Caspian Report - Issue: 08 - Fall 2014

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FATIH MACIT, HOLLY REHM 8 shale revolution, as it has become known, has immense potential to dramatically alter the domestic and global energy landscape. How did the shale gas revolution begin and what led to its development in the U.S. verses other areas also rich in shale resources This section will attempt to answer these questions while providing an overview of shale gas as well as its impacts on the American economy. SHALE GAS: BACKGROUND AND HISTORY IN THE U.S. Shale gas is a type of unconventional natural gas found in shale rock deposits. Other types of unconventional gas include coal bed methane, deep gas, tight gas, and methane hydrates. 2 Shale gas is generally dry gas and primarily composed of methane, though some shale beds also produce wet gas. Due to the low permeability of shale, the gas trapped in these deposits is unable to migrate within the rocks, except over millions of years. This feature distinguishes shale gas from conventional gas, which is contained in sands or carbonate reservoirs where it resides in interconnected spaces that allow permeable flow throughout the reservoir and also naturally to the well during the drilling process. By contrast, unconventional gas is produced from low permeability sources such as tight sands, coal, or shale. Due to this low permeability, the reservoirs must be artificially induced to produce additional permeability and stimulate the flow of gas to the well. Shale gas wells can be similar to conventional gas wells in their production rates, depth, and drilling. 3 Shale formations are found across much of the contiguous U.S. Shale gas is found in “plays,” or shale formations containing large quantities of natural gas with similar geological and geographic properties. 4 Two of the most active and important shale plays in the U.S. are the Barnett and Marcellus Shale. Other operational formations include the Haynesville, Permian, Antrim, Fayetteville, New Albany, Eagle Ford, and Bakken Shale areas. Each play has its own unique set of drilling challenges, such the depth of the formation and its location in relation to major cities or 2. EIA, “What is shale gas and why is it important” http://www.eia.gov/energy_in_brief/article/ about_shale_gas.cfm. Accessed June 6, 2014. 3. U.S. Department of Energy (2009) “Modern Shale Gas Development in the United States: A Primer,” Oklahoma, 14-15. 4. EIA, “What is shale gas and why is it important”
towns. The Barnett Shale in Texas led the way in the shale revolution, as many technological advances were discovered and tested during its development. 5 The Marcellus Shale is the most expansive play, encompassing six states in the north-eastern U.S., from Tennessee to New York. 6 The development of this play has seen significant strides in production, and according to the U.S. Energy Information Agency (EIA), production increased to approximately 12.5 bcm per month in April 2014, from 8.6 bcm per month in early 2013. Production increases have also been witnessed recently in the Bakken, Eagle Ford, and Permian Shale, while production decreased in the Haynesville Shale. 7 Horizontal drilling and hydraulic fracturing (commonly referred to as “fracking”) have made all of this shale gas extraction possible. Fracking involves pumping a high-pressure miture of water, sand, and chemicals to break apart the gas trapped in the shale formations. This process opens the cracks in the rock and stimulates the natural gas to flow from the cracks and into the well. Fracking, along with horizontal drilling, allows effective and economically efficient extraction of natural gas from shale THE FIRST PRODUCTIVE SHALE GAS WELLS WERE DRILLED IN NEW YORK IN 1821. formations. As the EIA has noted, without these technologies, gas would not flow freely into the wells, and commercially viable quantities of gas would not be recoverable from the shale. 8 Before the developments of these technologies, many shale reservoirs were deemed not economically viable. The first productive shale gas wells were drilled in New York in 1821. These shallow and simple wells provided small amounts of natural gas which were used mainly for lighting purposes. These early resources played a key role in bringing lighting to the homes and streets of the eastern U.S. The first field development of shale formations occurred in Ohio and Kentucky nearly one hundred years later. Hydraulic fracturing was first developed in the U.S. 9 CASPIAN REPORT, FALL 2014 5 U.S. Department of Energy, “Modern Shale Gas Development” 16-18. 6. Ibid, 21. 7. IEA, “Medium-Term Gas” 74. 8. EIA, “What is shale gas and why is it important”
Page 1: CASPIAN PUBLISHED BY CASPIAN STRATE
Page 4 and 5: Dear Readers, CASPIAN REPORT 2 It i
Page 6 and 7: CASPIAN CASPIAN REPORT 4 06 FATIH M
Page 8 and 9: FATIH MACIT, HOLLY REHM 6 THE U.S.
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Page 18 and 19: FATIH MACIT, HOLLY REHM 16 LNG’s
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Page 22 and 23: MANFRED HAFNER 20 THE SOUTHERN GAS
Page 24 and 25: MANFRED HAFNER 22 THE DOCUMENT RECO
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Page 30 and 31: MANFRED HAFNER 28 by the Shah Deniz
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Page 34 and 35: MANFRED HAFNER 32 THE ESTABLISHMENT
Page 36 and 37: MATTEO VERDA 34 LNG MARKET: TRENDS
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Page 44 and 45: MATTEO VERDA 42 of the global LNG m
Page 46 and 47: MUBARIZ HASANOV 44 AN OVERVIEW OF E
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NINO KALANDADZE 58 become comprise
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NINO KALANDADZE 60 This picture mak
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NINO KALANDADZE 62 Security policy.
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NINO KALANDADZE 64 There are benefi
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NINO KALANDADZE 66 tion of Crimea b
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RADU DUDAU 68 THE UKRAINE CRISIS: L
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RADU DUDAU 70 RUSSIA HAS FREQUENTLY
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RADU DUDAU 72 Russia, which depends
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RADU DUDAU 74 WHAT INTERNATIONAL LA
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RADU DUDAU 76 THE NEAR FUTURE WILL
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RADU DUDAU 78 THE UKRAINIAN GOVERNM
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RADU DUDAU 80 parliament decided to
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Black Sea Serpents’ Island. RADU
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RADU DUDAU 84 (where Russia holds v
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RADU DUDAU 86 IN TERMS OF ENERGY, A
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WHY RUSSIA SIGNED A MAJOR GAS CONTR
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MESUT HAKKI CASIN 90 I will focus o
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Russian President Vladimir Putin sh
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Figure II: Russian energy infrastru
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Kazakhstan President Nursultan Naza
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MESUT HAKKI CASIN 98 economic devel
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Figure IV: China’s gas import sou
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THANOS DOKOS, THEODORE TSAKIRIS 102
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ARZU YORKAN 114 TURKEY’S RENEWABL
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ARZU YORKAN 116 is 12 th in the wor
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Figure 4: Solar Energy Potential At
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ARZU YORKAN 120 Figure 8: The share
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ARZU YORKAN 122 THE STRATEGY PAPER
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ARZU YORKAN 124 TURKEY HAS NOT YET
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CASPIAN
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THE EU AGREEMENT ON THE 2030 FRAMEW
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EU Commission President Jean Claude
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ROMAN RUKOMEDA 132 THE PHANTOM OF R
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Russia’s gas giant Gazprom CEO, A
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CASPIAN CALL FOR PAPERS 136 Caspian
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Caspian Report - Issue: 08 - Fall 2014

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