Its official — the U.S. government’s authoritative Energy Information Administration has confirmed that the world’s three leading shale gas producers are U.S., Canada and China, respectively.

In a 23 October report entitled “North America leads the world in production of shale gas” the EIA reports, “The United States and Canada are the only major producers of commercially viable natural gas from shale formations in the world, even though about a dozen other countries have conducted exploratory test wells” and that China is the only nation outside of North America that has registered commercially viable production of shale gas, although the volumes contribute less than 1 percent of the total natural gas production in that country. In comparison, shale gas as a share of total natural gas production in 2012 was 39 percent in the United States and 15 percent in Canada.

This is not the whole global story, however.

According to the “Technically Recoverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States” analysis prepared by Advanced Resources International for the EIA, in comparison with 2011 figures, 41 countries were now assessed to have recoverable shale gas reserves, up from 32 two years ago. The number of basins with recoverable shale reserves increased from 41 in 2011 to 48 in 2013, and the number of formations containing shale gas nearly doubled in the same time period, from 69 in 2011 to 137 in 2013. Worldwide, estimates of “technically recoverable resources” of shale gas also increased, from 6,622 trillion cubic feet in 2011 to 7,299 tcf two years later. Shale/”tight oil” estimates also rose, more than 1,000 percent, from 32 billion barrels in 2011 to an impressive 345 bb.

The report’s most arresting statistic is that in only two years, estimates of U.S. potential shale gas reserves soared by nearly 50 percent. “The shale gas resources assessed in this report, combined with EIA’s prior estimate of U.S. shale gas resources, add approximately 47 percent to the 15,583 trillion cubic feet of proved and unproven non-shale technically recoverable natural gas resources. Globally, 32 percent of the total estimated natural gas resources are in shale formations, while 10 percent of estimated oil resources are in shale or tight formations.”

[Hear More: Kurt Wulff: The Big News in the Shale Play – Eagle Ford, Bakken, and Permian]

Another fascinating statistic from the study is its ranking of the “Top 10 countries with technically recoverable shale oil resources.” While the U.S. is first in extraction, the report ranks the Russian Federation in reserves, with 75 billion barrels of technically recoverable shale oil. The U.S. is number two, with 58 bb. China is number 3, with 32 bb, Argentina number 4 with 27 bb, Libya number 5 with 26 bb, Australia number six with 18 bb, leaving Venezuela and Mexico tied for seventh with 13 bb apiece and Pakistan and Canada tied for eighth place, with 9 bb apiece.

A number of interesting conclusions flow from the above information.

First, five of the top shale gas reserves are in the Western Hemisphere – the U.S. Argentina, Venezuela, Mexico and Canada, but only two of them, the U.S. and Canada, have aggressively moved to exploit them.

Secondly, conspicuously absent are Middle Eastern countries Saudi Arabia and Iran, where hydrocarbon information is regarded as a state secret. Iraq is also absent. Energy poor Pakistan and energy power Libya have shale gas reserves, but neither the money nor the technology to exploit them.

In the Pacific, Australia is doing nicely from its coal exports, and is looking towards ramping up its liquefied natural gas exports.

Canada, while having relatively modest shale gas reserves, nevertheless is only trailing the U.S. in their exploitation.

…leaving as wild cards energy superpower Russia and energy starved China, both as yet minors players in the shale gas revolution.

Bottom line?

Given North America’s commanding lead in exploiting shale gas, vast potential opportunities exist, and U.S. and Canadian energy firms can expect profitable contracts from nations endowed with substantive shale gas reserves to come knocking at their doors for assistance in unlocking their subterranean treasures.

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Let’s call it an energy shopping spree of sorts.

Last year, more than $10 billion poured from the pockets of Chinese investors seeking a stake in the U.S. energy sector.

And yet, for every cent they put toward U.S. shale projects, there was another patch of land attracting even greater attention…

Although it may be hard for some people to believe, given the fact that the media spotlight has been focused solely on the United States, the Chinese shelled out roughly $23 billion in Western Canada alone.

And that’s because for China, it’s all about natural gas right now.

More and More and More Gas

It’s easy to see where all this spending is taking us…

We can follow the money right to the Canadian frontier.

And China’s lust for North American energy is even more evident in the steps they’re taking at home.

A few weeks ago, I mentioned the ongoing war on smog being waged in Beijing. Perhaps the only way to turn the tide is to reduce the country’s dependence on coal. In order to cut their coal addiction, the Middle Kingdom is turning to natural gas.

This move is more serious than pledges and press releases. As it stands now, China can only import less than 26 billion cubic meters of LNG per year. However, within the next two years, that amount is expected to more than double — to nearly 65 billion cubic meters.

There is, of course, a major obstacle in China’s plans to implement natural gas on a grand scale, and that’s their serious inability to kick-start their own shale gas boom.

Here in the United States, we’ve been spoiled by the supply glut created from the dramatic ramp-up of shale gas production. On the other side of the globe, the Chinese are having problems producing their resources…

Even though they are sitting on a larger deposit of shale gas than Uncle Sam is (more than one quadrillion cubic feet of technically recoverable gas, according to the EIA), that doesn’t necessarily mean they can extract it.

(Don’t forget, it took George Mitchell nearly 20 years to get it right in the Barnett Shale.)

When it comes to drilling shale wells, cost is king. In the U.S., for example, wells in the Marcellus can run about $5 million apiece. So far, the handful of shale wells drilled in China has come with a price tag of almost $15 million per well.

Add to the fact that it’s taking more than three months to drill and complete each one, and that translates to the Chinese spending five times more andtaking four times longer than companies operating in the Marcellus Shale!

Barring a miracle, China will be forced to import a good deal of the natural gas it needs if it’s to meet the 230 billion cubic meters it expects to consume in 2015.

Follow the Money… Straight to Canada

It’s no coincidence China is quickly expanding its LNG import infrastructure. And I’ll give you one guess where the country will look to meet its supply shortfall…

British Columbia is home to the Horn River Basin, one of the largest shale gas deposits in North America. At last count, this area contains over 500 trillion cubic feet of natural gas underground.

While this figure doesn’t seem all that impressive when stacked against the 1,116 trillion cubic feet on the Asian continent, let me assure you that looks can be deceiving in this situation…

Because unlike China, where shale production is still a well of hopeful optimism right now, companies in British Columbia have 94 trillion cubic feet of recoverable gas on hand.

And we can take these potential investments in Canada’s burgeoning LNG industry a step further…

One of the biggest names right now in Canadian LNG is none other than Chevron. Back in February, Chevron became a 50% owner in the Kitimat LNG project in British Columbia.

Now, Chevron is great if you also happen to have a multi-decade time frame in mind.

Had you decided to invest in the source responsible for supplying Chevron with its natural gas, the results would have been drastically different.

Then again, you wouldn’t be shelling out over $120 per share, either…

Not only is this company trading for ten times less than major oil companies like Chevron, but it’s also exploiting Big Oil’s biggest weakness: the crucial need for more gas to export.

The Horn River player above is doing precisely that, and it’s actually one of a handful of companies that will practically monopolize the entire LNG trade with Asia.

I suggest you take a few minutes to learn the details of this opportunity.

Until next time,

Keith Kohl

@KeithKohl1 on Twitter

A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta oil sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing’s Energy Investor.For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor’s page.