North America’s Special Providence in Shale

There are many imitators out there, but only one region currently enjoying a genuine shale boom: North America. China, Australia, Poland, Lithuania, and Ukraine, amongst others, have all tried to emulate the North American shale bonanza. But as the Energy Information Administration (EIA) reminds us, the US and Canada remain the world’s only producers of significant quantities of shale gas. The EIA reports:

The United States and Canada are the only major producers of commercially viable natural gas from shale formations in the world, even though about a dozen other countries have conducted exploratory test wells, according to a joint U.S. Energy Information Administration (EIA)/Advanced Resources International (ARI) study released in June. China is the only nation outside of North America that has registered commercially viable production of shale gas, although the volumes contribute less than 1% of the total natural gas production in that country. In comparison, shale gas as a share of total natural gas production in 2012 was 39% in the United States and 15% in Canada.

This is partly due to the head-start North America is enjoying—the benefit of being a first mover in this new field of energy extraction. But that doesn’t explain why the rest of the world is finding it so difficult to ramp up any kind of commercial production. The fuller explanation is that this shale revolution has been, for a variety of reasons, a uniquely American success story.

North America’s geology was particularly well-suited for horizontal drilling, and much of it had already been mapped out, making it easier to know where to drill. The US already had a pool of investors willing to take risks, to wildcat in new oil and gas plays with new technologies. We also already had the world’s largest network of pipelines to help bring new oil and gas to market, as well as the subsurface mineral rights to give locals an incentive to permit drilling. And finally, unlike China, North America has enough water to use in the fracking process.

Mexico is slowly liberalizing its oil sector. If our southern neighbor opens its doors to the foreign companies with the expertise necessary to extract its prodigious shale oil and gas reserves, the whole of North America will be walking tall in a brand new energy landscape.

Features Icon
show comments
  • Jacksonian_Libertarian

    It’s unlikely that many American fracking companies with their proprietary fracking technology, are going to put themselves at the mercy of foreign governments, until they can’t find any more American shale deposits to exploit. At this time they are only exploiting private lands in the US, and all the Government owned lands are still available for development (California has huge deposits), whenever there is a change in the administration which will allow and encourage that development. In the mean time dealing with greedy government officials in China, Mexico and elsewhere, is going to be a distant 5th or 6th choice.

    • Andrew Allison

      That’s the rational conclusion, but the evidence, across-the-board, is that American companies are very short-sighted and will happily sell their seed corn for immediate profit. China, for example, has arguably benefited far more from gifted than from stolen technology. WRT fracking, the key element appears to be that N. American geology appears to be uniquely suited to it. That plus the first mover advantage appear likely to make the US the low-cost producer for the foreseeable future. The interesting question is: for how long will California continue to sit on its potential Black Gold rush.

© The American Interest LLC 2005-2017 About Us Masthead Submissions Advertise Customer Service