Energy Research & Social Science 20 (2016) 63–72

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Energy Research & Social Sciencejournal homepage: www.elsevier.com/locate/erss

Original research article

Looking through the prism of shale gas development: Towards aholistic framework for analysis
Juan Roberto Lozano-Maya
Asia Paciﬁc Energy Research Centre (APERC), Inui Bldg.-Kachidoki 11F, 1-13-1 Kachidoki, Tokyo 104-0054, Japana r t i c l e

i n f oArticle history:
Received 31 December 2015
Received in revised form 18 May 2016
Accepted 20 May 2016
Available online 16 June 2016
Keywords:
Shale gas development
Unconventional gas risks
Policy framework
Governance
CanadaChina
Mexicoa b s t r a c t
In consideration of the size and geographic concentration of proved conventional gas reserves and thepotential role of natural gas to reduce the carbon intensity of energy demand, unconventional gas
resources have become increasingly important to expand natural gas supplies. Shale gas in particular
has gained international relevance in recent years, largely due to its rapid development and gamechanging effects in the United States and its wider and larger distribution worldwide over conventionalgas reserves; nonetheless, developing shale gas in other countries has been much slower, as it presents
increased risks that span multiple interlinked dimensions and differ across the perceptions of an ample
array of stakeholders in diverse contextual settings. The premises presented in this paper attempt toadvance a holistic framework for shale gas development which comprises several factors grouped inthree major interlinked domains: access to natural resources, industry capabilities and governance. To
empirically test its premises under contextual variations, the framework is further used to consistently
analyze the cases of Canada, China and Mexico. Findings conﬁrm the interdisciplinary nature of shalegas development and suggest that governance is the most critical domain to bring about changes that
improve the management of underlying risks.
© 2016 The Author. Published by Elsevier Ltd. This is an open access article under the CC BY license(http://creativecommons.org/licenses/by/4.0/).

1. Introduction
The energy landscape has changed rapidly and drastically in thelast decades. In addition to the robust growth of energy demand,
especially in developing countries, the rising importance of climatechange has called for the use of fuels that emit less greenhousegases, in particular carbon dioxide. To meet these goals, one of
the major actions implemented in many countries consists of anincreased use of natural gas in the primary energy balance, as itleads to lower carbon dioxide emissions over other fossil fuels
and its use along with certain renewable energy sources fosters
an energy mix less reliant on coal and oil and more supportive ofcleaner technologies.
However, a larger natural gas supply in the world is currently
constrained by the geographic concentration of proved reserves ofnatural gas in a small number of countries and by the economic andenergy security trade-offs resulting from the growing dependency
on imported supplies. In recent years, however, the outlook for natural gas markets was dramatically affected by the advent of gas
volumes produced in the United States at an unprecedentedly large

E-mail address: lozzano@ymail.com

and rapid scale. These supplies are predominantly the result of shalegas, or unconventional natural gas produced from shale formations,which has transformed the economy of the United States and hasbrought about several positive effects that include lower carbon
emissions, economic spillovers in local communities where development of this resource is taking place, and energy security beneﬁts
manifest in the country’s emergence as an exporter of natural gas
in the form of liqueﬁed natural gas (LNG).
This experience in combination with preliminary geologicalassessments [15,16] indicating a more extensive and abundant
global distribution of shale gas over current proved reserves of conventional gas spurred avid interest across the world in the last ﬁve
years, with several countries embracing the potential developmentof their own shale gas resources. Nevertheless, considerable uncertainty remains, particularly in Asia and Europe [5,55], and by theend of 2015, shale gas production outside of the United States only
entered commercial stage in Argentina, Australia, Canada and China[6]. In all these countries, shale gas was produced at insufﬁcient low
growth rates and volumetric magnitudes to produce any positiveenergy or economic effects, let alone to similar levels to the UnitedStates.
To date, the study of shale gas development predominantly follows two broad research lines. One strand centers on the analysis
of single countries [11,13,34,64], but the outcomes of these studies

http://dx.doi.org/10.1016/j.erss.2016.05.014
2214-6296/© 2016 The Author. Published by Elsevier Ltd. This is an open access article under the CC BY license (http://creativecommons.org/licenses/by/4.0/).

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are usually too speciﬁc and idiosyncratic to allow comparisons andidentify common lessons and points of convergence among them.
Given the role of the United States as the earliest, the most successful and the best documented example of shale gas productionin the world, another major strand of research attempts to identify the underlying drivers of this experience that would facilitate
its reproduction in other countries [55,58,60], notwithstanding thedrastically different settings in the other jurisdictions interested
in or already engaged in shale gas development. In consequence,the study scope of worldwide shale gas development remains too
limited and fragmented, and a reconciliation of all these insights
into a cohesive framework with validity beyond the United States
is notably absent from the academic literature.
This paper aims to unify these approaches by examining thedevelopment of shale gas from a more consistent perspective. In sodoing, this paper rests on the main premise that shale gas development is fundamentally an interdisciplinary activity; for which, itsstudy must be inclusive, especially for comparative purposes. The
development of this argument not only addresses the main topic of
this special issue, but also several of the key areas pointed out by
Sovacool [50] in the ﬁeld of energy research and social sciences,namely about the effects on energy systems from social, political and economic conﬁgurations, from institutions and non-state
actors, and from diverse social groups and stakeholders.
Section 2 of this paper examines the multidimensional natureof shale gas development and the challenges in devising a homogeneous view applicable worldwide, in order to propose in Section 3 asystemic and holistic approach in the form of a generic framework.
Section 4 tests the framework empirically through its applicationin the brief analysis of shale gas development in Canada, China
and Mexico, while Section 5 concludes with the main ﬁndings andimplications.

