U.S. has big edge on world in shale oil and gas development, experts say

Posted Wednesday, Mar. 06, 2013  comments  Print Reprints

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HOUSTON -- When global energy players compare the opportunities for shale oil and gas development around the world, it becomes clear that the United States, not just the Pennsylvania community portrayed in the recent Matt Damon movie, is the real Promised Land.

Nowhere else in the world do the factors exist that allowed the U.S. energy industry to rapidly build new oil and gas production, a number of speakers told audiences at the CERAWeek energy conference. From private land ownership to a vast existing infrastructure of drilling equipment, pipelines and trained workforces, the United States has a combination of attributes that is hard to find elsewhere.

Consider Australia, said James Baulderstone, a vice president at Santos Ltd., a natural gas producer based in Adelaide. It has energy companies, sizable shale deposits and both domestic and export markets.

Then Baulderstone showed a map of the United States' pipeline network, with its busy web of interconnecting systems, followed by a map of Australia. Even though that nation has about 80 percent of the land mass of the United States, its pipeline network consists of perhaps a dozen main lines, none of which connects Australia's east and west coasts.

"The key is infrastructure," said Baulderstone.

It's hard to overstate the commanding position held by the U.S. regarding shale oil and gas and other "unconventional" resources.

Pal Haremo, senior vice president of global new ventures for Norway's Statoil, offered his own scorecard, which counted the number of unconventional wells drilled between 2008 and 2011.

It reads: USA 35,000, World 190.

"The U.S. shale experience is hard to replicate," said Fergus MacLeod, head of group strategy and planning for BP. Rather than the United States having shale deposits that are somehow unique, "the geology is probably the least difficult thing to replicate," MacLeod said.

The result is a phenomenon seen only three times in the world, said James Burkhard, vice president of oil market research at IHS, which sponsors CERAWeek. Only three nations have increased their oil output by at least 900,000 barrels a day and done it in just a year.

The nations are Saudi Arabia in 1974 following the OPEC oil embargo, Iraq in 1991 following the end of the Gulf War sparked by that nation's invasion of neighboring Kuwait, and the United States in 2012 following burgeoning growth in production from shale fields.

Another view came from Fanrong Li, CEO of China National Offshore Oil Co. Asked how long he thought it would take to begin developing Chinese shale fields, he said it would be "very slow," perhaps five to 10 years.

Xizhou Zhou, director of China energy for IHS, offered a more specific analysis.

China, he said, probably has more shale deposits than the United States in an estimated 70 different fields. But the government owns the mineral rights, pipelines are lacking, and producers don't know whether or not the retail price of oil and gas will be regulated at low levels to satisfy consumers.

There are, he said, "a lot of above-ground risks" in China, and shale development is probably seven to eight years away.

Jim Fuquay, 817-390-7552

Twitter: @jimfuquay

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