The Oil And Gas Revolution

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INTRODUCTION The Shale gas revolution has demonstrated a quantum leap from almost nothing in 2000 to over 30 billion cubic metres in 2011. This caused a crash of natural gas prices in the United States, significantly changing the country’s natural gas future outlook (Mangeri, 2012). The US oil and gas fracking revolution is a new paradigm which has made the country a game changer in the oil and gas scheme of things, and has immense implications for economics, energy and geopolitics. It is projected that in a few years, the US will surpass Saudi Arabia as the number one oil producer worldwide, having overtaken Russia as the number one natural gas producer in 2012 (Birol, 2013). This would exert a negative pressure on global oil prices,…show more content…
Shale oil operations are intensive, in that it needs wells to be drilled continuously in order to increase and maintain production. Nevertheless, a significant portion of US Shale oil at USD 50-65 per barrel is actually profitable, thereby rendering them unaffected by a drop in oil prices. The United States has over twenty large shale oil formations, chief of which is the Eagle Ford shale, whose boom in recent times revealed an endowment with respect to hydrocarbon, comparable to Bakken/Three Forks; which is a tight oil formation county in Montana and North Dakota. Technological advancements have grown tremendously in Shale gas operations as well as production, efficiency and well flow management (EPRINC, 2011a). These advancements have significantly crashed well drilling time by over 30%, which translates to a significant reduction in costs. The extension of fracking and horizontal drilling to conventional oil fields may well significantly turn around and increase oil production worldwide and even revive declining oil fields, as the same technologies applied to shale oil could also be applied to ramping up hydrocarbon liquids production. IMPLICATIONS FOR THE US ENERGY MARKETS The shale gas/oil revolution is poised to turn around America’s future in the energy market and boost the economy. Over the next 20 years, this would translate to millions of new jobs and a huge growth in capital expenditures. The expected drop in gas prices should crash
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