The U.S. Department of Energy recently emerged with a wide-ranging analysis of technically recoverable shale oil reserves across 42 countries. The new analysis indicates, in short, sufficient global reserves to respond to more than ten years of worldwide oil consumption.
Specifically, the report mentions 345 billion barrels, or roughly 10 percent of the world’s crude. However, only the U.S. and Canada currently produce oil and natural gas from shale reserves in quantities high enough for commercial purposes.
Meanwhile, Russia commands the world’s largest shale reserve, with an estimated 75 billion barrels. After the U.S., China follows with 32 billion barrels, Argentina with 27 billion, and Libya with 26 billion, reports the Financial Times.
As far as natural gas is concerned, the shale reserves in question imply an increase in global natural gas reserves by around 47 percent to a total of 22,822 trillion cubic feet.
The report goes on to indicate that shale production has also been vital in capping crude prices at around $120 per barrel, an economic advantage for Western nations, which have allowed the imposition of sanctions on Iran. Meanwhile, global demand remains at around 90 million barrels per day.
North America has, over the past few years, started to develop an expansive pipeline network, which will contribute to healthy levels of fracking and has resulted in growing production volumes. One thing that’s helping the U.S. is the system of allowing private landowners rights to any hydrocarbons located underneath their properties. It’s a highly attractive incentive, and it’s clearly working.
From the Financial Times:
Adam Sieminski, head of the department’s Energy Information Administration, said: “Today’s report indicates a significant potential for international shale oil and shale gas, though the extent to which technically recoverable shale resources will prove to be economically recoverable is not yet clear.”
Shale Future
The implications of this report are clear. As more and more nations cash in on the shale craze, it is likely that the Department’s report will need further revision—and it’s likely that any such revisions will be upward, not downward.
For example, the Department’s estimate for the U.S.—currently at 7,299 trillion cubic feet—is as much as 10 percent higher than the previous estimate, which was made just two years ago in 2011. Today, shale accounts for 30 percent of oil and 40 percent of natural gas production.
And such increases and shifts are occurring up in Canada too. Over in the U.K., increasing attention is being paid to enabling the exploitation of British shale, with legal and tax structures being revised in order to incentivize international oil majors.
There is a real shift taking place in the production dynamics of energy around the world, and as more countries harness infrastructure to set up a sustainable shale production model, energy estimates can only go up. A list of nations that are actively looking into developing indigenous shale production currently includes Argentina, Australia, China, England, Mexico, Russia, Saudi Arabia, and Turkey.
China is well situated to become a major player in the international gas market. The report estimates that China possesses the largest reserves of technically recoverable shale gas, with 1.1 quadrillion cubic feet. Argentina follows, with 802 trillion cubic feet. The U.S. comes in at a distant fourth with 665 trillion cubic feet, with Canada coming after that with 573 trillion cubic feet.
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When you consider that here in the U.S. we’re presently producing natural gas in so much volume that we literally cannot handle all of it and must flare off excess gas, it really puts China’s assets into perspective.
One thing to note is that all of these dramatic figures are covered by the disclaimer of being technically recoverable. What that means, in short, is that these are uncertain figures. Present technology may enable the recovery of these volumes, but with further advances in technology and infrastructure, more volumes may become accessible. See, for example, the Department’s revision of American natural gas reserves.
Another issue is economic feasibility. Poland, for example, recently advertised thrilling estimates. These were subsequently revised downward sharply.
And on top of that, exploration revealed that much of these reserves were located in such difficult territory as to render development nearly economically unviable.
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