2. The multidimensionality of shale gas development
Shale gas is generally more complex and multifaceted to produce than conventional gas, and although the ﬁrst commercial
natural gas well drilled in the United States in 1821 was actuallya shale gas well [12], the technology and production methods at
the time could not make the extraction of shale gas economical,
particularly when compared with relatively inexpensive, easy-toextract and abundant conventional gas. The advent of horizontal
drilling and hydraulic fracturing and their parallel deployment in
the 1980s ﬁnally helped to release the gas in the shale formations
in a cost-effective manner.
Despite these advances, shales show ample geological heterogeneity and a steeper declination rate, with shale gas wells
typically exhausting more than half of their gas output in theﬁrst few years [10]; additionally, the quality and quantity of shale
resources inferred in resource assessments and the exact location of the zones with the highest productivity (‘sweet spots’) or
richer content in liquids of higher economic value remain uncertain until actual exploratory drilling occurs [7]. In order to maintainor increase gas production levels cost-effectively, developers must
drill and hydraulically fracture a larger number of wells overshorter lead times, which exceeds the amount of technology inputs,
water, chemicals, surface facilities and human resources typicallyobserved in conventional gas production, demanding in turn thecreation of agile supply chains formed with external suppliers ofspecialized services [20]. In sum, because of this proﬁle, early shalegas development generally presents more intricate technical andoperational challenges, with higher economic costs and lower profitability margins [2,5].
More relevant, a faster pace and larger scale of development
ampliﬁes land, water and environmental impacts, and even thoughsome of these impacts are common with conventional gas development, what makes shale gas distinctive is that the intensity,
magnitude and extent of its operations pose cumulative risks witheffects still not fully understood that are insufﬁciently addressed byconventional risk management and regulatory approaches [18,62].
Performed at a large scale as in shale gas production, even a longestablished industry practice like hydraulic fracturing creates a
non-point source effect whereby the density and length in the rockfractures complicates the accurate traceability and assignment ofliabilities to incumbent operators in case of groundwater pollution[24]. Furthermore, shale resources are more widely dispersed, forwhich development stretches over more extensive areas and tends
to take place in proximity to communities with high population
densities that had little to no previous involvement in equivalent
activities. These issues increase social tensions and the potential toresult in conﬂicts.
Compared with conventional gas, the risks derived from shalegas development span quantity and quality issues in groundwaterand surface aquifers, including those apt for human use; emissions of toxic pollutants and greenhouse gases (most noticeably
methane) that affect overall air quality; induced seismicity; ecological damage to natural habitats and wildlife; occupational hazards
for workers and personnel adjacent to production sites; publichealth effects; and impacts to community life from the increased
noise, dust and road trafﬁc generated by ongoing operations. Other
negative externalities refer to boom-and-bust cycles, and losses in
the quality of life, property value and visual aesthetics [22,47,62].
In essence, shale gas development transcends purely technical and economic domains, to interweave environmental, social,
and political risks that interlink a larger number of stakeholders.
Therefore, to sever any of these links from shale gas development
renders incomplete the prism of risks and stakeholders involved,
which has deleterious effects, especially for comparative, strategymaking and policy-making purposes. In spite of this, the academic
discussion about shale gas development largely centers on speciﬁc
attributes that only capture part of these risks, overlooking several
relevant domains and their corresponding interrelations. A studyof the academic literature devoted to shale gas between 1990 and2014 conﬁrms that most research has been highly concentrated onengineering, technical and geological subjects [59].
In line with these arguments, scholars have stressed the need fora multidisciplinary approach different from that applicable to conventional gas, in order to overcome the multiple challenges andrisks associated with shale gas development [2,47] and favor theshift of energy research from a few speciﬁc domains towards a more
inclusive problem-based approach [51]. In addition to this fragmented scope, the majority of academic studies, including those
attempting to identify the major forces behind shale gas development [1,5,58,60,53] are usually restricted to the discussion of single
countries, which has further contributed to hamper the applicability of their ﬁndings to other settings.
In particular, deliberately or tacitly, the United States became
the reference for shale gas development around the world. Deliberately, the United States federal government formally launchedin 2010 its ‘Global Shale Gas Initiative’ to provide help to countries looking forward to developing their own unconventional gas
resources for energy security and environmental reasons [43]. Tacitly, the pioneering experience of the United States became a rolemodel in countries like Mexico [33] and the United Kingdom [22].
Empirical evidence however, has demonstrated the increasing difﬁculty in making shale gas production commercially viablebeyond the United States. Despite the early positive expectations
about shale gas, the experiences in the last few years in a number of countries with signiﬁcant inferred volumes of shale gas haveyielded poor results and have presented more considerable risks
than conventional gas production. Examples of challenges spanning

