Hydraulic fracturing, or fracking, is generating huge volumes of gas and oil from U.S. shale by cracking underground rocks, allowing hydrocarbons to seep upward. That is creating a glut that has driven down world oil prices by more than 50% since mid-2014. But outside North America, oil companies have had little success re-creating the fracking boom. Here’s why.
Q: Outside the U.S., where have companies drilled for shale resources?
A: All over—big oil companies like Royal Dutch Shell PLC, Exxon Mobil Corp. and Chevron Corp. have invested in Canada, Europe, Russia, South America and Asia, hoping shale reserves there could be similarly productive to those in the U.S.
Q: Which of those countries are producing?
A: Outside the U.S., only Canada, China and Argentina have commercial production from shale, the U.S. Energy Information Administration says.
Q: What happened everywhere else?
A: In some places—like Sweden, Poland and Romania—companies didn’t find enough gas or oil to keep drilling. In others, like Germany and the U.K., regulations have stopped or slowed development. And in China, where Shell is scaling back its big shale investment, poor roads, community protests and difficult-to-drill rocks have been obstacles. And then there’s the oil price—at $55 a barrel, the going rate for Brent crude, many shale wells wouldn’t be profitable.
Q: So why did it work in the U.S.?
A: It turns out that the U.S. has a rare convergence of factors that facilitates shale production. It has shales that are relatively easy to fracture; regulations in many states that make it easy to get permits for drilling wells; and, unlike in many other countries, underground resources in the U.S. tend to be held by private landowners. That means people can sell the gas beneath their homes—giving a real incentive to welcome fracking over potential environmental and health objections.