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Shale Gas in Latin America: Opportunities and Challenges

By David R. Mares
July 17, 2013

 
 

The Inter-American Dialogue is pleased to present another working paper of the Inter-American Dialogue’s Energy Policy Group. This paper was prepared by David Mares, an expert on energy and scholar at the Institute of the Americas, Rice University, and the University of California, San Diego. Our aim is to inform and shape national and regional policy debates on the energy challenges confronting the countries of Latin America, improve the quality of attention to those challenges, and encourage multilateral cooperation to address them.

In this working paper, Mares draws on lessons from the United States and analyzes challenges facing Latin America’s natural gas potential. He examines the legal environment, domestic market, and technological innovations that brought on the US shale gas revolution. Mares then provides an overview of Latin America’s vast supply of natural gas. He reviews the associated problems in terms of investment, security, and human capital, and examines the environmental risks and benefits.

The prospects for addressing these challenges successfully are analyzed in several countries, including Argentina, Mexico, Brazil, Colombia, Chile, and Paraguay. Mares concludes that shale gas will remain important for Latin America, both because of its abundance and cost-effectiveness, and its usefulness as a tool to fight poverty and enhance geopolitical stability. At the same time, the politics of hydrocarbon production in the region remain problematic

This working paper is part of a series of studies carried out through the Dialogue’s initiative on energy policy in the Americas. Previous papers have dealt with a diverse set of energy policy issues, including Latin America’s energy future, social conflicts over energy development, the prospects for nuclear power, and the management of Brazil’s national oil company Petrobras.

The Dialogue established its Energy Policy Group in 2009 with the generous support and cooperation of the Inter-American Development Bank. Led by Dialogue senior fellow Genaro Arriagada, a distinguished Chilean analyst and former minister of state, the group consists of a professionally and politically diverse membership of some 20 energy analysts, corporate leaders, and policymakers.