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Divine Intervention? Why the US Is No. 1 in Shale


America is the leader of the global shale energy boom, and the rest of the world is racing to catch up. But countries like China and Australia are having difficulty replicating the successes of the US. Whether due to providence, dumb luck, or plain old technological prowess, the US shale revolution just isn’t easily exported. Writing for Forbes, Jeff McMahon explains why.

First of all, America’s existing pipeline infrastructure has been a boon to shale production. The US has the most extensive network of pipelines in the world, and though the system needs updating, it has allowed wildcatters to bring hydrocarbons to market relatively quickly. The US also benefits from world-class drilling expertise, which is in short supply elsewhere around the globe.

But the most interesting point McMahon makes is the role that US mineral and land rights have played in the shale boom:

Individual landowners in the United States can lease mineral rights to their property, a right landowners do not possess in some other nations.

“Here in the states one of things [sic] that draws people to invest is that we have basic contract rights around our mineral interests,” said James Kipp of Wells Fargo Securities. “That’s, you know, kind of a foreign concept in many of the lesser developed and even some of the more developed countries around the globe.”

This is an important point, and it helps explain why oil discoveries Nigeria lead to land confiscation and rioting while similar discoveries in America are more likely to create more wealthy Clampetts.

But McMahon misses one crucial advantage that North American shale has over the rest of the world: geology. For the most part, US shale lies in areas that have been relatively “uncrunched” by tectonic activity. Underground rock layers lie in neat horizontal strata, one on top of the other like a wedding cake. That makes it a lot easier to extract the layers of shale oil or gas with horizontal drilling.

The rest of the world is eager to catch up, but it looks like America will remain at the head of the pack for years to come.

[Image courtesy of Shutterstock]

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  • Corlyss Drinkard

    Why the [sic]? Looks to me like the subject “one” agrees with the verb “draws.”

    • Marcus Miller

      Yeah, but it’s missing the “the”.

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