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multiple dimensions include Argentina [34], China [26,57], Mexico[13,33], Poland [28] and the United Kingdom [11,22]. These experiences have also questioned the use of the United States experience
as a ‘template’ or ‘benchmark’ of shale gas development success,given the structural and contextual divergences throughout theworld. In Europe, several countries had embraced the replication of
the successful shale gas ‘revolution’ in the United States as a means
to reduce their dependence on Russian pipeline gas imports, yet assoon as they faced the challenges involved in such task, many ofthem pulled out indeﬁnitely from their strategy to develop theirunconventional gas resources [25,55].
To begin with, one of the most distinctive characteristics inthe United States refers to the private ownership of petroleum
rights, which has helped reduce the social tension produced byshale gas development through the economic incentives that many
landowners perceive [53,60] but which is highly unlikely to be
replicated, given the predominance of state-owned rights in mostother jurisdictions worldwide. Secondly, the United States shale
gas boom is far from being a spontaneous occurrence, as it is theresult of economic incentives, industry capabilities and extensive
infrastructure systems developed over long timespans and under
different institutional arrangements [1,58]. Lastly, due to the diversity of legal, regulatory arrangements, policy priorities at different
government levels and the social questionability and evolution ofcertain environmental practices across jurisdictions, there are no
uniform shale gas pathways from which to portray a single model
absolutely representative of the United States [9].
Besides, scholars have noted an intrinsic ﬂaw in the natural useof the United States as an ‘international benchmark’ of shale gas
development, insofar as the adaptability of such benchmark and its
derived aspirational goals are poor in countries with fairly different settings [33,38]. This is also consistent with some views thatclaim shale gas production to be an overly exaggerated or ‘hyped’
phenomenon, since it is largely limited to the United States dueto the unique characteristics of that country and the timing offavorable external events to foster such a large scale of production[30,58]. These considerations suggest that there is no one-size-ﬁtsall approach for the development of shale gas resources, and leadthe academic discussion to question whether this activity is uniqueenough in every case to prevent the use of any reference based oncommon attributes [36].
Interestingly enough, more than two decades ago, in light of
the works at the time in the United States towards the commercial
development of different types of unconventional gas resources,
not only was that country suggested as the most likely pioneer ofshale gas production, but particularly as a source of learning forother countries to follow suit [36]. In this sense, this paper adheresto the argument that valuable knowledge can be assimilated fromthe examination of the United States and of those countries at an
early stage of commercial shale gas development, albeit not in theform of a rigid template but as a knowledge source to design transferable policies [33,38] and illustrate actual negative examples andmajor risks to avoid in the development of shale gas for other settings [9,22]. The following section strives to condense these notions
into a cohesive systemic framework.

3. Introducing a generic perspective for shale gas
development
The design of a single approach to shale gas development is not astraightforward task, as it involves differing, and sometimes opposing views between major stakeholders that include the oil and gas
industry, the government, local communities, non-governmentalorganizations (NGOs) and the general public. Contextual settings at

65

a country or regional level are likely to inﬂuence a richer diversityof subgroups and interests within these major stakeholders.
Prior efforts to reﬂect the interdisciplinary nature of shale gas
development for comparative purposes fell short in capturing thiscomplexity. These attempts include a SWOT analysis on China’s
experience [63] that blurred the distinction between the macroand micro levels of analysis and between the perspectives of thediverse stakeholders embedded; similarly, a robust approximation
to potential risks was presented by Wiseman [62], nevertheless,it was based on and applied only to particular jurisdictions in the
United States.
The framework presented in this section strives to provide
a multidisciplinary and more consistent perspective following
the main assumption that the pace and magnitude of shale gas
development will vary across countries and possibly between thejurisdictions within them [6,21]. This statement aligns with otherviews underscoring that shale gas development will tend to diverge
as it is inﬂuenced by different considerations, especially of political nature [5], and includes the values of different stakeholders
in response to their perception on the distribution of beneﬁts andrisks [49]. The overarching premise is that scarce as they are, energy
issues are fundamentally entrenched in an indissoluble nexus withmultiple dimensions that in turn, exert asymmetrical inﬂuence
over diverse stakeholders and settings and occur at different spatial
and physical scales [4,19].
Therefore, shale gas is not exclusively a geophysical, technicalor economic endeavor, but a set of higher interrelated multidimensional constructs that contingent on their context, reﬂect a political
position concerning shale gas resources, involve the industry proﬁciency to develop those resources, and affect the perceptions andthe formal and informal relationships of the actors involved. These
three domains are respectively denoted in the framework as Accessto Natural Resources; Industry Capabilities, and Governance.
These arguments use and reﬁne the guidelines of the ‘RIG’model presented in APERC [6], through the support of an extensive
literature review and case studies that included semi-structured
interviews with industry experts and government ofﬁcers visited in Mexico City, Mexico; Alberta, Canada; and Pennsylvania,
United States during June 2014. The insights about global shale gas
development condensed in this framework also beneﬁted from theauthor’s participation in several international academic and institutional events on the subject held during 2013 and 2014 and fromhis visit to several communities affected by shale gas activities in
Denton City and across the Eagle Ford Shale in Texas in February
2016. This framework elaborates on the principles of an integral
petroleum resource management system posited by Al-Kasim [3],with the addition of the concept of governance from the argumentsthat emphasize its role as a vehicle to support more effective outcomes in the development of natural resources among the different
stakeholders involved and their respective interests [4,52]. In thisframework, governance is conceived as the distribution of authority between state and non-state actors at multiple parallel levels[4,48].
The framework assumes a systemic relationship whereby its
three major domains are interdependent and necessary for shalegas development, but among them governance comprises the elements that signiﬁcantly affect the incentives in the interactions of
the diverse stakeholders involved, which in turn affects the othertwo domains. According to this assumption, governance issues
are then expected to inﬂuence the industry capabilities and credibility, to affect operations and recovery factors in the shale gas
resource base, including the subset of resources with potential tobe produced on a commercial scale. This inﬂuence on the industry’s
capabilities and the resource base has the potential to inﬂuence theconditions and extent of the access to shale resources and also to
feed back into the social response and the political position towards

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Fig. 1. Generic framework to assess shale gas development.
Source: Adapted from Ref. [6].

