Shale has transformed America’s energy landscape virtually overnight. In 2005, the U.S. was producing just over 5 million barrels of oil per day; today, that number is well over 9 million. This energy renaissance has prompted no shortage of hand-wringing from the world’s petrostates, jealous of their share of an increasingly crowded global market, and it’s also kicked off a race to see who might be able to catch up to the American boom. And though the U.S. doesn’t have the world’s largest shale reserves, it remains the only country reaping the benefits of commercial production. Why?
The answer, in brief: Shale’s success relies on much more than possessing the resource, and so far no other nation has been able to replicate the long list of necessary ingredients for really benefitting from shale (that includes favorable geology, deep capital markets, a healthy drilling services industry, the space in which to drill, landowner possession of mineral rights to help circumvent local opposition, access to water, and, as we’ve seen most recently, the ability to get off the ground during a period of sustained high oil prices).
Approximating those conditions abroad, however, is not impossible, and countries like China, Argentina, Russia, the UK, and even Saudi Arabia are working on doing so. So how are they doing? So far, the results of their efforts have been uneven, as a FT report on the global state of play for shale shows. The U.K. and Russia, for example, have seen domestic opposition to shale and U.S. sanctions, respectively, limit their pursuit of the resource—though Gazprom has decided to open a Siberian play to development in 2018. Saudi Arabia is faced with water shortages that challenge its ability to extract the resource, but the country nevertheless believes it can increase its output to 500 million cubic feet per day by 2018. According to the FT, China has done the best, after the U.S. The story cites the case of the Fuling field, where “Sinopec, one of the large state-controlled oil groups, has increased production faster than expected, reaching 460m cu ft a day last June.”
This halting, intermittent progress probably isn’t what the companies and governments keen on following the American example were hoping for when they first started chasing the shale bandwagon. For the near future, that is, shale seems set to remain an American-dominated phenomenon—and it could remain so for even longer if global oil prices stay as low as they now are.