The Future of Unconventional Gas Resources in Europe: Potential and Implications for Energy Security

Master's Thesis 2010 84 Pages

Energy Sciences


Table of Contents


List of Abbreviations

List of Figures

List of Tables

1. Technological Backgrounds
1.1. Basics on Natural Gas
1.2. Conventional Gas
1.3. Unconventional Gas
1.3.1. Coalbed Methane
1.3.2. Tight Gas
1.3.3. Shale Gas
1.3.4. Gas Hydrates
1.4. Advanced Technologies

2. Unconventional Gas Resources
2.1. Reserves, Resources and Depletion
2.2. The Natural Gas Resource Triangle
2.3. Global Distribution of Unconventional Gas Resources

3. The Global Natural Gas Market
3.1. Global Natural Gas Production and Supply
3.2. Global Natural Gas Demand

4. Prospects for Europe
4.1. The European Natural Gas Market Until Today
4.2. Outlook on the European Natural Gas Market
4.3. Exploration Activities in Europe
4.4. Roadmap for the Unconventional Gas Development in Europe
4.5. Economic Impacts
4.6. Environmental Challenges

5. Implications for Energy Security
5.1. The Security of Natural Gas Supplies to Europe
5.2. Unconventional Gas as a Lever for Europe’s Energy Security

6. Conclusions



The European natural gas market is characterized by declining indigenous production rates of conventional gas in combination with growing consumption rates across all sectors, which both result in concerns about the future dependence on natural gas imports. The production of unconventional gas has revolutionized the natural gas market in the USA because significant contributions to the indigenous supply of natural gas have been achieved and thus, lowered their import dependence. This thesis results from the need to determine the potential of unconventional gas resources in Europe under consideration of opportunities, in terms of economic impacts and benefits to the energy security, as well as challenges that arise from technological and environmental aspects. For this purpose, a roadmap for the future unconventional gas industry in Europe is developed, which prospects different stages of an anticipated development path.

An assessment of the global distribution of unconventional gas resources is presented on the basis of introducing the natural gas resource triangle concept. Following a quantification of the entire unconventional gas resource base, the importance of natural gas from a global perspective, and subsequently from a European perspective, is analyzed. This comprehensive approach provides the overall picture of the European natural gas market until 2015 and 2030, respectively. Hereby, forecasts of the unconventional gas production rates in Europe are essentially included.

The results indicate that the sole consideration of the unconventional gas resource base in Europe does not lead to significant changes in the future indigenous natural gas supply portfolio. But, local economies in Europe benefit from several economic impacts that are accompanied by an evolving unconventional gas industry in Europe. Furthermore, it is concluded that the global production of unconventional gas acts as a lever to maintain Europe’s dependence on foreign natural gas supplies.

List of Abbreviations

illustration not visible in this excerpt

List of Figures

Figure 1: Hydrocarbon Trap

Figure 2: Conventional vs. Unconventional Gas Production

Figure 3: Natural Gas Reserves and Consumption (1980 - 2008)

Figure 4: Natural Gas Reserve-to-Consumption Ratios (1980 - 2008)

Figure 5: Natural Gas Resource Triangle

Figure 6: Conventional vs. Unconventional Gas Resources

Figure 7: Global Primary Energy Demand Scenario

Figure 8: Proven Conventional Gas Reserves (tcm)

Figure 9: Major Importers and Exporters of Natural Gas in 2015

Figure 10: Primary Energy Consumption

Figure 11: Indicators for the Natural Gas Market of the European Union

Figure 12: Natural Gas Production and Import in the European Union

Figure 13: Natural Gas Supply Gap in the European Union until 2030

Figure 14: Natural Gas Demand by Sector until 2030

Figure 15: Indigenous Production, Imports and Unconventional Gas

Figure 16: Unconventional Gas Exploration Activities in Europe

Figure 17: Unconventional Gas Roadmap for Europe

Figure 18: Unconventional Gas as a Lever for Europe’s Energy Security

List of Tables

Table 1: Global Distribution of Unconventional Gas Resources (tcm)

Table 2: Global natural gas production (bcm)

Table 3: Global natural gas demand (bcm)

1. Technological Backgrounds

1.1. Basics on Natural Gas

Natural gas is a nonrenewable fossil fuel that is stored in subsurface reservoirs. The color- and odorless gas is a mixture of hydrocarbons and non-hydrocarbons. The essential part of natural gas is methane (CH4) with a share of 85 - 95%. The chemical structure of the other parts varies so that ethane (C2H6), propane (C3H8) and butane (C4H10) occur along with nitrogen, hydrogen, sulphide and carbon dioxide.[1]

Most naturally occurring deposits of this primary energy source with a significant reservoir size are located in sedimentary basins and produced by the decay and alteration of organic matter millions of years ago. Thus, natural gas contains of the energy of the sun that was stored in plants and animals and then transformed into hydrocarbons over a long period.

