Shale Gas to the Rescue?

It is understood that Chongqing currently owns 18 shale gas exploration rights established by Ministry of Land and Resources as the first domestic shale gas mining rights the Sinopec Fuling shale gas field.

Technological advances and innovation have begun to turn the longstanding dream of energy independence into a reality. Whereas extraction of America s extensive reserves of natural gas was previously thought to be unfeasible, technologies such as hydraulic fracturing ( fracking ) have ushered in a shale gas revolution.

As a result, energy will be significantly cheaper in the US than in Europe or China for the foreseeable future. Indeed, shale gas extraction is so economically favorable that even American gas exported to Europe would cost 30 less than what the Russian energy giant Gazprom currently charges.

PRAGUE In late June, the British Geological Survey announced the world s largest shale gas field. The Bowland Shale, which lies beneath Lancashire and Yorkshire, contains 50 more gas than the combined reserves of two of the largest fields in the United States, the Barnett Shale and the Marcellus Shale.

Shale gas is a clean energy resource. It is understood that the completion of the 10 billion cubic meter shale gas field will help cut 12 million tonnes of CO2 emission annually.

Even the much heralded shale gas revolution is a lot of hype similar to the gold rushes and stock bubbles of the past. Shale gas wells deplete far more rapidly than conventional fields do.

The technology of horizontal drilling and hydraulic fracturing, by which shale and other tight rock formations at great depths are bombarded with water and chemicals, has released major new supplies of both natural gas and oil. America s shale gas industry grew by 45 annually from 2005 to 2010, and the share of shale gas in America s overall gas production grew from 4 to 24 .

Even the much heralded shale gas revolution is a lot of hype 160 similar to the gold rushes and stock bubbles of the past. Shale gas wells deplete far more rapidly than conventional fields do.

Companies must find ways to introduce new technologies and do business that are popular with their customers and retain their trust. (Indeed, in a world of human robot interfaces, 3D printing, nanotechnology, and shale gas extraction, any innovative company must ask itself this basic question.)

The US has the largest recoverable shale gas reserves and the second largest recoverable shale oil reserves in the world. It also enjoys a technological lead in shale energy technologies, and it already has a vast network of pipelines, refineries, and ports in the energy sector that can be repurposed for shale gas and oil (though much more investment will be needed).

First, fracking s opponents worry that shale gas will displace renewable energy sources such as wind and solar power. But the fact is that CO2 emissions cannot be reduced without cutting coal use, and shale gas is already displacing coal in the US.

BRUSSELS The global energy community is abuzz with excitement about hydraulic fracturing, or fracking, a newish technology that has opened formerly inaccessible reserves of gas trapped in underground shale formations. The boom in this so called shale gas production has allowed the United States to become almost self sufficient in natural gas.

But the most crucial and almost always overlooked point about fracking is that shale gas, like all hydrocarbons, can be used only once. The real issue is thus not whether shale gas should be developed in Europe, but when it should be used today or tomorrow.

But Europe cannot build an industrial strategy on cheap energy. Unlike the United States and China, which the International Energy Agency estimates possess the world s largest shale gas deposits, Europe cannot rely on its limited energy reserves to lower prices especially given that its greater population density makes extraction more difficult, and thus prohibitively expensive.

It is understood that a 10 billion cubic meter shale gas field is equivalent to a 10 million tonne oil field.

A significant proportion of its OFDI value is in resource extraction activities (oil, natural gas and minerals) dominated by state owned enterprises.

In the United States, the shale gas revolution, facilitated by the development of hydraulic fracturing ( fracking ), has brought prices to their lowest levels since natural gas gained prominence after the oil crises of the 1970s. With many more countries set to tap shale gas reserves over the next decade, this downward trend will most likely continue, helping to lower the price of electricity generation further.

Moreover, an existing pipeline network implies that this conventional gas can be brought to Europe at a low marginal cost. From an economic (and environmental) standpoint, fracking is thus unlikely to bring large benefits for Europe shale gas might simply substitute for plentiful conventional gas.

Europe certainly needs Russian gas. But Russia needs European consumers, and sooner rather than later it will seek more European investment in energy exploration and extraction.

I recently read an article that suggested that, if oil prices remain at recent levels, US production of shale oil and gas next year could be 10 below recent projections. That seems plausible and, given how important shale oil and gas has become to America s economic recovery, it also seems like something that US policymakers would be eager to avoid.

And yet the UK could improve its energy security dramatically, because it has enough gas reserves to cover roughly the entirety of its gas consumption for a half century or more. Moreover, increased UK production would lower world prices, making countries with fewer or no shale gas resources safer.

