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Shale gas economics

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Shale gas economics

  1. 1. 02/04/2013 US shale gas economics: giant with feet of clay?18/10/2012 E&C Market info slide 1
  2. 2. Conventional vs shale gas wells• Production – Between 350 and 400 million m3 with a conventional gas well – Between 50 and 100 million m3 with a shale gas well• Costs – The shale gas production costs are similar/higher Source: Dévelopement and production costs, International Energy Agency02/04/2013 Shale gas economics slide 2
  3. 3. The market price : US vs EU hubs02/04/2013 Shale gas economics slide 3
  4. 4. The production profile02/04/2013 Shale gas economics slide 4
  5. 5. Economics• Due to the profiles – Better pay back: even if more gas is produced with a conventional well, it seems to be less profitable due to the depreciation of money (Net Present Value formula) – The investment is covered after 2 years – For the same production of gas: a company can invest 3 times more money due to the faster pay back 02/04/2013 Shale gas economics slide 5
  6. 6. Any implications• It’s by far more interesting for companies to invest in shale gas production• BUT…• It means that more than 1000 new wells have to be dwelled to assure the sustainability of the production - The fast depletion of shale gas deposits has to be balanced - Companies have to coutinuously invest. It’s profitable, but some of them are redeploying their activities towards unconventional oil production (seems to be even more profitable)02/04/2013 Shale gas economics slide 6
  7. 7. Any implications• What would happen for the country is companies stopped drilling? …  risks02/04/2013 Shale gas economics slide 7

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