"Shale" activity outside North America has been slow

There are many reasons why development of low permeability resources (shale gas, tight oil, etc.) has been slow outside North America. In fact, Canada and Mexico have significant challenges of their own. Beyond geology, the conditions that sustained the U.S. pace of development do not exist elsewhere in their entirety:

• Dynamic, competitive industry with private mineral ownership

• Deep supply chain of the oilfield services sector

• Access to water and sand

• Widespread midstream infrastructure & ability to expand with relative ease

• Relatively supportive policy & regulatory environment

In order to develop their industries towards meeting these conditions as best they can, regions with good geologic potential need to attract experienced operators, oilfield services industry and associated supply chain providers, and large sums of capital across the value chain. This strategy would require following components:

• Competitive fiscal terms

• Regulatory competency

• Policy stability

A transparent communications program about the risks and opportunities is needed to address concerns of communities near development sites. But larger, national economic context also needs to be communicated to the public. YPF of Argentina provides a good example while discussing the Vaca Muerta Challenge (also the source of cover photo for this post).

On the other hand, slower development may allow other regions to avoid the side effects of fast development such as negative cash flows and low returns for many of the operators.