shale gas in the governance domain, either in the vein of a ‘virtuous
cycle’ of interlinked positive effects leading to improved operations, enhanced recovery factors increased participation and social
trust [32] or as a ‘vicious cycle’ that undermines the authority andexpectations of stakeholders to prevent reciprocal agreements andspur radically opposing stances. Fundamentally, the factors in thisdomain converge with the position that shale gas can bring overall
positive beneﬁts if done responsibly through adequate governancemechanisms [5,27,52].
The design aims to make the framework widely applicable,
while also keeping it sufﬁciently detailed to have an insightful
analysis in which the relevant issues for a particular context ﬁt
in. Owing that the three major domains in the framework could
be largely applicable to other type of energy and even non-energy
undertakings, their subdivision into ﬁner factors helps to accountfor contextual granularity speciﬁc to shale gas development. As themultiple risks of shale gas development are systemically linked
with each other, the three domains in the framework inﬂuenceand overlap each other, for which their respective factors may
not be totally discrete, spanning more than one of these domains.
As described in more detail below, a main premise in the framework is that a dynamic process permeates across its three domains
whereby stakeholders perceive risks and react differently, depending on their set of values, information and expectations; their
spatial, geographical and institutional context; and the iterationand evolution of their interactions over time [37,56].
It must be stressed that the framework is comprehensive but
not exhaustive, which implies that it cannot include every possible
element involved in the development of shale gas, for which somelevel of abstraction is inevitably necessary. Likewise, the framework
only comprises those elements concerning shale gas development

which a country can fairly inﬂuence or modify; in consequence,external variables such as geopolitical events or international priceﬂuctuations lie beyond its scope, notwithstanding their relevanceand inﬂuence. In addition, although the framework outlines thepotential risks and interdisciplinary considerations in a broad arrayof contextual settings, its objective is to provide a consistent andholistic view of shale gas development, not to promote it. For thesake of clarity, Fig. 1 depicts a visual representation of this tripartite framework with its overlapping dimensions. The subsections
below describe the interactions and ﬁner factors in the tripartite
framework.
3.1. Access to natural resources
The founding domain of the framework refers to the access tonatural resources, which includes (i) the shale gas resources tobe extracted, along with the (ii) water resources required to perform the required methods to produce the gas economically fromthe shale formations. In line with the multidisciplinary approachembedded in the framework, this notion of access transcends geophysical, technical and economic constraints to emphasize the legal
right to extract shale and water resources, including the degreeof control and the extent of access embedded [38]. This access islargely dependent on the political and institutional trade-offs in
the governance domain described below.
This is a fundamental consideration, inasmuch as the existenceof shale gas resources is a necessary, but not sufﬁcient condition
to their development whenever there are blanket restrictions totheir extraction. Legal access explains why countries presumed tohave a large shale gas potential such as France has declined to pursue the development of those resources due to legal restrictions.

