First tight gas well producing 15 million cubic feet per day of natural gas is on line at Sajawal gas field in Kirthar block in Sindh province, according to a report in Express Tribune. This marks a major milestone in development of unconventional hydrocarbon energy sources in Pakistan. Sajawal gas field is located 110 km south east of Karachi, Pakistan. It puts Pakistan in an exclusive club of just a few nations producing unconventional natural gas.
The tight gas well in Kirthar belt is being operated jointly by Poland's Polskie Gornictwo Naftowe i Gazownictwo (PGNiG) and Pakistan Petroleum Limited (PPL).
The state-owned Sui Southern Gas Company (SSGC) is buying gas from the joint venture at $6 per million BTUs (half the price agreed for Iranian gas) for distribution through its network in southern Pakistan. SSGC is laying a 52-kilometre-long pipeline at an estimated cost of Rs 325 million, carrying gas from the Suleman Range to the Nooriabad industrial estate.
First tight gas production launch in Sajawal is a very significant milestone for Pakistan. It augurs well for the future of both tight and gas production in the country because there are similarities in how both are extracted. Pakistan is endowed with huge deposits of both---105 trillion cubic feet (TCF) of shale gas and at least 33 trillion cubic feet of tight gas. In addition, Pakistan is also blessed with 9.1 billion barrels of shale oil which is also extracted in a similar way.
Pakistan's current demand for natural gas is about 1.6 trillion cubic feet per year. Even if consumption triples to 5 trillion cubic feet per year, the current known reserves of over 150 trillion cubic feet of conventional and unconventional gas are sufficient for over 30 years.
Wells for both of these unconventional resources (tight and shale) must be "hydraulically fractured" (fracked) in order to produce commercial amounts of gas. Operator challenges and objectives to be accomplished during each phase of the Asset Life Cycle (Exploration, Appraisal, Development, Production, and Rejuvenation) of both shale gas and tight gas are similar, according to a paper on this subject. Drilling, well design, completion methods and hydraulic fracturing are somewhat similar; but formation evaluation, reservoir analysis, and some of the production techniques are quite different.
The current technology known as hydraulic fracturing or fracking was developed in the United States and it has spawned shale oil and gas revolution increasing supplies and reducing gas prices. The Chinese are now working on further cutting costs to make the equipment and technology more affordable.
Like the shale gas revolution in the United States, tight gas is transforming China's gas production - accounting for a third of total output in 2012 -- and will form the backbone of the country's push to expand so-called "unconventional" gas production nearly seven-fold by 2030, according to Reuters. The speed and size of the boom has exceeded forecasts and has been led by local firms developing low-cost technology and techniques, already being rolled out by Chinese companies in similar gas fields outside of China. Pakistan can benefit from the Chinese in its efforts to increase tight and shale gas and oil production.
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US EIA Estimates 9.1 Billion Barrels of Shale Oil in Pakistan
Pakistan's Vast Shale Gas Reserves
Abundant, Cheap Coal Electricity
Twin Energy Shortages of Gas and Electricity in Pakistan
Pakistan Energy Security Via Shale Revolution
So does that mean that we could, potentially, be self-sufficient in Petroleum & Gas Consumption if we ever choose to utilize those resources ?
Armstrong: "So does that mean that we could, potentially, be self-sufficient in Petroleum & Gas Consumption if we ever choose to utilize those resources ?"
Pakistan has the world's 9th largest shale oil reserves of 9.1 billion barrels and 17th largest shale gas reserves of 105 trillion cubic feet, according to US EIA's latest report for 2013.
Pakistan can become an energy-surplus country by developing its shale resources.
Riaz Sb., Thanks for your well researched and excellently written articles! Enjoy reading them.
I think you should publish some selected ones in major newspapers (like Dawn) or magazine also. More people can benefit from these.
Rehan: "I think you should publish some selected ones in major newspapers (like Dawn) or magazine also. More people can benefit from these."
I'm glad you enjoy reading my posts.
I find that Pakistani media people are too lazy to do their own research. But they do usually pick up on some of my blog posts a few days, and sometimes a few months, after I write them and publish the info as if it's their own research. But the publication dates don't lie.
An Express Tribune story says ENI wants $14 an mmBTU for shale gas.
I think the ET correspondent has misunderstood the figure.
The COST (not price) calculation I have seen from ENI is $14 per boe (barrel of oil equivalent).
Each boe has 5.55 mmBTU energy. So $14 per boe works out to about $2.53 per mmBTU.
Of course, the price would be significantly higher than the cost production to incentivize investors.