The process of natural gas formation began after the residues of marine animals and plants sank to the bottom of lakes, inland seas, lagoons or oceans. The residues built layers of sapropel which were then covered by sandy-argillaceous particles called sediments. These sediments embedded and compressed the sapropel whereby a fast decomposition, caused by oxygen that is dissolved in water, has been avoided. Under the influence of anaerobic microorganisms that work without the influence of oxygen, the organic matter is transformed into kerogen. A high concentration of kerogen describes a formation known as source rock that produced oil and natural gas under high temperatures.

The sediment layers, including the kerogen layers, sank continuously to porous rock formations in great depths until the mechanism of subsidence was interfered by impermeable layers. Predominant high temperatures and high pressures convert the kerogen into hydrocarbons. The conversion process into oil requires ideal temperatures between 50 - 120°C. Higher temperatures result in the conversion to natural gas. The conversion process ends at ~200°C.[2]

Natural gas migrates from the source rock, where it is produced, to the reservoir rock. This process is called first migration and is initially caused by a predominant overpressure. The pressure situation is caused by fluid expansion on temperature increase, compression of source rock formations, occurrence of water and production of oil and natural gas.[3]

The direction of the primary migration path depends on the geological characteristics of the subsurface and especially on the alternation of different rock layers. Natural gas itself tends to migrate in the direction of least resistance or highest permeability. The migration process within the reservoir rock is known as secondary migration.

The secondary migration continues within the reservoir rock. Natural gas moves upwards into the direction of an impermeable barrier, which avoids diffusions into adjacent rock formations. Further movements follow along the impermeable barrier until the natural gas is trapped in an arched or domed area. Natural gas usually accumulates in the highest point of the reservoir rock, which is sealed by an impermeable cap rock. The higher the porosity of the reservoir rock the more gas can be trapped.[4] Figure 1 shows the general requirements for the formation of hydrogen traps. The requirements include the following elements within the subsurface area: (1) the existence of a source rock, (2) the migration of hydrocarbons towards and within the reservoir rock, (3) the impermeable barrier that functions as a seal, and (4) the establishment of a trap that allows the accumulation of hydrocarbons.

illustration not visible in this excerpt

Figure 1: Hydrocarbon Trap[5]

The type of a hydrocarbon trap varies according the geological and structural formation of the rock layers. Figure 1 further describes an ideal cross-section of a hydrocarbon trap. This formation of an arched hydrocarbon trap is the most common formation.[6] The hydrocarbons are capsulated in a porous and permeable sandstone reservoir, which is sealed by an impermeable barrier made of shale. After the migration processes of the hydrocarbons into the trap, the oil and gas accumulations stratify and build up layers according to their relative densities.[7] As a result, natural gas is located at the highest level of the reservoir, whereas oil resides underneath, and water on the lowest level.

1.2. Conventional Gas

Natural gas accumulations in conventional reservoirs are categorized in two groups: (1) Non-associated gas is produced from reservoirs that contain unremarkable amounts of other hydrocarbon liquids like crude oil. (2)Associated gas occurs in combination with other hydrocarbon liquids and is produced as a byproduct from oil wells.[8] In conventional reservoirs, natural gas is located in sandstone and carbonate formations, which are characterized by interconnected pores that result in high permeability rates. Hereby, an oil- or gas-water contact describes the bottom of the reservoir. The exploitable reservoir size depends on the geologic configuration of the hydrocarbon trap, the sealing capacity, and the efficiency of the migration processes. Furthermore, the actual quality of the natural gas accumulation is a determining factor to the reservoir characteristics.[9]

The production of natural gas from conventional reservoirs is processed by a wellbore drilled through the subsurface rock formations and directly into the hydrocarbon trap. In general, the conventional reservoir rock is a porous sandstone characterized by medium to high permeability. The predominant pressure within the hydrocarbon trap of the conventional reservoir together with the geological formation of the sandstone allows the natural gas to move in the direction of the production wellbore. Hereby, significant volumes of natural gas can be extracted by continuously lowering the pressure of the conventional reservoir.

The production rates remain constant as long as a sufficient reservoir pressure is predominant. The occurrence of formation water within the reservoir maintains the pressure during the drilling process and improves the recovery rate. Conventional gas can be produced with the use of drilling technologies that represent the industry standard.[10] These technologies allow commercial production rates.