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These restrictions might be indirect, imposed on the use of water
resources or on the deployment of certain production methods suchas hydraulic fracturing. Thus, access to natural resources will varyin every country and even within the internal jurisdictions in a single country, largely because of political considerations; however,the framework acknowledges four essential preconditions to allow
the development of shale resources.
These preconditions refer to (a) market demand, whether internal or external, to absorb the potential incremental gas supply;(b) a minimal price level at which massive shale gas production
would become proﬁtable and (c) access to capital, necessary tofund the activities associated, whether in the form of ﬁnancial
markets in free-market economies, public investments prevalent
in command-driven economies or a combination of both. Anotherprecondition refers to (d) governmental support in the form of subsidies, research programs, more accurate and publicly accessible
geologic information or other incentives. On this last precondition, subsidies and incentives are deemed necessary to support the
introduction of technologies widely available but not yet fully commercial for a certain geographic reach, at least until they reach ascale-up stage [54] and gain acceptance at the political, social andindustry levels [30].
3.2. Industry capabilities
The proﬁtability of companies producing shale gas hinges
on their strategies to enhance knowledge, ﬂexibility and costefﬁciency capabilities, to leverage the linkages with other external
providers, and to effectively mitigate potential environmental andsocial risks in anticipation of the uncertain changes in the oil andgas markets. These characteristics are fairly reminiscent of theconcept of ‘dynamic capabilities’ which ﬁrms deploys in order tosense their environment, seize potential business opportunities
and adapt themselves adequately and timely to remain competitive[46].
The complexity embedded in the development of shale gas is
calling for a new business model that demands more sophisticated technical and organizational capabilities with technologicalprowess, increased ﬂexibility, cost-efﬁciency and competitiveness[7], especially under the recent period of continued low oil (and gas)
prices. Industry capabilities thus determine the adaptability andpotential timespans associated in the activity of producing shalegas. In some contexts, a legacy oil and gas industry will represent
an advantage in terms of the existing wealth of human and physical assets that might be better adapted to the task of shale gas
production, contingent on the quality and quantity of those assets
and their experience in the commercial production of other type of
unconventional gas resources or even in early stages of shale gas
development.
In step with the critical role that technological applications andcapabilities play in the production of shale gas [2,7], the industry capabilities domain encompasses four speciﬁc factors: (i) theindustry’s technological and operational capabilities, including anadequate workforce in terms of size and skills and the presence ofinternational oil and gas companies with previous experience in the
production of shale gas; (ii) the availability of providers of specialized oilﬁeld services and equipment; (iii) sufﬁcient infrastructurenecessary to produce, process, store and transport the gas produced
up to the markets; and (iv) the adherence to practices, including
industry standards, to minimize the risks to industrial safety, to theenvironment and to local communities, in order to affect the way
in which the general public perceives shale-gas-related operations.
Beyond economic criteria, the factors in this domain acknowledge that oil and gas ﬁrms looking for a sustained competitive
advantage must legitimate their operations through a genuine
commitment that balances their commercial proﬁtability with the67interests, perceptions and expectations from other stakeholders, inwhat is generally known as a ‘social license’ [41]. In line with theframework’s premises, energy technology and infrastructure areconceived as socio-technical systems that involve, depend on, andevolve with the socio-economic context and the interests of thedifferent stakeholders involved [30,47]. This means that potential
technology progress allowing the eventual abandonment or reduction in the use of water, a necessary- and controversial-input in thedevelopment of shale gas, would certainly also affect the associated perceptions of risk and acceptance among stakeholders. Thesesocial perceptions pertain as well to the next domain.
3.3. Governance
The governance domain in the framework concerns the way inwhich different state and non-state stakeholders involved in thedevelopment of shale gas articulate their interactions and relationships based on their interests, expectations, beneﬁts and risks
over time and across contextual situations. Governance is criticalbecause at heart, shale gas development is a political undertaking
and creates asymmetrical beneﬁts and risks in different spatial andtemporal scales, leading to disputes among stakeholders which are
guided by their respective ‘narratives’ or ‘storylines’, since facts anddata are no longer relevant for them owing to their divergences invalues, beneﬁts, risk perceptions and reciprocal trust [8,23,37].
Accordingly, the governance domain encompasses three factors: (i) the political frames and their narratives regarding shalegas development at different levels; (ii) the institutional structure
including the arrangements between owners and developers of
shale gas, applicable regulations and legal issues; and (iii) a multistakeholder engagement. Implicit in this domain is a fair degreeof political stability allowing polycentric governance, whereby theparticipation of empowered local communities in the management of natural resources is more appropriate due to their betterknowledge of social and environmental risks and the government’s
ineffectiveness to act on behalf of the public interest due to moral,
informational or intellectual reasons [40].
The ﬁrst factor alludes to the position or frame of meaningdevised by major stakeholder groups to help their own positions
on shale gas dominate the public opinion for policy-making purposes. Because shale gas interlinks several scales of action (national,
regional, local), plausible beneﬁts and risks are perceived differently, producing mixed societal responses and irreconcilable
conﬂicts that push stakeholders not to look for a rational dialogue,
but rather to create their own views of what shale gas development
is about, in order to impose those views with the aid of coalitions formed with other like-minded actors [11,23,49]. The aim
evidently, is to increase the discursive dominance of these partisan views by creating compelling narratives that encourage large
audiences to interpret shale gas development in just the same way.
To be successful, these narratives seek to connect to their audience values by building storylines that underpin certain arguments
through selective meanings, evidences and sense of urgency, tobe then delivered by trustworthy actors [37,61]. These narratives
are usually antagonistic, conceiving on one hand shale gas as an‘opportunity’ to bring beneﬁts like energy security, reduced carbon
emissions and economic growth, with typical supporters being theindustry, governments and media. On the other hand, there are
narratives of shale gas as a ‘threat’, which leverage the negative
impacts on public health and the environment, mostly at the local
level, although at a broader scale, they also argue that shale gas
development locks-in economies into a higher use of gas that hinders the opportunities to expand renewable energy and introduce
low-carbon energy systems. Typical supporters of this narrative
include local communities, NGOs, the renewable energy industry
and media [8]. Recent empirical research stresses for instance, that

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contexts with prior oil and gas activities seem to be more favorable
to the development of shale gas [61] and that a dominant industry voice in shale gas development, makes regulation lag behind[18]. Irrespective of the tone supported, a shale gas narrative isclosely connected to the political position underlying the access toshale and water resources, which further reﬂects the cross-linkages
among the framework’s domains.
The second governance factor recognizes the different risks ofshale gas over conventional gas in terms of the incumbent institutional arrangement rooted in a set of geophysical, economic,
environmental, legal and social trade-offs that affect the distribution of costs and beneﬁts [4]. This second factor includes theconsiderations that articulate the relationships between owners
and developers of shale gas resources, as manifest in legal rights
and ﬁscal regimes [38] along with the regulatory approaches toacknowledge and avoid the cumulative effects in several dimensions areas, most noticeably environmental [47].
The third and last domain factor refers to a permanent multistakeholder engagement that includes the efforts by shale gas
companies to interact with local communities and inﬂuence theirperceptions to gain (or lose) social acceptance. Also included are
the governmental efforts to involve other stakeholders in the governance of shale gas development. Again, as per the framework’s
premises, these factors have strong links with others in the industry
capabilities and access to natural resources domains.
Local communities are becoming more relevant in thegovernance of shale gas development, demanding meaningful
information, decision-making and beneﬁts; likewise, developing
companies are increasingly aware of the favorable role that earlysocial licenses gained through legitimacy, credibility and trust havein the mitigation of the business risks that social conﬂicts poseto operations, including delays and eventual project cancellations[11,41]. For governments, multistakeholder engagement in energy
projects improves decision-making and risks mitigation in a more
integrated and equitable manner [41,48] but demands in turn thegovernmental ability to empower those stakeholders and better
manage of their expectations about risks, developers, processes
and beneﬁts [56]. A more inclusive governance of shale gas development, especially involving those whose voice is less likely to
be heard, helps governments stay away from partisan narratives
to strengthen their own political autonomy and credibility, andultimately, avoid the ‘coalmine canary effect’ whereby unfulﬁlled
social demands and excluded local communities will ﬁrst impact a
reduced number of local actors but eventually will expand and create much stronger social and environmental effects with broader
implications (Willow, 2010 cited in Ref. [18]).

