The COVID-19 has brought the largest change in the industry since the beginning of the shale boom, in 2007. The pandemic is expected to impede the growth of the market with most of the risky assets being restructured and many companies either leaving or soon to leave the basins till the price point becomes profitable. Factors such as an increase in consumption of oil and rising growth in the oil-dependent industries are expected to drive the market. However, volatility in the oil market with prices going below the Shale Gas production cost may act as a restraint to the market.

Increasing environmental concerns during the production of shale gas are expected to restrain the market studied.

New development in the Shale Gas production technology, like the advancements in horizontal drilling technology, is expected to make the Shale Gas reservoirs more viable and may provide an opportunity for market players.

North America is expected to be the largest market in the forecast period owing to its large-scale production of Shale Gas in the region. The United States is expected to lead the Shale Gas production in the region.

Key Market Trends

Increasing Environmental Concerns to Restrain the Market

Despite the economic benefits, environmental risks associated with hydraulic fracturing are restraining the shale gas market.

Methane gas emissions during the drilling process pose potential air pollution risks. Additionally, incorrect disposal of large volumes of chemically treated water used in hydraulic fracturing operations can potentially cause severe surface water contamination. This has attracted criticism from environment protection bodies and NGOs, around the world. Local farmers and residents have also repeatedly opposed hydraulic fracturing, owing to its impact on health and farming. ​

Additionally, a typical fracking well requires approximately 2-10 million gallons of water during fracking operations, which puts additional strain on the water supply, particularly in the drought-prone regions. ​

In West Texas, where the Permian Basin (which is expected to drive the growth of shale gas activities in the United States ) is located, shale gas companies already faced opposition and criticism from the farmers, owing to the water shortage due to hydraulic fracturing.

The United States Geological Survey (USGS) blamed shale gas activities for the increase in earthquakes in the recent times, in certain parts of the Central and Eastern United States that are well-known for the extraction of oil and gas. ​

Thus, the increasing environmental concerns are expected to restrain the market during the forecast period.

North America to Dominate the Market

The United States, in 2019, was the largest producer of shale gas in the world. Many different countries such as Brazil, Canada, China, and Argentina have tried to emulate the American shale boom but have not been able to succeed. However, large progress has been made in China but due to the difficulties posed by the unstable reservoirs, the Shale Gas production may only rise slightly in the forecast period.

In January 2021, Reliance Industries Ltd agreed to sell its entire stake in certain upstream assets in the Marcellus shale gas asset in south-western Pennsylvania in the United States for USD 250 million amid weakness in the global hydrocarbon market. The assets, controlled by RIL’s wholly-owned unit Reliance Marcellus LLC and operated by affiliates of EQT Corporation, a United States-based energy company engaged in hydrocarbon exploration and pipeline transport, are to be sold to Northern Oil and Gas (NOG) Inc. The shock caused by Covid-19 has caused many smaller investor in the shale region to delay or abandon the projects in the industry.

The shale gas production in the United States increased, by 1.8%, from 835.247 billion cubic feet (bcf) in 2019 to 850.192 bcf in 2020. Shale Gas production may increase further due to new wells being drilled across the country.

Canada is known to have significant conventional gas reserves, and the country was a key supplier of natural gas to the United States for decades until the recent shale boom in the country. However, with conventional natural gas sources in decline, Canada’s industry is turning to unconventional sources, including shale gas. Many oil and gas companies are now exploring and developing shale gas resources in Alberta, British Columbia, Quebec, and New Brunswick, which could balance the difference in shale gas production in the coming future.

An estimation by Energy Information Agency (EIA) shows that American dry shale gas production in 2020 is about 850 bcm. The current scenario of the region demands more natural gas supply during the forecast period, which attracts investment in the exploration and production of shale gas.

Hence, North America is expected to dominate the market due to the overwhelming production of shale on the continent and further increase in the investment in the sector.

Competitive Landscape

The shale gas market is moderately fragmented due to many companies operating in the industry. The key players in this market include Chesapeake Energy Corporation, Royal Dutch Shell PLC, Exxon Mobil Corporation, PetroChina Company Limited, and ConocoPhillips, among others.

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