Petroleum Economist Maps, Books and Reports 2 | Page 2

Shale gas
The slow rise of global unconventional gas
The world has 7,300 trillion cf of shale to exploit. Development has been slow outside North
America, but momentum is building

B

LACKPOOL, a down-at-heel resort
on England’s rainy northwest
coast, hardly feels like an energy
capital-in-the-making. In the UK, it is
famous for its tower, its tat and its
windswept pier.
But global renown may be on its
way. The area around Blackpool
probably holds 1,300 trillion cubic
feet (cf) of shale gas, making it far
bigger than the UK’s conventional
reserves, says the British Geological
Survey. Spurred by the size of the
prize and generous new tax breaks
from the UK government, drillers are
piling into the area. British press
have already labelled Blackpool the
“new Dallas”.
It isn’t there yet. Exploration has
barely begun. Protesters are still
trying to hold up drilling. No one yet
has any idea how easy the geology
will be to exploit. Meanwhile, the
countr y keeps sucking in Qatari
liquefied natural gas (LNG) while
subsidising costly renewables. British
shale gas remains a virtual source of
supply, not a real one.
That’s true in every other country
outside North America. As Petroleum
Economist’s survey on shale gas this
month shows, the US unconventional
surge – a key part of that country’s
recovery from the financial crisis –
has yet to be repeated overseas.
Some of the progress – or lack of
it – has been truly disappointing. In
Poland, seen just a few years ago as
the likeliest major shale-gas producer
in Europe, several drillers have left
the country. Complex geology is partly
to blame. But, as our piece on Poland
argues, vested interests have also
emerged to stymie plans that could
have freed the country from Russian
gas supplies.
Governments elsewhere in Europe
are doing their best to ignore the
economic opportunity offered by shale
gas. France has banned hydraulic
fracturing (fracking) outright – a decision that panders to fear-mongers’
misinformation about shale gas and
would look silly even if the French
economy were thriving, which it is not.
Germany’s coalition government is
also suspicious of fracking. Bulgaria
has put a moratorium on the practice.
Romanian protesters are trying to stop
drilling. And so on. Meanwhile the EU
continues to preach about climate
change to the rest of the world while
2

the continent’s coal use rises. (By
contrast, the substitution of coal with
shale gas in the US has sent its emissions tumbling.)
Different barriers have arisen to
stall shale elsewhere. Two years ago,
Algeria was shale gas’s next big thing.
International firms have signed some
agreements, but little is being done
in its remote plays. Politics has left
Mexico’s abundant shale-gas reserves
untapped, even while the boom
continues across the border. South
Africa hasn’t figured out a strategy
to fracking its promising reserves.
State-owned firms in China haven’t
shown much nous in opening up the
country’s shale.
Even in Canada, where drillers
have found and proved much gas, the
sector is now in neutral. The surfeit
of supply in the US has decimated
Canadian exports, forcing down its
production.

Vive la revolution!

But only a true shale Pollyanna would
think the sector is not progressing.
And it was never going to happen
overnight. American engineers and
geologists took decades to hone
hydraulic fracturing and horizontal
drilling into viable shale-busting
techniques. The good news is that
the hard, technological progress has
been made. But drillers will still need
patience as they figure out how to
apply the methods to shales that can
be vastly different from country to
country.
But things are moving. China is a
good example. Government targets
for shale-gas output will not be met.
But the sector, including gasfield
services, is beginning to take shape.
Table 1: Top 10 countries with technically
recoverable shale gas resources
Rank
Country
Shale gas (tcf)
1
China 1,115
2 Argentina 802
3
Algeria 707
4
US 665
5
Canada 573
6
Mexico 545
7 Australia 437
8
South Africa
390
9
Russia 285
10
Brazil 245
World
Total 7,299
Source: EIA

As our lengthy article on the country’s
shale gas says, the reserves are too
big – the world’s largest – and the
government too determined to exploit
them. Eventually, China will be a major
shale-gas producer.
Elsewhere, shale-gas prospects
are growing daily. Who five years ago
would have expected Saudi Arabia,
home of easy oil, to be fracking the
k i n g d o m ’ s u n c o nve n t