In early January this year, Total, the
French oil major, announced its
plan to acquire America's Chesapeake Energy in a deal worth $2.25
bn. That was nothing unusual in an industry where deal mongering is a way of
life, literally, except the fact that it was a vindication of growing global
trend among oil biggies to snap shale gas properties, as they strive hard to
look for alternatives to their dwindling oil reserves. A string of similar deals
have followed its trail this year in the US alone where shale gas production
accounted for 20% share of the country's total gas production in 2009,
jumping from almost nil a decade ago. And if experts are to be believed, the share of
the shale gas will reach a hefty 50% by 2035. These and other optimism
arises from the technological advances in drilling techniques that have improved
efficiency in extracting energy from this unconventional reservoir.
Shale gas is a type of natural gas which is sourced from the shale or
underground rock formations, which act as both source as well as reservoir of
natural gas and oil. This unconventional gas form is now the most prized
possession for any oil company worth its salt. The reason is not far to seekit can be
a game changer for the oil industry, globally, especially in the energy
hungry west which is desperately looking to reduce its dependence on the Middle
East. The US Energy Information Administration predicts America's total
domestic natural gas production to grow from 20.6 trillion cubic feet (tcf) in 2008
to 23.3 trillion cubic feet by 2035. In its report, Annual Energy Outlook 2010,
it further suggests that technology improvements and rising natural
gas prices would push natural gas production from shale formations to reach
6 trillion cubic feet in 2035, more than offsetting decline in other production,
and accounting for 24% of the natural gas consumed in the United States, up
from 6% in 2008. In another report dated April 2009, the US Department of
Energy said that at the US natural gas production rates for 2007 of about
19.3 trillion cubic feet, the current recoverable resource estimate provides
enough natural gas to supply the US for the next 90 years while a few other
reports even predict the supply to last even for 116 years. Halliburton, the world's
second largest oilfield services company estimates the current recoverable
reserves to be at 500 to 1,000 trillion cubic feet. No wonder, why the oil
biggies are in a hurry to lead the fray.
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