1.3. Unconventional Gas

Natural gas accumulations in unconventional gas reservoirs require advanced drilling technologies and additional stimulation treatments to be explored and produced at commercial flow rates.[11] Generally, these gas accumulations are located in heterogeneous and complex subsurface rock formations that require detailed geological analyses. A typical unconventional gas reservoir cannot be described because the predominant conditions and local fracture structures vary. Therefore, the production rates are highly variable and regional trends cannot be determined.[12] Unconventional gas occurs in several different reservoir types, but unlike discrete conventional reservoirs, these continuous reservoirs have generally lower permeability rates and produce lower volumes of natural gas. Categorized by the source reservoir, unconventional gas includes coalbed methane, tight gas, shale gas and gas hydrates.[13]

At first, the following chapters provide a comprehensive description of the geological characteristics of the different unconventional gas types. Subsequent to this, Chapter 1.4 describes horizontal drilling and hydraulic fracturing as key technologies to successfully produce natural gas from unconventional reservoirs.

1.3.1. Coalbed Methane

For decades, coalbed methane has been considered as a mining hazard and has been recovered in the course of deep coal mining operations to lower the risk of accidental explosions or asphyxiation. Geologists have usually searched for deep coal formations as source rocks for the purpose of determining overlying conventional gas reservoirs. Nowadays, research activities and evolving technologies enable the targeted production of natural gas from coalbeds. Coalbed methane differs from conventional gas because the coal performs simultaneously as source rock and reservoir rock. The development of coalbed methane starts with the coalification process. Organic matter is converted to coal under the influence of high temperatures and pressures, whereby significant amounts of natural gas are generated as a byproduct and stored within the coal’s molecular structure or absorbed onto the coal surface.[14] Coal generally produces more natural gas than it is capable to store or absorb. Despite migration processes that allow the natural gas to move into adjacent rock formations with higher permeability rates above or below a coal layer, large amounts of natural gas remain trapped in the coal fractures or on the coal surface. The storage capacity of coal is immense due to the large internal surface area: The average ratio between the storage capacities of coal formations compared to conventional gas reservoirs is 7:1.[15] This ratio implicates that significant volumes of natural gas m producible from coalbeds.

Coalbed methane is produced with similar drilling techniques as used for conventional gas. The production process is induced by lowering the subsurface reservoir pressure. Hereby, formation water that is trapped in or on the coal fractures needs to be removed. At the beginning of the process, low production rates of natural gas are accompanied by high production rates of formation water. The process continues with decreasing water production rates and a period of stabilized natural gas production rates. Finally, the production rates decline continuously until the process of dewatering leads to an insufficient reservoir pressure that inhibits further gas flows.[16]

1.3.2. Tight Gas

Tight gas reservoirs are defined as natural gas accumulations in geologic formations with low permeability rates. Most of these accumulations are trapped in (tight) sandstones, impermeable and non-porous rock formations or limestone formations.[17] Production of natural gas trapped in tight subsurface reservoirs is difficult because of the limited ability of the natural gas to pass through the rock formations. The exclusive consideration of permeability rates provides a common used definition of tight gas reservoirs. But, to precisely assess these unconventional reservoirs and to determine the potential production performance, more parameters need to be considered. These parameters include the subsurface pressure situation, the sedimentary environment, the porosity of the rock formations, and the required production technology. Hereby, the well productivity is directly influenced by these parameters.[18] The characteristic fine grained rock formations represent a porosity of merely 7 - 12% and the natural gas saturation is 40% lower compared to conventional reservoirs.[19] Each tight gas reservoir is characterized by different parameter values so that the distribution, the orientation, and the natural gas density varies. Therefore, a typical definition of tight gas reservoirs cannot be determined.[20]

At the beginning of the tight gas production, the production rate shows a short peak which declines rapidly depending on the effectiveness of the applied production technology. Subsequently, the production rate shows continuing low volumes.

1.3.3. Shale Gas

Traditionally, shale layers are considered as source rocks and impermeable barriers that seal natural gas accumulations in conventional porous rock formations (see Figure 1). Today, shale formations incorporate two different functions. As organic-rich formations, shales function as a source rock for natural gas and simultaneously as a reservoir rock. Hereby, natural gas is encapsulated within the pore spaces, between thin fracture layers within the shale or absorbed onto minerals within the shale.[21] Low permeability rates that tend to impermeability prevent migration processes of the natural gas within the shale. Shale formations tend to be non-homogeneous and show alternating layers in vertical and horizontal directions. This diversity determines the dimension and orientation of the reservoir.

