As technological advances help lead the US shale gas revolution, other countries are being left behind despite the abundance of shale reserves in their own backyards.
However, the potential of shale plays across the globe – including countries such as China and India as well as parts of Africa and Latin America – guarantees such development will come abroad eventually. And those countries and others looking to replicate US hydraulic fracturing success to extract shale gas and oil will likely look toward North American oilfield suppliers to gain expertise, suggested a report by EnergyPoint Research, an independent oil and gas research firm.
Shale oil and gas production in the US is expected to double by 2035 based on International Energy Agency figures, the firm reported. Shale gas share of total US oil and gas production could increase from just more than 20% in 2010 to close to 50% in 2035, while shale oil’s share could jump from less than 10% to about 20% for the same time period.
“North American E&P companies and their supplier partners are the de facto world leaders in managing and developing these unconventional fields because of the continent's early identification and ready exploitation of its shale resources,” the report said. “The advantage goes beyond a simple head start. Industry suppliers with proficiency in shale development rank among the highest in customer satisfaction of all the upstream supplier sectors that EnergyPoint tracks in terms of overall satisfaction, performance, reliability, technology, and engineering. What’s more, these performance advantages exist across contract drilling, oilfield services, and equipment suppliers.”
The report showed that shale-oriented applications had a higher three-year rating as a percentage of industry-wide average than other applications in just about every category: satisfaction with technology and engineering for land drillers, service suppliers, and product suppliers; pricing and contract terms along with quality of personnel for land drillers, service suppliers, and product suppliers; performance and reliability; drilling, equipment, and tools for rig-related, drill bit, and other downhole services; completion-related services including wireline logging, LWD, coring, fluid analysis, and well testing; and drilling-related services including directional drilling and fluids services. The only area in which non-shale applications rated higher than shale-oriented ones was for MWD and cementing.
That track record along with performance so far will make shale-oriented companies a highly sought commodity for overseas countries, according to EnergyPoint.
Among the companies the firm ranked very high in total satisfaction in shale-oriented applications, and thus likely to benefit, were Davis-Lynch, Derrick Equipment, Helmerich & Payne, Pason Systems, and Scientific Drilling. Very high rankings in technology and engineering went to Davis-Lynch, Derrick Equipment, Newpark Resources, and Pason Systems.
“It’s difficult to deny the potential world of opportunity that global shale represents for the industry. Clearly, enthusiasm for the practiced North American perspective is pervasive,” the report explained.
“As ExxonMobil CEO Rex Tillerson told Fortune Magazine recently regarding international shale, ‘[Foreign governments and NOCs] admire our industry because of what we can do. They are almost in awe of what we are able to do.’ Suppliers deserve much of the credit. And it’s our belief they, and their stakeholders, will benefit enormously as the global shale story unfurls,” EnergyPoint said.
Dry shale gas production increased 23%, going from about 0.39 Tcf in 2000 to 4.8 Tcf in 2010, according to a 2011 report published by the US Energy Information Administration (EIA). Wet shale gas reserves jumped 21%, increasing to about 60.6 Tcf by the end of 2009.
And production is expected to increase. The rise in production is predicted by some energy experts to position the US as an energy independent nation and boost the nation into becoming a leading supplier of natural gas when infrastructure is fully developed and government approval is granted for export facilities such as for LNG.
Technically recoverable shale gas resources in the US stand at about 862 Tcf, according to the EIA. If recovery rates increase, the US could add even more production.
The estimated amount of technically recoverable shale gas resources in 32 countries the EIA studied was 5,760 Tcf. “To put this shale gas resource estimate in some perspective, world proven reserves of natural gas as of Jan. 1, 2010, are about 6,609 Tcf, and world technically recoverable gas resources are roughly 16,000 Tcf, largely excluding shale gas. Thus, adding the identified shale gas resources to other gas resources increases total world technically recoverable gas resources by over 40% to 22,600 Tcf.”
Countries with an estimated technically recovered shale gas resources above 150 Tcf, according to the EIA, include France, 180 Tcf; Poland, 187 Tcf; US, 862 Tcf; Canada, 388 Tcf; Mexico, 681 Tcf; China, 1,275 Tcf; Australia, 396 Tcf; South Africa, 485 Tcf; Libya, 290 Tcf; Algeria, 231 Tcf; Argentina, 774 Tcf; and Brazil, 226 Tcf.
However, the US has outpaced the others in developing shale gas resources by its use of hydraulic fracturing.
“Of course, some regions may be extra guarded in adopting processes that are met with significant concerns, even opposition, over environmental issues,” the EnergyPoint Research report pointed out. “But in a time of pandemic recession and increasingly tenuous geopolitical proceedings, the promise and magnitude of the resource seems too great to for all to discount.”
Other countries already have begun to tap the US knowledge base to share such information. Statoil is among those companies based outside the US that have taken interest in North America’s shale plays. The company has ownership interests in the Eagle Ford and Marcellus shale gas plays as well as the Bakken and Three Forks oil plays.
“As the shale revolution spreads, host countries’ decisions on whether or not to utilize techniques such as hydraulic fracturing will be made with the pro-shale chorus singing a song of solvency, security and even sovereignty,” the report said. “Whatever the lyrics, the melody will be economic. It will also prove impossible to ignore.”
Contact the author, Velda Addison, at firstname.lastname@example.org.
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