Shale gas prospects

WEB DESK: Pakistan is believed to have abundant resources of shale gas. Briefing the Public Accounts Committee (PAC) at the Parliament House recently, the Director General, Petroleum Concessions of the Ministry of Petroleum, disclosed that Pakistan had shale gas/oil reservoirs estimated at 586 Trillion Cubic Feet (TCF), out of which 105 TCF gas and over 9 billion barrels of oil were recoverable.

A study conducted by the US Energy Information Administration had shown that 95 TCF recoverable reservoirs were available in Sindh and southern Punjab. It was also revealed that exploration of shale gas/oil was not only technology-intensive but financially two times expensive and time-consuming compared to other conventional natural resources. Further, it took 40 years for the US to develop shale gas where this resource was found on the surface while it is lying in depth of 2,000 to 4,000 meters in Pakistan.

Once shale gas/oil policy was formulated in the country, exploration and production (E&P) companies will get around dollar 12 per MMBTU as wellhead gas price, which was almost double from the price E&P companies get from the conventional gas. However, the Ministry of Petroleum was planning to start a pilot project to know the exact cost of shale gas.

The revelation of the Ministry of Petroleum brings to light certain facts about the prospects of shale gas which were largely disregarded by a large number of people in the country who had hoped that since the country had vast quantities of this resource, enough to last for a long time, the economy of Pakistan would get a big boost soon and economic worries of its citizens would be over almost indefinitely.

In particular, shale gas buried underground the territory of Pakistan would greatly help in confronting the challenge of energy crisis in future and boost the chances of earning a surplus in the external sector accounts, accumulating large amounts of foreign exchange reserves and appreciating rupee rate besides improving the standards of life of ordinary citizens.

It is clear from the presentation that no such development was in the offing, at least in the near future because the country has no capacity to extract shale gas resources by its own and it would require foreign companies and latest technology for the purpose.

It is true that a precious resource amounting to trillions of cubic feet is available to the country but its exploration and utilization is only possible if the country has the latest technique and a lot of foreign exchange at its disposal. Besides, the country has to come to terms with new dynamics of energy situation.

The future shale production could be badly hit because of a significant decline in international oil prices as shale oil is now relatively expensive to get out of the ground requiring a price of dollar 70 a barrel to be economical.

Obviously, it will be a losing proposition for the country to extract shale gas if the oil prices continue to rule at the present level in the international market. Keeping all these factors in view, we feel that though it is good to have shale gas in great quantities, promising a better future for the country and its citizens, it would be advisable not to be carried away by its potential, at least for the time being.

Source: Bussinessrecorder