipeline. The company is also increasing its natural gas gathering system capacity to 350 MMcfd (millions of cubic feet per day).
BP plc started the Na Kika Phase 3 in the deepwater Gulf of Mexico in February 2014 and established a joint venture with Z Energy and New Zealand Refining Co. Ltd. In March 2014 to produce and process crude oil through New Zealand’s oil refinery. In July 2013, BP and CNOOC signed an agreement for the exploration of Third Deepwater Block in South China Sea and also opened the largest bio-refinery in the U.K. in Hull in a joint venture with AB Sugar and DuPont. At full capacity, the refinery would produce 420 million liters of bio-ethanol per year.
The demand for shale gas is constantly increasing as the depleting reservoirs have forced the world to focus on unconventional source of energy. A revolution in this sector started with the production of shale gas in North America. The success of shale gas in North America has motivated other countries such as China to invest in it. The U.S. dominates the shale gas market in terms of production as well as revenue followed by Canada. China has not been able to produce shale gas at a commercial level and the production at the commercial level is expected to start in 2015. The price of natural gas has drastically decreased after shale gas production and is expected to remain low over the forecasted period. As natural gas is a feedstock and fuel for various industries hence reduction in prices has helped various industries such as petrochemical, chemical, automotive, etc. to increase their profit margins. Domestic and commercial customers are equally benefit from the reduction in price resulting in their low power bill.
Technically recoverable reserves of shale gas are available abundantly around the world and are expected to serve the global energy need for a long time. Asia Pacific being the region with a majority of reserves but the region has not produced commercially due to lack of technology. Foreign investors have established joint ventures and mergers with Asia Pacific companies due to potential reserves in the region. European countries are strongly opposing the shale gas production due to its impact over the environment. Chemicals which are used during the hydraulic fracturing may contaminate the ground water if leaked and the water which is recovered during production also needs to be treated before pumped to a ground water resource or reused. High cost of production mainly due to hydraulic fracturing and contamination of surface water are expected to hinder the market growth in the near future. Shale gas is found in rock with low permeability and hence the number of times hydraulic fracturing required by a well is more than a conventional well leading to a high cost of production. The quantity of water used in shale gas fracturing is very high and creates water scarcity for drinking and domestic purpose used in some areas where the water is limited.
This report focuses on estimates and forecasts of the global shale gas market in terms of volume (Bcf) and revenue (USD billion) from 2013 to 2019. For the purpose of this report, we have considered the supply side and not the demand side, for each region and application segment. The report analyzes value chain components in order to study value added at each stage. The study discusses major driving and restraining factors for the shale gas market and emerging opportunities in the near future.
The major applications analyzed in this report include industrial, power generation, residential, commercial and transportation. The demand of shale gas in these applications has increased and environmental regulations are also promoting the use of shale gas instead of other fuels such as coal which leads to the environmental pollution. Most of the coal fired plants across the globe are being converted into a gas fired plants hence creating a demand for shale gas. Each application is further analyzed and forecasted on the basis of regional production including the U.S., Europe, Asia Pacific and Rest of the World over the forecasted period from 2013 to 2019.
The study provides a comprehensive view of the market competition by using Porter’s Five Force Model and the impact of suppliers, buyers, new entrants, substitutes and the degree of competition. It also covers market share analysis by company and gives detailed profiles of leading players in the market such as ExxonMobil, Chesapeake Energy, Shell, Total SA, ConocoPhillips, and Dart Energy, among others.
Shale Gas Market: Technology Analysis
- Horizontal Drilling
- Hydraulic Fracturing
- Water Usage Issue
- Power Generation