The Peter Zeihan Podcast Series - Can Anyone Replicate the US Shale Revolution? || Peter Zeihan

Episode Date: November 29, 2025

Ready to level up your geopolitical insight? Join Peter Zeihan's Patreon and get 50% off your first month with code PZ50.Black Friday Sale: https://bit.ly/PZBFSaleThe US shale revolution has altered the trajectory of the US energy sector, but can that success story be replicated anywhere else?Full Newsletter: https://bit.ly/4ijvhdS

Hey, everybody, Peter Zine here, coming to you from Colorado. Today we're taking a question from our Patreon page, specifically from one of our friends down in Australia, wondering if it would be possible for Australia to recreate the sort of energy complex that the United States has. Courtesy of the Shale Revolution, the United States is now just a gross overproducer of both oil and natural gas. It's driven down energy costs in the country,

especially electricity costs, which are now among the lowest in the world. And it's generated a robust processing and manufacturing system with downstream work, And a significant export industry. Australia, having a smaller population, but almost as much land, could they do it? Black Friday and Cyber Monday are upon us. And so we are offering discounts on new signups for whatever level of our Patreon system that you're interested in. You've got our base reader level where you get all the videos and the daily digest as they come in.

Then you have the analyst level where you get to participate in an ongoing Q&A with me every quarter and try to stump me. Lots of other frills here and there. Anyway, if you use code PZ50, you get 50% off of your first month, regardless of what the sign-up happens to be, and that will last throughout the weekend. I don't want to say no, but there's some things you have to keep in mind. Number one, geology is just the first step. So in order to have a shale industry, you have to have a lot of sedimentary layers that are petroleum bearing at just the right age to generate oil and natural gas. And the United States has that because in the past, the North American content, especially our part of it, has had a series of shallow seas.

And then geology would change, and then you'd get another shallow sea. And you basically got these stacked layers. So you can drill down and hit multiple petroleum producing zones. In fact, in some places in West Texas, you can have upwards of 20 layers that you can all access from one vertical. Now, with shale technology, you go down it until you hit that layer. and then you go horizontally. And that brings us to the second thing you need water.

The way shale works is you make this suspension of water and sand, and that is pumped into the lateral through a series of holes that basically crack the rock open and release the petroleum, and then back pressure pushes all the liquid out, and eventually oil and natural gas comes to the surface. You don't have to pump this stuff. But you have to have the water to do it. And part of that folds into the third issue,

which is proximity. You have to have relative proximity for your oil and natural gas production to population centers or places that can take the stuff for processing. And in this, the United States is pretty good. We have shale zones in Texas, which of course can get pumped to Corpus Christie in Houston and the rest. We've got some in Colorado, which benefit the Denver area. We've got some in Ohio, which can be pumped into the northeast in Pennsylvania. Same thing. Australia's problem is that most of the geology that looks promising is in the outback. So not only is it a long ways away from any potential population centers, you're in the middle of a literal desert. So the water access is more difficult. You can access groundwater. That's done in the United States, too.

But all of these things incrementally raise the cost of development. Let's see. What else? Regulatory structure. This is one where a lot of countries trip up. Shale wells as a rule generate somewhere from the hundreds of barrels to thousands of barrels a day, which sounds great, but it's not like the mega wells that you're going to get a place like, say, Saudi Arabia. So you're going to have more of them, and they're more involved from a technical point of view for production. So you have to have a more advanced educational system to generate that sort of workforce. And the United States really does stand out among the world when it comes to petroleum engineers because we've been doing it for so long. The Shell Revolution at this point is about 20 years old in the United States.

Our first oil deposits were back in the mid-1800s. So this is something that we've been going and going and going. It's not that the Australians don't have that, but most of what the Australians have been doing for energy production, the last 30 years has been off shore, where they tap foreign labor almost as much as local labor. So there's a labor crunch there. In addition, if you live in Houston, you can work in West Texas. If you live in Sydney or Brisbane, you're probably not going to be working on the Northwest shelf. It's just too far. So linking these together. And then on the regulatory side, you have to be able to do things on the fly very, very quickly and have a regulatory structure that's okay

with that. So in Texas, the Texas Railroad Commission, which is the one that regulates the space, issues permits 24 hours a day, 365 days a year. They drill on Sundays. They drill on Christmas. And if you don't have an institution set up to handle that, everything else gets pushed back. This is one of the reasons why the shale attempt in Poland just didn't work out because the polls tried to work European hours and it just didn't fly. The geology wasn't as good either. But the most important thing, the single most important thing, is landowners have to have an interest in the industry. So in United States, unless you have signed it away, you own the mineral rights on your land. So if a petroleum company comes in and wants to drill in your land, you get a chunk of the

proceeds. We're the only country in the world that does it that way. So when the United Kingdom tried to kick into shale about 10 years ago, they discovered huge amounts of local opposition because the companies would take all of the money, and that would be that. The locals had to deal with the noise and the traffic and all the rest, and they saw absolutely no benefit. Australia is kind of in that camp. So if, if this is going to happen, it's going to take a lot more money and put a lot of pressure on the labor force

and require a regulatory and maybe even a legal overhaul of property rights in Australia in order to generate this sort of outcome that you might want to see. There are three countries, however, that are worth keeping an eye on when it comes to shale that are closer than Australia to achieving something like the United States.

The first, ironically, is Argentina. They already have pre-existing infrastructure in a place called Vacamorte, the dead cow fields, which are very close to populated Argentina, including Buenos Aires. The socialist governments of the past set a price floor, so anyone going into invest knows how much they're going to get out. So even though the property loss structures are weird, and it's Argentina, so they're very weird, if you know the rules of the game on the day that you start, you can get some projects going. And so Argentina already has a second most successful shale industry in the world. The other two to watch are Mexico and Canada.

Both have shale fields that in many ways are extensions of the American geography, especially northern Mexico. The weird thing about Canada and Mexico, though, is their closest population centers for most considerations are on the American side of the border. So if we're going to ever see a successful shale industry in those two countries, it will be because they're accessing American infrastructure, population structure, processing infrastructure, and basically linking into a greater North America. American energy grid. Doesn't mean it can't happen, but if you're in Ottawa or Mexico city developing a local energy sector to serve another country, let's just call that a bit of a political complication.