ENI proposes putting the floor at $42 per boe which translates into $7.57 per mmBTU cost plus some additional profit margin.
It also suggests using oil price as reference and shows a graph that puts gas price at $10 per mmBTU when oil price is $100 a barrel.
It will going to cost too much as there are foreign origin companies that are selling at $$$ cost. I think PSO who is willing to expand should try to convince GoP to do Exploration on its own for Oil, Gas and Minerals in Pakistan. Form up a company naming Pakistan Hydrocarbon and Minerals Corporation.
Jamshed: "It will going to cost too much as there are foreign origin companies that are selling at $$$ cost. I think PSO who is willing to expand should try to convince GoP to do Exploration on its own for Oil, Gas and Minerals in Pakistan. Form up a company naming Pakistan Hydrocarbon and Minerals Corporation."
1. PSO is a distribution and retail co; it does not do exploration and production. Pakistan's state-owned OGDC and PPL do exploration and production.
2. The price of domestic tight gas is $6 per mmBTU, half of the price agreed for Iranian gas.
3. The price SSGC or SNGC or PSO pay for domestic oil and gas will be in Pak rupees, not in US dollars. Only a portion of it will be repatriated in US dollars by foreign companies (PGNiG, ENI, UEP, etc) which have stake in joint ventures with Pakistani companies like PPL and OGDC
Tight Gas well development is very expensive.
They are also investing very high dollar in offshore:
Ras: "Tight Gas well development is very expensive."
Sui Southern is paying $6 per mmBTU for domestic tight gas from Sajawal gas field. It's more than $4 per mmBTU for conventional domestic gas but a lot less expensive than the agreed $12 per mmBTU for Iranian gas.
And Iranian gas price could go up a lot if the price of oil rises much above $100 a barrel of oil. The Iranian price formula is tied to the price of oil.
Maintenance on Tight Gas wells is also expensive since they are prone to flooding.
Ras: "Maintenance on Tight Gas wells is also expensive since they are prone to flooding."
I'm sure the producers have put all of their costs and profits with significant ROI into their calculations to arrive at $6 per mmBTU price that PNGiG and PPL Joint Venture is charging SSGC. BTW, $6 per mmBTU for tight gas is 50% higher than the price of conventional gas in Pakistan.
Here's a brief tutorial from Shell on shale and tight gas:
What is shale gas?
Shale gas is a description for a field in which natural gas accumulation is locked in tiny bubble-like pockets within layered sedimentary rock such as shale. Think of it as similar to the way tiny air pockets are trapped in a loaf of bread as it bakes.
While geologists have known for decades that shale gas existed deep beneath many areas of the North American continent, traditional vertical oil and gas drilling methods were able to access only a small fraction of the gas within these formations. But recently, operational efficiencies and proven technology have come together to make shale gas both accessible and economically competitive.
To extract the gas from shale formations, Shell uses thoroughly tested technology in a responsible way.
What is tight gas?
While shale gas is trapped in rock, tight gas describes natural gas that is dispersed within low-porosity silt or sand areas that create a tight-fitting environment for the gas. How tight? Tight gas is defined (in the U.S.) as having less than 10 percent porosity and less than 0.1 millidarcy permeability.
Porosity is the proportion of void space to the total volume of rock. For example, fresh beach sand has around 50 percent porosity. Tight gas is held in pores up to 20,000 times narrower than a human hair.
Permeability is the ability of fluid to move through the pores. A person can blow air through a rock sample having about 1000 millidarcies permeability.
Horizontal drilling. This technology makes it possible for a well to be drilled vertically several thousand feet or meters, then curved to extend at an angle parallel to the earth’s surface, threading the well through the horizontal gas formation to capture more pockets of gas. From a central location Shell can drill multiple wells in different directions that penetrate the reservoir vertically or horizontally. This limits the number of drilling locations – known as well pads – on the surface.
S-shaped drilling. In some geological settings, it is more appropriate to directionally drill s-shaped wells from a single pad to minimize surface disturbance. S-shaped wells are drilled vertically several thousand feet or meters, then extend in arcs beneath the earth’s surface.
During drilling, mobile drilling units are moved between wells on a single pad. This avoids dismantling and reassembling drilling equipment for each well, making the process shorter and saving resources.
Any idea of time frame? Can substantial qty of tight/shale gas come on line before
Iran or Turkmen gas
Akber: "Any idea of time frame? Can substantial qty of tight/shale gas come on line before
Iran or Turkmen gas"
Tight gas production has already started in Pakistan. Ramping up production quantities will depend on how much investment and focus goes into it. The Americans with shale gas and the Chinese with tight gas have shown it can be done quite quickly.
