Sunday, December 2, 2012

The State of International Shale Drilling

The front page of Monday's Wall Street Journal features a great article on why it will take at least a decade to achieve the "shale boom" outside of North America.  The bottom line is that the industry infrastructure, private land ownership and governmental support of private enterprise, among other factors, have held back the realization of shale oil and gas resources in Europe and Asia.

Each country has its own issues, but the bottom line is that we are probably a decade from seeing any real development of shale oil and gas outside North America.  This is good news for the U.S. for a number of reasons.  First, cheap gas creates a competitive advantage for petrochemical and industrial producers that are expanding on our shores.  Many of these companies now are coming home after chasing cheap gas in other nations.  Second, the price differential between North America and what big consumers elsewhere in the world have to pay will support an LNG export market - assuming the federal government gets behind it - for at least a decade.

While I am fond of shale gas, I'm rather pleased that the boom won't be as rapid elsewhere in the world.  The golden goose has overproduced in North America and it will take a while to re-balance the ship.

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