What is the best way to balance global supply and demand for unconventional oil and gas?

1 Technology and innovation

One of the main drivers of the unconventional oil and gas boom is the development and deployment of new technologies that enable the extraction of these resources from previously inaccessible or uneconomic sources. These technologies include horizontal drilling, which allows wells to reach more reservoir area; hydraulic fracturing, which injects water, sand, and chemicals to create cracks in the rock and release the trapped hydrocarbons; and enhanced oil recovery, which uses various methods to improve the flow and recovery of oil from reservoirs. Technology and innovation can help improve the efficiency, productivity, and profitability of unconventional oil and gas operations, as well as reduce the environmental and social impacts. However, they also require significant investments, expertise, and infrastructure, which may not be available or affordable in all regions and markets.

2 Environmental and social impacts

Another major challenge of unconventional oil and gas is the potential environmental and social impacts of these activities, which may affect the local communities, ecosystems, and climate. Some of the main environmental and social concerns include water consumption and contamination, air pollution and greenhouse gas emissions, land use and disturbance, seismic activity and induced earthquakes, health and safety risks, and human rights and social justice issues. Unconventional oil and gas operations need to comply with the relevant laws and regulations, as well as adopt best practices and standards, to minimize these impacts and ensure the protection of the environment and the people. They also need to engage with the stakeholders, such as governments, regulators, NGOs, civil society, and local communities, to address their concerns and expectations, and to foster trust and cooperation.

3 Market dynamics and prices

A third critical factor that influences the supply and demand of unconventional oil and gas is the market dynamics and prices of these resources, which are affected by various forces, such as supply and demand fundamentals, geopolitics, trade policies, consumer preferences, and competition from other energy sources. Unconventional oil and gas have contributed to the increase in global supply and the decrease in prices of fossil fuels in recent years, which have benefited some consumers and producers, but also created challenges for others. For example, low prices may discourage investments and innovation in unconventional oil and gas, as well as in renewable energy and energy efficiency, while high prices may stimulate more production and consumption, but also increase the environmental and social costs. Therefore, the market dynamics and prices of unconventional oil and gas need to reflect the true value and impact of these resources, as well as the changing needs and preferences of the energy consumers and producers.

4 Policy and regulation

A fourth important factor that shapes the supply and demand of unconventional oil and gas is the policy and regulation of these resources, which are determined by the governments and authorities at different levels, such as local, national, regional, and international. Policy and regulation can have a significant impact on the development and deployment of unconventional oil and gas, as they can create incentives or barriers, opportunities or risks, for these activities. For example, policy and regulation can affect the access and allocation of resources, the taxation and fiscal regimes, the environmental and social standards, the infrastructure and security requirements, the trade and investment rules, and the climate and energy goals. Policy and regulation need to balance the interests and objectives of various stakeholders, such as the public and private sectors, the domestic and foreign actors, and the current and future generations, as well as align with the broader vision and strategy of the energy transition.

5 Cooperation and collaboration

A fifth essential factor that can help balance the supply and demand of unconventional oil and gas is the cooperation and collaboration among the different actors and entities involved in these resources, such as the producers and consumers, the companies and governments, the regions and countries, and the industry and academia. Cooperation and collaboration can enhance the sharing and learning of knowledge, experience, and best practices, as well as the coordination and integration of policies, regulations, and markets, among the unconventional oil and gas stakeholders. They can also foster dialogue and trust, address conflicts and disputes, and promote mutual benefits and win-win outcomes, among the unconventional oil and gas partners. Cooperation and collaboration can be achieved through various mechanisms and platforms, such as bilateral and multilateral agreements, joint ventures and partnerships, networks and associations, forums and conferences, and research and innovation projects.

6 Here’s what else to consider

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