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Shale gas--the unfolding story

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  • Howard Rogers

Abstract

In the early 2000s US gas production was in slow but steady decline despite increasing drilling activity. As US natural gas prices rose in response to the resulting tight market, the only supply-side solution appeared to lie in the development of liquefied natural gas (LNG) projects in the Middle East and Africa for importation to the North American market. Almost unnoticed in its early stages, the US shale gas phenomenon gathered momentum from 2004 onwards through the combination and application of two proven technologies, namely horizontal drilling and pressure-induced hydraulic fracturing or 'fracking'. The pioneers of this approach were not the majors but the much smaller, domestically focused 'independent' upstream companies who, together with a well-established and adaptable service sector, instigated what is now commonly referred to as the 'shale gas boom' and which has increased US natural gas production to the point where only minimal imports of LNG are expected to be required for the foreseeable future. This paper looks at the genesis of the US shale gas industry, the intensive nature of its operations, and the factors which have underpinned its success to date. It also addresses the question of whether similar developments might be expected in Europe and what specific challenges would need to be overcome. In a world where increased LNG supply has created trade flow and price linkages between regional gas markets, the paper also examines the impact US shale production has had on other markets through the re-direction of LNG originally intended for the US market. Copyright 2011, Oxford University Press.

Suggested Citation

  • Howard Rogers, 2011. "Shale gas--the unfolding story," Oxford Review of Economic Policy, Oxford University Press, vol. 27(1), pages 117-143, Spring.
  • Handle: RePEc:oup:oxford:v:27:y:2011:i:1:p:117-143
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    File URL: http://hdl.handle.net/10.1093/oxrep/grr004
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    Cited by:

    1. Giles Atkinson & Kirk Hamilton, 2016. "Asset accounting, fiscal policy and the UK’s oil and gas resources, past and future," GRI Working Papers 250, Grantham Research Institute on Climate Change and the Environment.
    2. Yang, Chi-Jen & Zhou, Yipei & Jackson, Robert B., 2014. "China's fuel gas sector: History, current status, and future prospects," Utilities Policy, Elsevier, vol. 28(C), pages 12-21.
    3. Jenner, Steffen & Lamadrid, Alberto J., 2013. "Shale gas vs. coal: Policy implications from environmental impact comparisons of shale gas, conventional gas, and coal on air, water, and land in the United States," Energy Policy, Elsevier, vol. 53(C), pages 442-453.
    4. Philipp M. Richter, 2015. "From Boom to Bust? A Critical Look at US Shale Gas Projections," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    5. Li, Huajiao & An, Haizhong & Fang, Wei & Jiang, Meng, 2017. "A theoretical cost optimization model of reused flowback distribution network of regional shale gas development," Energy Policy, Elsevier, vol. 100(C), pages 359-364.
    6. Cotton, Matthew & Rattle, Imogen & Van Alstine, James, 2014. "Shale gas policy in the United Kingdom: An argumentative discourse analysis," Energy Policy, Elsevier, vol. 73(C), pages 427-438.
    7. Gracceva, Francesco & Zeniewski, Peter, 2013. "Exploring the uncertainty around potential shale gas development – A global energy system analysis based on TIAM (TIMES Integrated Assessment Model)," Energy, Elsevier, vol. 57(C), pages 443-457.
    8. repec:gam:jsusta:v:10:y:2018:i:3:p:697-:d:134713 is not listed on IDEAS
    9. Logan, Jeffrey & Lopez, Anthony & Mai, Trieu & Davidson, Carolyn & Bazilian, Morgan & Arent, Douglas, 2013. "Natural gas scenarios in the U.S. power sector," Energy Economics, Elsevier, vol. 40(C), pages 183-195.
    10. Chi Kong Chyong and David M. Reiner, 2015. "Economics and Politics of Shale Gas in Europe," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 1).
    11. Eleanor Stephenson & Karena Shaw, 2013. "¨ A Dilemma of Abundance: Governance Challenges of Reconciling Shale Gas Development and Climate Change Mitigation," Sustainability, MDPI, Open Access Journal, vol. 5(5), pages 1-23, May.
    12. McGlade, Christophe & Speirs, Jamie & Sorrell, Steve, 2013. "Unconventional gas – A review of regional and global resource estimates," Energy, Elsevier, vol. 55(C), pages 571-584.
    13. Wang, Qiang & Chen, Xi & Jha, Awadhesh N. & Rogers, Howard, 2014. "Natural gas from shale formation – The evolution, evidences and challenges of shale gas revolution in United States," Renewable and Sustainable Energy Reviews, Elsevier, vol. 30(C), pages 1-28.
    14. Hammond, Geoffrey P. & O’Grady, Áine, 2017. "Indicative energy technology assessment of UK shale gas extraction," Applied Energy, Elsevier, vol. 185(P2), pages 1907-1918.

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