All productive shale gas reservoirs show one crucial similarity: These unconventional reservoirs are huge and contain abundant volumes of natural gas. In contrast, these reservoirs are located in different sedimentary basins that have individual geologic structures in which natural gas originates from thermal conversion processes as well as from organic transformation processes.[22] Therefore, each shale gas reservoir is unique and requires individualized exploration and production technologies. In addition, the appearance of formation water during shale gas productions cannot be ascribed to specific geological characteristics.

1.3.4. Gas Hydrates

Gas Hydrates are primarily known as disruptive side effects in the areas of fossil fuel production or processing. On the one hand, gas hydrates, which are located at the ocean floor, can interrupt deep water drilling operations during the production of crude oil. On the other hand, fossil fuel processing is also affected because pipeline walls are prone to blockage from hydrogen deposits, which show the same characteristics as gas hydrates.

As an unconventional gas resource, gas hydrates are natural gas accumulations, usually methane, trapped within frozen ice-like reservoirs. Each natural gas hydrate molecule consists of an ice lattice that functions as a cage of water molecules, which incorporates guest gas molecules. Gas hydrates are formed by migration processes of natural gas molecules along geologic faults in combination with precipitations and crystallization processes as gas molecules contact the ocean water.[23] A sufficient stability of these compounds depends on low temperatures and high pressures. Thus, gas hydrates generally occur in permafrost regions like the Arctic or in ocean sediments around the world.[24]

The production of gas hydrates can be accomplished by three different technological methods: (1) depressurization, (2) thermal stimulation, and (3) chemical inhibition.[25] The depressurization method enables the gas hydrates to dissociate by lowering the pressure. The dissociation of gas hydrates can also be accomplished by the injection of hot water or steam, which results in an energy intense process. Injecting substances like carbon dioxide refers to the chemical inhibition whereas the gas hydrates dissociate without changing the pressure or temperature.

At standard temperature and pressure, 1cm of gas hydrate dissociates approximately 170cm of natural gas.[26] Both, the proven worldwide distribution of gas hydrates and the natural gas concentration within gas hydrate reservoirs are indications for the abundance of this unconventional resource.

1.4. Advanced Technologies

The majority of unconventional gas resources, especially coalbed methane, tight gas and shale gas, cannot be produced unless advanced technologies are applied. Advanced technologies have been developed in the areas of exploration, drilling, reservoir engineering, well stimulation and production. All technologies that have been developed to access unconventional gas resources focus on a continuous reduction of the production costs while enhancing the production rates. A sustained progress in research and development is required to secure the future viability of unconventional gas resources and is induced by incentives that arise from the future growth in global natural gas demand.

Previously inaccessible, though abundant, natural gas reservoirs in low permeability rock formations are in the focus of unconventional gas producers. Before the production from unconventional gas reservoirs can be realized under commercial conditions, the subsurface reservoir must be identified and geologically studied. By localizing the most productive gas accumulations, the starting point of the production process is determined. The so-called sweet-spots represent areas within a reservoir where the permeability is highest and the flow of natural gas is least restricted. The predominant logging technologies, especially for tight gas and shale gas, include amplitude variation with offset besides standard seismic exploration methods, whereas nuclear magnetic resonance analysis tools provide more detailed estimates of the formation permeability.[27] Amplitude variation with offset is a geophysical method, which analyzes the thickness, porosity, density and other reservoir characteristics by alternating the seismic reflection amplitude. Independently from the type of the rock formation, nuclear magnetic resonance analysis determines the permeability and porosity of a reservoir as well as the containing volume of unconventional gas. Most of the logging technologies were developed to analyze conventional gas accumulations with high porosity and high permeability, but their sensitivities provide insufficient results when applied to unconventional reservoirs. Improved methods and tools are required to enhance the quality of unconventional reservoir analyses. Precise analyses on the formation permeability and the formation porosity are crucial and improve the development of unconventional gas reservoirs because in this case, the production technologies can be tailored to the specific requirements of an unconventional gas reservoir.

In general, vertical wells are drilled into subsurface natural gas reservoirs to access and exploit conventional gas accumulations. The production from unconventional reservoirs combines vertical and horizontal drilling processes as shown in Figure 1. At first, vertical wells are drilled to reach the surrounding subsurface areas of unconventional gas reservoirs, which are partly located in great depths. Afterwards, horizontal wells are drilled to improve the drainage area of unconventional gas reservoirs.[28]

One characteristic and challenge at the same time is the dimension of unconventional gas reservoirs. In general, these reservoirs expand widely in horizontal direction unlike their vertical expansion, which remains thin. Horizontal wells are drilled in parallel to the unconventional reservoir so that natural gas accumulations can be effectively produced.[29] Hereby, the contact area between the horizontal well and the respective rock formation is increased. Thereby, the surface area for unconventional gas to flow into the well is also increased.[30]

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Figure 2: Conventional vs. Unconventional Gas Production[31]

Most of the horizontal wells require additional treatments to achieve sufficient production rates because the natural gas accumulations are tapped within low permeability reservoirs.

