TPT May 2015

Global Marketplace

The EIA noted that other above-the-ground factors – such as ownership of mineral rights, taxation regimes and social acceptance – also play a role in decisions regarding the development of shales and other tight resources. Elsewhere in oil and gas . . . › The US government is predicting that trains hauling crude oil or ethanol will derail an average of ten times a year over the next two decades, causing more than $4 billion in damage and possible fatalities in densely populated areas. The projection, from a Department of Transportation analysis, reviewed the risks of moving vast quantities of both fuels across the nation and through major cities. Based on past accident trends, anticipated shipping volumes and known ethanol and crude rail routes, the analysis predicted about 15 derailments in 2015, declining to about five a year by 2034. The study was completed in July 2014 but drew attention on 16 February when a train loaded with crude derailed in West Virginia. The fiery accident was the latest in a series, and senior federal officials said it emphasises the need for stronger tank cars and more effective braking systems, among other safety improvements. The volume of flammable liquids transported by rail in the US has risen dramatically over the last decade, driven mainly by the oil shale boom in North Dakota and Montana. This year, nearly 900,000 loads of oil and ethanol are expected to move by rail in tank cars, each holding 30,000 gallons of fuel.

producers of either natural gas from shale formations (shale gas) or crude oil from tight formations (tight oil); only the US and Canada produce both. China produces some small amounts of shale gas, while Argentina produces some small amounts of tight oil. Although hydraulic fracturing (“fracking”) techniques have been used to produce natural gas and tight oil in Australia and Russia, the volumes produced did not come from low-permeability shale formations. Also according to the EIA, the four countries producing commercial volumes of shale gas and tight oil all raised their output in 2014. In all four, natural gas and crude oil production from shale and tight formations grew at a faster rate last year than production from non-shale and non-tight formations. What Mr Aloulou characterises as “notable shale resource exploration efforts” are under way in several countries, including Algeria, Australia, Colombia, Mexico and Russia. However, he wrote, commercial shale development of the type seen in the US requires the ability to rapidly drill and complete a large number of wells in a single productive geologic formation. The logistics and infrastructure necessary to support this level of activity – including the drilling and completion processes, the manufacture of drilling equipment, and the distribution of the final product to market – are not yet evident other than in the US, Canada, China and, to some extent, Argentina.

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