Unlikely that Foreign Countries Can Repeat Shale Revolution | Russell T. Rudy Energy LLC
According to Morgan Stanley Research, the answer is “Possible, but not likely”. In their Commodities Fall Symposium, the investment firm concedes there are many shale deposits around the world, but a repeat of what we have seen in the U. S. is improbable, especially in this decade. Geology, human capital, infrastructure, drilling expertise and industry structure are all cited as reasons which made our shale revolution possible, and unlikely to be duplicated.
Each shale play is different and it takes years to fathom the complexities of the individual structures. Some are devoid of hydrocarbons, and others cannot be economically developed with current technology. Depths, thickness of pay zones, and reservoir fluids can vary greatly. Another factor is the shortage of skilled petroleum engineers and managers who are able to direct complex, multi-well, horizontal drilling programs. Also, horizontal drilling and hydraulic fracking require water, sand, drilling and completion fluids, manpower, and highly specialized equipment. All of these are difficult to assemble in remote locations. Another constraint is that shale plays are notorious for steep decline curves and the major ones require thousands of wells to replenish and augment production rates. This requires drilling knowledge, capital and resources.
Finally, smaller exploration and production companies have led the effort to develop U. S. shale resources, especially at the outset. The large number of independent oil and gas companies is unique to the U. S. industry. In most foreign countries the energy sector is dominated by state owned or large integrated oil companies.
The Morgan Stanley report contends that the complexity and magnitude of shale operations are greatly underappreciated. In 2012 the U. S. completed 45,468 oil and gas wells, Canada 3,450, and the rest of the world 3,921. If the shale revolution can be repeated anywhere, it is most likely in Russia. There, shale deposits are near existing oil and gas operations where there is already some expertise and infrastructure. Nevertheless, no more than 10,000 barrels per day of shale oil is anticipated by 2018 in that country.
