Perceived Impediments

Even among astute investors, there is a great deal of misinformation; and such misinformation can mean missed investment opportunities.  Plays are often overlooked because of perceived impediments; yet many of these can be addressed and overcome by using suitable means.  Such issues include:

  • lack of fresh water
  • high clay
  • depth of deposits
  • complexity of deposits
  • poor infrastructure  (rigs, roads, pipelines)
  • rugged terrain
  • danger of earthquakes
  • opposition from local population

Yet these issues are often easily addressed.  For example, fresh water is no longer essential for hydraulic fracturing; brines at moderate depths are found at most shale plays (for non-accidental geologic reasons); such brines are easily recovered, have no other commercial value, and can be substituted for fresh water.  High clay content sometimes means rock that will not fracture, and can be taken as cause to abandon a play; yet fracturablity depends equally well on silica content.  Arguments have been put forth that plays are either too shallow (endangering ground water) or too deep (leading to higher drilling costs), but these issues can be addressed, often at much lower cost than that of alternative energy sources.  Cost depends on the price of natural gas, and in many regions of the world (Europe, UK, Japan, China) the cost of LNG is far higher than the cost of shale gas, even for deep deposits.

We feel that none of the perceived impediments are not necessarily show-stoppers, but that each must be thoroughly studied before an investment decision is made.  We also feel that the results of such an investigation can lead to remarkable opportunities that would otherwise be missed.

A critical issue for all shale plays is potential opposition from the local population.  This must be anticipated and addressed through stakeholder and community engagement.