For a long time, mining engineers pondered how to extract the huge amounts of oil and natural gas that are trapped in layers of sedimentary rock. They found the answer eight years ago; horizontal drilling and hydraulic fracturing or fracking, whereby pumped water breaks up reservoir rock and allows the gas and oil to escape and be captured. Thus began the shale revolution, the biggest catalyst for change in energy markets for decades.
The revolution is centred in the US because, while there are large shale-gas reserves around the world, it’s only there that everything is in place for shale-gas production to boom in coming years. That “everything” includes a big natural-gas market, extensive pipeline infrastructure, technical know-how, ample water and favourable tax and regulatory regimes. China, for example, has large shale reserves but lacks the water and technical know-how to frack it out while Europe is beset with policy restrictions.
Thanks to fracking, the US arrested years of declining oil production and boosted output enough to become a net exporter of refined oil products for the first time in 60 years – fracking is even leading to the end of the ban on crude oil exports in place since 1975 as exceptions are being allowed. Statistics from the US’ Energy Information Administration show that US crude oil production averaged 8.5 million barrels per day in July 2014, the highest monthly output in 27 years and about 3.5 million barrels a day more than in 2008. Thanks to fracking, the US dream of energy independence no longer looks a fantasy.