BHP greets the shale revolution
Prepare for superlatives if you talk to BHP Billiton, the world's biggest miner, about the shale energy revolution.
Looking at BHP's shale investments in a better light
"This is absolutely stupendous," says Mike Yeager, chief executive of its petroleum division and a 35-year energy industry veteran. "This is the biggest thing that has happened in my career."
For once, the company line could be an understatement. The shift taking place in the energy industry is of a scale to rival anything seen in several decades, say industry watchers. As one puts it: first there was nuclear, then
What that refers to is the resource-rich shale rock that was formed from the "muddy gumbo", as Yeager puts it in his Texan drawl, which lay at the bottom of ancient oceans. Today, it sits beneath traditional oil and gas reservoirs, for which the shale rock is often the source.
Advertisement That the shale itself held riches has been known for years, but the large-scale extraction of its oil and gas has been made practical only recently, by developments in hydraulic fracturing or "fracking" - shattering the rock and flushing it with liquid to encourage the oil and gas to flow out - and horizontal drilling, allowing vastly increased access to the seams of shale underground.
The implications for the world's biggest economy are profound, since it happens to be endowed with the stuff.
As for oil, total
What that all adds up to is a major ramp-up in industry activity over the past three years. Because of shale, the International Energy Agency this week announced the
Like any gold rush, the beginnings of this shale revolution were dominated by nimble, entrepreneurial operators. However the big players have the resources to catch up, and are doing so.
BHP, the Anglo-Australian mining colossus, has only been in the shale arena for 18 months, but by spending some $US20 billion buying up assets it has key positions in four major
But every revolution must have its losers too, and in the shale phenomenon they are still being decided. With landowners savvy about negotiating mining royalties of up to 25 per cent of the shale revenues, stories of people owning just "one cow, and they now live in the Ritz-Carlton" abound, says Yeager.
But that is not to say there is no push-back. Headline concerns around fracking may focus on people setting fire to what comes out of their taps and fears about earthquakes, but locals are more bothered about the dust clouds and road damage from the huge trucks rolling to and from the shale gas operations.
The industry has to tread a careful line to make sure it all stays worth the while of those living in fracking areas.
There are national-level political considerations too. While the 1.75 million jobs created by the shale boom have surely smoothed its acceptance by President Barack Obama, he is not seen as a fan. The fall in the petrol price driven by the flood of shale supplies has made many renewable energy sources uneconomic.
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