4. Case studies
In line with the notions on the multidisciplinary nature of shalegas development and the need to design a more consistent viewof this activity across the world, this section presents three brief
country cases analyzed with the framework presented in the previous section. The ﬁrst criterion used to select Canada, China and
Mexico as case studies referred to the inferred existence of shalegas resources in all of them as per EIA [16], the relative size of
those volumes over the remaining countries assessed, as well as
evidences of early shale gas development. To enhance the comparative analysis, the selection of Canada and Mexico responded
to the assessment of countries within a single geographical region(North America), especially against their neighboring exemplar theUnited States. Canada and China were also selected as they represent some of the most advanced experiences of commercial shalegas production beyond the United States.

4.1. Canada
4.1.1. Access to natural resources
Canada has huge shale gas resources that put it at the fourthlargest place worldwide [16], but because of the primary legal powers vested in the Canadian provinces, oil and gas issues differ acrossthe country. Thus, this brief analysis centers on the western Canadian provinces of Alberta and British Columbia where shale andwater resources have been accessible thus far under the competitive premises of a free market.
As for the preconditions to this domain, despite the continued
low market prices since late 2014, commercial shale gas development has been underway in these provinces leveraging robust
ﬁnancial and capital markets, with province governmental support that encompasses incentives embedded in the royalty regime,
as well as repositories that by legal mandate provide open accessto an exhaustive inventory of geological samples collected acrossthe provinces over decades, from nearly every well ever drilled[6]. Market demand is weak, however. The United States became
the most important market for Canadian gas and the only one forexports, providing stable growth for decades, but due to the risingself-sufﬁciency of that country, Canadian natural gas production,
especially of shale gas, greatly depends on ﬁnding other export
markets overseas [35].
4.1.2. Industry capabilities
In these western Canadian provinces there is a long-establishedoil and gas industry that grew in deep integration with the UnitedStates market and which is also experienced in the productionof other unconventional gas resources such as coalbed methane,tight gas and shale gas, that have rested on sufﬁcient experienced personnel and oilﬁeld service providers [42]. Infrastructure
faces certain gaps concerning the age of some pipelines, but especially on the lack of lateral transport systems that connect theseprovinces with the rest of Canada, mostly due to the traditional
focus on north-to-south gas transport ﬂows from Canada to theUnited States [35]. In terms of the adherence to practices, industry associations and operators have progressively become moreaware of environmental impacts, although the discussion of thefull risks embedded continues, as supported by different levels ofgovernment, universities and research bodies [42,47].
4.1.3. Governance
While some Canadian provinces do not allow shale gas development and have current legal bans, the political position in theprovincial governments of Alberta and British Columbia is clearlyfavorable to the development of shale gas. The signiﬁcance of the oiland gas industry in the province economies in combination with thecompetitiveness between upstream gas projects on a global scale
has tied provincial governments to offer attractive conditions fordevelopers with the aim of keeping them operating in their jurisdictions, much at the expense of a powerful narrative stressing themacro-level beneﬁts of shale gas development and providing dedicated ﬁscal measures to this activity contingent on the age, typeand output of each well [18]. Given the institutional arrangement
between the different levels of government, the oil and gas industry
and its signiﬁcance in the economic activity, and the rights granted
to aboriginal groups like the First Nations, social and environmental
risks are major concerns in shale gas development. In this regard,
the legacy of oil and gas production in Alberta and British Columbia
provided a wide scope of regulations; nevertheless, managementof shale gas development risks is not comprehensive, and althoughspeciﬁc regulations are in progress, studies suggest that the management of risks substantially lags behind actual projects, thatenforcement and monitoring are loose, and that despite the consultation processes established in these regulations, many projects

J.R. Lozano-Maya / Energy Research & Social Science 20 (2016) 63–72

69

started operations without the prior feedback of local communities
to identify critical risks [42,45].
Due to these issues, communities and aboriginal groups in particular, perceive their engagement in consultations as superﬂuous,
regulations as not enough demanding of the industry, and theirdemands and concerns as overlooked by authorities and regulators, who are increasingly sensed as deliberately favoring shale
gas on the fear of losing the investments associated, much to theexpense of social welfare [45]. More important, these issues haveresulted in a serious distrust in the government which has triggereda proactive shift of decision-making whereby local First Nationsgroups in British Columbia are bypassing authorities to inform theirconcerns and negotiate current projects directly with developers,
who in turn have responded favorably in their interest of securing a social license [18]. If not addressed efﬁciently, governanceissues, could greatly block the advance of shale gas production inwestern Canada. What is more important is that these incidents
seem to have eroded the credibility of the provincial governments
and have prompted an emergent governance of shale gas development in which aboriginal groups are empowered and have shaped
regulation proactively in the face of the regulatory gaps and ineffectiveness perceived.

proven [54]. Furthermore, none of the winners of the shale tenders
had previous experience developing these resources [14]; and the
combination of bold production targets with incipient regulations
does not help to effectively manage the safety and environmental
risks associated [29].
The Chinese industry is basically dominated by three verticallyintegrated national oil companies (CNPC, CNOOC and Sinopec) that
hold most of the shale acreage and concentrate the capital, workforce, technology and infrastructure. In the practice, this impedes
operators without ties to these three major owned companies
from using common infrastructure like pipelines and prevents aricher technological exchange; by the end of 2012, state-owned
companies held more than 85% of the Chinese oilﬁeld services
market, with international companies accounting for less than
5% [57]. Additionally, with the exception of Sichuan, the extension of China’s gas pipeline network does not effectively connect
potential shale producing basins and markets [21]. Adding up to
this complexity, China’s legacy oil and gas industry stretched into
the production of other unconventional gas resources like coalbed
methane since the late 1990s; however, production is still low,
mostly because of several remaining challenges very similar to
those of shale gas [63].

