A new approach to estimating surface facility costs for shale gas development

Surface facility costs are a significant component of the development costs that account for most of the shale gas development input. In conducting feasibility studies for shale gas development projects, particularly during the preliminary feasibility study stages, better estimation techniques for surface facility costs can help quickly and accurately estimate the input required to unlock shale gas investment opportunities. After investigating the salient characteristics of shale gas surface facilities, this study develops a new estimation approach for shale gas surface facility costs that combines the advantages of considering terrain variance and the law of declining costs. The results of an example in China indicate that this new technique can significantly improve the accuracy of estimating surface facility costs associated with shale gas development. Furthermore, this study can significantly improve the evaluations of the economic viability of shale gas development projects, thereby reducing investment risks and enhancing investment opportunities. (C) 2016 Elsevier B.V. All rights reserved.