The following is a summary of the strategy session "Will the Unconventional Revolution Be a Global One?" which took place today on 5th March at CERAWeek 2013. You can access more summaries like these through IHS CERAWeek On Demand.

Bob Fryklund, Vice President, Energy Research, IHS, chaired the strategy session "Will the Unconventional Revolution Be a Global One?" examining the global prospects for countries seeking to replicate the energy revolution in North America over the past five years. The panelists agreed that unconventional oil and gas production will expand globally, but they also expected that the pace of development will be slower than in North America because of regulatory constraints, inadequate access to land, and unattractive commercial terms.

James Baulderstone, Vice President, Eastern Australia, Santos Ltd, discussed the Australian experience in developing unconventional resources. Australia's large resource base, combined with the proximity to energy growth markets in Asia and the opportunity to serve a booming global liquefied natural gas market, has stimulated a strong influx of foreign investment in unconventional development, with the early movers being the large international oil companies. Mr. Baulderstone pointed out that a key success factor thus far has been the transfer of technology, experience, and expertise from the United States. However, he also said that Australia's limited pipeline infrastructure will likely be a major obstacle to scaling up exploration and development over the near to medium term.

Tomas Garcia Blanco, Executive Director, Repsol (a partner of IHS CERAWeek 2013), stated that "necessity is the mother of invention," explaining that the growing need for natural gas and domestic energy security in many countries will boost unconventional production globally. He also highlighted the success factors that have driven the energy revolution in North America and contrasted the challenges companies are facing in other regions: political indecision, restrictions on access to acreage for exploration, unattractive investment terms, and difficulties in securing the proper combination of trained personnel, technology, and equipment on the ground. Mr. Garcia Blanco expects that unconventional gas development will advance faster than unconventional oil. He also asserted that the greatest challenges facing unconventional energy growth over the long term will come from governments in the form of inconsistent regulatory regimes and high royalties, and from the coal industry, which has been hit hard by the unconventional revolution but is fighting back and remains highly competitive.

Pål Haremo, Senior Vice President Exploration, Statoil ASA (a sponsor of IHS CERAWeek 2013), described Statoil's strategy in developing North American unconventional assets and stated that current opportunities in the rest of the world are not nearly as attractive as US plays. Statoil conducted a five-year study of several potential basins and found that, with the exception of a few spots in Russia, Argentina, Australia, China, and South America, there are serious obstacles to gaining access to land for commercial exploration. Mr. Haremo said that land access and competitive commercial terms are the key factors that will dictate which basins will be developed first around the world. He expressed optimism about the long-term potential of unconventional oil and gas development.

Adil Toubia, CEO of Oil & Gas Division, Siemens Energy (a sponsor of IHS CERAWeek 2013), voiced his support for unconventional energy development but also suggested that he is a strong advocate of exploring all possible sources of energy. He said most unconventional growth outside of North America in the next few years will be in the gas sector, led by China, Argentina, and perhaps Saudi Arabia, the latter having the resources and know-how to make a big bet on unconventional energy. According to Mr. Toubia, the biggest factors behind the expansion of unconventional development will center on progress in water treatment and wastewater management, as well as the development of technologies that can compensate for the lack of water in arid countries such as Saudi Arabia. Mr. Toubia said that Siemens has a global footprint and is open to partnering with exploration companies in new unconventional plays around the world, but stressed that his company will base investment decisions on the potential for return on investment and proper focus.

The panel unanimously agreed that unconventional energy exploration requires a new type of corporate mentality and focus for oil and gas companies, with an even greater emphasis on having the right technical expertise and supply chain management, as well as an increased willingness to seek partnerships.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.