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EPG Spotlight – Policy in Focus: Regulatory challenges in developing shale gas.

Supporting the naissance of the US shale gas industry is the regulatory environment for exploration and production, which is more developed than in the UK. This article looks at the differences between the regulatory regimes and identifies opportunities for development for the British regime.

document pdf EPG Spotlight   Policy in Focus: Regulatory challenges in developing shale gas. EPG Spotlight - Policy in Focus: Regulatory challenges in developing shale gas - pdf, 204.64 kB

 

This entry was posted on Monday, May 14th, 2012 at 9:47 am and is filed under Publications. You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.

One thought on “EPG Spotlight – Policy in Focus: Regulatory challenges in developing shale gas.

  1. Amy Myers Jaffe, director of Baker Institute Energy Forum, a poilcy think tank at Rice University in Houston: “They are saying to themselves: I am going to produce the gas regardless of what the price is, because I’m making money on the oil and liquids” (source)

    The article isn’t about shale gas. It talks a great deal about gas production coming from drilling for oil. A lot of that gas comes from conventional oil wells, not shale. Yes, these companies can make a lot of money. But that does not mean that the shale gas producers who get a bit of liquids can make it with prices as low as they are. With petroleum selling for $90 a barrel, drillers in places like the Eagle Ford shale or the Bakken can give away their natural gas for nothing and still make 100% annual returns on their drilling dollars (Forbes).

    Show me the 10-K forms that tell me that shale gas is profitable. (And when you do make sure that you are not just looking at the production cost, which is a fraction of the total.)Technology development and application are and will remain key elements in maximizing the full value of these large, long-life resources.

    Here are some examples: Unconventional production from Haynesville increased four-fold in 2010, while production in Fayetteville doubled in 2010 (

    source. The Barnett Shale, where we currently have gross production of approximately 900 million cubic feet per day of gas, is another good example of value creation through technology. We have been able to maximize long-term ultimate recovery with longer lateral lengths and improved drilling and completion efficiency. And our net unit development cost in this shale play is about $1 per thousand cubic feet equivalent, a 50 percent improvement in the last five years …” — ExxonMobile

    What exactly is meant by net unit development cost? What happens when you include all of the other costs? Does this cost include the full depreciation or is Exxon using the overstated reserve estimates and the high EURs that have yet to be seen in the real world?And surely if shale gas were this profitable the pure shale gas players would be swimming in cash. But if that were true why are they swimming in read ink instead and trying to sell themselves off or find new credit lines.

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