Kemp: Shale Revolution Reverses Global Energy Flow

Not since the mid-1980s, when new oil fields came onstream in the North Sea, Alaska and the Soviet Union, have world oil supplies been so diversified.

With diversification comes greater security. Global oil markets have weathered the loss of millions of barrels per day from Libya, Syria, South Sudan and Iran over the last three years with almost no impact on prices or the availability of crude.

New Era of Shale

Some analysts question whether the gains in U.S. shale output can be sustained or replicated in other countries, where the conditions both above and below ground are very different.

The hunt for shale opportunities in the rest of the world to match the quality of U.S. plays has so far proved disappointing, according to the head of exploration at Norway's Statoil .

But the shale revolution is just beginning. By coupling hydraulic fracturing and horizontal drilling with better use of seismic surveys, U.S. shale producers are cutting costs and focusing their drilling programmes more efficiently. Well productivity is still rising.

In the rest of the world, development continues to be hampered by lack of specialist crews and equipment, opposition from environmental campaigners, and the absence of the small entrepreneurial oil producers and private mineral rights that underpinned the North American shale boom.

Each of the barriers is in fact an opportunity to drive significant production if it can be overcome. The potential is enormous. Shale technology is becoming more mature. Skills are beginning to diffuse. And the financial incentive is strong.


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