Here's an ET report about a Canadian exploration company exiting Pakistan:
Canadian oil and gas exploration firm Niko Resources (Pakistan) Limited (NRPL) has decided to pack up and quit Pakistan apparently because of low wellhead gas prices that make it difficult to sustain operations.
NRPL, a subsidiary of Canada’s Niko Resources Limited, was exploring hydrocarbons in four offshore blocks in Indus namely Indus-X, Indus-Y, Indus-Z and Indus North. The company has collected 2,000 square kilometres of 3-D seismic data in these blocks.
“Now, Niko Resources has served a notice, announcing its decision to quit these four blocks and wind up the company in Pakistan,” an official said.
Niko is a Calgary-based independent international oil and gas company with operations in India, Bangladesh, Indonesia, Kurdistan, Trinidad, Madagascar and Pakistan.
It is one of the fastest growing companies in the industry with market capitalisation of over $5 billion in the Toronto Stock Exchange under the symbol NKO. The government of Pakistan had awarded the four blocks to Niko in March 2008 for offshore drilling.
According to sources, low wellhead gas price for offshore fields was one of the key reasons which forced Niko Resources to stop operations in Pakistan.
“Drilling of an onshore well requires expenditure of $15 million whereas an offshore well needs spending of $80 to $100 million,” a source said, adding exploration companies working on offshore fields had been demanding more incentives to make drilling for oil and gas economically viable.
Sources revealed that Canadian High Commissioner to Pakistan met Federal Petroleum and Natural Resources Minister Shahid Khaqan Abbasi in the first week of July. During the deliberations, Abbasi asked the high commissioner to persuade Niko Resources to take back its decision of leaving Pakistan as the government “is now offering incentives for offshore drilling.”
In the new Petroleum Policy 2012, the price of gas discovered in the Offshore Shallow Zone will be $7 per million British thermal units (mmbtu), for Offshore Deep Zone the price will be $8 per mmbtu and for Offshore Ultra Deep Zone the price will be $9 per mmbtu.
A bonanza of $1 per mmbtu has also been announced for the first gas discovery in the offshore field.
Abbasi told the diplomat that Pakistan had huge reserves of natural resources and there were ample opportunities for investment in the oil, gas and mineral sectors. “We welcome Canadian investment and technical support in the oil and gas sector in Pakistan,” he said.
Pakistan has a vast onshore and offshore sedimentary area covering 827,268 square kilometres, of which around 30% is being explored.
Owing to existing opportunities, transparent and predictable policies and presence of major international exploration firms like ENI and BHP, there is vast potential of investment in Pakistan, Abbasi said.
Here's a link to Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) detailing facts and data on activities in Pakistan:
Here's a CNBC report on Prince Walid Bin Talal's concern about growing shale oil and gas hurting Saudi economy:
Saudi billionaire Prince Alwaleed bin Talal warned that the Gulf Arab kingdom needed to reduce its reliance on crude oil and diversify its revenues, as rising U.S. shale energy supplies cut global demand for its oil.
In an open letter to Oil Minister Ali al-Naimi and other ministers, published on Sunday via his Twitter account, Prince Alwaleed said demand for oil from OPEC member states was "in continuous decline".
He said Saudi Arabia's heavy dependence on oil was "a truth that has really become a source of worry for many", and that the world's biggest crude oil exporter should implement "swift measures" to diversify its economy.
(Read more: Oil prices jump as US crude takes bigger role on world oil stage)
Prince Alwaleed, owner of international investment firm Kingdom Holding, is unusually outspoken for a top Saudi businessman.
But his warning reflects growing concern in private among many Saudis about the long-term impact of shale technology, which is allowing the United States and Canada to tap unconventional oil deposits which they could not reach just a few years ago. Some analysts think this may push demand for Saudi oil, as well as global oil prices, down sharply over the next decade.
Over the past couple of years the Saudi government has taken some initial steps to develop the economy beyond oil - for example, liberalising the aviation sector and providing finance to small, entrepreneurial firms in the services and technology sectors.
Nowhere Is Immune from Unrest: Saudi Prince
Saudi Prince Alwaleed Bin Talal, talks to CNBC about turmoil in the Middle-East and the price of oil.
Naimi said publicly in Vienna in May that he was not concerned about rising U.S. shale oil supplies. Prince Alwaleed told Naimi in his open letter, which was dated May 13 this year, that he disagreed with him.
"Our country is facing a threat with the continuation of its near-complete reliance on oil, especially as 92 percent of the budget for this year depends on oil," Prince Alwaleed said.
