Global Energy Conference Highlights Significant Barriers to Unconventional Resource Development

The Texas Christian University Energy Institute demonstrated their leadership in the energy industry as the hosts of The Global Impact of Unconventional Energy Resources on campus in Fort Worth in September.

I was honored to be in the audience and hear thought provoking international perspectives including presenters from Russia, Australia, China, Africa, Mexico, Canada, South American Countries, and the United States.

The key takeaway is that despite success in exploration and identification of shale basins worldwide, there are significant barriers. There is a lack of investment in technology, infrastructure, and transportation to deliver energy from unconventional resources in most of the world. Long-term stakeholder alignment of public and private investment is required to develop efficient profitable resource development operations, address environmental concerns, and build out supply chains.

Conversation was balanced and candid in an academic setting. Recent trade show discussions in comparison have been reactive to recent market dynamics and fractured. The Energy Institute did an excellent job providing a big picture view of unconventional fuels and pragmatic approaches. The presenters kept us engaged discussing everything from abundance to misery to optimism.

The following lists a few excerpts from the international presentations that I found especially interesting focused on resources outside of North America.

China and Japan’s Pursuit of Unconventional Fuels by Dr. Manochehr Dorraj, Professor of International Affairs, Texas Christian University

• Known global oil reserves increased by 33% since 2000 with hydraulic fracturing responsible for most of the increase.
• China is the largest consumer of energy in the world, by 2016 will be 1/4th of the global demand.
• China is reported to have more shale gas reserves than the US and Canada combined.
• Geographic constraints in addition to inadequate technology, infrastructure, pipelines, lack of land rights, and bureaucratic red tape are challenges to development of shale energy in China.
• Japan is investing heavily in methane hydrate (flammable ice) extraction from below the sea beds. Technological challenges and the cost of extraction may prove to be prohibitively expensive.

Development Of Shale Oil And Gas In Russia by Dr. Tatiana Mitrova, Head of Oil and Gas Department, Energy Research Institute of the Russian Academy of Sciences

• Tight oil reserves in Russia are not homogenous and include different types of formations that make production more challenging.

• Russian liquid output has reached plateau, the main challenge now is to sustain production volumes.
• Higher oil prices are necessary ($75-225 a barrel) for the required return on investment.
• Taxation, laws on strategic reserves, the corporate landscape, environmental issues and manpower requirements are limiting factors.

The Nascent Non-conventional Hydrocarbon Industry of Latin America: Market, infrastructure, policy, stakeholders, opportunities, and constraints by Isidro Morales, School of Government. Tecnológico de Monterrey

• Argentina, Brazil and Mexico have great potential with non-conventional hydrocarbon resources but do not anticipate a shale revolution similar to that taking place in the US.
• Only Argentina has put in place a development program aimed at increasing its non-conventional gas output in order to reduce imports.
• Mexico is moving from a state monopoly regime to a full liberalized market approach for developing its energy industry. This is aimed at boosting net oil exports and reduce growing gas imports.

Socio-legal dimensions of Unconventional Petroleum Development in Australia: Shale Gas and Coal Seam Gas by Dr Tina Hunter, Co-Director, Centre for Energy Law, University of Aberdeen

• Coal seam gas contains water in pores and requires a dewatering process for extraction.
• There is a proactive approach in Western Australia and South Australia.
• Investments are being made in developing transport options.
• They are addressing technical hazards and concerns along with community issues.
• Regulatory issues are complex with challenges associated to groundwater monitoring, licensing, and integrated planning in agricultural areas.

Unconventional Energy in Europe, Policy Issues, Impact and Prospects by Dr. Andreas Goldthau, Professor, School of Public Policy, Central European University, Associate, Geopolitics of Energy Project, Harvard Kennedy School

• The EU’s supply gap may reach 350 bcm or 12 tcf annually.
• A scattered market prevents a competitive pricing environment.
• Cost estimates remain rough and don’t suggest similar competitive gas as in the US.
• Don’t bet on European shale as large scale supply source.
• Expect slow learning curves for the development of unconventional resources.
• Energy innovation will continue but with more emphasis on demand side, supply management (power), storage (power-to-gas), etc.

Unconventional Energy in Africa: Impact of the US Shale Revolution and Prospects for African Exploration by Stefan Andreasson, Queen’s University Belfast

• Africa has a very high dependence on hydrocarbons and minerals exports,
• Sustained economic growth comes with rapidly increasing demand for energy.
• Continent-wide power shortages are a key impediment to further growth and development.
• There is exploration for hydrocarbons in all but three of sub-Saharan Africa’s 48 nations but comparatively less emphasis on unconventional resources.