Pakistan's vast Shale Oil & Gas Reserves | Updates & Discussions

[ejaz007]

Pakistan's best interest is not in defying Saudis and Americans to buy expensive Iranian gas and end up with crippling sanctions which could be much worse than its current energy crisis.

Its best interests will be served by developing its own cheap domestic shale oil and gas on an accelerated schedule with Saudi investment and US tech know-how.

If the Americans and the Saudis refuse to help, then Pakistan will have a stronger case to go with the Iran gas option.

Haq's Musings: Pakistan's Shale Gas With US & KSA Help?

Discovering and producing shale oil and gas is not cheap compared to conventional oil and gas.

Also somewhat relevant to the topic remember the recently much talked about tight gas production that is going to commence for the first time in Pakistan. Pakistan has just recently announced tight gas policy and much talked about first tight gas production shall be commencing this June. It's selling price is much higher than conventional gas selling price.

 

[RiazHaq]

Discovering and producing shale oil and gas is not cheap compared to conventional oil and gas.

Also somewhat relevant to the topic remember the recently much talked about tight gas production that is going to commence for the first time in Pakistan. Pakistan has just recently announced tight gas policy and much talked about first tight gas production shall be commencing this June. It's selling price is much higher than conventional gas selling price.

The price agreed for domestic shale gas in the policy is less than half of the price Pak has agreed to pay for Iran gas. And Iran gas price is linked to oil price and it could rise substantially with oil prices in future.

Haq's Musings: Pakistan's Energy Security Via Shale Gas Revolution

 

[amanwas]

WE need sincere leader who really want to utilize all these resources available under our mother land Pakistan.

 

[ejaz007]

The price agreed for domestic shale gas in the policy is less than half of the price Pak has agreed to pay for Iran gas. And Iran gas price is linked to oil price and it could rise substantially with oil prices in future.

Haq's Musings: Pakistan's Energy Security Via Shale Gas Revolution

I am not aware Pakistan has a shale gas policy. Can you please share a link.

The price agreed for the IP gas pipeline is derived from an agreed formula. The people negotiating the contract from Pakistan's side should be asked why they agreed to this formula when alternate option was available i.e. TAP pipeline

 

[tarrar]

What we don't know is there are oil reserves in Karachi sea shores, some experts say it is the biggest in the world. So the internationals lobbies are not only stopping Reqo Diq, Kala Bagh Dam, Bhasha Dam, Thar Coal project, etc. they are also stopping Pakistan to use these sea oil reserves.

The enemies of Pakistan have their eyes set on Pakistan's Mineral & natural resources.

 

[RiazHaq]

Haq's Musings: Pakistan's Energy Security Via Shale Gas Revolution

US natural gas prices have fallen below $2 per million BTU (approx 1000 cubic feet), about one-sixth of the price Pakistan has agreed to pay for Iranian gas. With over 100 trillion cubic feet of known shale gas reserves (revised upwards by US EIA in 2013) in Sindh alone, Pakistanis can also enjoy the benefits of cheap and abundant source of energy for decades via the shale gas revolution already sweeping America.

Increased production of gas from shale rock in the US has created a huge new supply, pushing down gas prices from $13/BTU (million British thermal units) four years ago to just $2/BTU today, even as the price of oil has more than doubled. By contrast, the Iran pipeline gas formula links the gas price to oil prices. It means that Pakistan will have to pay $12.30/BTU at oil price of $100/barrel, and a whopping $20/BTU for gas if oil returns to its 2008 peak of $150/barrel.

To encourage investment in developing domestic shale gas, Pakistan has approved a new exploration policy with improved incentives as compared with its 2009 policy, a petroleum ministry official said recently. Pakistan Petroleum is now inviting fresh bids to auction licenses to explore and develop several blocks in Dera Ismail Khan (KPK), Badin (Sind), Naushero Firoz (Sind) and Jungshahi (Sind), according to Oil Voice.


In addition to the fact that the Iran gas is extremely expensive, the entire Iran-Pakistan gas pipeline project raises other serious issues as well.

Iran-Pakistan Pipeline Issues:

1. Chinese investors and contractors have pulled out of the project for fear of being hit by US sanctions on their banks and other companies.

