Commercial development of shale gas with directional drilling and hydraulic fracturing is for the present almost entirely restricted to North America. The techniques were initially developed in the Barnett shale in Central Texas and then adapted to other shale plays, as well as other types of unconventional gas formations in the US and Canada.
NGLs from the Barnett shale as well as the Woodford in Oklahoma were already in 2009 making significant contributions to NGL production in the US.
Not all shales are created equal, however. The new techniques work better on some shales than on others, and there are many other technical and commercial factors that make one play more profitable than another.
As more natural gas is being produced and gas prices remain low, one of the more important factors has become the liquids content of the play because the liquids sell at a premium to the natural gas if they can be separated and shipped to markets. This "liquids boost" has shifted attention to plays with high liquids content such as Eagle Ford (Texas) from dry gas plays such as the Fayetteville. Some shales, such as the Bakken (North Dakota) and Niobrara (mostly Colorado and Nebraska) are primarily oil plays rather than gas plays but will still have significant byproduct production of NGLs.
The Marcellus Shale gas play is of particular interest because it is near Northeast natural gas markets but far from most of the NGL pipeline and fractionation infrastructure. Like many of the shale plays, the liquids content of the raw gas varies across the play. The richest gas in the Marcellus appears to be in western Pennsylvania and northern West Virginia.
The propane and heavier components of rich gas pose logistical problems there, but the real issue is the ethane content. Propane and heavier components can be shipped by truck or rail, but ethane is typically only shipped via pipeline. Some ethane in the Marcellus natural gas may need to be removed to allow the residue gas to meet natural gas pipeline specifications.
With no ethylene crackers on the US East Coast, there is no nearby market for the ethane. Several pipeline solutions have been proposed to take the NGLs to Midwest processing and to Sarnia, Ont. There are other possible approaches as well. The amount of NGLs that make it to market will depend on which solution to the ethane problem ultimately wins.
With the success of the shale plays within the US, it was only a matter of time before shales would be investigated in other areas of the globe. Examples of active shale projects are in China, Poland, and France, but there are many more. Significant international shale gas production (and any associated NGLs) appears to be a few years away, provided producers in highly populated areas like Europe can overcome resistance from activists.
Shale plays are also likely to affect NGL production in other ways. For example, if shale gas production becomes so inexpensive that it inhibits LNG from entering the US, then large quantities of NGL (including ethane) would be generated within the US. If however, LNG comes into the US in large quantities and shale gas production is curtailed in response, less NGL might be produced within the US and more LPG and condensates would likely be available on the global waterborne market.
It should also be noted that natural gas frequently replaces LPG in markets that build natural gas pipeline infrastructure. Premium LPG markets could be threatened in some regions if natural gas remains relatively inexpensive.
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