The global unconventional gas market is largely fragmented with a large number of local players and only a few international companies, reports Transparency Market Research (TMR) in a new market study. While the shale gas market is highly fragmented with top three players, namely Chesapeake Energy, Devon Energy, and Exxon Mobil collectively holding 19.9% of the overall shale gas market in 2012, the coal bed methane (CBM) market is considerably consolidated with BG Group, Dart Energy, and Arrow Energy together holding 62.5% of the overall CBM market in the same year.
“Joint ventures are a favored growth model of top companies in the global unconventional gas market,” says a TMR analyst. A case in point is Anadarko Petroleum Corporation. The company recently entered into joint ventures with a subsidiary of Korea National Oil Corporation (KNOC), to strengthen its financial position.
Focus on reducing greenhouse gases in the utilization of shale gas is also what top companies in the global unconventional gas market are focused on.
Efforts to reduce reliance on conventional gas sources is the major factor driving the global unconventional gas market, points out TMR analyst. The use of natural gas as a mainstream fuel in place of crude oil is strongly catching up, as it is less harsh on the environment. In 2010, unconventional gas accounted for more than 45% of the overall natural gas supply in North America and it is expected to reach 80% by 2040.
Growing foreign investments by Asian companies is also a major factor propelling the growth of the global unconventional gas market. Asian companies are entering into the unconventional gas market by means of acquisition of assets, predominantly in North America.
Governmental support to boost production of unconventional gases is also fuelling the growth of this market. The Global Shale Gas Initiative (GSGI) introduced by the U.S. Department of State is a major initiative that aims to identify and develop shale gas resources in many parts of the world.
Excessive water utilization and water contamination during unconventional gas production is a major factor impeding the growth of this market. For instance, the wastewater released in shale gas extraction contains organic and inorganic chemicals, radioactive materials, and metals. Hydraulic fracturing technique used in conventional gas production has caused earthquakes, such as in the Cuadrilla shale gas operations in the U.K.
The high cost of production of unconventional gas over conventional gas is also detrimental to the market’s growth. This is because the production of unconventional gas involves horizontal drilling and hydraulic fracturing techniques, which is expensive than vertical drilling used for conventional gas.
The unconventional gas market is expected to reach a valuation of US$126.93 bn by 2019, states TMR. At present, tight gas is largely produced and held 44.4% of the overall unconventional gas production in 2012. However, shale gas is anticipated to account for over 47% of the global market by 2019 due to technological advancement for the development of shale reserves.
The U.S. is the leading producer of unconventional gas due to vast reserves and technological advancements for the development of shale reserves.