IT'S TAKING LONGER THAN WE THOUGHT: WHY HAVE INTERNATIONAL SHALE DEVELOPMENTS LAGGED BEHIND THE U.S.?

• Jurisdiction: Derecho Internacional

International Mining and Oil & Gas Law, Development, and Investment
(Apr 2013)
CHAPTER 13B
IT'S TAKING LONGER THAN WE THOUGHT: WHY HAVE INTERNATIONAL SHALE DEVELOPMENTS LAGGED BEHIND THE U.S.?
Scott Schwind
Partner, Jones Day
Houston

WILLIAM PRESCOTT ("SCOTT") MILLS SCHWIND is a Partner in Jones Day's Energy and Global Infrastructure practice groups, based in the firm's Houston office. Mr. Schwind focuses his practice on international energy and natural resources, with a particular emphasis on upstream, midstream, and downstream oil and gas transactions. Advising foreign and domestic companies and individuals in matters across the globe, he devotes much of his practice to assisting clients throughout Latin America and Africa. Fluent in Portuguese, Spanish, and French, he studied at the Faculdade de Direito da Universidade de São Paulo and previously practiced law in Brazil.

One Firm Worldwide™

It's Taking Longer Than We Thought: Why Have International Shale Developments Lagged Behind the U.S.?

Scott Schwind

Jones Day

Rocky Mountain Mineral Law Foundation

Cartagena, Colombia

April 23. 2013

We can never know about the days to come

But we think about them anyway,

And I wonder if I'm realty with you now

Or just chasin' after some finer day

Anticipation, anticipation

Carly Simon

[Page 13B-2]

What is the State of Shale Developments in the United States

• From 1% of U.S. natural gas production in 2000, shale gas grew to 20% by 2010 and is estimated to reach 46% by 2035.

• Recoverable gas estimates in the U.S. now top 2,384 tcf, which are thought by some to be the highest in U.S. history.

• U.S. crude oil production is expected to grow from 6.5 million BPD in 2012 to 7.9 million BPD in 2014.

• By the end of 2013, U.S. crude oil production is expected to exceed crude imports for the first time since 1995.

• The U.S. has surpassed Russia and is now the world's second largest oil producer.

What Challenges Are Facing Shale Developments in the United States?

• Gas prices continue at all time lows, with no long-term significant price increases on the horizon, and the economies are questionable.

• U.S. infrastructure is aging, with much of the country's gas transmission and distribution grid near the end of its useful life, and additional infrastructure is desperately needed.

• Existing refining capacity may be insufficient or not properly configured to handle excess volumes of oil.

• Environmental and tax regulations threaten the economic viability of shale developments in the United States.

• Public opposition tends to vary from state-to-state, but concerns over the environmental impact of hydraulic fracturing has led to bans in some jurisdictions.

[Page 13B-3]

What Contributed to the Success of U.S. Shale Developments?

...