4.2. China

4.2.3. GovernanceThe central government’s power and its omnipresence in theindustry back the leading narrative to produce shale gas massively.
China’s rising energy needs and current coal use at approximately
two-thirds of its primary energy supply have prompted a strategy
to expand the use of natural gas, with the increased production ofdomestic gas resources being set to reduce its reliance on external supplies. Because of this, shale gas has become a priority in thegovernmental agenda, aided by the top-down nature of the Chinese institutional system and its authoritarian politics [57]. This
shale gas narrative puts economic drivers ahead of environmental
concerns, and has led the Chinese government to grant shale gas
special ‘independent mineral’ status in 2011 in order to provide
stronger economic support and foster the participation of private
capital that rushes large-scale production [21,26]. China’s institutional arrangement is also multi-layered, with numerous agencies
overlapping or bypassing others at different administrative levels
and blurring the distribution of risks and beneﬁts among stakeholders, with central-made legislations that must be enforced by
the provinces, which in turn greatly depend on the revenue andemployment provided by national oil companies owned by thecentral government. This results in regulatory ambiguity whichin combination with the lack of transparency in all the government levels leads to environmental risks being greatly overlooked,
but most notably, stakeholder engagement, happens if at all, only
when projects are operating and when environmental impacts aremost likely to have occurred [21]. Along with this lack of meaningful engagement, some social protests were reported over thenuisances and environmental effects of the shale gas activity in
Sichuan [14,29] and could grow if unattended.

4.2.1. Access to natural resources
China has the largest inferred resource base of shale gas in theworld [16] and manifested its interest in shale gas from 2009. Aftersigniﬁcant technical and ﬁnancial efforts, by the end of 2013, theFuling ﬁeld in southeastern Sichuan Basin entered the commercial
stage of production [6]. A centralized economy, the majority of oil
and gas operations in China are held by a few dominant national oil
companies; however, in light of the complexity to produce shale
gas at a large scale, the Chinese government has thus far conducted
two tenders for the exploration of several shale gas blocks whichwere granted to Chinese private and state companies; and it has
allowed a modest participation of international oil companies that
include Shell from 2012 and BP from March 2016 to participate
in the development of shale resources [14,39]. Currently, there isaccess to water resources for shale gas extraction, although many
Chinese shale basins are located in arid and semi-arid regions withhigh water stress levels, and even in those regions with relatively
more abundant water resources like the Sichuan basin, other competing human and agriculture needs pose a major risk to a larger
scale of shale gas production [26].
Regarding the framework’s preconditions to access these natural resources, energy sustainability and energy security reasonssustain a growing demand of natural gas and the efforts to increase
domestic gas supplies. Funding of these projects is present mainly
through the capital of Chinese development agencies and stateowned oil and gas companies, and producers enjoy a progressively
decreasing subsidy to help them with the proﬁtability of their operations [26]. The Chinese government has been fully supportive of
shale gas through a broad array of initiatives that besides production subsidies have included ambitious production targets, researchand development programs, special mineral status to shale gas, andinternational cooperation strategies to accelerate the production ofthese resources [54,64].
4.2.2. Industry capabilities
The Chinese gas industry is evolving to harness the technicalchallenges of shale formations, but to a large extent, it lacks thetechnological and operational capabilities to substantially increase
the pace of production, in consideration of the drastically different
geological properties of the Chinese shale formations against thosein North America where current technologies were successfully

4.3. Mexico
4.3.1. Access to natural resources
Mexico’s potential shale gas resources are considered the sixth
largest in the world, with formations that are shared with theUnited States [16]. Mexico is a remarkable example of access toshale resources and energy as a whole. For more than 75 years,
the Mexican oil and gas industry remained strictly closed to nearly
every form of private investment, carrying out all the activities in
the oil and gas value chain exclusively through its monopolistic
national oil company Pemex, but in 2013 an overhauling energy
reform granted private operators legal access to produce oil and gas

