Annual Report and Accounts 2009 - BG Group

12
Directors’ Report: Business Review
Strategic review continued
Key strategic developments
During 2009, there were substantial and positive developments in BG Group’s plans in Australia
and Brazil which materially advanced the Group’s strategy.
The Group is on track to sanction the Queensland Curtis LNG plant in Australia this year. In
Brazil, excellent progress with the Santos Basin appraisal and commercialisation programme
has significantly de-risked the Group’s investment in the development of these world-class
pre-salt resources. There were further advances in the UK North Sea, and the Group entered
into a US shale gas alliance.
Unconventional gas
A significant new growth opportunity
Unconventional gas resources are set to play an increasingly important role in BG Group’s global portfolio.
Coal seam gas and shale gas resources are abundant, some of the largest accumulations are located in areas of low political risk such
as Australia and the USA, and the development of new technologies means these resources can now be produced at scale and with
attractive economics.
Coal seam gas
Coal seam gas occurs when coal is formed
underground by geological processes
which heat and compress plant matter. As
the coal is formed, large quantities of gas
are generated and stored within it. Coal
has a relatively large internal surface area
and can store up to six or seven times as
much gas as a conventional gas reservoir
of equal rock volume.
The gas – which is predominantly pure
methane – is trapped by the pressure
of water within and around the coal
seams. Although coal seam gas presents
a significant hazard for miners operating
underground, the techniques for its
extraction for use by the gas industry
Shale gas
Shale gas is a form of natural gas which
is stored in organic-rich rocks, such as
dark-coloured shale, within continuous
accumulations that extend across
large areas.
Gas can be stored in shale by a number
of different geological mechanisms:
it can be held within the pores of the
rock; trapped within naturally occurring
fractures; or adsorbed onto the shale
materials or organic matter within
the shale.
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are proven and effective. Wells are
drilled at ground level down into
the coal seam, pumping out the
water to release the gas, which is
processed and then piped to a
compression plant for injection
into gas transmission pipelines.
Large numbers of wells are normally
required to produce coal seam gas.
However, as coal seams are
generally found at shallow depths
of 300-1 000 metres, individual coal
seam gas wells are significantly
simpler, cheaper and faster to drill
than conventional gas wells.
Reservoirs are difficult to produce due
to their low permeability. However,
recent technological developments
have led to a significant increase in
shale gas production in the USA. Those
techniques include horizontal drilling,
in which the drill bit is directed along a
path through the most productive areas
of shale beds, and hydraulic fracture
stimulation techniques or ‘fracing’, where
water and sand is injected under high
pressure into underground shale beds to
fracture the rock and release the gas.
Coal seam gas well, Queensland, Australia
Shale gas drilling, Louisiana, USA