(Read more: Don't mess with West Texas: US oil to keep outpacing Brent)
"It is necessary to diversify sources of revenue, establish a clear vision for that and start implementing it immediately," he said, adding that the country should move ahead with plans for nuclear and solar energy production to cut local consumption of oil.
The shale oil threat means Saudi Arabia will not be able to raise its production capacity to 15 million barrels of oil per day, Prince Alwaleed argued. Current capacity is about 12.5 million bpd; a few years ago the country planned to increase capacity to 15 million bpd, but then put the plan on hold after the global financial crisis.
While most Saudi officials have in public insisted they are not worried by the shale threat, the Organization of the Petroleum Exporting Countries (OPEC) has recognised that it needs to address the issue.
(Read more: OPEC ministers: falling demand is our top concern)
In a report this month, OPEC forecast demand for its oil in 2014 would average 29.61 million bpd, down 250,000 bpd from 2013. It cited rising non-OPEC supply, especially from the United States.
At its last meeting in Vienna in May, OPEC oil ministers spent time discussing shale technology and set up a committee to study it.
No-one in their right mind would come to Pakistan
Jugni:"No-one in their right mind would come to Pakistan"
Pakistan does have security challenges. But your assertion that "No-one in their right mind would come to Pakistan" is just plain wrong. There are hundreds of multi-nationals currently operating in Pakistan.
In oil and gas sector, there's an entire association called "Pakistan Petroleum Exploration and Production Companies Association" with dozens of foreign member companies working in Pakistan now.
The amount of FDI is entirely insignificant.
My friend, sugar coating the truth doesn't stop it being bitter.
And let me tell you what else, from 2010, FDI fell again in 2011 to around the $1 billion mark then again in 2012 to below the half a billion mark in USD terms. That is according to the world bank.
Jugni: "The amount of FDI is entirely insignificant."
Yes, overall FDI figures are down.
Sector-wise, FDI has declined the most in telecom sector mainly because of delays in 3G licensing.
But FDI in oil ad gas sector has continued to be over half a billion dollars each year for many years:
Net FDI in Pakistan up 76% from 2011-12 to 2012-13:
Net foreign direct investment into Pakistan rose 76 percent in the fiscal year 2012-13, which ended in June, reaching $1.447 billion compared to previous year, according to data from the State Bank of Pakistan.
Between July and June, there was an inflow of $2.653 billion and outflow of $1.205 billion, according to the central bank. In the same period the year earlier, there was an inflow of $2.099 billion and outflow of $1.278 billion.
During June this year, net foreign direct investment rose to $128 million compared to $56 million a year earlier.
Here's a China Daily report on what China can learn from US shale energy development:
WASHINGTON -- The surging shale energy output in recent years has been centering in North America, but it can also happen in other places like China, a US energy expert said Friday.
Shale gas will come to play a more important role in China's energy mix in the long term, said IHS Cambridge Energy Research Associates Chairman Daniel Yergin at a seminar on energy boom in North America.
"China has great potential for shale gas but it will take perhaps five to 10 years to develop, due to the lack of infrastructure and logistic capabilities," Yergin told Xinhua.
He added that Chinese energy companies among others are learning the necessary technologies from their American counterparts to unlock the unconventional energy including shale oil and gas.
The energy industry was concerned a decade ago that US energy output had hit the ceiling and started to go down, but now the United States is about to overtake Russia in terms of oil and gas production, said Yergin.
The United States produced the equivalent of 22 million barrels a day of oil, natural gas and related fuels in July, according to figures from the Energy Department.
The shale energy bonanza reduced US imports of natural gas and crude oil by 32 percent and 15 percent respectively in the past five years.
However, the environmental implications of shale gas extraction, a process that includes hydraulic fracturing, remain uncertain.
Hydraulic fracturing involves pumping water, sand and chemicals deep underground into horizontal gas wells at high pressure to crack open hydrocarbon-rich shale and extract natural gas.
Accelerated shale gas drilling and hydrofracking in recent years has fueled concerns about contamination in nearby drinking water supplies.
Here's a Marketwatch report on oil and gas find in Pakistan:
CALGARY, ALBERTA, Feb 18, 2014 (Marketwired via COMTEX) -- Jura Energy Corporation ("Jura") CA:JEC +18.37% today announced a gas and condensate discovery at the Ayesha-1 exploration well in the Badin IV South block.
