Kurdin: Shale revolution has already occurred, but hasn’t yet spread beyond the North American continent

15 july 2014

Head of the Department for Strategic Studies in Energy of the Analytical Center Alexander Kurdin took part in the roundtable "Shale gas: economic benefit or ecological disaster" that took place in the press center of the "Parliamentary newspaper".

Experts discussed the Decree of the Government of the Russian federation Nr. 322 “On approval of the state program of the Russian Federation “Reproduction and exploitation of natural resources”. The document stipulates the actions that need to be taken for the assessment of resources and reserves of shale gas, gas hydrates and coalbed methane in regions with insufficient provision of oil and gas. In this regard, production of shale oil and gas becomes a new environmental challenge for Russia.

“Shale revolution has already occurred and we all became its witnesses, but so far it hasn’t spread beyond the North American continent, "- said Mr. Kurdin.

The expert noted that North America represents a competition threat for Russian gas supply to Europe and Asia. Thus, in 2015-2016 the first export terminal for natural gas supply from America will be introduced. “Nevertheless it cannot be claimed that shale gas will replace Russian gas. - believes Mr. Kurdin. - After all, from an economic point of view, shale gas supply from North America to Europe is possible, but it will be at the limit”. According to European experts, the American gas can compete, but it will not have a significant advantage in terms of costs compared to the Russian gas. In this regard Mr. Kurdin considers that US gas supply can be a constraining factor, but it won’t be able to disrupt the whole market.

The expert also believes that putting big pressure on the development of shale gas in Russia is pointless, as the country still has a lot of conventional gas. “Costs of shale gas exploitation will be unprofitable for us, - he said. - As the traditional mining areas will start to disappear, we will have to make a gradual transition to the exploitation of the more remote regions. And then the question will arise whether it is better to exploit unconventional sources or the regions that are difficult to develop".

Mr. Kurdin pointed out that the situation regarding Russian oil is getting more complicated: the traditional regions are almost depleted and production growth is not expected. The new exploitation areas will not have enough oil. In this regard, according to the expert, the issue of the development of unconventional sources is gaining importance. It should be noted that Russia has the first place in regard to the quantity of shale oil reserves. “We have Bazhenov formation and its reserves are enormous. Technically recoverable resources reach to about 10 billion tons”- he said, adding that this represents a significant wealth that we need to learn how to develop.