The Board of Directors took notice of the monitoring outcomes on the shale gas industry development in various regions of the world.

The meeting mentioned that the industrial production of shale gas was underway only in the USA and Canada at the moment.

The production of shale gas is associated with significant environmental risks, in particular, the hazard of land surface and underground water contamination with chemicals applied in the production process. This fact already caused the prohibition of shale gas development and production in France. The Republic of South Africa and certain regions of Germany declared the temporary moratorium for drilling and hydraulic fracturing operations for shale gas until the completion of third-party environmental impact assessment. A moratorium is also effective in the states of New York and New Jersey (USA).

The meeting paid special attention to the gas production issues in Europe. It was highlighted that apart from environmental, juridical limitations exist dealing with the peculiarities of land and subsurface ownership rights, consumption and utilization of water as well as high population density. Besides, Europe presently lacks for the equipment required for shale gas fields development. Thus, the prime cost of shale gas production in Europe will be twice as high as in the USA.

The meeting underscored that the previous year had not seen the distribution of any breakthrough technologies providing for a significant decrease in the shale gas production costs. At that, more stringent environmental requirements for the companies developing shale gas may raise the shale gas production costs.

The Gazprom Management Committee was tasked to keep monitoring the shale gas industry development.

Background

Non-conventional gas including shale gas has been increasingly attracting public attention worldwide, but it is no news for the gas industry.

Shale gas production projects feature a number of technological and commercial peculiarities. These are a large scope of production drilling, a sharp drop in production volumes in the first years, a constant need to move to new development areas, consume significant volumes of water, and substantial environmental risks. Moreover, the prime cost of shale gas production in USA is rather high, and it is several times higher than the prime cost of conventional gas production in other world regions, including new fields in Russia. These factors predetermine the role of shale gas as a local resource offsetting the lack or absence of conventional gas in regional markets.

Meanwhile, Gazprom possesses its own non-conventional gas production technologies and applies them for coalbed methane extraction in Kuzbass.