2013 Exhibitions
Of all energy resources, oil and coal dominate global consumption. While natural gas currently holds a significant share of the energy market, newly discovered shale gas reserves around the globe are likely to promote consumption of gas as both an energy source and an affordable feedstock for a wide variety of chemicals and materials.
While the excitement is building in the US since vast reserves of shale gas there can be used to produce ethylene feedstock at a lower cost, the large shale gas reserves in China are also expected to temporarily ease the country’s import burdens.
The Chinese government recently announced subsidies on shale gas production to encourage the exploration and development of the unconventional fuel.
The nation will offer 0.4 yuan/cu. m for shale gas (compared to 0.2 yuan/cu m for coal-bed methane) that is developed and consumed from 2012 to 2015, the Ministry of Finance said recently. The subsidy may be adjusted and local governments may provide additional funds, it said.
China, home to the world’s biggest shale reserves, held its second round of auctions for exploration blocks recently, attracting 152 bids from 83 companies. While China has yet to produce the unconventional fuel commercially, output in the US has surged fourfold from 2007 to 2010.
China plans to produce 6.5 billion cu m of shale gas annually by 2015 and between 60 billion and 100 billion by the end of the decade, the country’s National Development and Reform Commission has said. The country has 25.08 trillion cu m of exploitable reserves of the fuel compared to the US that has an estimated 14 trillion cu m of technically recoverable shale gas, according to the US Energy Information Administration.
China’s natural gas consumption is also expected to increase fourfold by 2030 to 600 billion cu m/year, accounting for 30% of the global growth in demand for the fuel.
Growing demand in China
Meanwhile, a new study by UK-based Frost & Sullivan titled "Analysis of the Global Shale Gas Market" says that most demand for shale gas in Asia will come from China and Japan, following China’s insatiable energy needs (as a result of rapid growth) and Japan’s expected increased dependence on natural gas following the Fukushima nuclear disaster.
But besides serving the energy needs, shale gas will be in demand by large chemical companies that are shifting investment patterns to exploit the rich shale gas reserves in the US, at the expense of the Middle East and other natural gas-rich regions, says the report.
North American natural gas prices are the lowest globally, and chemical companies are fuelling a revival of the US manufacturing sector by capitalising on this cheap supply. Opportunities also exist for wastewater treatment companies due to the high volumes of water consumed in shale gas production and for companies that produce hydraulic fracturing chemicals, a sector that is projected to grow at 10% annually until 2020, says the report.
“Though the market is dominated by large energy service companies that enjoy close relationships with oil and gas participants, chemical companies still have a significant market share. Gelling agents are the major fracturing chemicals by volume, followed by friction reducers and corrosion inhibitors," according to a summary of the report.
Due to increased shale gas production in North America, demand has increased for gelling chemicals, such as guar gum, resulting in severe global shortages, resulting in high prices. The wastewater treatment chemicals market is also growing because of the shale gas boom. While some chemicals are commoditised, innovative solutions to water treatment continue to emerge. Due to the huge volumes of water needed for shale gas production and increased regulations limiting toxicity levels in wastewater, innovative firms can tap into a market with good growth prospects over the next 20 years.
(PRA)
