Chevron: Shale Gas Outside US to Hit Markets Slower Than Most Expect
KUALA LUMPUR - Development of shale-gas reserves outside the U.S. is likely to proceed more slowly than generally expected due to uncertainties about the size and quality of reserves and a lack of infrastructure to distribute the gas, a top Chevron Corp. executive said Wednesday.
The energy profile of the U.S. has been transformed in the past decade by a boom in the production of shale gas and shale oil due to new drilling technology, raising the prospect of a similar revolution in many other parts of the world.
"The speed at what people speculate shale gas will be coming to market is faster than what reality will actually show," Chevron Vice Chairman George Kirkland said in an interview with Dow Jones Newswires and The Wall Street Journal.
"There is a huge difference between the U.S. and the rest of the world. There have been millions of wells drilled in the U.S. and you know a lot more about the actual geology, and the U.S. has the infrastructure to deliver gas. I don't know of any other place in the world that has such a well-developed gas infrastructure," he said.
"If you find it in the U.S., you can develop it and move it. Elsewhere it is a different situation," he said.
While Chevron is pushing ahead with shale-gas projects in many countries, a big chunk of the growth in its future energy output will come from conventional gas, particularly in Australia, where it is the operator of two huge liquefied natural gas projects.
These are the A$43 billion Gorgon development, which is expected to begin exporting in 2014, and the $29 billion Wheatstone venture, which should start exporting two years after that.
Chevron is also expecting to start joint-venture LNG exports from Angola in the very near future.
Despite the boom in shale-gas development in the U.S., Chevron remains cautious about the prospects for LNG exports from the U.S., Mr. Kirkland said, due to questions about whether production and sales costs would enable a profitable investment given the time needed to bring export facilities online.
"And a huge issue is, will you get the political approval to export the LNG? I don't say never. I will not say that, but there are issues," he said.
China, which by some estimates may hold shale reserves even greater than those of the U.S., has attracted the attention of many global energy majors.
Chevron has already started to drill at shale prospects there in partnership with Sinopec Group, Mr. Kirkland said. In February, Chevron announced that it had signed an agreement to explore and assess shale-gas opportunities in China's Qiannan Basin.
On Tuesday, Exxon Mobil Corp. Chief Executive Rex Tillerson also warned that the pace of shale-gas development in countries such as China would be considerably slower than in the U.S., although the ultimate impact could be just as big.
Chevron has also been active in Eastern Europe, where it has projects in Poland, Bulgaria, Romania and most recently in the Ukraine.
"Most of the world's shale opportunities outside the U.S. and Canada are in an early stage. We have drilled the first well in Poland and have plans to drill probably up to four wells in Poland this year," Mr. Kirkland said.
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