Market analysis | global shale
capital markets, ending foreign exchange restrictions, devaluing the currency, cutting red tape and, above all, initiating subsidy reductions. The Vaca Muerta shale formation is almost double the size of the Eagle Ford shale play and its current well results are in line with the best shale plays in the US. The Vaca Muerta is also relatively sparsely populated, has sufficient water supplies and, as a further bonus, a newly discovered source of suitable sand. The Argentinian government is now courting
potential foreign investors and shale was recently heralded as “the future of hydrocarbons in Argentina “by Daniel Gonzalez, Chief Financial Officer of YPF, the country’s largest oil company. Foreign energy compa- nies including Chevron, Dow Chemicals, ExxonMobil and Total, are present in the country and a pilot project, if successful, could open up more than $10bn more investment from ExxonMobil. Most importantly, well costs are coming down; Chevron told CNN Money it had reduced its drilling costs from $14m to $11.2m per well in the final three months of 2015. Highly competitive acreage prices, compared to the US, and easing of import controls on specialised rigs and fracturing equipment could also help allow Argentina’s shale oil and gas production to finally take-off.
The impact of shale Until relatively recently the benefits of the shale energy revolution were largely confined to the US. For the consumer, cheap oil and gas for heating, cooling and transport increased disposable income. Meanwhile, cheap feedstocks for industry have lowered costs and increased competitiveness. The displacement of coal in power generation has also contributed to a 12% decline in US energy-related carbon emissions in the decade up to 2015.
The sheer scale of shale oil and liquids output has
propelled the US to become the world’s largest oil liquids producer with a production of 14.8 Mb/d. That
China and Argentina are planning to become bigger players in shale production
compares to Saudi Arabia’s 11.7 Mb/d and Russia’s 11.5 Mb/d. The US is, therefore, now one of the three giants of the oil
market.Commensurately, OPEC’s share of US oil imports has reached a 30-year low. The oil price war initiated in summer 2014 - primarily by Saudi Arabia – has hurt all oil producers but has certainly not killed the US shale industry. Many argue it has actually strength- ened it. OPEC’s recent decision to cut output is likely to provide a boon to US shale drillers, who will revive drilling using the benefits of the efficiency gains they have developed in recent years. The expansion in shale gas output is equally momen-
tous. It has not only reversed expectations of the US having to import LNG, but also underpinned the seminal entry of US LNG on world markets. By 2020, with at least five LNG export plants in operation, the US could be exporting as much as 10 Bcf/d of LNG, positioning it as a rival to Qatar and Australia. The geopolitical consequences of the US shale energy boom have yet to work themselves through.
About the author: Nicholas Newman is an energy journalist and consult- ant with a particular focus on investment, risk manage- ment, geopolitics and trading in the global offshore and onshore oil&gas industries.
Follow us on...
Be the first to know when we publish a new edition, plus industry news and updates on our conferences.
www.twitter.com/pipelinecoating
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34