The American Interest
Analysis by Walter Russell Mead & Staff
America Leads World in Energy Revolution

The U.S. is already reaping the benefits of new energy extraction techniques, but other gas-rich nations are having trouble achieving similar results. The basic obstacles are the same everywhere: environmental worries, government hangups, and a lack of technical expertise and infrastructure related to fuel extraction. The Wall Street Journal details their problems:

Poland was once regarded as one of the more promising plays, but early wells have hit less gas than expected. In addition, community wariness of drilling and changes to the government’s tax and royalty rules have dampened industry enthusiasm. Exxon Mobil Corp., an early proponent of Polish shale, decided to throw in the towel after drilling just two wells, saying it didn’t find enough oil or gas to justify additional drilling.

China is believed to have more shale oil and gas than the U.S. The problem is that most of it is in arid or heavily populated areas; oil companies worry they won’t be able to obtain enough water to hydraulically fracture the rock—the process needed to free hydrocarbons from shale. “To create a flat drilling pad, we almost always have to take out some part of a hillside and basically someone’s rice paddy,” says Simon Henry, Royal Dutch Shell PLC’s executive director for the Asia Pacific region.

Argentina recently nationalized the assets of a Spanish company that discovered an enormous shale deposit there that is estimated to hold nearly one billion barrels of oil. This has chilled outside investment, which already suffered from rules that made it difficult to import needed technology and export potential profits. Houston-based Apache Corp., which holds rights to drill in 450,000 acres of Argentine shale, says it can cost twice as much to drill a well there as the U.S., and then two to four times as much to frack the well so it can begin producing.

The energy revolution will be a difficult force to hold back. Most of these countries will eventually sort out their problems, especially when they see how well it’s paying off in the U.S. But for the time being, it looks like America has a sizable head start.

Published on December 3, 2012 3:32 pm