Shell and Apache sign Egypt’s first fracking contract

Shell Egypt and the Apache Corporation signed Egypt’s first contract for the production of shale gas in Egypt, the oil ministry announced on Wednesday.

The production contract follows years of exploration and feasibility testing by foreign oil companies interested in extracting Egypt's shale gas.

The project, in the Abuel Garadeek region of the Western Desert, involves drilling three horizontal wells with initial investments of US$30-US$40 million from Shell and Apache. Gas will be extracted using a technique known as hydraulic fracturing, or fracking, in which a high-pressure fluid is injected into a well to create cracks in deep rock formations and release natural gas inside.

Hydraulic fracturing has proven controversial in other countries due to what opponents characterize as health and environmental risks. The technique requires vast amounts of water—between 2 and 4 million gallons per well in the United States. The water is mixed with a variety of chemicals to help release gas, some of which are known to be harmful to mammals. Industry claims the additives are no more dangerous than food-grade chemicals, but keep their exact mixtures a trade secret.

If fracking fluids are handled improperly, they can lead to surface water contamination, or seep into ground water if they escape the rock formation being fractured. Protests have also been staged due to air pollution from methane gas, sulfur dioxide and other potentially dangerous emissions. 

However, the technique allows gas to be extracted economically from reservoirs that are not easily accessible by conventional drilling techniques. The technique has fueled a gas and oil boom in North America, opening the way for the United States to push past Russia and Saudi Arabia as the world’s number one oil producer.

The United States energy administration estimates that Egypt has up to 100 trillion cubic feet of technically recoverable shale gas reserves. By contrast, the country is believed to have just 77 trillion cubic feet of conventional gas.

Egypt, whose economic recovery has been hampered by fuel shortages, is eager to tap into these reserves. Petroleum Minister Sherif Ismail noted that the deal signed today will “open up new horizons” for producing unconventional gas in the Western Desert region.

Egypt, which currently has around 663 cubic meters of water per capita, falls below the United Nations threshold for water poverty, which is set at 1,000 cubic meters per person.

Europe and North America have also seen protests over the use of public land for hydraulic fracturing, and concerns that the process is triggering an increase in earthquakes.

Egypt has also seen controversies around fracking. Environmentalists claim that fracking tests near Aswan were responsible for flooding in Faras, a charge that DanaGas, the operator of the well in question denied. 

*This article has been updated after reader comments to reflect the controversy around fracking in Faras since 2009.