My presentation about Shale Gas for Global Business Context and Development lecture at ISM University of Management and Economics.

1. Shale Gas –
Revolution or evolution of global gas
market?

2. Agenda:
• Importance
• History
• USA story
• Rest of the world
• Main players
• Eco issues

3. Why we are talking about shale gas?
Source: IEA

4. 2010 - 77 billions dollars
were added to USA GDP
by shale gas
2015 – 111,2 billions dollars
expected

6. When it began?

7. 1821 – First US commercial natural gas well in
Fredonia, NY, produces natural gas from shale;

8. 1821 – First US commercial natural gas well in
Fredonia, NY, produces natural gas from shale;
After 160 years of development and experiments
1980s – Department of Energy spearheads
research in micro seismic and other 3-
dimensional mapping techniques that proved
critical to shale gas recovery;

9. 1821 – First US commercial natural gas well in
Fredonia, NY, produces natural gas from shale;
After 160 years of development and experiments
1980s – Department of Energy spearheads
research in micro seismic and other 3-
dimensional mapping techniques that proved
critical to shale gas recovery;
2000s – natural gas holds steady
in United States with the highest
annual increase in production of
any energy technology – modern
natural gas boom

10. Development of technology

11. How it works?
443 m
Source: Visual Capitalist – www.visualcapitalist.com

12. Shale formation are fine-grained
sedimentary rocks with gas
trapped in them. Shale has low
permeability and gas does not
flow through it easily.
443 m
Source: Visual Capitalist – www.visualcapitalist.com

13. Producers drill down to the
level of shale,
And then drills then turn
horizontal to
go along shale
443 m
Source: Visual Capitalist – www.visualcapitalist.com

14. Producers drill down to the
level of shale,
And then drills then turn
horizontal to
go along shale
Water, proppants and chemical
additives are injected into the
shale at a high pressure to
create fracture pathways that
increase flow of the well.
443 m
Source: Visual Capitalist – www.visualcapitalist.com

15. Producers drill down to the
level of shale,
And then drills then turn
horizontal to
go along shale
Water, proppants and chemical
additives are injected into the
shale at a high pressure to
create fracture pathways that
increase flow of the well.
Gas and wastewater flows
443 m
back to surface. Wastewater it
stored in steel tanks until it
can be stored log-term by deep
injection into oil and gas waste
well
Source: Visual Capitalist – www.visualcapitalist.com

16. The shale gas
revolution in USA

17. Shale development has made US gas reserves the largest in
the world

21. $77 $926 $23,16
600,000
billion in savings per hourly
2010 jobs household wage rate

22. The shale gas impact to petrochemical market
Source: American Chemistry Council

23. The shale gas impact to petrochemical market
Source: American Chemistry Council

24. The shale gas impact to petrochemical market
Source: American Chemistry Council

25. Expected impact for US economy
More than 1.6 Million Jobs

26. Expected impact for US economy
More than 1.6 Million Jobs
$231 Billion in Total Value Added

27. Expected impact for US economy
More than 1.6 Million Jobs
$231 Billion in Total Value Added
$933 Billion in
Tax Revenues

28. Who’s next?

30. China – preparing for opportunity
Chinese policymakers and state behemoths are laying the groundwork to begin
extracting the country’s apparently mighty shale gas resources.
China has set itself an ambitious target of producing 229.5 billion cubic feet of shale gas a year
by 2015.

31. China activities for shale gas production
Before 2004 - Study foreign shale gas exploration technology
From 2005 to 2007: Shale gas resource exploitation.
In 2008: Exploitation of the Upper Yangtze region and
planning shale gas project.
In 2009: Evaluating shale gas resource potential and defining
favorable exploration targets in key areas.
In 2011: Defining areas of probable shale gas reserves in
China
June 2011, China conducted the first round of shale gas
exploration competitive bidding and invited six state-owned
enterprises to participate in bidding.

