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Shale gas

Asia-Pacific’s shale gas
potential yet to be tapped
Promising plays are scattered across the region, but exploration has scarcely begun

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nconventional gas plays in
the Asia-Pacific region are largely
unproven with the exception of coalbed methane (CBM) in Australia.
Shale’s potential has been hyped
up, yet there are only two wells – one
in China and the other in Australia –
that have flowed commercial volumes
of gas.
So far, early shale-gas exploration wells have only been drilled in
China, Australia and India. But there
are no plays with more than 100
wells drilled yet – considered the
minimum requirement to prove up
a basin.
Nevertheless, developers remain
excited about opportunities in both
China and Indonesia, where on a technical basis the shales signal a high
likelihood of being commercial. Both
countries are gas-short and domestic
gas prices are steadily rising, offering
opportunities for investors.
Australian shale has great potential
too, but the cost of doing business
remains high and most of the plays
remote, making break-even costs
the biggest question mark. However,
it’s relatively cheap to farm into the
emerging plays.
Thailand’s shale resources, though
s mall, also look promising.
But the identification of sweet spots

outside of Australian CBM will take
some time.
Australia may not have the most
unconventional gas but it’s certainly
the best at getting its act together,
says Dylan Mair, an Asian upstream
specialist at consultancy IHS.
Australia is the second biggest CBM
producer in the world after the US.
China ranks a distant third, followed
by India and Indonesia. But in terms
of gas in-place, China is number one,
followed by Indonesia, India and
Australia.
For investors it is about waiting.
“They need to be willing to stick it out
for the long-run or sell it to someone
who is,” adds Mair.
Since nothing is really proven yet
it’s not clear which nation’s regulatory environment will work best. Terms
in Asia are generally a derivative of
production-sharing contracts (PSCs).
“Of those, Indonesian CBM terms
are considered reasonably good,
however the concept still works with
an exploration and production phase,”
says Mair.
B u t t h e u n c o nv e n t i o n a l - g a s
business is generally a continuous
farming operation with production
a n d ex p l o r a t i o n h a p p e n i n g i n
parallel. PSC terms that work with
that model need to be developed.

Whether that happens in Asia
remains to be seen, given little production to speak of yet, adds Mair.

Indonesia

Indonesia has significant shale-gas
potential. It could eventually be bigger
than CBM, which is being prioritized by
the government.
Indonesia has an estimated 46
trillion cubic feet (cf) of technically
recoverable shale-gas resources
out of 303 trillion cf of shale gas
in-place, according to the US Energy
Information Administration (EIA).
However, Indonesia’s upstream
regulator has estimated the nation’s
resources at 574 trillion cf and a
study from the Bandung Technology
University puts it even higher at 1,000
trillion cf. But the basis for these
assessments has not been reported.
Western Indonesia tends to be
dominated by structurally simple nonmarine shales. On the other hand,
Eastern Indonesia – Sulawesi, Seram,
Buru and Irian Jaya – is tectonically
more complex but has excellent
marine-deposited shale source
rocks, a report from US consultancy
Advanced Resources International
(ARI) shows.
The nation has received more than
70 proposals for shale-gas projects,

Table 1: Size of assessed shale gas and shale oil resources
Country
Basin
Formation

Thailand

Khorat
Nam Duk Fm
Indonesia

C. Sumatra

S. Sumatra

Tarakan

Kutei

Bintuni
India

Cambay
Krishna-Godavari
Cauvery
Damodar Valley

Risked gas
Technically
Risked oil
Technically
in-place Recoverable
in-place Recoverable
(tcf)
(tcf)
(Billion barrels) (Billion barrels)
22

5

0

0

Brown Shale
Talang Akar
Naintupo
Meliat
Tabul
Balikpapan
Aifam Group

41
68
34
25
4
16
114

3
4
5
4
0
1
29

69
136
0
1
11
17
0

2.8
4.1
0.0
0.0
0.3
0.7
0.0

Cambay Shale
Permian-Triassic
Sattapadi-Andimadam
Barren Measure

146
381
30
27

30
57
5
5

54
20
8
5

2.7
0.6
0.2
0.2

Source: EIA

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