The US Unconventional Gas Experience - Can the Model be Repeated in Other Countries?

Abstract

Abstract The US has experienced massive increases in reserves and production of natural gas from unconventional reservoirs. The scale of this increase is unprecedented and is the envy of the rest of the world. Largely as a result of general regional studies by the US Energy Information Agency (EIA) and others similar organizations which promise similar, and in some cases, even higher resource volumes than in the US, many other countries have embarked on unconventional gas exploration efforts. This presentation will describe the impact of US shale gas and the success factors responsible for its growth. These factors include ‘below ground’ factors such as favourable geologic conditions, presence of natural gas liquids and abundance of well and reservoir data. These factors are, in varying degrees, present in other countries and regions as well. However, the US also enjoys a number of unique ‘above ground’ factors such as a dynamic service sector, low cost operators, favourable tax and regulatory regime, easy access to pipeline capacity, availability of capital and technology, transparent gas prices, and property rights to land owners. These factors are much harder to find in other countries and regions and are more crucial, it can be argued, for development of unconventional gas than for conventional gas. Thus, the answer to the question "Can the US model for unconventional gas development be repeated elsewhere?" is unfortunately, "NO". Unless governments and regulatory agencies take strong steps to improve their ‘above ground’ score, it is unlikely that these countries will enjoy the success of unconventional gas development to the same extent as the US.