2. Russia's Gazrom is reportedly interested but only if it gets the deal at whatever price it decides to charge without any competitive bidding.

3. Pakistani companies and financial institutions are also under threat of US sanctions if they participate in the project.

4. If the pipeline does eventually get built, it will still be several years before gas starts to flow to Pakistan.

5. If Iran is still under US sanctions when the Iranian gas imports finally begin, Pakistan will have difficulty paying for the gas using international banking system. Iran has already been suspended by SWIFT, the Society for Worldwide Interbank Financial Telecommunication, which is the main mechanism used for international bank transactions.

6. The largest chunk of Pakistan's trade deficit is accounted for by energy imports. Iranian gas bill will only worsen this deficit, contributing to yet another balance of payments crisis sending Pakistan back to IMF.



Advantages of Domestic Shale Gas Development:

1. Cheap domestic gas can start flowing from Pakistani shale in a couple of years if Pakistan can make a deal with US (and American pioneers of shale gas like George Mitchel's Devon Energy) to invest and execute on an accelerated schedule in exchange for dropping Iran pipeline.

2. Pakistan will dramatically reduce its dependence on foreign sources and save a lot of foreign exchange spent on hydrocarbon imports.

3. Gas burns a lot cleaner than coal which is also a option given vast amounts of it in Thar desert. World Bank and other International financial institutions are more amenable to financing shale gas development than coal.

4. Abundant and cheap domestic gas supplies can help reduce electricity load-shedding which is caused mainly by under-utilization of installed generating capacity for lack of affordable fuel.

Shale gas revolution began a few years ago when an American named George P. Mitchell defied the skeptics and fought his opponents to extract natural gas from shale rock. The method he and his team used to release the trapped gas, called fracking, has paid off dramatically. In 2000, shale gas represented just 1 percent of American natural gas supplies. Today, it is over 30 percent and rising.



Among the potential downsides of shale gas development is the possibility of groundwater contamination reported in some places in the United States. Such risks can be minimized by following accepted practices to protect the aquifers which are found at levels well above the deep shale rock fractured for extracting natural gas.

Cheap and abundant energy is a pre-requisite for rapid economic growth in any country. Pakistan is no exception. The sooner Pakistanis recognize and resolve this crisis, the better it will be for the south Asian nation.

Haq's Musings: Pakistan's Energy Security Via Shale Gas Revolution

 

[RiazHaq]

Here's a summary of a market research report on developing oil and gas resources in Asia Pacific, including Pakistan:

The new Asia Pacific shale gas report from OGANALYSIS noted that soaring demand, rapidly escalating LNG prices are forcing countries to look for possibility of shale gas production. In particular, China and India are witnessing rapid rise in demand and accordingly are planning to realize shale production earlier than planned. Australia is also planning to exploit its shale reserves to supply feed gas for its planned liquefaction terminals.

Success of the US shale and ongoing activities in Europe are encouraging Asian players to develop policy and frameworks for shale gas development. While China is allowing foreign companies to participate in shale exploration, India is planning to launch first bids in 2013. Over 10 companies are actively perusing shale operations in Australia and Pakistan and Bangladesh are in plans of identifying their reserve potential.

The report analyzes the current status, potential and feasibility of shale development, ongoing activities, government stance and companies operating in each of the key Asian shale markets including Australia, china, India, Pakistan and Bangladesh. The research work also identifies the top trends of Asia Pacific shale market. Key drivers and challenges faced by countries along with feasibility of first commercial production are also discussed in detail. Further, the Asia Pacific shale gas report from OGANALYSIS discusses physical characteristics of major basins in each country along with their reservoir properties and resource characteristics. Further, shale formations and key plays in each basin are discussed in detail. Basin wise company information along with the current status of activities in permits awarded is analyzed. In addition, company wise shale activities are provided for leading ten companies.