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along with Pemex, including the eventual development of shale gas
resources through competitive tenders [38]. There is legal access towater resources to perform hydraulic fracturing, although Mexico’s
northeastern territory, where most shale gas activities are taking
place, is arid and prone to droughts [33].
4.3.2. Industry capabilities
Mostly because of its long-lasting monopolistic structure,
Mexico’s oil and gas sector suffered from chronic underinvestment, overstafﬁng and ﬁnancial pressures that seriously eroded theindustry’s capabilities and infrastructure, more so for the eventual
development of unconventional resources like shale gas. Serious
infrastructure bottlenecks like the 22 ‘critical alerts’ in 2012 that
asked consumers to curtail their natural gas consumption due to thesaturated capacity in the main transmission pipelines [13] blocked
an expanded use of gas, and although they triggered new pipeline
projects, these will take some years more to come online.
4.3.3. Governance
Mexico’s federal government built an ofﬁcial narrative that not
only supported shale gas development but also, at a broader level,
its overhauling 2013 energy reform. Aided by heavy media coverage, this narrative was notorious because the administration
at the time touted the economic prosperity and game-changing
effects from embarking on shale gas development, nearly taking
for granted that once reforms were passed, Mexico would follow
suit the shale gas experience of the United States, without any
prior consideration of potential risks [13,33]. Shale gas activities
led by Pemex commenced in 2010, and despite originally ambitious
plans and the presence of international and domestic oilﬁeld service companies in Mexico, by the end of 2014 only 17 shale wells
had been drilled, most of them with mixed performance results[6]. Furthermore, by the end of 2015 no tenders had been yet conducted and in May 2016 it was announced that the unconventional
resources (including shale gas) tender scheduled for that same year
was further postponed, on the grounds of low oil prices and speciﬁc
regulations still in progress [17].
In this regard, no ﬁscal regime speciﬁc to shale gas exists in
Mexico as tenders have not yet occurred, although the new legal
instruments provides an economic incentive in the form of a royalty
exemption for non-associated natural gas whenever prices remain
under USD 5 per million BTU [38]. Mexico’s evolving regulations inshale gas development demand the institutional ability to enforce
them effectively through a number of incumbent federal agencies
that were created as a system of check and balances to increasetransparency and avoid the deeply embedded corruption history
in the oil and gas sector [31].
In Mexico, petroleum rights belong to the federation, for whichstates and local communities get no more beneﬁts than economic
spillovers. With the reform passed, the law now considers a small
economic retribution to landowners from developers, but in parallel it grants oil and gas activities the highest priority over otherland uses, which in the practice forces landowners to monetize
their potential risks [6]. Although public consultation processes foroil and gas projects were also included in the laws, their importance is relegated, and social demonstrations could increase undera scenario of larger production, especially as tenders and actual
development are further delayed and NGOs and local communities
gain time to strengthen their actions and arguments to change thecurrent governance and offset the government’s narrative. Last but
not least, key to sound shale gas governance is political stability,
but organized crime activities, especially in the northeast Mexican
territory where exploratory shale occurs [44], threaten the otherkey factors that support shale gas development, especially in theindustry capabilities domain.

5. Conclusions and implications
Largely inspired by the game-changing experience of the UnitedStates and by the promise of sustaining larger gas consumption
with expanded domestic supplies, many countries have pursued
the development of shale gas, with modest results at best in few
of them. As the academic study of shale gas development haseither centered on speciﬁc dimensions for certain countries or on
the experience on the United States, there is a fragmented scopethat overlooks spatial and contextual variations and the interdisciplinary nature embedded in this activity.
In an analogy with a prism, the numerous risks underlying shalegas development are further ampliﬁed by the interrelations andperceptions of the different stakeholders involved, for which thispaper proposed a holistic study in the form of a tripartite framework that condenses the systemic relationships of different factors
pertaining to the domains of access to natural resources, industry capabilities and governance. The arguments in the framework
converge with the position that the risks of shale gas development
vary across actors, spaces, times and context; therefore, this activity entails diverse trade-offs that accommodate certain narratives,
for which it is essentially a political undertaking.
While access and industry proﬁciency are fundamental toextract the gas from shale formations, it is governance, and particularly a multi-level inclusive governance, which is likely tosigniﬁcantly affect the incentives that bring about mutually beneﬁcial outcomes for the stakeholders involved, which in turn affect theother two domains. This is critical since empirical experiences illustrate that whenever a narrative is imposed on those stakeholders
who do not receive direct beneﬁts but endure the risks, states canundermine their political autonomy and credibility and stir moreantagonist positions. More important, in their narrative to deliberately favor shale gas in exchange for overall economic beneﬁts at
the expense of more vulnerable social groups, governments may fallprey of the ‘coalmine canary’ effect, undermining the risks involved
and triggering much larger social and environmental impacts once
shale gas development advances.
The decision to undertake the development of shale resources isin the end contingent on the particular actors, interactions and context involved, meaning that depending on the circumstances, thebest collective decision may be not to undertake shale gas development at all, at least until there is a balanced, inclusive approachthat results in the creation of economic opportunities while still
protecting the land, environment and rights of local communities. In regions where shale gas is being produced commerciallylike western Canada, the dominant narrative imposed by provincial
governments is showing that local and aboriginal communities arelosing trust in regulators and empowering themselves as effective
interlocutors with the industry, shaping regulations proactively. In
China and Mexico, social and environmental issues could spur similar dynamics, especially if a unilateral narrative is not willing tolisten to other voices.
Nevertheless, whenever shale gas development is pursued, theframework concurs with the position that it must bring net positive beneﬁts to all stakeholders through appropriate governancemechanisms and meaningful dialogue that promote a socially andenvironmentally responsible production of these resources locally,
while also looking for macro-level beneﬁts associated to energy
security and economic competitiveness.
The premises presented in this paper attempted to advance acommon reference framework for the analysis and comparison of
shale gas development around the world, and while this framework is only an initial approximation to capture the complexity
surrounding shale gas development, it provides an interdisciplinary
perspective with generic characteristics that ascertain the key
domains and interactions involved, as well as those lying beyond

J.R. Lozano-Maya / Energy Research & Social Science 20 (2016) 63–72

its control. The insights and empirical cases presented highlightthe study of shale gas development as a fertile ﬁeld for the convergence of several disciplines, with robust opportunities for anenlarged participation of social sciences. Hopefully, this study will
instill more research that reﬁnes the framework’s premises, in particular in countries other than the ones presented here, especially inthose which have banned this activity. Ultimately, this paper could
help policy-makers and countries across the world to understandthe risks underlying shale gas development, and to devise more
inclusive strategies with balanced governance approaches in thosecases where political will is favorable to such goal.
Acknowledgment
The author expresses his deepest gratitude to three anonymous referees whose thorough and valuable insights improved thispaper.
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