Outside of the United States and Canada, shale development even in the most favorable spots is still five to 10 years away from beginning to come to fruition, according to a new report from consulting firm Accenture.
The report, "International Development of Unconventional Resources: If, where and how fast?" identifies eight factors affecting the viability of tapping unconventional resources, starting with a given region's geology -- "the quality of the rock, the presence of data about the resources it contains, and the complexity of local characteristics."
Accenture analysts applied the eight factors to nine nations spread on all of the continents: Argentina, Australia, China, Mexico, Poland, Russia, Saudi Arabia, South Africa and the United Kingdom. "The factors that have the greatest influence on if, where and how fast each basin will develop differ across locations and will change over time," the report said.
Outside of North America, the report rates Argentina as having the greatest potential for shale development in its Neuquen Basin. Mexico and Australia are somewhat problematic because of what Accenture called the "competition for investment and human resources" from conventional or other resources such as coal-bed methane in Australia and shallow water and offshore investment in Mexico.
The other seven critical factors include: resource potential, land access/operability, unconventional services availability, oil/gas distribution network availability, conventional and other competition, skilled work force availability, and finally, financial resources available.
The report looked at each nation in regard to how it stacks up against the critical factors, rating them on a three-part scale -- green (will be overcome), amber (an issue being addressed but it is unclear if it can be overcome) and red (a lot of uncertainty). Only China, Russia and South Africa had red designations for some of the critical factors.
While nations like Mexico had only green and amber ratings, the report cautioned that "understanding the factors that will pace the market is much more important than counting the greens vs. ambers." A single factor can prevent a market from developing, but overcoming a single factor could help resolve others, Accenture said.
"In Argentina, the fiscal regime is the most important factor driving pace of development. Similarly, Poland could increase its activity to the Baltic Basin with the help of pending changes to its fiscal regime, and U.S. sentiment towards Russia could change, accelerating investment into Russia."