In an effort to capitalize on potential shale gas reserves and meet a rapidly rising domestic demand, the Algerian state company Sonatrach announced last year it will begin production of its shale gas fields by 2020. The $70 billion hydraulic fracturing project is expected to bring in profits from energy exports as well as meet a rising domestic demand.
The project, however, is facing wide public scrutiny. Recent protests across the country have turned violent, as local populations cite environmental concerns over the fracking process. Though the government has been able to contain the protests to an extent, it will need to address these popular concerns to move forward.
Strong Shale Gas Reserves
According to the U.S Energy Information Administration (EIA), Algeria has the third largest shale deposits in the world, with more than 700 tn cubic feet spread across six basins. It is the leading producer of natural gas in Africa and the second-largest gas supplier to Europe.
Gross natural gas production, however, has been slowed in recent years due to a variety of security concerns across the Sahel and inefficient technical expertise and infrastructure in place. Additionally, due to the nature of its condensate and crude oilfields, it has to recycle more than half the gas it produces back to the reservoirs. The process is largely wasteful and results in a lower production value.
The demand for domestic gas, however, is growing rapidly. Domestic consumption has risen from 23.2 billion cubic meter (bcm) in 2005 to 32.3 bcm in 2013. The Algerian Electricity and Gas Regulation Commission projects domestic consumption to grow to 50 bcm by 2020.
The discovery and production of shale gas has the potential to meet this rising demand and allow Algeria to maintain its export markets.
Last year, the government announced plans to create a $100 billion budget for new hydrocarbon development. The exploration project includes testing a dozen wells over the next 7 to 13 years in addition to providing incentives for foreign companies interested in investing in shale gas and shale oil.
Environmental Concerns and Public Protests
While the discovery and production of shale gas has the potential to have a positive impact on the Algerian economy, there are many environmental concerns associated with the production process.
The U.S. EIA estimates that an average shale well can require up to 5 million gallons of freshwater from start to finish. With water resources already in short supply, this could prove a major challenge to the fracking process.
Over the past few months, there have been mass protests across the country in response to the governments fracking plans. Public opposition is rooted in fears of destroying a delicate desert aquifer system shared by Algeria, Libya and Tunisia.
On December 27th 2014, public opposition intensified when the state announced it successfully drilled a well near Ain Salah. Demonstrations turned violent in early March 2015 when protesters tried to stage a sit-in at a facility owned by Halliburton. Police fired tear gas and detained several of the demonstrators.
Environmental protests are rare, especially in the Arab world where political and economic issues tend to be at the top of agendas. But the growing environmental opposition demonstrates popular awareness and appreciation of Algeria’s natural resources.
The government has so far responded by blaming the protesters as being influenced by “foreign powers” and said that it will continue “studies” and the possibility of exploration.
As it moves forward, the Algerian government is likely to see continued opposition to fracking projects. So far security forces have been able to contain unrest, but if violence continues it risks spiralling into a larger security concern.
To quell opposition, one option is to concentrate economic resources to further developing Algeria’s conventional gas production while fracking technology evolves to be more environmentally sustainable. Otherwise, the government runs the risk of contaminating or depleting its nation’s delicate water supply.