Argentina's Neuquén basin promises the greatest potential for
development of its unconventional resources, including shale gas and
oil, of any country outside of North America, according to a new report
published by Accenture (NYSE:ACN).
Accenture's report, International
development of unconventional resources: If, where and how fast?
reviews basins in Argentina, Australia, China, Mexico, Poland, Russia,
Saudi Arabia, South Africa and the United Kingdom. The report examines
these basins against eight critical factors required for the development
of unconventional resources and analyses their investment prospects.
"Before investing in shale oil and gas basins, developers need to
consider eight key areas. These not only include the size of the
potential resources and an enabling fiscal regime, but also
the basin's geology, in particular the availability of data,
quality of the rock and requirements to adapt technology to the local
rock", said Melissa Stark global managing director of Accenture's new
energy business. "It's also important to consider land access and
operability, including population density, water availability and
existing roads and rail infrastructure, as well as views of local
Non-Governmental Organisations (NGOs). Additionally, developers should
consider the presence of an existing unconventional services sector
to support development; existing oil and gas distribution networks
to commercialise the product; competition from conventional or
other resources that could divert focus away from shale; and, finally, a skilled
oil and gas workforce to enable future development of unconventional
"Although 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. We
believe that even in the most favourable basins, development is at least
five to 10 years away, and one thing that we tried to determine in this
analysis is which factor will define the pace of development in each
market," Melissa Stark added.
So far, the largest number of exploration and test wells (~200) have
been drilled in Argentina and China, where the technically recoverable
shale gas resources are estimated at 802 trillion cubic feet (tcf) and
1,115 tcf, respectively, compared to the United States, which has 665
Although Argentina is a challenging environment for foreign investment,
its government has begun to offer attractive incentives demonstrating a
commitment to developing its unconventional resources. The established
Neuquén basin has significant conventional oil and gas production and
existing infrastructure, including roads, pipelines and rail, as well as
an experienced oil and gas workforce, making it the next most attractive
prospect for development. The fiscal regime is the most important factor
driving its pace of development.
China's biggest challenge is land access and operability, given its
terrain, population density and water scarcity. But the pace of
development in China will be driven primarily by its geology, the
success of Sinopec's and China National Petroleum Corporation's
exploration and the ability of those companies to adapt existing
technologies to the local geological conditions.
In Australia and Mexico, the level of competition for investment and
human resources from conventionals, or other resources like coal-bed
methane in Australia and shallow water and offshore investment in
Mexico, will have the greatest effect on the pace of developing
In the UK, NGO opposition to unconventionals is the key factor affecting
the pace of development.
The pace of development of Poland's Baltic basin will depend upon the
draft bill currently in parliament that addresses many of the operators'
concerns regarding the previous regulatory proposals. The draft bill
abandons plans to create a new national regulator, proposes a more
attractive tax regime and seeks to streamline licensing procedures. The
question is whether the early enthusiasm in Poland will return.
Energy demand in Saudi Arabia is growing rapidly but lack of knowledge
of the shale formation and lack of infrastructure in some frontier
locations are so far among the biggest challenges for developing
unconventional resources in the region.
"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. Although
Argentina is the most promising market today, this may change depending
on how other markets respond. 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," concluded Melissa Stark.
Accenture is a global management consulting, technology services and
outsourcing company, with approximately 289,000 people serving clients
in more than 120 countries. Combining unparalleled experience,
comprehensive capabilities across all industries and business functions,
and extensive research on the world's most successful companies,
Accenture collaborates with clients to help them become high-performance
businesses and governments. The company generated net revenues of
US$28.6 billion for the fiscal year ended Aug. 31, 2013. Its home page
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