RPT-COLUMN-Shale 2.0, going global: Kemp

Mon Nov 18, 2013 2:01am EST
 
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By John Kemp

LONDON Nov 15 (Reuters) - How quickly the shale revolution spreads from North America to the rest of the world is the single most important factor affecting the outlook for oil and gas markets over the next two decades.

For pessimists, the conditions that made the shale revolution possible in the United States will be difficult to replicate, slowing the spread of shale oil and gas production.

In its 2013 World Energy Outlook, the International Energy Agency projects shale oil production will reach almost 6 million barrels per day (bpd) by 2030, about 6 percent of global supplies.

But three quarters of the total (4.3 million bpd) will still come from the United States. Despite large resources identified elsewhere, the agency projects there will be only minor production from shale in Russia (450,000 bpd), Argentina (220,000 bpd) and China (210,000 bpd), and little elsewhere.

The agency's caution is echoed by the highly respected oil and gas team at Bernstein Research, who warn that differences above ground and below ground will slow the spread of shale gas production in the rest of the world.

According to Bernstein, no other country has the same favourable alignment of mineral rights with landownership; a vibrant exploration and production industry matched with deep financial markets; and extensive network of gathering and transmission pipelines.

Below ground, Bernstein points to sharp differences in the quality of shale resources. Every formation, or play, is different. The countries with a large volume of shale gas and oil resources are not necessarily those with high-quality shales that can be developed easily.   Continued...