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Market analysis | global shale

Global shale: set to take-off?

US shale production has had a huge impact on the oil&gas sector and on the country’s economy. Nicholas Newman considers shale opportunities in North America and beyond

Technological innovation and the high ‘Henry Hub’ US natural gas prices during 2005 sowed the seeds for the take-off in North American exploration and production of shale oil and gas. Surprisingly, however, a decade later only four countries - the US, Canada, China and Argen- tina - have reached what can be described as commer- cial scale production. And the US remains the big player, accounting for close to 90% of global shale gas produc- tion of 42 Bcf/d (billion cubic feet per day) last year. US shale gas production stood at 37 Bcf/d (billion

cubic feet per day) in 2015 - more than half of all US natural gas production. The Marcellus and Utica shale plays of the north-east of the country produced the bulk of this, at around 22.63 Bcf/d. Canada, which began shale production in 2008 and is the world’s second biggest player, produces just 4.1 Bcf/d of shale gas. China, meanwhile, which has drilled over 600 shale gas wells to date, produces just 0.5 Bcf/d. And Argentina, despite having considerable oil and gas shale resourc- es, produced just 0.07 Bcf/d at the end of 2015, according to data from the US Energy Information Administration (EIA). From 2015 to 2040, however, world shale gas

production is expected to grow to 168 Bcf/d and, by that time according to the EIA, shale gas will account for

30% of the world’s natural gas production. In the US, shale gas production is forecast to more than double to 79 Bcf/d over this period, taking it to around 70% of total US natural gas production. China is expected to produce 13 Bcf/d by 2035, equivalent to 40% of the country’s natural gas production, according to BP Energy Outlook 2016. Together, the US and China will account for 70% of the world’s shale gas output, while in both Canada and Argentina shale gas output is predicted to grow. Today’s four producers are expected to be joined by Mexican and Algerian shale gas production after 2020 and 2030 respectively (Figure 1).

The story of US shale Frenetic drilling in more and more acreage, a direct response to the rising trend in world oil prices, resulted in the US nearly doubling shale output between 2008 and 2015 to 9.6 million barrels a day(Figure 2). The Permian, Eagle Ford, the STACK (Sooner Trend Anadarko Basin Canadian and Kingfisher Counties) area west of Oklahoma City, and North Dakota’s Bakken shale plays are currently among the most productive and are largely profitable at pricing of $50 a barrel. US shale now includes some of the world’s lowest cost sources of new oil. According to energy consultants

December 2016 | PIPELINE COATING 11

Main image: The US

accounts for 90% of world shale oil and gas production

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