Hydraulic fracturing is the key technology to complete horizontal wells and to allow the extraction of economic volumes of unconventional gas. By injecting a fracturing fluid under high pressure through the perforated well casing, fractures are generated within the geological structure of the reservoir. The fracturing fluid is a mixture of water and additives that carry the proppant (e.g. sand) and is directly injected into the thin layered unconventional gas reservoir. The reservoir rock is opened up and fractures are created within the rock formation, whereas the proppant prevents the fractures to close.[32] The proppant increases the permeability of the reservoir, and therefore, enables the natural gas to flow to the production well. The effectiveness of the fracturing process is measured by the generation of higher permeability rates and is determined by the amount of fracturing fluids, the level of the injection pressure, and the chemical composition of the fracturing fluids.[33] These parameters have to be designed individually according to the characteristics of an unconventional gas reservoir.

After the execution of horizontal drilling and the completion with hydraulic fracturing, natural gas is produced together with water as a byproduct. The occurrence of water results from previously injected high volumes of fracturing fluids and the existence of formation water within the subsurface reservoirs. However, the water is contaminated with the fracturing chemicals and needs to be discharged, recycled or re-injected.[34]

Natural gas producers take advantage of the application of the above described advanced technologies to maximize the reservoir exploitation. Furthermore, the usage of multi-well drilling pads allows the consolidation of wells because the overall number of wells can be reduced. Hereby, several horizontal wells originate in one vertical well. Parallel to this, the required infrastructure to access and operate a well is optimized because less equipment is required on the above-ground production site. Thus, multi-well drilling pads incorporate positive impacts on the economic efficiency of the unconventional gas production.[35]

2. Unconventional Gas Resources

2.1. Reserves, Resources and Depletion

The starting point for quantifying the total amount of natural gas that is stored in subsurface reservoirs, regardless of the reservoir’s production performance and the difference between conventional and unconventional gas, is the distinction between reserves and resources. Reserves are those amounts of natural gas that are identified and commercially extractable at the time of determination. Natural gas resources comprise all reserves plus natural gas accumulations that are either currently or in the future commercially extractable, provided that market prices increase and technology advances.[36]

The natural gas resource base is determined by two dimensions: (1)consumption and (2)market price.[37] Today, natural gas is a crucial entity to the world energy market and remains a major primary energy source. Fossil fuels make up 80% of the global primary energy mix in 2030 and further on dominate energy markets whereas the natural gas share amounts to ~22%.[38] Natural gas is a non-renewable finite resource. It took several thousand years to naturally form the resource, but worldwide consumption rates predict the depletion within a human time scale because its regeneration or replacement with an alternative energy source is not viable. Despite research and development activities into alternative energy sources, the global economy remains dependent on fossil fuels, and in the same way, on natural gas.

Figure 3 illustrates the trajectories of natural gas reserves and natural gas consumption between 1980 and 2008. Both curves start at a low level, show an increased trend over the past three decades, and have a positive correlation. Both curve progressions result from improved information about the distribution of natural gas resources and, in particular, from technological improvements.

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Figure 3: Natural Gas Reserves and Consumption (1980 - 2008)[39]

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Figure 4: Natural Gas Reserve-to-Consumption Ratios (1980 - 2008)[40]

The natural gas resource base has expanded under the influence of fast growing economies, continuously increasing energy consumption rates, and constantly improving exploration and production technologies. The reserve-to-consumption ratios between 1980 and 2008 are shown in Figure 4 and average 63years. Each of the annual reserve-to-consumption ratios represents a static indicator to determine the time of depletion of natural gas. The given reserve-to-consumption ratios indicate that improvements in exploration technology as well as in production technology were able to cope with growing consumption rates in the past decades. In the opposite sense, this means that the natural gas resource base did not decline in the past decades, but rather increased.

