Last week, the US Energy Information Administration (EIA) released the first study of its kind on shale oil and gas reserves worldwide. While the EIA presented extensive information on the size of global shale reserves, the challenge that remains is to take these reserves forward into the production stage. The EIA pointed out in the report that the figures cited are only initial estimates based on surveys but not drilling. Indeed, a very large number of wells must be drilled first to confirm these reserves. The preliminary reserves mentioned in the report can be extracted using currently available technology, without taking into account the economics of production. The survey that was conducted does not take into account the shale oil available at the bottom of the mega fields in the Middle East and the Caspian region, where shale layers have not been surveyed and no data on them is available so far. The study is the first of its kind on global shale oil reserves, and can be taken as a preliminary indication to what can be expected globally. Previously, the EIA conducted a study on shale gas globally, but not on shale oil, the reserves of which having only been assessed in the United States. The main revelation of the study is that shale oil and gas are available in many countries around the world, at a time when shale hydrocarbons are being produced only in the United States and Canada. The study indicates that more than half of shale oil reserves in the world, outside the United States, are available in four countries: Russia, China, Argentina, and Libya, while more than half of shale gas reserves outside the United States are available in five countries: China, Argentina, Algeria, Canada, and Mexico. The study puts global shale oil reserves at about 345 billion barrels, in 41 countries. The top ten countries in terms of the size of these reserves are Russia with 75 billion barrels, followed by the United States with 58 billion, China with 32 billion, Argentina with 27 billion, and Libya, the only Arab country in the list, with about 26 billion barrel. Shale oil reserves represent around 10 percent of total oil reserves worldwide, which amount to approximately 3.357 trillion barrels. Shale gas reserves, meanwhile, were estimated to stand at about 7,299 trillion cubic feet. China tops the list of the first ten countries in terms of shale gas reserves, with about 1.115 tcf of shale gas, followed by Argentina with about 802 tcf. Algeria is third with 707 tcf, and is the only Arab country in the list, followed by the United States with 665 tcf, and Canada with 573 tcf. Shale gas reserves represent around 32 percent of total global gas reserves. Shale oil and gas are produced commercially only in the United States and Canada at present, two countries that have beaten the rest of the world to discovering and producing shale hydrocarbons because of the relative flexibility of their laws, the possibility for local independent oil companies to venture into this oil wealth, as well as the availability of financial facilities to support these new projects, and the presence of large pipeline networks to transport the discovered oil without high infrastructure cost. It is worth noting that after small companies discovered these energy resources, major international companies from North America, Europe, and Asia have acquired stakes in, or entered into partnership with them. Shale oil and gas poses a serious challenge to the conventional oil and gas industry. No similar challenge has been brought to bear by any of the alternatives (solar, wind, or nuclear energy), which even after decades still account for less than 10 percent of total energy sources in use worldwide, despite the subsidies offered to their production and consumption. Shale oil and gas companies in the United States have been able to produce large quantities, quickly and at reduced costs. Now, shale oil accounts for nearly 29 percent of total US oil output, while shale gas production accounts for about 40 percent of total natural gas output in the United States, in 2012 figures. But despite the importance of shale oil and gas, it is not expected that it will be produced on a mass scale worldwide in the foreseeable future. This does not mean that this vital energy source must not be given due importance, as its impact on the global oil industry is set to increase with time. Particularly so when the shale oil and gas industry remains in its infancy, and the size of confirmed reserves of shale oil and gas is not yet known – or indeed the extent of future challenges and obstacles to this industry. The best example of this is the experience of Poland, which was ranked 12th on the list for its reserves. But despite the great interest in the discoveries there, drilling operations by international companies such as ExxonMobil, Marathon, and Talisman soon met with difficulties. Some of these firms pulled out from Poland, despite encouraging initial indications about the existence of shale oil reserves there. Meanwhile, shale oil production requires the use of new technologies such as hydraulic fracturing or drilling horizontal wells. As the study of the EIA itself indicated, and as is evident from discoveries in the United States as well, the odds for success vary with each field. Clearly, we are on the verge of a new era in petroleum, where talk about the possibility of oil and gas reserves not meeting future energy demand disappears, which means the end of the peak oil theory common in the past few years. As for the Arab oil-producing countries, which will benefit from the extension of the oil age, there is a need to develop national oil companies to deal with this trend successfully. They must not content themselves with producing conventional oils in the countries of the region, but also enter into partnerships with international oil companies to venture into shale hydrocarbons worldwide. The issue then is not the future of Arabs and oil, but the Arabs and the future of oil. This is the mantra of the stage to come. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)