Boom or bust? Mapping out the known unknowns of global shale gas production potential

Jérôme Hilaire, Nico Bauer and Robert J. Brecha

Energy Economics, 2015, vol. 49, issue C, 581-587

Abstract: To assess the global production costs of shale gas, we combine global top-down data with detailed bottom-up information. Studies solely based on top-down approaches do not adequately account for the heterogeneity of shale gas deposits and hence, are unlikely to appropriately capture the extraction costs of shale gas. We design and provide an expedient bottom-up method based on publicly available US data to compute the levelized costs of shale gas extraction. Our results indicate the existence of economically attractive areas but also reveal a dramatic cost increase as lower-quality reservoirs are exploited. At the global level, our best estimate suggests that, at a cost of 6US$/GJ, only 39% of the technically recoverable resources reported in top-down studies should be considered economically recoverable. This estimate increases to about 77% when considering an optimistic recovery of resources but could be lower than 12% when considering pessimistic ones. The current lack of information on the heterogeneity of shale gas deposits as well as on the development of future production technologies leads to significant uncertainties regarding recovery rates and production costs. Much of this uncertainty may be inherent, but for energy-system planning purposes, with or without climate change mitigation policies, it is crucial to recognize the full ranges of recoverable quantities and costs.

Keywords: Shale gas; Extraction cost curve; Global; ERR (search for similar items in EconPapers)
JEL-codes: Q31 Q32 Q33 Q41 Q47 Q54 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:49:y:2015:i:c:p:581-587

DOI: 10.1016/j.eneco.2015.03.017

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