The Ongoing Rise of Shale Gas

The Largest Revolution the Energy Landscape Has Seen in Two Decades

The so-called shale gas revolution has already had a transformative impact on the U.S. natural-gas market, on the country's energy landscape broadly, and on a number of U.S. industries, most notably petrochemicals. Its reach promises to expand considerably as development practices continue to improve and growing numbers of countries, such as Argentina, China, Poland, and the UK, seek to exploit the shale reserves within their borders.

The seven articles in this e-book examine the shale gas revolution through a number of lenses.

  • "The Great, Global Shale-Gas Development Race: Where to Focus Commercial Resources" discusses the "second wave" of shale gas development that BCG believes will take place—outside of North America—over the next five years. The prize could be quantities of abundant, low-cost natural gas an order of magnitude greater than those available in North America. But not all shale resources will be commercially viable, and in many regions, geological, commercial, and regulatory challenges could pose significant hurdles to development. To be successful, operators and investors will have to systematically assess each region and understand its challenges.
  • "Shale Gas: Ten Levers to Ensure Safe and Effective Development" offers a blueprint for policy makers seeking to develop their countries' resources in the face of sizable challenges. The article details ten levers—spanning such issues as licensing, permitting, fiscal policy, monitoring frameworks, and water treatment and disposal—that can help ensure successful and sustainable development.
  • "The U.S. as One of the Developed World's Lowest-Cost Manufacturers: Beyond the American Export Surge" explores the nascent renaissance in U.S. manufacturing, including the critical, contributing role being played by the country's growing supply of low-cost natural gas. An abundance of cheap natural gas helps manufacturers in two main ways. First, natural gas is a key feedstock for chemicals and plastics and a significant cost in the manufacture of primary metals, paper, synthetic textiles, and other products. Second, cheap natural gas has a salutary effect on power costs at U.S. manufacturers. The upshot: the shale gas revolution is translating into economic benefits for U.S. companies in industries beyond energy and related sectors.
  • "How Cheap Natural Gas Benefits the Budgets of U.S. Households" focuses on the direct impact of cheap natural gas on U.S. consumers. The impact is, in fact, significant: BCG estimates that the average U.S. household is already saving anywhere from $425 to $725 per year because of lower energy costs that can be attributed to domestically recovered shale gas. By 2020, the average annual household savings could rise to as much as $1,200.
  • "Natural-Gas-Liquid Derivatives: The Energy Tsunami's Next Wave" looks at the shale gas revolution's impact on natural-gas-liquid derivatives, such as ethylene, propylene, and butadiene. The new market dynamics and higher price volatility have significant implications for petrochemicals and other industries.     
  • "The Future of Petrochemicals in Europe: Continuous Retreat or Rising Profitability?" assesses the challenging competitive terrain facing Europe's petrochemicals companies—and what these businesses must do to if they hope to emerge successful. One of the topics examined is the significant price advantage enjoyed by U.S. petrochemical players over their European counterparts in the sourcing of feedstock.
  • "Britain's Bowland Shale: What Next?" weighs in on the debate in the UK about whether the country should seek to exploit its shale reserves. Those in favor of development cite the potential for the country to lower its energy costs, help restore industrial competitiveness, and boost job creation, as the U.S. has done; those opposed are concerned about the potential for environmental harm.

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The Ongoing Rise of Shale Gas