The analytics firm IHS released a study yesterday regarding the prospects of tight oil reserves outside of North America. They discovered that the global potential for tight oil could be as high as 500 billion barrels.
Tight oil is a petroleum play that is made up of crude oil contained in non-porous rocks such as shale. Tight oil and gas reserves have become increasingly popular in North America, as IHS recently concluded that tight oil will add approximately 94 billion barrels of recoverable oils to the reserves of this region.
Unconventional oil plays in North America
Shale has been adding significantly to production of North America with Permean and Bakken basins among the most famous ones. North America currently has twenty-seven tight oil plays which contain lucrative prospects.
Modern extraction techniques, including horizontal drilling and hydraulic fracturing, has improved the oil output of the U.S. The country has become less dependent on oil imports and it is expected that with the growth in output from tight oil plays, U.S. oil imports will decline significantly over the next decade.
Tight prospects outside the U.S.
The extraction technologies applied in the U.S. can be applied in other regions which have the same or better geologies for tight oil existence.
“Likely tight oil formations in producing and frontier regions are known all over the world in the major hydrocarbon-bearing basins and in basins with very little exploration to date. Limited exploration and production (E&P) has already started in a few areas such as the Vaca Muerta in Argentina and some of the Jurassic plays in China,” says the IHS.
IHS expects material volumes of likely commercial tight oil potential in countries including Argentina, Brazil and Colombia in the Americas, Germany, Poland and the United Kingdom in Western Europe, Russia and Ukraine in the Commonwealth of Independent States, Algeria, Egypt and Libya in North Africa, Saudi Arabia and Oman in the Middle East, India and Pakistan in the Asian Subcontinent and China, Indonesia and Australia in the Asia Pacific region.
Table 1: Tight oil plays in different regions
“Potentially recoverable tight oil reserves outside the United States could amount to 500 billion barrels, 175 billion of which is contained in just 23 plays,’ the leading consultancy revealed in its study. ‘In particular, the study identifies the 23 highest-potential plays throughout the world and found that the potential technically recoverable resources of just those plays is likely to be 175 billion barrels – out of almost 500 billion for all 148 play areas analyzed for the study.”
These 23 major tight oil plays include Vaca Muerta formation in Argentila, the Silurian hot shales in North Africa and the Bazhenov Shale in West Siberia, as well as lesser-known geological plays in Europe, the Middle East, Asia and Australia.
Valuable reserves outside the United States
Reuters states that the IHS study puts the cost of the average well outside North America at USD 8 million compared with USD 5.6 million inside North America, ranging from USD 6.5 million in Australia to more than USD 13 million in parts of the Arabian Peninsula.
This study highlights other areas for investment for tight oil giants like ConocoPhillips (NYSE:COP) and Chevron Corporation (NYSE:CVX), and indicates the potential for good earnings. These firms can use their experience in North America to reap the reserves in other parts of the world. They can best organize their investments to achieve the target of a strong position in the tight oil industry.