The size of the natural gas resource base is also influenced by the market prices and the expectations of their future development. A crucial component of the market price is the demonstration of the finite character of natural gas and the point in time of the imminent depletion. In addition, alternating market prices provoke changes in the allocation of reserves and resources. On the one hand, increasing market prices enable the production from existing, but previously marginal or uneconomic reservoirs. On the other hand, increasing market prices also push research and development activities, which contribute to technological solutions that enhance the performance of exploration and production activities. Thus, new natural gas reservoirs are determined, become accessible and are produced under commercial conditions. Furthermore, operators of existing production wells benefit from cost reductions as technologies evolve and production economies of scale can be achieved. Changes in the allocation of natural gas reserves and resources result in a reclassification process of the entire resource base. Hereby, the reclassification process transforms resources into producible reserves, while the accessible resource base continuously grows. But, the availability of an increased resource base levels the finite character of natural gas off, and in an equal measure, the influence of the imminent depletion on the market price. Thus, the growth of the resource base is constrained by declining price expectations. As a result of lower market prices, expensive exploration and production activities as well as technological advancements are constrained.

At first, and for a short time, the net effect represents an increase in exploration and production activities. As a consequence of this, price expectations are affected and adjusted downwards. Followed by a reduction in explorations activities, the resource base stagnates. These periodic stagnations are shown in Figure 4 as segments of the reserve-to-consumption ratio curve where the curve progression proceeds horizontally. In turn, periodical estimations of the natural gas resource base positively influence future price expectations and the cycle starts over.[41] On a regular basis, these estimations are processed by government bureaus, industrial societies or independent communities. These estimations show remarkable consistency and thus, represent a precise market price determinant.[42]

The above described cycle provides a recurring short-term analysis of the natural gas resource base, which is influenced by market prices and price expectations. Ultimately, this approach does not represent the correct classification and allocation of the entire natural gas resource base because periodical adjustments interfere. However, a continuous emergence of new natural gas reserves and resources, a more intense production from existing reservoirs, and advancements in production technologies have affected an increased trend.[43] Despite the balanced ratio between reserves and consumption within the past decades, the true size of the natural gas resource base is never exactly known and varies in the course of time. However, continuing reviews of the size and distribution of the resource base are required to maintain uncertainties of the future depletion of natural gas.

The following chapter provides a concept to analyze the resource base according to the definitions of conventional and unconventional gas resources.

2.2. The Natural Gas Resource Triangle

The analysis of the natural gas resource base in the context of reserves and resources defines a fundamental distinction of both terms and is given in Chapter 2. These definitions are helpful for a classification of the natural gas resource base within a short-term perspective. But, long-term geological, technological or economic considerations that determine a dynamic perspective of the natural gas resource base are certainly ignored. As a result, the resource base reflects a static view and incorporates periodic stagnations.

The entire natural gas resource base expands under the influences of growing economies, continuously increasing energy consumption rates, and constantly improving exploration and production technologies. This chapter provides an extended analysis of the natural gas resource base by presenting the concept of the natural gas resource triangle, which allows the analysis and quantification of the entire natural gas resource base with regard to the distinction between conventional and unconventional gas resources. Therefore, coalbed methane, tight gas, shale gas and gas hydrates are put in the center of consideration.

The concept of the natural gas resource triangle incorporates a long-term dynamic perspective and suggests that the amount of recoverable volumes of natural gas varies in the course of time. Hereby, the traditional distinction between resources and reserves is replaced by a classification approach that is derived from the typical distribution of natural gas, while focusing on specific geological settings and technological requirements that determine the viability of natural gas production. With regard to changing market prices for natural gas and evolving technologies, a long-term dynamic perspective can be applied to the natural gas resource triangle. The concept is presented in Figure 5.

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Figure 5: Natural Gas Resource Triangle[44]

The triangular shape results from the consideration of the log-normal distribution of natural gas reservoirs in nature.[45] The size of each layer of the resource triangle allows a qualitative estimation of the respective resource size. The layers located at the top represent conventional gas resources, which are recognized as high quality natural gas accumulations in small volumes. By comparing all individual layers of the resource triangle, an increasing abundance of unconventional gas resources, especially in the lower layers, can be observed. In contrast to conventional gas resources, unconventional gas resources are characterized as natural gas accumulations of lower qualities.

The exploration and production costs correlate with the size of the layers and thus increase by proceeding towards to the bottom of the natural gas resource triangle. The predominant market prices for natural gas allow the commercial production of conventional gas resources. To produce unconventional gas resources, advanced technologies need to be applied. These technologies require higher market prices to allow commercial production rates.

