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Global Shale Prospects

JPT Editor John DonnellySeveral years into the “shale revolution,” progress remains confined largely to North America. It is a viable question whether the shale oil and gas business will take off outside North America at all, or just at a slower pace.

The reasons for slow growth vary from country to country but center around lack of infrastructure, ownership rights, government and public support, an active service sector that can support the activity, and whether such production makes sense economically.

The growth in shale oil over the past few years has been impressive. Unconventional oil production in the Permian Basin, Eagle Ford, and other areas has lifted output in the state of Texas to 2.7 million BOPD. North Dakota’s production, thanks to the Bakken, has doubled to almost 1 million BOPD. Total US production reached 7.5 million BOPD last year, a yearly increase of 1 million BOPD and, according to a US Department of Energy forecast, could hit 9.3 million BOPD by the end of next year, which would make the US among the top producers in the world.

With oil prices for WTI and Brent still around USD 100/bbl, economics would appear right for continued growth in unconventional E&P. And several countries have unconventional resources rivaling that of North America. Commercially recoverable reserves of tight oil could be double or more those of North America and the geology of many of those prospects is better, according to a study released last year by IHS.

Russian’s Bazhenov shale in Siberia has been called the “next Bakken” and initial estimates suggest it could be the largest shale oil deposit in the world. Shell and Gazprom have begun drilling the first of five horizontal wells there after several years of assessment. Rosneft and ExxonMobil agreed in 2012 to jointly develop the shale and will be undertaking a study to determine the commercial potential of the resources.

The Asia Pacific region holds 74 billion bbl of technically recoverable tight oil resources, according to the International Energy Agency’s World Energy Outlook 2013. The most promising prospects are in China, Australia, and Indonesia.

Most forecasts are optimistic about China’s prospects. It is estimated to hold the world’s third-largest technically recoverable tight oil resources, 32 billion bbl across the Junggar, Tarim, and Songliao basins. Growing oil demand in the country and a supportive government should encourage production. And the country is adept at using hydraulic fracturing and horizontal well drilling because of its abundance of low-­permeability fields. Advanced studies and preliminary drilling by PetroChina, Sinopec Hess, and Shell have already taken place.

A state intervention model for shale oil advancement will help countries such as China develop infrastructure needed for development. Also boosting the country’s chances are the experience that several Chinese firms have gained working in unconventional projects in North America.