The Ayesha-1 well was completed in the 'B' Sands of the Lower Goru Formation of Cretaceous age. During a short test on 32/64 inch choke, the well flowed gas with a heating value of approximately 1,000 Btu/Scf at a rate of 11.34 MMcf/d and a wellhead flowing pressure of 1,998 psi. The condensate to gas ratio was in the range of 10-12 bbl/MMcf with minimal water cut production. Detailed testing of Ayesha-1 will continue over the next few days.
Anticipated future production from the Ayesha-1 discovery is expected to be entitled to a gas price of US$6 per MMBtu under Pakistan s Petroleum (Exploration & Production) Policy, 2012.
Shahid Hameed, CEO of Jura, commented on the Ayesha-1 test results saying: "We are delighted with the successful test results. Given Ayesha-1's proximity to existing processing and pipeline infrastructure, this commercial discovery could be brought into production on a fast-track basis. Our Badar and Guddu fields are already in production and first gas production is anticipated from Zarghun South in the first half of 2014."
The drilling rig has now been released from Ayesha-1 and mobilized for the drilling of another exploration well, Haleema-1, in the Badin IV South block. The drilling of Haleema-1 is expected to commence in the first week of March 2014.
Jura holds a 27.5% working interest in the Badin IV South block, which is operated by Petroleum Exploration (Pvt) Limited.
Modi on petroleum exploration in Pakistan: Referring to the exploration scope in the region, he said Pakistan has started exploring the area across the border for gas and petroleum products.
"Look across the border in Pakistan, they have started massive work in gas and petroleum sector, why can't we?" he asked.
"It is the same region. There is immense scope for gas and petroleum here. I am sure we can definitely find it here as well. It can give new strength to our nation."
Addressing the youths, he said there will be opportunities in the exploration work in future and asked them to prepare themselves for it.
"We have started a petroleum university in Gujarat and this is for youngsters. I would urge the youth here to go on Internet and search about petroleum university. I invite you to make full use of it," he said.
Here's a Dawn report on tight gas in Naushero Feroz in Sind:
KARACHI: The Pakistan Petroleum Limited (PPL) announced discovery of gas from Exploration Well, Naushahro Firoz X-1 in Naushahro Firoz Block, Sindh.
In a filing with the stock exchange on Wednesday, under the disclosure of ‘insider information’ in terms of section 15D(1), the PPL reminded that it holds 90 per cent working interest in the well.
M Mubbasshar Siddique, company secretary for PPL, stated that the exploration well at Naushahro Firoz X-1 was drilled down to target depth of 3,773m(MD) within Chiltan Formation.
Based on gas shows encountered during drilling and wire line logs evaluation, a cased hole drill stem test (CHDST) was carried out.
The PPL informed that after acidization, the well flowed good quality gas at variable rates with the maximum of 11.2mmscfd with a flowing wellhead pressure of 2,635psi and a minimum of 1.7mmscfd with a flowing well head pressure of 375psi at a choke size of 32/64 inches.
PPL observes: “Preliminary analysis of the test data suggests the discovery to be the tight gas. However, further evaluation is required to determine the nature and commerciality of the discovery based on the geological, geophysical and engineering data collected during the drilling and testing of the well and also by drilling of additional well(s)”.
#Pakistan Petroleum reports gas, condensate discovery in Gambat South. #Sanghar #Sindh http://www.worldoil.com/news/2015/8/25/pakistan-petroleum-reports-gas-condensate-discovery-in-gambat-south#.Vd1G-p03cKk.twitter …
KARACHI, Pakistan -- Pakistan Petroleum Limited, operator of the Gambat South Block with a 65% working interest, has announced another gas and condensate discovery at its Kabir X-1 exploration well in Sanghar District, Sindh, Pakistan.
Kabir X-1 was spud on April 24 and reached final depth, of 4,020 m, on June 28. Based on wire line logs, potential hydrocarbon bearing zones were identified in the Basal Sand of the Lower Goru formation.
During initial well testing, Kabir X-1 flowed at 1.94 MMscfgd along with 253 bcpd on a 16/64-in. choke.
Currently, well testing is underway to evaluate the potential of the discovery.
Copy from wiki
Analysts expect that $150 billion will be spent on further developing North American tight oil fields in 2015. The large increase in tight oil production is one of the reasons behind the price drop in late 2014.
Outside the United States and Canada, development of shale oil (tight oil) resources may be limited by the lack of available drilling rigs: 2/3 of the world's active drill rigs are in the US and Canada, and rigs elsewhere are less likely to be equipped for horizontal drilling. Drilling intensity may be another constraint, as tight-oil development requires far more completed wells than does conventional oil. Leonardo Maugeri considers this will be "an insurmountable environmental hurdle in Europe".
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