On the assumption of a continuing development of advanced technologies and higher market prices for natural gas in the future, this concept implicates that the future resource availability is determined by abundant volumes of unconventional gas. Thus, unconventional gas resources are considered to make an essential contribution to the future supply of natural gas.[46]

The natural gas resource triangle incorporates a dynamic perspective, which results from the distinction between conventional and unconventional gas resources. The amount of natural gas, which can be commercially produced, is determined by the current market prices and the viability of available technologies. Thus, dividing lines can be individually defined to quantify the producible layers of the natural gas resource triangle with regard to the variation in time.[47] A global biunique definition of the dividing lines for the past, present or future composition of the producible natural gas resource base can not be accomplished, which results from the following reasons: On the one hand, the global natural gas market is divided into separate regions. North America, Europe and Asia-Pacific represent mostly independent markets, whereas the international trading and transportation volume merely accounts for 7% of the global demand.[48] Thus, individual market prices refer to the regional interaction between natural gas demand and supply so that a global market price is not available. On the other hand, the worldwide distribution of natural gas and the geological characteristics of the reservoirs vary in each region. These characteristics determine the required technologies that must be applied. Hereby, regional market prices directly influence the viability of the applicable technologies and thus, the ability to incorporate unconventional gas resources into the resource base.

At present, the commercial production of natural gas in Europe is limited to conventional gas reservoirs. In contrast, the production from unconventional gas reservoirs has a long tradition in the USA and represents a significant share in their indigenous natural gas supply. Between 1990 and 2008, the unconventional gas production in the USA increased by 400%.[49]

Unconventional gas resources have not yet been focused in other countries than the USA although their global distribution is widespread. On the one hand, assessments of the geological conditions outside the USA are scare. On the other hand, regional policies and market conditions primarily focus on conventional gas resources. In addition, the required technological expertise to ramp-up production from unconventional gas is concentrated in the USA, while failing to appear in other regions.[50] As a result, the production of unconventional gas resources has not been developed in Europe so far.

With regard to the dynamic approach of the resource triangle and recent assessments of the unconventional gas resource base, it is now recognized, that natural gas is an abundant and broadly distributed energy source. The following chapter provides a comprehensive overview of the distribution of unconventional gas resources and quantifies the natural gas resource triangle.

2.3. Global Distribution of Unconventional Gas Resources

Most assessments of the global natural gas resource base focus on conventional reservoirs that can be exploited with current technological knowledge and given market conditions, and therefore, represent an intermediate to short-term consideration. The main characteristic of natural gas resources, which is the log-normal distribution, is generally not included in these assessments. Therefore, the future depletion of natural gas is generally overestimated. Annual calculations of global reserve-to-consumption ratios throughout the past decades have predicted that natural gas is available for approximately six decades although the consumption of natural gas has constantly increased (see Figures 3 and 4). Thereby, distortions of the actual natural gas scarcity are implicated. In addition, an overestimated depletion of natural gas resources interferes with other long-term assessments and distorts the accuracy of their conclusions. For instance, future estimates on environmental impacts of greenhouse gas emissions may conclude that emissions are cut off in the course of natural gas depletion.

Despite the consideration of unconventional gas resources, which transform natural gas into an abundant energy source, the definition of natural gas as a finite resource still remains unaffected. Recently, the understanding of the natural gas resource base has increasingly changed. The unconventional gas resources gain more attention in the USA and already account as an integral part of the domestic natural gas supply. Furthermore, the natural gas resource base is considered to be an abundant primary energy source, due to production from unconventional resources that is gaining momentum and becoming more competitive in the course of time. Historical rates of technological advancements can be extrapolated and projected to the future accessibility of unconventional gas resources. As a result, the total amount of natural gas increases significantly.

The detailed analysis of the resource base with the concept of the natural gas resource triangle provides a dynamic perspective and improves the data quality of long-term projections. Based on this concept, detailed assessments of the distribution and size of the global unconventional gas resources can be accomplished. Mapping and quantifying the availability of regional natural gas resources is a basic requirement to precisely analyze future demand and supply scenarios.[51] In addition, realistic information on the future depletion directly impact current market prices as well as price expectations and therefore, indicate a more precise reflection of the natural gas scarcity.

From a global perspective, an expansion of natural gas demand is foreseeable. The global demand for natural gas is expected to increase from 2,916bcm in 2006 to 4,434bcm in 2030, and therefore expands by ~150%. In the future, the share of natural gas changes insignificantly and accounts for 22% of the total world primary energy demand.[52] The global economy continues to rely on fossil fuels and natural gas furthermore represents a major contributor in global primary energy supply. To cope with the projected growth in natural gas demand, economies permanently shift from one natural gas source to another, and therefore, increase the natural gas resource base. Figure 4 shows that these shifts occurred in the past decades and must continue in the future to align with annual demand growth rates of 1.80%.[53]