32. Main players in China shale market
Sinopec Group, China's second largest oil and gas producer, has
launched its first shale gas project and plans to develop production
capacity of 300-500 million cubic meters a year by the end of this yeard
In January 2010, Sinopec and BP cooperated to develop a shale gas
block in Guizhou.
Yanchang Petroleum has drilled 12 exploration wells and evaluation
wells, strives to produce 20 million cu m/year of gas by 2012, and aims
to produce 500 million cu m/year by 2015.
CNPC started shale gas exploration and development in 2006,
becoming the first Chinese company to begin work in the sector.
CNPC has obtained North Yunnan-Guizhou mineral rights and drilled a
shale gas data well in the Sichuan basin in 2009.
In March 2010, CNPC and Schlumberger signed a 2010-12 cooperation
agreement on logging services.
In April 2011, CNPC and Total SA agreed to invest $2 billion in Inner
Mongolia Province to develop unconventional gas.

33. India – Shale of the century?
Excitement about a potential Indian shale gas boom is building. As yet, there is not
enough evidence to justify the hype.

34. India – Shale of the century?
In January 2011 India’s
state-owned Oil and Natural
Gas Corporation (ONGC)
found the country’s first
shale gas at an exploratory
site near the city of
Durgapur in West Bengal.

35. India – Shale of the century?
Oil and Natural Gas
In January 2011 India’s
Corporation (ONGC) has
state-owned Oil and Natural
called in international
Gas Corporation (ONGC)
expertise to help with
found the country’s first
exploration by partnering
shale gas at an exploratory
the world’s biggest oil
site near the city of
services
Durgapur in West Bengal.
company, Schlumberger

36. India – Shale of the century?
Oil and Natural Gas
In January 2011 India’s
Corporation (ONGC) has
state-owned Oil and Natural
called in international The Indian government is
Gas Corporation (ONGC)
expertise to help with finalizing its shale gas
found the country’s first
exploration by partnering exploration policy and
shale gas at an exploratory
the world’s biggest oil expects to launch its first
site near the city of
services auction of shale gas blocks
Durgapur in West Bengal.
company, Schlumberger by December 2013

37. Poland – The next Norway?
Shale gas gives Poland a chance to bypass Russia—maybe.

38. Poland – The next Norway?
Oil and gas investment is
flooding into the region in
amounts not seen since the
fall of the Berlin Wall.
Anglo-Dutch giant Royal
Dutch Shell, France's Total
and ConocoPhillips of the
U.S. have acquired
exploration rights in Poland

39. Poland – The next Norway?
Oil and gas investment is
Poland has granted 112
flooding into the region in
shale exploration licensees
amounts not seen since the
to international firms such
fall of the Berlin Wall.
as Chevron, ConocoPhillips
Anglo-Dutch giant Royal
and Marathon Oil.
Dutch Shell, France's Total
and ConocoPhillips of the
Exxon Mobil decided to quit
U.S. have acquired
Poland market.
exploration rights in Poland

40. Poland – The next Norway?
Oil and gas investment is
Poland has granted 112
flooding into the region in
shale exploration licensees
amounts not seen since the The country’s government is
to international firms such
fall of the Berlin Wall. preparing draft legislation
as Chevron, ConocoPhillips
Anglo-Dutch giant Royal for development of shale
and Marathon Oil.
Dutch Shell, France's Total gas resources, expecting to
and ConocoPhillips of the start natural gas production
Exxon Mobil decided to quit
U.S. have acquired in late 2014
Poland market.
exploration rights in Poland

41. Argetina – untapped potential
Unconventional hydrocarbons meet familiar problems in Argentina as in USA

42. Argetina – untapped potential
In May 2011 Argentina
announced that it would
become the site of the first
large-scale development of
oil from
an unconventional reservoir
outside of the US and
Canada.

43. Argetina – untapped potential
Repsol, a Spanish oil major,
In May 2011 Argentina
announced that its
announced that it would
Argentinian subsidiary,
become the site of the first
Yacimientos
large-scale development of
Petrolíferos Fiscales (YPF),
oil from
will drill 17 new wells and
an unconventional reservoir
fracture 14 existing ones
outside of the US and
this year in the Vaca
Canada.
Muerta

44. Argetina – untapped potential
Companies worldwide are
showing interest in
Argentina shale gas
Repsol, a Spanish oil major,
In May 2011 Argentina projects, and investment in
announced that its
announced that it would shale gas production is
Argentinian subsidiary,
become the site of the first expected to reach US $1
Yacimientos
large-scale development of billion in 2012. Joint
Petrolíferos Fiscales (YPF),
oil from ventures are currently the
will drill 17 new wells and
an unconventional reservoir preferred model for
fracture 14 existing ones
outside of the US and financing development
this year in the Vaca
Canada. activities.
Muerta

45. South Africa – Game changer?
Shell and other shale gas contenders meet stiff resistance in South Africa, which has
the continent’s most promising reserves of the gas.

