Shale gas policy formulated: E&P companies to get $13/mmbtu well-head gas price | Business Recorder

Shale gas policy formulated: E&P companies to get $13/mmbtu well-head gas price

August 08, 2014 ABDUL RASHEED AZAD0 Comments

The Ministry of Petroleum and Natural Resources has formulated the first-ever ‘Shale Gas Policy’, which would be forwarded to the Economic Co-ordination Committee of the Cabinet for final approval, officials said. A senior Petroleum Ministry official told Business Recorder on Thursday according to shale gas policy, the Exploration and Production (E&P) companies will get $13 per mmbtu as well-head gas price, which is almost double the price of E&P companies getting through conventional gas produce.

“We are confident that in the next meeting of the ECC the first-ever shale gas policy would be approved and subsequent to its approval, the ministry will allow E&P companies to start exploration activities,” the official added. According to US Energy Information Administration (EIA), total shale gas reserves in Pakistan stand at 586 Trillion Cubic Feet (TCF), whereas shale oil reservoirs over 9 billion barrels.

The EIA has estimated recoverable shale gas reserves of 105 TCF and over 9 billion barrels of oil in Pakistan. These estimates of recoverable hydrocarbon reserves are many a time higher than so far proven reserves of 24 TCF gas and about 300 million barrels oil. Pakistan currently produces a little over 4 Billion Cubic Feet per Day (BCFD) of gas and about 100,000 barrels of crude oil per day. The official said the extraction of shale gas/oil is four times costlier and technology extensive as compared to conventional natural resources. He said the shale gas had seen tremendous developments in the US and a couple of other countries were trying to use the latest technology. Pakistan, he said, was also encouraging exploration and production companies to venture into shale gas.

He said in next ECC meeting, the ministry is going to forward a total 16 different summaries for approval, which include deregulation of Liquefied Petroleum Gas (LPG) prices and fixation of Oil Marketing Companies (OMCs) and petroleum dealers’ margins.

The ministry is also to forward a summary regarding the construction of a Liquefied Natural Gas (LNG) terminal at Gwadar Port with a capacity to handle up to 1 BCFD commodity and a summary regarding the fixation of dealers margin “We are also sending a summary regarding the allocation and tariff of imported LNG to different segments of economy,” the official added.

The ministry will forward a summary of the allocation and use of flare gas to different sectors, another summary is regarding policy guidelines to Oil and Gas Regulatory Authority (Ogra). “The ministry has constituted a team to negotiate LNG prices with different potential commodity suppliers, including Qatar and we are also seeking the approval of LNG. Pakistan in first phase is all set to import up to 400 mmcfd of LNG on fast track basis,” he maintained.

“Pakistan is world’s top CNG consuming country, where an estimated four million vehicles are running on CNG, while the CNG outlets for past 6 years are facing serious gas shortage as a result of national energy crisis to keep the CNG business intact we have decided to allow CNG sector to import LNG for their outlets and for this purpose a summary is being moved to the ECC,” the official added.

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