Shale gas production in the United States with some output from Canada is expected to more than triple by 2020, according to a new report released by Calgary-based Ziff Energy Group last Thursday.
The report pegs current North American shale gas production at 5 Bcf/d, of which 98% comes from the United States and 2% from Canada. It projects that North American shale gas output will climb to 16 Bcf/d by 2020, with nearly 15 Bcf/d being produced in the U.S. and a little more than 1 Bcf/d coming from Canada. Ziff Energy estimates that shale gas accounted for 8% of the gas produced in North America last year and is expected to grow to 20% of North American gas production by 2020.
The Barnett play in Texas not surprisingly was the biggest shale play in North America in 2008, accounting for 3.5 Bcf/d of total shale production, but the Haynesville Shale play in northwestern Louisiana and East Texas is expected to eclipse production from the Barnett before 2015, said Bill Gwozd, Ziff Energy vice president of gas services.
The Haynesville play was fourth behind the Barnett in 2008, with an output of 0.2 Bcf/d, but Ziff Energy sees Haynesville bypassing the Barnett and assuming the No. 1 spot around 2015 as it shale gas production climbs to 4.8 Bcf/d. Haynesville is expected to account for 30% of the projected shale gas production of 16 Bcf/d in 2020, Gwozd told NGI.
The Fayetteville Shale basin in Arkansas held second place last year, with output of 0.7 Bcf/d, and was followed by Woodford Shale play in Oklahoma’s western Arkoma Basin (0.4 Bcf/d); Haynesville (0.2 Bcf/d); the Marcellus Shale basin, which extends through Pennsylvania, New York, Ohio and West Virginia (0.1 Bcf/d) and the Horn River Basin in British Columbia (0.1 Bcf/d).
Three smaller shale plays — the Ohio in the Appalachian region, Lewis in New Mexico and Antrim between Detroit and Chicago — had a combined gas output of 0.8 Bcf/d in 2008, but their productivity is expected to decline in the years ahead, said Gwozd.
By 2020 the Barnett will have projected production of 3.2 Bcf/d, placing it solidly in the No. 2 spot, and it will be followed by the Fayetteville (a little more than 2.4 Bcf/d), according to Ziff Energy. The Barnett’s share of the North American shale gas market will be 20% in 2020, and the Fayetteville area is expected to hold a 15% piece of the pie, the report said.
“One of the major challenges for shale gas activity is the rapid decline rates that are experienced,” Gwozd said. “Some shale gas wells decline 65% or more in the first year, and a 35% decline rate is common in the second year.” He said producers will have to continue “poking wells” to grow production in the shale basins.
The current full-cycle cost for the production of shale gas is $6-8/Mcf, of which consumers only pay $4 for gas, Gwozd noted. He questions “how many years producers can continue to do this before they go belly-up.”
Gwozd further noted that imports of liquefied natural gas into the U.S., at prices of $3-5/Mcf, will be the No. 1 threat to the industry.
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