Countries throughout the world are trying to develop oil and natural gas drilling programs based on the success of the ongoing U.S. shale boom.
It’s not an easy prospect.
While oil and natural gas development has been ongoing in many parts of the world for up to a century, modern unconventional shale drilling poses serious challenges that make it much more difficult to replicate in other parts of the world.
The shale boom was sparked by a combination of horizontal drilling with hydraulic fracturing, or fracking, and other technologies, including three-dimensional seismic imaging, which allows producers to better understand rock layers beneath the surface and target the best places to drill.
Fracking requires large amounts of water and sand as well as other chemicals used to shatter the rock and hold the sand in the cracks. And 3D seismic requires specialized equipment both to cause vibrations and to measure how those small seismic vibrations react with the rock layers.
The biggest challenge is more fundamental.
In almost every country outside the United States, land owners have no rights to the minerals beneath them. Without the ability to profit financially from the drilling, the people who live near potential drilling sites are less likely to cooperate with the drilling program.
Another difference is that most American wells are drilled by companies owned by individuals or shareholders. Internationally, most oil companies are owned by the state.
Fourteen of the world’s top 20 oil companies are national oil companies. ExxonMobil, the largest international oil company and one of the two largest companies in the world, is only No. 12 among the world’s top oil companies.
Those national oil companies are taking a more active role in oil and natural gas development, said Foster Mellen, a senior strategic analyst for Ernst and Young in North Carolina.
“Historically, national oil companies have been resource keepers, guarding their nation’s resources for the benefit of their people,” Mellen said last month at Oklahoma City University. “But national oil companies have increasingly also become resource seekers. This means the national oil companies are now not only customers for international oil companies, but they are also partners and competitors. We have a very different dynamic in the business than we had in the old days.”
The change has been fueled largely by growing demand in China, India and other parts of the world.
Chinese national oil companies aggressively have pursued joint ventures and other partnerships with domestic independent oil and natural gas companies in part to learn how to best produce from shale and other dense rock. Russia has begun preliminary work to define some of its vast shale reservoirs.
A delegation from Tanzania last month traveled to Oklahoma City to learn how best to produce and use a large, offshore, conventional natural gas field.
Shale and other unconventional oil and natural gas resources are available throughout much of the world. Despite the challenges, the growing energy demand likely will lead to more development.