More than 50 years ago energy experts began speaking of "peak oil" - the idea that the world was passing the point of maximum production and that supplies would decline. Today, shale calls that assumption into question. In the US new extraction techniques have transformed gas production, opening reserves that some estimate will last 100 years. Liquid-rich shales - ones that also contain oil - have enabled the US significantly to cut its dependence on crude imports.
Shale also has the potential to reshape domestic economies. In this year's State of the Union address. President Barack Obama said experts predicted it would support 600,000 jobs, with more to follow as industries that rely on cheap energy were brought back onshore. Lord Browne, the former chief executive of BP and now a partner at Riverstone - backer of Cuadrilla Resources, a company exploring for shale gas in the UK - is convinced it is a prize worth pursuing.
"Ultimately, shale gas gives us options for the future. It puts our energy supply in our own hands, as well as providing obvious economic benefits. It is clear that shale will be one of the linchpins of global energy supply in the 21st century, alongside nuclear and renewables," he says.
Shales are the most abundant form of sedimentary rock on earth, serving also as the source rocks for hydrocarbons that migrate into conventional reservoirs. Nigel Smith at the British Geological Survey, a research council, uses the analogy of looking for something to eat in a house. "All the food in the kitchen, the cupboards, the fridge and the freezer - that's the hydrocarbon source rock kitchen. The conventional hydrocarbons that we have used so far have migrated to the dining
room. We are going back into the kitchen to see what is still left in the source rocks or shales."
The apparent abundance of riches in the "kitchen" is causing a stir around the world. Aside from Argentina, significant reserves have been identified in Australia, South Africa, northern Africa and eastern Europe as well as in the UK and France. After an assessment of the potential in 32 countries the Energy Information Administration, a US federal agency, has estimated shale could increase the world's technically recoverable gas resources by more than 40 per cent.
David Fuller's view At a time when the world's markets are obsessing
about the ungovernability of Greece, Spain's private sector debts, the nature
of China's economic landing and the high cost of energy, it is worth recalling
that shale gas and oil really are game changers. The immediate challenge is
the wherewithal to tap this abundant resource beyond the USA national borders.
This takes time, which is why I have often said that we are living in the second consecutive decade of tight supplies and therefore expensive energy relative to what we should experience in the next decade, in real (inflation adjusted) terms. It will happen, I maintain, not least because most people recognise that there is no sustainable GDP growth worthy of the name without affordable energy. However, not all countries will develop their shale resources at the same time and failure to do so is likely to impede their growth.
Re fracking, The Willis Energy Market Review: "Just how concerned should energy insurers be about hydraulic fracturing", contains some insights, including: "A Cocktail of Chemicals?" on page 16.