The US shale gas revolution is never far from the thoughts of those involved in both the chemicals and Specialised Products shipping industries. This fact is hardly surprising considering the number of new projects and expansions being built in the US, the most recent being from OCI and Ordebrecht. The technological success of harnessing cheap feedstocks from shale plays is quite staggering if the level of investment is anything to go by. Equally, the way the rest of the world has been left in smoke and struggling to catch up shows just how much of a game changer shale gas has become from our markets.
Shale gas reserves are however not just confined to the US. World reserves of technically recoverable shale gas resources are estimated by the EIA to be in the region of 7,299 tcf with China leading the way at 1,115 tcf and Argentina a close second at 802 tcf (we should note that these figures are constantly revised and challenged). On the face of it, the possibilities for other countries to catch up and overtake the US seem easy however if we dig a little deeper, the waters are not so clear. If we take Europe for example, where reserves are estimated at 883 tcf, there is a developed and well-funded environmental lobby who have argued vociferously against the practice of fracking. Indeed, the UK’s own recent issues with shale gas development are the embodiment of the opposition from environmental groups over the geological concerns that this practice could cause. What has been made clear by European governments is that at a time when energy bills are rising then fracking in the long term will give some relief. A public relations exercise perhaps but evidence from the US is hard to ignore. Whilst Europe may be an example of political and environmental opposition, countries in the developing world have less to overcome in terms of protest and more in terms of corruption and infrastructure challenges. China is often accused of both of these and despite its huge reserves will need to embark on massive infrastructure projects to release shale gas. Fracking requires a huge amount of water and with China’s reserves located in the Western end of the country, developing this region is problematic even before it’s begun.
Perhaps the best example of an area in the developing world that will able to challenge the US for a slice of the shale gas pie is Latin America. It is often forgotten that the Eagle Ford Shale Play stretches from Texas right into Mexico. Whilst, the entire region faces structural problems it seems that this time there is a collective will to seize the moment. Braskem Idesa, a 75:25 joint venture, are building the rather grandly named Ethylene XXI project which will come complete with a 1.05 million tonne ethane cracker plus 3 downstream units producing HDPE (350K mts and 400K mts) and LDPE (300K mts). This is due to come onstream in the second half of 2015. Argentina is also gearing up with the state energy company YPF recently signing an MOU with Dow Chemical to develop 45 sqkm of the El Orejano shale region and pledging to look at other areas of cooperation in the country. These are all steps forward in the right direction with only Brazil being left behind at this stage; repeated attempts to restart the Petrobras Comperj project with Braskem continue to drag on but there is no concrete being laid yet! The shale gas drum will continue to up its tempo as the years go by but its whether the Latin America challenge can actually be sustained and mounted that will determine exactly where the beat will emanate from. Only time will tell of course, but either way it is an exciting opportunity for all involved in our sector!