Read more here: Asia Pacific Shale Gas Market Prospects to 2025- Demand Growth and Escalating Gas Import Costs Force Asian Countries Drive Shale Investments - PR Newswire - The Sacramento Bee

 

[RiazHaq]

Here's an OilPrice editorial on oil and gas potential in FATA:

Pakistan’s Tribal Areas (FATA) and Frontier Regions (FR) are believed to have massive reserves of oil and natural gas—which Pakistani officials have suddenly become very keen to demonstrate. But this is a highly restive, war-torn area where one right move could make all the difference, and one wrong move could ignite a conflict with irreversible consequences.

For now, the area remains unexplored and it was only in 2008 when Pakistani geologists began to study the area in earnest, with the support of the local authorities in the Federally Administered Tribal Areas (Fata) and the Frontier Region (FR). The results of this research were collected, processed and digitized in June 2012. The geologists discovered seven new oil and gas seepages during the mapping. The geologists also claim that 11 oil and gas exploration companies have already reserved 16 blocks in Fata.

The potential:

• Pakistani geologists say Fata in particular is poised to become a “new oil state” whose production could rival Dubai’s in only five years
• The FR is bursting at the seams with gas, so they say

Here’s what the interest looks like so far:

• 17 companies have initiated operations in Fata/FR (in Khyber, Orakzai, North and South Waziristan, Peshawar, Kohat, Bannu, Tank and DI Khan)
• Tullow has been active in Pakistan since 1991,…

Tapping into Pakistan's Massive Oil and Gas Reserves

 

[RiazHaq]

There are some who argue that shale oil and gas extraction requires a lot of water.

The fact is that shale gas extraction uses a lot less water than other forms of energy production and the water can be reused in producing more gas.

Here's a comparison:

One MMBtu, or 1 million British thermal units, a standard measurement for the energy content of fuels, was produced from these energy sources using the following amounts of water:

Deep shale natural gas 0.60-5.80 gallons

Nuclear (uranium ready to use in a power plant) 8-14 gallons

Conventional oil 8-20 gallons

Synfuel-coal gasification 11-26 gallons

Coal (ready to use in a power plant) 13-32 gallons

Oil shale 22-56 gallons

Tar sands/oil sands 27-68 gallons

Fuel ethanol from corn 2,510-29,100 gallons

Biodiesel from soy 14,000-75,000 gallons

Deep shale gas drilling uses least amount of water

 

[Windjammer]

Pakistan’s latent wealth

Sometimes good news, like lightning, strikes unexpectedly. The US Energy Information Administration (EIA), an agency of the US Government, has released a report which ranks Pakistan as the country with the ninth largest shale oil reserves in the world. Other countries listed in the top 10 by the report, which bears the weighty title ‘Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States’ include Russia, Venezuela, Mexico, Indonesia and the United States. The report estimates Pakistan’s technically recoverable shale oil reserves at 9 billion barrels. Compare this to our current proved oil reserves of approximately 300 million barrels and the extent of the good news — a 30 fold increase in reserves — becomes clear.

But it may be a little too early to celebrate. Shale oil, as the term suggests, is oil trapped in a shale formation. Shale is a type of sedimentary rock composed of a mix of clays with small quantities of other minerals such as quartz and calcite. Geologists have always known that shales contain oil and gas. But the problem is that recovering these is not easy. This is because shale has what is called in oil industry jargon — low permeability. Simply put this means that even if you drill a well into a shale formation, oil will not flow into the well because it is tightly locked into the shale. Over the last 4 or 5 years however, new technologies have been perfected which allow cost efficient recovery of this formerly difficult to extract shale oil and gas. The first of these is ‘horizontal drilling’. The second is ‘hydraulic fracturing’.

Conventional oil wells are drilled vertically into the ground. Shale formations, in for example the lower Indus Basin where most of Pakistan’s shale oil reserves are located, have a typical thickness of about 200 to 250 feet. So a vertical well would make contact with the formation for only this distance limiting the size of what is called the ‘producing zone’. A horizontal well starts off as vertical but as it penetrates deeper into the ground, new technology allows the driller to slowly incline it until by the time it reaches the formation, it has become completely horizontal. Once horizontal, it travels across the formation for several thousand feet, greatly increasing the size of the production zone. But a horizontal well alone will not get the shale to give up its oil. This is where hydraulic fracturing or fracking, as it is called, comes in. Once the horizontal well is in place a mixture of water and sand is injected into the formation at extremely high pressure. The pressure fractures or cracks the formation and the sand injected with water ‘props up’ the cracks and prevents them from closing once the pressure is removed.

