Why the World has not been able to mimic

the success of US shale revolution!

Its been almost a decade since the US shale revolution began, which was one of the major reasons of the
2014 oil price crash. The US is now becoming self-sufficient in catering its energy demand by extracting
natural gas from the shale plays, some of which are the PERMIAN, EAGLEFORD AND MARCELLUS
producing 5,6 and 13 billion cubic feet per day (bcfd) respectively.

Shale gas deposits have been found almost in every continent of the globe but the capability to extract
successfully in commercial value and transform it into a national energy boom has achieved only by the
US.

The United States, Canada, China, and Argentina are currently the only four countries in the world that
are producing commercial volumes of either natural gas from shale formations (shale gas) or crude oil
from tight formations (tight oil). The United States is by far the dominant producer of both shale gas and
tight oil.

Canada is the only other country to produce both shale gas and tight oil. China produces very small
volumes of shale gas, while Argentina produces some small volumes of tight oil. While hydraulic fracturing
techniques have been used to produce natural gas and tight oil in Australia and Russia, the volumes
produced did not come from low-permeability shale formations.
The shale technology has basically been referred to the use of combination of horizontal drilling and
then hydraulically fracturing the low permeability formation to make the natural gas flow from the
fractures to the wellbore.

Years after the shale boom started in America, the rest of the world is still disappointingly behind in
developing their shale resources, which makes us to think that: why has the rest of the world left behind
the US shale boom?

According to experts, six main reasons are:

1. UNATTRACTIVE PRICE:
The price of natural gas in 2008 were 12 $ per million BTUs when the drillers were applying the technology
of fracking, which was an attractive commodity for those who wanted to make money. Natural gas glut
made it no longer profitable for drilling for the expensive shale. Unconventional drilling practices have
become unattractive abroad since the US has stopped importing gas and started exporting gas which has
made price fall globally.

2. REGULATORY FRAMEWORK:
The regulatory framework in US has helped independent drillers to make use of hydraulic fracturing and
horizontal drilling. The regulations and ban on fracking in European countries and sanctions on Russia has
not enabled the transfer of technology to tap into shale plays. The energy companies lose their interest
after investment in prospecting countries when they must face strict regulations, non-compliance and
delays in approvals of licenses by the regulatory bodies.

3. PROPERTY AND MINERAL RIGHTS:

In United States, property owners enjoy rights of leasing their property to energy companies on their
own while in other countries the citizens are not allowed to do so.
"Here in the states one of things that draws people to invest is that we have basic contract rights around
our mineral interests," said James Kipp of Wells Fargo Securities.

4. INFRASTRUCTURE:
US shale plays are located near the pipelines and facilities required for processing the gas to bring the gas
to the market. Most countries lack the infrastructure of gas supply and therefore will need to invest
billions of dollars to capture the market.

China has the world's largest reserves of shale gas, and an upcoming shale competitor to US, but China is
facing difficulty in developing them at a fast rate because of the lack of infrastructure of gas deliverability.

5. WATER:
Producing from shale requires the formation to be penetrated by a horizontal well and then fracturing the
rock along many directions by injecting high pressure water mixed with chemicals to make pathways for
gas to escape out.

The water is polluted by pollutants and different radioactive minerals and much of the water remains
underground.

So, when considering a frack job, a huge amount of water will be required and in places where the
population centers are situated, like in China, water is becoming scarce.

6. EXPERTISE:
With no doubt to say, hydraulic fracturing is a pure American technology and credit remains to them for
developing and mastering the technique to extract gas from rocks that were considered impermeable in
previous decades.
The technology developed in the US and the experts in the fracturing and shale geology developed with
it. To develop these resources in other countries require flying those experts from US to countries
developing the resources which makes the cost of shale development unattractive to the investors.

Expertise is so much concentrated in the US so that the experts would have to be taken off from their
jobs for resources to be developed abroad. Geologists are also in very much demand because each shale
formation presents unique challenges.

The technology transfer from the Eagle ford to abroad is not an easy task and requires a lot of work.

REFERENCES:
www.forbes.com/sites/jeffmcmahon/2013/04/07/six-reasons-fracking-has-flopped-
overseas/#27a7d0864ef7