Physics Faculty Publications

Document Type

Article

Publication Date

5-2015

Publication Source

Energy Economics

Abstract

To assess the global production costs of shale gas, we combine global top-down data with detailed bottom-up information. Studies solely based on top-down approaches do not adequately account for the heterogeneity of shale gas deposits and hence, are unlikely to appropriately capture the extraction costs of shale gas. We design and provide an expedient bottom-up method based on publicly available US data to compute the levelized costs of shale gas extraction. Our results indicate the existence of economically attractive areas but also reveal a dramatic cost increase as lower-quality reservoirs are exploited. At the global level, our best estimate suggests that, at a cost of 6 US$/GJ, only 39% of the technically recoverable resources reported in top-down studies should be considered economically recoverable. This estimate increases to about 77% when considering an optimistic recovery of resources but could be lower than 12% when considering pessimistic ones. The current lack of information on the heterogeneity of shale gas deposits as well as on the development of future production technologies leads to significant uncertainties regarding recovery rates and production costs. Much of this uncertainty may be inherent, but for energy-system planning purposes, with or without climate change mitigation policies, it is crucial to recognize the full ranges of recoverable quantities and costs.

Inclusive pages

581-587

ISBN/ISSN

0140-9883

Document Version

Preprint

Comments

The pre-printed accepted manuscript, available for download after the publisher's required embargo, is licensed under the Creative Commons CC-BY-NC-ND user license (attribution, non-commercial use only, no derviatives). Permission documentation is on file.

Publisher

Elsevier

Volume

49

Peer Reviewed

yes

Keywords

Shale gas, Extraction cost curve, Global, ERR

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