The Shale Boom…and Bust

Posted: July 31, 2013 in Economics, Geo Politics
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Oil and Gas energy markets are being revolutionised by a boom in shale oil and gas production in many regions of the world, most notebly the USA.

Forecast to become the leading exporter of oil by as early as 2020 by the IEA (International Energy Agency), many other countries such as the UK and China, to name a few, are exploring their potential reserves of shale in order to provide for their energy hungry populations. Read a couple of articles here for further details

This raises many serious considerations for the medium term state of geo-politics and particularly the power/revenues of middle eastern states and their cartel OPEC, although the longer term picture may see things return to the previous status-quo of heavy US/European dependence on Arab oil.

Saudi Prince Talal has just spoken out about the impact to his native economy, showing alarm bells may start to ring in the gulf state.

Here is the pinch of salt….watch the first 14 minutes of this RT piece discussing the realities of shale, in brief;

– the growth of the US is more geared towards prices at around $20-$30 per barrel of oil, as opposed to the region of $50-$80 that shale may cost
– the per barrel a day return of shale wells, is a fraction of the crude recovery at current levels with substantially more drilling and capital investment required
– it raises considerable environmental questions…but as long as it boosts GDP, whoes counting the cost?

http://rt.com/shows/capital-account/outlook-energy-oil-gas/

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