This blog post examines the institutional, technological, geological, and investment environment characteristics that enabled the United States to secure overwhelming dominance in shale gas development, providing an in-depth analysis of how the global energy landscape is being reshaped.
The Industrial Revolution, which began in Britain in the late 18th century, marked a decisive turning point when humanity began mass-consuming fossil fuels like coal and oil across various industrial sectors, including agriculture and manufacturing. This shift accelerated industrial development, shaping modern civilization and enabling humanity to enjoy a far more convenient life than before. However, over time, fossil fuels gradually showed signs of depletion, and the limitations of the primary energy source underpinning modern civilization emerged as a serious problem. However, the 21st century saw the large-scale development of shale gas, significantly expanding fossil fuel supplies. Particularly since the 2010s, the rapid surge in U.S. shale production has exerted long-term downward pressure on international oil prices, causing structural changes in the global energy market. As South Korea also relies on overseas imports for oil and natural gas, it found it difficult to avoid these fluctuations in oil prices. Indeed, during the sharp drop in international oil prices in 2015, South Korea’s shipbuilding and automotive industries were significantly impacted by reduced demand for offshore plants and shifts in automobile market consumption. Therefore, it is necessary to examine what shale gas is, given its influence on the global energy market and our overall economy, and why it is once again being discussed as an important energy source.
Shale gas refers to natural gas contained within shale layers—sedimentary rock strata formed by sand and clay compacted horizontally into solid rock. Its existence has been known since the 1600s. However, past technological limitations made it difficult to economically extract gas from these horizontally extensive shale layers. The background to the full-scale development of shale gas lies in the hydraulic fracturing method, commonly called fracking. Fracking is short for hydraulic fracturing, a technology that involves injecting a fluid mixture of water, sand, and chemicals at high pressure to fracture rock layers, then extracting gas through the resulting cracks. After George Mitchell successfully commercialized it in 1998, this method became central to global shale gas development and fundamentally transformed the structure of the U.S. energy industry.
The actual fracking process is as follows. First, similar to oil drilling, a pipe is installed vertically down into the ground to reach the resource-bearing layer. However, since shale gas is distributed extensively horizontally, once the shale layer is reached, the pipe is switched from vertical to horizontal direction and drilling continues (average drilling depth is approximately 5,000 ft vertical and 7,000 ft horizontal). After horizontal drilling is completed, cracks are formed in the shale rock. Injecting a high-pressure mixture of water, sand, and chemicals into these cracks expands them, allowing gas to be recovered through the pipe. This multi-stage horizontal drilling and hydraulic fracturing technology has been refined since the mid-2010s, significantly improving production efficiency relative to resources invested by the 2020s.
According to 2024 data from the International Energy Agency (IEA), the global potential reserves of shale gas are estimated at over 200 trillion cubic meters. This represents approximately 60 to 70 years of supply based on current consumption rates. In terms of heat content, this amounts to about 170 billion TOE, a level quite comparable to conventional natural gas. According to the latest estimates from the U.S. Energy Information Administration (EIA), the top countries by reserves are China, Argentina, Mexico, the United States, and Algeria. However, the United States accounts for over 70% of actual production. The United States has explosively expanded shale production, centered on the Texas Permian Basin and the Marcellus and Utica shales, through a combination of systems recognizing landowners’ resource rights on their property, private investment, pipeline infrastructure, and technological innovation. It has maintained its position as the world’s largest oil and natural gas producer since 2023. Despite possessing vast reserves, China faces difficulties in achieving full-scale commercial production due to water shortages and geological challenges in key deposits like the Sichuan Basin and northern regions.
The expansion of shale gas supply significantly impacted international oil prices and the global economy. After low oil prices emerged during the 2020 pandemic, the surge in prices triggered by the 2022 Russia-Ukraine war saw increased U.S. shale production act as a short-term supply buffer. Conversely, Middle Eastern oil-producing nations have found it difficult to maintain market share due to the sustained increase in shale gas and tight oil production. Saudi Arabia and Gulf nations are now adjusting policies to ensure fiscal stability. Furthermore, since offshore oil drilling has a relatively expensive cost structure, the phenomenon where orders for offshore plants decrease as oil price volatility intensifies, affecting the entire global shipbuilding industry, has been steadily recurring since the 2010s. South Korea’s shipbuilding industry has also experienced severe fluctuations in orders whenever high-price and low-price oil phases intersect.
However, shale gas remains at the center of global controversy due to the various environmental issues its development process can cause. First, the fracking process involves the use of diesel-powered heavy equipment and methane leaks, resulting in greenhouse gas emissions. According to the IPCC’s 2023 report, methane leakage rates during shale gas development can significantly worsen overall greenhouse gas emissions if not properly managed. Second, concerns persist that chemicals used in fracking could seep into aquifers and cause contamination. Consequently, the U.S. Environmental Protection Agency (EPA) has further strengthened its standards for treating flowback water since 2022. Third, hydraulic fracturing, which applies intense pressure to rock formations to create fractures, has been linked to induced earthquakes due to ground weakening. Studies have shown an actual increase in earthquake frequency following fracking in the Texas and Oklahoma regions. A 3D modeling study by SMU geologist Professor Matthew Hornbach’s team analyzed that fracking-induced changes in underground pressure can have an impact approximately 10,000 times greater than during drought conditions, which could promote earthquake occurrence. These environmental concerns have sparked opposition movements worldwide. In the United States, Philadelphia citizens protested over concerns that fracking could threaten the Delaware River’s water quality. In the UK, renowned designer Vivienne Westwood staged a protest in a military vehicle against the British government’s shale development permits. Recently, New York State has maintained a broad fracking ban policy citing water quality and environmental impacts, while several European countries, including France and Denmark, have either banned or strictly restricted fracking.
The 1973 Club of Rome report projected oil depletion within about 30 years. However, as of 2025, technological advancements and the emergence of shale resources mean the world is estimated to have secured over 200 years’ worth of energy based on estimated reserves. This does not mean depletion concerns have vanished; it still indicates that fossil fuel reserves have long-term limits. Furthermore, fossil fuels exacerbate the climate crisis by emitting large quantities of greenhouse gases. Shale gas, in particular, cannot be considered a sustainable energy source due to the complex environmental issues accompanying its development, such as groundwater contamination, methane leaks, and ground weakening. Therefore, rather than relying on relatively cheaper fossil fuels like shale gas over renewable energy sources like solar and wind power for immediate energy security reasons, it is necessary to strengthen investment in renewable energy technology development in the medium to long term. As of 2024, fossil fuels still account for approximately 80% of global energy consumption, making it realistically difficult to halt shale gas development immediately. However, to prevent shale gas companies from neglecting environmental management under the pretext of cost reduction, mandatory disclosure of chemicals used in fracking and the treatment methods for flowback water is essential. Strengthening safety standards and environmental regulations is crucial to minimize environmental pollution. When such institutional safeguards are in place, shale gas development can be maintained in a more responsible manner during the energy transition era. Long-term, it can serve as a buffer, preparing for the shift to renewable energy.
