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US companies keen to invest in Algerian unconventional oil, gas: Moniz

Highlights

US companies are interested in developing unconventional oil and gas resources in Algeria, US Energy Secretary Ernest Moniz said Sunday.

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"Our companies are interested in the Algerian market because they have extensive experience in the field of shale oil and gas exploitation, which has enabled us to realize an economic boom and energy independence," he said during an official visit to Algiers.

After meeting with Algerian energy minister Youcef Yousfi, Moniz said he saw numerous investment opportunities for US firms in Algeria's energy sector. The experience gained in recent years in the US shale oil and gas sector could be put to use in Algeria, he said.

Regarding deepwater oil and gas development, he said the expertise of US producers could be transferred to Algeria's offshore areas in the Mediterranean, where water depths are comparable to those in the US Gulf of Mexico, he added.


Yousfi said energy security was vital for Algeria and pointed out that non-conventional oil and gas resources had helped the US achieve that security.

Algerian and US energy officials discussed risks to groundwater associated with shale oil and gas development and precautions that could be taken during the production process.

"It turns out that exploiting non-conventional hydrocarbons is not more polluting than exploiting other resources," Yousfi said. "Algeria is currently evaluating the potential for shale oil and gas, attempting to determine the quality of the rock while studying all potential environmental impact," he added.

Yousfi described recent media reports of pollution and environmental damage from gas development as exaggerated.

"It is absolutely vital for us to use all possible resources to achieve energy security," he added.

Separately Sunday, Algerian Prime Minister Abdelmalek Sellal said his government would seek to assure Algeria's long-term future as an oil and gas exporter, while also satisfying domestic energy requirements.

"The government will ensure the long-term energy security of Algeria and maintain its position as an active player in the international oil market, intensifying exploration and development efforts and bringing new oil and gas deposits on stream to return to production growth," he said in a speech before the National Assembly outlining the policies of the country's new government, appointed after Algeria's April 17 presidential election.

Pilot drilling would be carried out to determine production methods for unconventional oil and gas resources, Sellal added.

"We have adopted a new law on shale gas and we must explain to our citizens that we cannot put off the long-term exploitation of the resource," he said. "This development is not for today."

Sellal said groundwork for long-term shale gas exploitation would take place over the next five years with the implementation of the pilot drilling program.

Executives of Algerian national petroleum company Sonatrach would be trained in best methods of shale gas production. A higher education program related to shale gas would also be established, he said.

The preliminary program outlined Sunday indicates a significant escalation in Algeria's resolve to pursue technically challenging non-conventional oil and gas development. Less than two weeks ago, the country's council of ministers said it would take between seven and 13 years to confirm Algeria's estimated 700 Tcf of recoverable shale gas resources, even as it gave formal approval to the development of unconventional hydrocarbon deposits.

The country also has an estimate 300-500 Tcf of tight gas resources.

"Shale gas exploitation has been made necessary by the need to ensure Algeria's energy security for the very long term," Sellal said. "The country needs in future to bolster its oil and gas reserves in order to maintain export volumes and preserve its position as an active player in in the international petroleum market."

He estimated Algeria's current hydrocarbon reserves at 12 billion barrels of oil and 4 trillion cubic meters of gas, predicting this would be insufficient for the country to maintain its current export volumes through 2030.

"If the reserves remaining in 2030 are at the current levels, we will cover domestic demand but there will be very little for export," Sellal said.

Algeria's new government hopes to reverse a declining trend in gas production since 2005. Oil output also fell last year.

Sonatrach in January said combined Algerian oil and gas production fell 4% in 2013 from the previous year to 190 million mt of oil equivalent (3.81 million boe/d), while exports declined 7% to 100 million mtoe.

Algeria pumped 1.15 million b/d of crude in April, the latest Platts survey of OPEC production showed.

--Lies Sahar, newsdesk@platts.com
--Tamsin Carlisle, tamsin.carlisle@platts.com
--Edited by Meghan Gordon, meghan.gordon@platts.com