By Abboud Zahr
THE UNITED States of America is experiencing a revolution in gas production which is known as shale gas.
For the past three years, the United States has been the world’s fastest-growing hydrocarbons producer, and the trend is set to continue for several years to come. US natural gas production has risen by 25 per cent since 2010.
Having already outstripped Russia as the world’s largest gas producer, by the end of the decade the US will become one of the world’s largest exporters, fundamentally changing pricing and trade patterns in global energy markets.
The cost of finding and producing gas in shale and tight rock formations are steadily decreasing and will drop further in the coming years. The evidence from what has been happening is now overwhelming. Efficiency gains in the shale sector have been substantial and are now hovering at around 25 per cent yearly. Efficient production will reduce the price of the commodity which will enable major advances in global economic growth.
The shale revolution has been pretty much a “made in America” phenomenon. In no other country can landowners also own mineral rights. In only a few other countries (like Australia, Canada & the UK) is there a tradition of an energy sector featuring many independent entrepreneurial companies, as opposed to a few major companies or national champions. And in still fewer countries are there capital markets able and willing to support financially risky exploration and production.
This powerful combination of indigenous factors will continue to drive US efforts. A further 30 per cent increase in U.S. natural gas production is conceivable before 2020.
A few years ago, hydrocarbons export from the United States were negligible. But by the start of 2013 this commodity became the single largest category of US exports, surpassing agricultural products, transportation equipment and capital goods.
Since shale resources are found across the globe, many countries are trying to duplicate the United States’ success in the sector, though it is unlikely that many will be able to do it.
In 2008, the United States was a net importer of petroleum products, taking in about two million barrels per day; by the end of 2013, it was a net exporter, with an outflow of more than two million barrels per day.
As for the US economy, experts are confidently pointing to the benefits of abundant supplies of this unconventional gas for growth: lower energy costs, new jobs, and even a revival of the manufacturing sector which stagnated for many years.
Abboud Zahr is an oil and gas specialist