1. 02/04/2013
US shale gas economics:
giant with feet of clay?
18/10/2012 E&C Market info slide 1
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 Agency
02/04/2013 Shale gas economics slide 2
3. The market price : US vs EU hubs
02/04/2013 Shale gas economics slide 3
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. 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. Any implications
• What would happen for the country is companies stopped
drilling? … risks
02/04/2013 Shale gas economics slide 7
