Shale Gas Could Be the Next Big Thing, BCG Says

An oil derrick is seen at a fracking site for extracting oil outside of Williston, North Dakota, on March 11, 2013. (Reuters Photo/Shannon Stapleton)

By : Gabriel Kereh | on 9:08 PM April 29, 2013
Category : Business, Commodities, Environment, Featured

An oil derrick is seen at a fracking site for extracting oil outside of Williston, North Dakota, on March 11, 2013. (Reuters Photo/Shannon Stapleton) An oil derrick is seen at a fracking site for extracting oil outside of Williston, North Dakota, on March 11, 2013. (Reuters Photo/Shannon Stapleton)

Shale gas could serve as an alternative energy source for Indonesia, lessening the country’s reliance on other types of fossil fuel such as crude oil and natural gas, the Boston Consulting Group says.

“When you’re moving into a shortage situation, one of the big questions is, where are there potentially new economic sources of energy?” Ming Teck Kong, a principal at BCG based in Singapore, told the Jakarta Globe in Jakarta last week. “And when people look around the world, they look and see very frequently shale gas resources.”

According to the US Energy Information Administration, shales are fine-grained sedimentary rocks that usually contain natural gas and petroleum, which are embedded between layers. After drilling into the shale, water is pumped, and the ensuing pressure forces the hydrocarbon particles to be released and collected for processing.

Indonesia’s abundance of crude oil and natural gas indicate that shale lies in formations below ground and can be extracted, the BCG says. The website of upstream energy resources regulator SKKMigas shows that Indonesia’s potential shale gas reserves are estimated to be as much as 574 trillion square cubic feet (tscf), which would be more than the 453 tscf estimated for coal bed methane and 334 tscf for natural gas.

“This abundance in fossil fuel would usually have great correlation with the existence of shale gas,” said Soon Ahn, a BCG partner and managing director based in Seoul.

EIA data suggests a total of 6,622 tscf of shale resources can be recovered in 32 countries, excluding Indonesia.

The United States and China currently are the world leaders in shale gas technology, BCG says, and Indonesia still needs to explore areas such as Sumatra and Kalimantan for potential shale gas resources.

Economic and industrial growth in Asia could be a driving force behind exploration for shale gas, with growth in energy supplies lagging demand.

“We are in a unprecedented area of energy demand growth. Asia over the past 20 years has added a United States’ worth of energy demand,” Ming Teck said. “Despite its great potential, Indonesia is still in the very early stages of shale gas development.”

Shale gas, and the process for its extraction, has been controversial abroad.

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