With a few exceptions, only minor attention is given to coalbed methane, tight gas or shale gas outside the USA.[54] Since their production from conventional gas reservoirs peaked in 1971, the development of unconventional gas resources has been emerged on the basis of commercial incentives, technological advancements, and an increased knowledge of those resources.[55] Extensive research, development and production activities in the USA within the past decades have led to a broad experience and an improved understanding about their unconventional gas resource base: Over 100,000 wells were drilled and ~4tcm of unconventional gas reserves are already developed.[56] These developments have result in iterative processes of gaining more insights into the actual unconventional gas resource base, as well as to the discovery of new unconventional gas resources. Consequently, the technological expertise in the characterization of geologically complex reservoirs, and thus, the ability to precisely estimate the indigenous unconventional gas resource base, is concentrated in the USA. In other regions, these resources have not yet been developed or only to a limited degree. Therefore, the global unconventional gas resource base is essentially understudied.


[1] Cf. Chambers (1999), p. 56.

[2] Cf. Babusiaux (2007), p. 57.

[3] Cf. Allen/Allen (1990), p. 346.

[4] Cf. Babusiaux (2007), p. 59.

[5] Cf. Tiab/Donaldson, p. 44.

[6] Cf. Speight (2008), p. 29.

[7] Cf. Lyons/Plisga (2005), p. 2-73.

[8] Cf. Deutch/Lester (2004), p. 167.

[9] Cf. Lerche/Noeth (2004), p. 10.

[10] Cf. Horn/Engerer (2010), p. 10.

[11] Cf. Holditch (2003), pp. 34.

[12] Cf. Attanasi/Coburn (2009), p. 154.

[13] Cf. Ghosh/Prelas (2009), p. 293.

[14] Cf. Kidnay/Parrish (2006), p. 10.

[15] Cf. Ghosh/Prelas (2009), p. 303.

[16] Cf. Speight (2008), pp. 33.

[17] Cf. IEA (2008a), p. 227.

[18] Cf. Lerche/Noeth (2004), pp. 11.

[19] Cf. Rojey (1997), p. 360.

[20] Cf. Holditch (2006), p. 84.

[21] Cf. Geology.com (2010).

[22] Cf. Schulz/Horsfield (2009), p. 50.

[23] Cf. Speight (2008), pp. 34.

[24] Cf. Kvenvolden (1998), p. 9.

[25] Cf. Demirbas (2010), p. 114.

[26] Cf. MHAC (2002), p. 3.

[27] Cf. Holditch/Chianelli (2008), p. 321.

[28] Cf. Joshi (1991), pp. 329.

[29] Cf. Horn/Engerer (2010), p. 10.

[30] Cf. Andrews et al. (2009), p. 20.

[31] Cf. DTE Energy (2010).

[32] Cf. Schlager (2004), pp. 22.

[33] Cf. Chermak/Patrick (1995), pp. 113-135.

[34] Cf. GWPC (2009), pp. 67.

[35] Cf. GWPC (2009), pp. 11, 48.

[36] Cf. DOI (1980).

[37] Cf. Shafiee/Topal (2008), pp.181.

[38] Cf. IEA (2008b), p. 78.

[39] Data collected from BP (2009).

[40] Data collected from BP (2009).

[41] Cf. Rogner (1997), pp. 221.

[42] Cf. Rogner (1989), p. 48.

[43] Cf. Kuuskraa (2007b), pp. 64.

[44] Cf. Masters (1979); Cf. Russell/Stevens/Godec (2001), p. 364.

[45] Cf. Holditch (2006), p. 85.

[46] Cf. Russell/Stevens/Godec (2001), p. 363.

[47] Cf. IEA (2008a), p. 227.

[48] Cf. IEA (2008b), p. 119.

[49] Cf. Horn/Engerer (2010), pp. 11.

[50] Cf. Perry/Lee (2007), p. 2.

[51] Cf. Rogner (1997), p. 250.

[52] Cf. IEA (2008b), p. 110.

[53] Cf. IEA (2008b), p. 110.

[54] Cf. Mankin (1983), p. 42.

[55] Cf. Youngquist/Duncan (2003), pp. 232.

[56] Cf. Kuuskraa (2007b), pp. 64.


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University of Münster – University of Muenster & RWTH Aachen University
Unconventional Gas Natural Gas Energy Security Conventional Gas Coalbed Methane Tight Gas Shale Gas Gas Hydrates Hydraulic Fracturing Horizintal Drilling Natural Gas Resource Triangle Europe European Natural Gas Market Russia Exploration Roadmap Reserves Resources Depletion




Title: The Future of Unconventional Gas Resources in Europe: Potential and Implications for Energy Security