The Global Shale Oil Bonanza

A quick look at this page reveals one of the biggest developments in the energy sector to take place in recent years. Spurred on by an oil price war, the exploitation of shale oil has taken front place in modern day production in ways unanticipated fifty years ago. This new bonanza holds huge opportunities for keen investors who know what to look for in terms of new production and related services, and the companies involved.

The Energy Information Administration (EIA) has completed a recent survey of world oil and gas reserves available for production. Shale formations are included in the latest maps and the indications are startling. As reported by both the EIA and Reuters News Agency, the biggest shale basins in the world are to be found within the Americas. Not only oil but natural gas is locked up within these vast mineral formations, waiting to be tapped. North and South America have one-third of the total volume of reserves, with the United States, Canada and Mexico holding more than half that volume within their contiguous territories.

In terms of investment, this amounts to vast exploitable reserves available for extraction, processing and transport within the intracontinental area. This means a lower cost for supplying these operations since the logistics takes place entirely on land. The variables involve certain political complications in Mexico between state and private ownership of the shale fields and lack of infrastructure. The former will be resolved in time, the latter offers its own opportunities for the building and supplying of a new industrial operation relatively close to home, so to speak.

Internationally, opportunities as great abound. The Peoples’ Republic of China has put the development of its own vast shale reserves as a primary energy priority along with its development program in solar power and other renewable energy sources. American involvement in this project has been significant, with technical assistance provided through the Unconventional Gas Technical Engagement Program. China needs oil for domestic consumption and export, and natural gas as replacement for coal while meeting growing demand for electricity.

Meanwhile, in Argentina, a 50-50 joint partnership venture between Chevron and Argentina’s state-owned YPF S.A. concern seeks to drill 100 wells in the Vaca Muerta basin. When fully online, the project will produce 50,000 barrels of oil and 3 million cubic meters of gas per day. Eventually, $15 billion in investments could be committed to this project by 2020.