46. South Africa – Game changer?
In August 2011 the South
African
government decided to
extend a six-month
moratorium on licensing for
shale gas exploration for
another half-year period—a
disappointment for those
circling what are thought to
be the world’s
fifth-largest shale gas
resources.

47. South Africa – Game changer?
In August 2011 the South
African
government decided to
extend a six-month
moratorium on licensing for South Africa’s shale gas
shale gas exploration for could be a “game changer”.
another half-year period—a The country depends on
disappointment for those imports (of oil and some
circling what are thought to gas) and does not generate
be the world’s enough electricity to satisfy
fifth-largest shale gas demand.
resources.

48. South Africa – Game changer?
In August 2011 the South
African
government decided to
extend a six-month
moratorium on licensing for South Africa’s shale gas
shale gas exploration for could be a “game changer”.
another half-year period—a The country depends on
disappointment for those imports (of oil and some 2012 Sep. 7 South Africa
circling what are thought to gas) and does not generate has lifted a moratorium on
be the world’s enough electricity to satisfy shale gas exploration in the
fifth-largest shale gas demand. Karoo region
resources.

49. Shale gas provides opportunity for countries
• Decrease gas prices;
• Collect more taxes;
• Become more independent from import;
• Attract investments;
• Create new jobs and new industry;

50. BUT…

51. Source: Visual Capitalist – www.visualcapitalist.com

52. Source: Visual Capitalist – www.visualcapitalist.com

53. Source: Visual Capitalist – www.visualcapitalist.com

54. Communities actively protesting against
fraking because of danger to environment

55. Bulgaria - after a nationwide protest in January
2012, the government decided to ban the hydraulic
fracturing technology.
Denmark - a critical view is reflected in national
media, and national campaigns against shale gas
have started.
France - Hydraulic fracturing was banned in France
in 2011 after public pressure.
UK - Though not officially suspended, the process
was unofficially suspended for nearly a year in the
UK from June 2011 over safety concerns, but an
expert report in April 2012 said that it’s safe
US - This method of drilling has become
controversial because of the complaints, from
some residents of the areas, about pollution, and
health effects, and a sense that their lives and their
community have been ruined by the system.

56. Main players in shale gas industry

57. World’s largest producer of shale gas

63. Revolution or evolution…?

64. EUROPE
“Europe, with higher population
density, higher environmental
hurdles and increased levels of
government coordination, will likely
see a ‘shale evolution’. Europe will
require more environmentally
friendly materials and more advanced
horizontal drilling technology.
The net effects are:
• A flatter geology-specific shale
gas learning curve.
• Slower aggregate growth in
proved reserves and production.
• A more R&D focused approach
with longer play timelines. “
Delloite.

65. CHINA
“China’s lower population density in regions with shale gas
potential, less restrictive environmental concerns, centralized
government planning and willingness to invest enables replication of
the US manufacturing-style shale development. The likely result will
be a ‘shale revolution’ as China progresses rapidly along the shale
gas learning curve.”
Delloite.

66. SOUTH AMERICA
‘’Shale reserves in Brazil are estimated to
be one of the biggest in the region, but
there has been little interest or investment
in exploring this resource. Argentina is the
only South American country that seems
set to embark on full-scale shale gas
production, primarily in the Neuquén Basin.
Development of shale gas in Argentina will
be valuable to the country and occur at
reasonable prices. Further, given the
Argentine government's willingness to
support these projects, we expect that
shale gas field development will continue to
be allowed.”
KPMG

67. Many ways Australia is in a similar emerging position
to where the North American shale industry was
several years ago. As the resource in Australia
becomes better defined and clear routes to market
identified, then the transaction values could increase
significantly.
Norton Rose

69. Questions?