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Joint ventures and tailored programs are among the opportunities that exist for foreign investors to take advantage of emerging shale gas and shale oil opportunities across the globe, according to industry leaders in the US and abroad.
Lush shale plays and the potential for others to become lucrative have companies looking to various countries across the world to fulfill needs.
Successfully tapping into those markets involves forming partnerships and gaining knowledge about available investment opportunities, according to speakers who delivered presentations recently at the World Shale Oil & Gas Conference from Sept. 18-21 in Houston.
Shale gas basins in Argentina are attracting attention. The South American country has an estimated 774 Tcf of technically recoverable shale gas resources, according to an analysis by the US Energy Information Administration (EIA) and Advanced Resources International. That amount ranks Argentina as having the world’s third largest assessed endowment, following China and the US.
Although Argentina’s natural gas output has dropped since 2006, with the country being the continent’s largest natural gas consumer, its shale gas potential could help reverse the downward trend. However, shale oil could play a role as well. In 2011, YPF, the state-run oil company, announced a large shale oil discovery in the Loma La Lata field in the Vaca Muerta shale formation that, according to the EIA, has an estimated 741 MMbbl of recoverable shale oil.
Nicolas Mallo Huergo, chairman of Argentina’s Andes Energia, said he sees different ways to access the Argentine market. Among them are joint ventures with local private companies and joint ventures with YPF, which has been searching for more strategic partners. An example includes a recently announced partnership between Chevron and YPF to develop oil and natural gas wells in Argentina’s Vaca Muerta shale formation.
International players bring the know-how, longtime relationships with shale service providers, and strong balance sheets, Huergo said. Local players contribute in-country qualified personnel, secure acreage, and knowledge of regulatory, environmental, and permit issues. Combined, the two can create a joint venture to the benefit of both with financing, development, and production in place. He called it a win-win common agenda.
Also key to such ventures is securing community support, Huergo added.
“We have immense resources,” Huergo said after sharing that Andes Energia has resources of 390 MMboe and reserves 2P of 12 MMboe. “We have a unique resource with a huge potential, but we need the know-how coming from international companies.”
Services and much more capital also are needed, he added.
Political challenges remain in Argentina. The government recently nationalized YPF, taking the company away from Spain’s Repsol. Many investors are waiting to see if there are any additional changes before providing funds.
Ukraine also continues to push projects in the energy sector. Igor Zaitsev, advisor to the board chairman for Nadra Ukrayny Njsc in Ukraine, touted the country’s 23,600 miles of pipeline, recoverable reserves of conventional gas and gas condensate of 28 Tcf, and 1.12 Tcf of natural gas underground storage.
In September, Bloomberg reported Ukraine had 18.3 Bcm of natural gas in underground storage. The figure came from DP Ukrtransgaz, the state pipeline operator.
Among the options for doing business in Ukraine are establishing production-sharing agreements, forming joint ventures with Nadra Ukrayny, or investing with one of Nadra’s branch companies, Zaitsev said.
In the US, where talk of shale gas development was a reoccurring topic among presenters at the conference, a program focuses specifically on working with other countries and governments wanting to seize natural gas opportunities in the US. Goals of the Unconventional Gas Technical Engagement Program include promoting greater energy security, achieving critical environmental objectives, and furthering US economic and commercial interests, said Joseph Figueiredo, program manager for the US Department of State’s Bureau of Energy Resources.
To accomplish these goals, the program shares good and bad experiences as well as best practices and information on US environmental, regulatory and policy, and legal issues, Figueiredo said. Co-hosting workshops abroad and inviting delegations to the US to share knowledge are among the program’s activities.
“International collaboration on shale gas development is absolutely essential to the success of shale gas development globally,” he continued. “We believe, in the US, that if a country chooses to pursue shale gas development that they do so as a small part of a much larger, more robust energy security strategy to meet the energy needs of their people.”
Thanks to the shale gas revolution, mostly driven by the efforts of small, independent oil and gas producers, the US has about 100 years of natural gas to consume, he explained. Increased efficiencies in production, existing pipeline infrastructure, private ownership of mineral rights, and a deregulated market also contributed to the gas revolution.
Today, unconventionals including tight gas and coalbed methane (CBM) make up more than 50% of US natural gas production. By 2035, the percentage of shale gas production combined with tight gas and CBM is predicted to be more than 75%, Figueiredo said. The increase will push gas past coal as the second most-consumed energy resource globally and come close to matching that of oil.
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