The North American shale market is expected to register a CAGR of over 6% during 2020 - 2025. Factors, such as using shale gas, which is a cleaner fuel than coal for energy generation, are likely to drive the North American shale market. However, higher breakeven costs for the oil and gas produced from unconventional reservoirs is expected to have a negative impact on the North American shale market.
- The shale gas segment, because of its increasing production, has dominated the market in 2018 and is likely to dominate the market during the forecast period.
- Massive amounts of proven reserves of shale and its development in countries, such as Canada and Mexico, are likely to create an opportunity for the North American shale market.
- The United States due to the production of 95% of shale gas and shale oil in North America held the major share in 2018 and is expected to dominate the market during the forecast period.
Key Market Trends
Shale Gas to Dominate the Market
- Shale gas is generally produced by hydrofracturing the reservoir to increase the permeability so the gas can easily flow and produced. Shale gas is usually 95% pure methane and has very less amount of impurities, like sulfur, due to which the processing cost of the shale gas decreases than the natural gas processing cost.
- Countries in North America have planned to decrease their carbon signature by using cleaner fuel, such as shale gas, from which the carbon emissions are very less.
- Canada is a net exporter of oil and gas in North America with 97 % of the exported hydrocarbon of Canada to the United States. The energy demand in Canada is approximately constant for the last few years while their production kept on increasing. Increasing demand from the United States had driven Canada to explore and produce shale gas.
- In March 2019, oil major Chevron Corporation announced to increase the exploration and production activities in the Permian Basin of United States. The Permian Basin is majorly a shale reservoir producing the highest amount of shale gas in the country. At the Horn River and Liard shale basins in British Columbia, Canada, the company holds a 50 percent operated interest in 290,000 net acres (1,174 sq km).
- Therefore, owing to the above points, shale gas is likely to dominate the North American shale market during the forecast period.
United States Expected to Dominate the Market
- In 2018, shale gas production in the United States was 22.3 trillion cubic feet (Tcf). Shale gas production in 2018 accounts for 75% of the total gas produced in the country. Shale oil production in the United States, in 2018, was approximately 2.2-billion-barrel oil per day (bopd).
- Royal Dutch Shell, in 2019, was active at seven sites of shale play in the United States. In the United States, it is engaged in the Marcellus, and Utica gas plays in Appalachia, the Delaware Basin portion of the Permian play, and a non-operated position in the Haynesville gas play. In Permian Basin company is exploring and producing light crude oil from the shale formation, which exhibits the company's interest in the country's shale business.
- Chevron holds approximately 428,000 net acres (1,732 sq km) in the Marcellus Shale, one of North America's largest and most productive sources of natural gas from shale. In the Permian Basin, Chevron holds approximately 1.7 million net acres (6,880 sq km) in the Delaware and Midland basins, where it is developing tight oil and gas shales.
- In January 2018, Exxon Mobil Corp announced to triple its oil and gas production by 2025 from Permian Basin. The Permian Basin is the largest shale oil and gas basin in the United States. Increasing company's production is likely to add upto the dominance of United States on the North America shale market.
- Hence, the above points indicate that the United States is expected to dominate the North American shale market during the forecast period.
The North American shale market is moderately consolidated. Some of key players in this market include Exxon Mobil Corporation, Murphy Oil Corporation, Royal Dutch Shell PLC,Total SA, and Chevron Corporation.
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