Argentina’s Neuquen basin is the best placed region outside the US & Canada to become the next significant producing shale play, a new analysis has argued.
The basin came out on top of nine basins considered by global management consultancy Accenture in Argentina, Australia, China, Mexico, Poland, Russia, Saudi Arabia, South Africa and the United Kingdom.
The report measured each of the basins against a set of nine criteria affecting their development.
The issues considered for a successful shale basin were:
the size of the potential resources;
the fiscal regime;
geological factors including availability of data and permeability;
land access and operability, including population density, water availability, transport infrastructure, as well as views of local organisations;
the presence of an existing unconventional services sector;
existing oil & gas distribution networks;
competition from conventional or other resources;
and a skilled oil & gas workforce.
Accenture global managing director of new energy business Melissa Stark said that “all eight factors need to fall into place to enable successful development in each location and regulators need to support the progression of all factors, not just the local fiscal regimes”.
She added that while “it would seem like the more factors that are met in each location, the sooner it is likely to become a viable unconventional resources investment, any single factor can delay development”.
Stark said that all of the basins considered were looking at a development timeframe of at least five to ten years before they enter significant production.
She said that while the Neuquen was currently the most promising shale play, the ranking could change depending on how each country handles its shale potential.
“For example, Australia, the United Kingdom and Saudi Arabia, and even China, could all progress quite quickly, if they address the factor that is pacing the development in these markets,” she said.
Argentina and China have seen the most shale exploration and appraisal wells internationally with about 200 probes sunk in each country.
Technically recoverable shale gas resources are currently estimated at 802 trillion cubic feet for Argentina and 1,115 tcf for China, as compared to the US’s 665 tcf.
Accenture said that while Argentina was a challenging environment for foreign investment, its government has begun to offer attractive incentives demonstrating a commitment to developing its unconventional resources.
As an established hydrocarbon basin, the Neuquen also benefits from significant existing infrastructure and an experienced oil & gas workforce.
China has the benefit of its geological potential as well as the abilities and scale of its state players, but its shale development is also constrained by land access and operability, given its terrain, population density and water scarcity, Accenture argued.
The report said that Poland’s Baltic basin remained in the hands of parliament where the long-awaited legislative reforms remained to be approved.
In Australia and Mexico, shale may be held back by competition for investment and human resources from conventional plays, the consultants said.
Stiff opposition from non-governmental organisations is the UK’s biggest stumbling block, while Saudi Arabia lacks shale expertise and infrastructure in some frontier locations, the report said.