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Fracking Spreads Worldwide

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Nidaa Bakhsh and Brian Swint, Bloomberg

A record 400 shale wells may be drilled beyond U.S. borders in 2014, with most of the activity in China and Russia, according to energy consultants Wood Mackenzie. Once they start drilling and fracking, though, countries such as China, Argentina, and Russia could experience new oil and gas booms.

(In contrast, thousands of shale wells will be drilled in the U.S. next year.) The number of rigs used onshore in Europe and the Asia-Pacific region has increased 10 percent over the past year, data compiled by oil services company Baker Hughes (BHI) show. Most of those rigs are meant for shale. “It’s likely there will be a revolution,” says Maria van der Hoeven, executive director at the Paris-based International Energy Agency. “But not everywhere at the same time. And you just can’t copy the U.S. experience.”

Fracking in the U.K. will start next year, after the government lifted an 18-month moratorium imposed when a fracking company found it had accidentally caused earthquakes. Two utilities—Centrica of Britain and GDF Suez of France—have bought stakes in British drilling licenses to help bankroll the drillers and win a cut of any profit.

The shale boom has moved the U.S. closer to energy independence, added jobs, helped revive manufacturing, and lowered gas bills. Yet the conditions that fostered the U.S.’s success don’t exist elsewhere. In some countries, landowners don’t own the oil and gas in the ground: The state retains all mineral rights. Or a country may levy much heavier taxes on oil and gas profits.

Once they start drilling and fracking, though, countries such as China, Argentina, and Russia could experience new oil and gas booms. China has the largest shale gas reserves, estimated to be the equivalent of 212 billion barrels of oil. In shale oil, Russia tops the list with about 75 billion barrels, the U.S. Energy Information Administration says. Australia, Poland, and Algeria all have big reserves.

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