The cracks now act as pathways for the locked oil or gas to flow into the well. And the length of the horizontal well means that enough of the stuff is able to get through to make the whole exercise cost efficient. While the EIA report is wonderful news for Pakistan, getting the shale oil out of the ground represents a technical, financial and organisational challenge. How should the government go about it? Horizontal drilling and fracking technology is currently almost the exclusive preserve of a few global ‘oil service’ companies. They are expensive — too expensive for Pakistan. The good news is that a large cadre of highly capable Pakistanis work in the oil industry in the Middle East and further afield.

Some of them, with typical Pakistani entrepreneurial spirit, have set up companies to compete with global oil service giants. And, make no mistake they are giving the giants a run for their money. We need to get these people back home and encourage them to do the same here. The government needs to develop a plan and strategy with clearly defined objectives to exploit what is an unexpected windfall from out of the blue. Pakistan produced, in 2011, some 63,000 barrels of oil per day on reserves estimated then to be about 300 million barrels. With shale oil included, reserves are up 30 fold. Apply the same production-to-reserve ratio to daily oil output and Pakistan could be producing almost 2 million barrels of oil a day. Imagine what that could do for our country.

- See more at: Pakistan

 

[Kompromat]

This indeed is our ONLY chance to industrialize Pakistan. We must have a robust, industrialization strategy,endorsed as a 'core national interest,never to be interfered with any political party.'

Should Pakistan,get the maximum out of these reserves,as well as our gas reserves ONLY for domestic demand,we could save huge forex which can be used for economic development.

We must allow the American and Chinese firms to invest as well as our own small oil companies. Pakistan doesn't need an overnight miracle,to realize our potential.

True,visionary leadership is required to turn this poor nuclear power into a proud member of the global top 10 economic club. This may well be our finest chance,to effectively fight the economic battle with India.

 

[Kompromat]

We need to learn to fend for ourselves and Break the Begging bowl ... With the begging hand chopped off.

We need to stop begging our brotherly nations ie Saudis. A jobless brother with no coin in his jeans pocket,usually ends up getting kicked out of the house with an unshaven face!

This is our chance to Shine!

 

[Chinese-Dragon]

This is a big chance for Pakistan.

Any and all spare cash that can be generated from this initiative should immediately be invested back into infrastructure, especially social infrastructure such as education and health.

There is a danger of falling into the "resource curse", whereby resource-rich nations don't spend the money wisely, and end up with most of the money in the hands of a few rich families, and the rest of the money spent to "bribe" the population with social welfare spending.

 

[Windjammer]

We need to learn to fend for ourselves and Break the Begging bowl ... With the begging hand chopped off.

We need to stop begging our brotherly nations ie Saudis. A jobless brother with no coin in his jeans pocket,usually ends up getting kicked out of the house with an unshaven face!

This is our chance to Shine!

As one Pakistani military analyst once put it, "Sanctions have actually proved a blessing in disguise for Pakistan, else rather than producing some of our own equipment, we may have still be using Korean era weapons" !!

If same can be applied with the likes of IMF, no doubt the tide will turn, regardless who is in the office, the recent power shortages should come as a wake up call and force the authorities to look into long term solutions rather than penny packets.

 

[Kompromat]

This is a big chance for Pakistan.

Any and all spare cash that can be generated from this initiative should immediately be invested back into infrastructure, especially social infrastructure such as education and health.

There is a danger of falling into the "resource curse", whereby resource-rich nations don't spend the money wisely, and end up with most of the money in the hands of a few rich families, and the rest of the money spent to "bribe" the population with social welfare spending.

China being our closest friend not only has a genuine interest and stake in Pakistan's economic development but also in ensuring that the right economic trajectory is maintained through timely advice for course correction. Joining SCO and our corridor project will help us further engage China in our economic synchronization.

@Windjammer At today's price Pakistan's shale oil reserves are worth $864 Billion.