Growth in shale energy will mean more investment, production, and jobs in the energy sector itself. Lower gas prices will boost manufacturing production, particularly in downstream industries like petrochemicals and primary metals that use natural gas as fuel and feedstock.

Similarly, oil and natural gas were to run out in 1990 and 1992, respectively today, reserves of both are larger than they were in 1970, although we consume dramatically more. Within the past six years, shale gas alone has doubled potential gas resources in the United States and halved the price.

Few economic regions have made much progress in this transformation. In fact, the United States is now investing heavily in natural gas without recognizing or caring that its shale gas boom, based on new hydraulic fracturing technology, is likely to make matters worse.

Even in the US, where cheap shale gas is reshaping the energy industry, more wind power was connected to the grid last year than gas, and, in the first three months of this year, more than 80 of new capacity was renewable.

In comparison, shale gas in the US has created an estimated 600,000 jobs that are generating about 100 billion in added GDP and almost 20 billion in public revenue.

So, whether it's logistics and supply chain management or natural gas and resource extraction, financial services, pharmaceuticals, bioinformatics, those are the topics right now, but that's not a killer app.

Energy reform opens up electricity generation and oil exploration, extraction, and refining to private foreign or domestic investment through licenses, concessions, production sharing, or profit sharing. The oil workers union has been banished from the board of directors of Pemex, the national oil company, and new contracts for shale oil and gas, together with deep water prospecting and drilling, will be signed with a government agency, not with Pemex.

The latter include developing an international food security initiative, cooperating to increase vocational training in fragile states, expanding clean energy research, investing in global disease detection systems, and collaborating to explore shale gas extraction. In addition, the US and India should create innovation partnerships, which would not only yield direct returns to both countries, but would also demonstrate how a strong bilateral relationship can improve the international system.

But extracting shale energy involves environmental risks and uncertainties, among them groundwater contamination, higher methane emissions, and potential seismic effects. And shale gas emits CO2 when burned, even though it has half the carbon content of coal and has played a significant role in cutting US carbon emissions to mid 1990 s levels.

But now a new and powerful factor could change this dismal political equation shale gas, which is already having an important effect on the United States and its economy. With US natural gas prices down to just over 4 per million BTU (from 13 just a few years ago), even prudent analysts expect the shale energy revolution to increase America s potential economic growth and add as many as two million new jobs.

It's rooted in extraction.

But extracting shale energy involves environmental risks and uncertainties, among them groundwater contamination, higher methane emissions, and potential seismic effects. And shale gas emits CO2 when burned, even though it has half the carbon content of coal and has played a significant role in cutting US carbon emissions to mid 1990 s levels. 160

The US is estimated to have enough gas to sustain its current rate of production for more than a century. While many other countries also have considerable shale gas potential, problems abound, including water scarcity in China, investment security in Argentina, and environmental restrictions in several European countries.

And incorporating shale gas into the world s energy mix could help to combat climate change by creating a bridge to a low carbon future. So long as methane leakage is contained, CO2 emissions from natural gas combustion can be significantly lower than those caused by reliance on oil.

Europe, by contrast, is clearly lagging. Exploration is proceeding only hesitantly and shale gas production has not even started, prompting many observers to lament that Europe is about to miss the next energy revolution.

In 2011, the American energy company Noble discovered some 200 billion cubic meters of gas in the Eastern Mediterranean the value of this block, known as the Aphrodite gas field, has been estimated at some 80 billion. Work has already begun on extraction, with production expected to commence in 2018.

In fact, estimates by the International Energy Agency suggest that the most significant recoverable reserves of shale gas are in the US and China, not Europe. Moreover, even these estimates are really not much more than educated guesses, because only in the US have shale formations been subject to intense exploration over a period of decades.

The impact of shale energy on South America is twofold. For starters, there is the potential for cheaper imports for those countries with no gas (Chile) or where local demand could exceed local supply (Brazil).

The Shale Revolution s Global Footprint

With the advent of hydraulic fracturing, or fracking, US oil production has risen by 30 , and gas production by 25 , in just five years. Shale gas contributed almost nothing to US natural gas supplies at the start of the century by last year, its share had soared to 34 , with the US Energy Information Administration predicting a further rise to one half by 2040.

That is Coltan extraction, gold mining.

The reports mention various initiatives currently conducted in Africa, particularly a liquefied petroleum gas (LPG) project in Sudan and a project running in Rwanda for the promotion of innovative technologies for the extraction and purification of methane.

Nor are earlier trade balances about to reemerge. America s trade position will be strengthened by the shale gas revolution, which promises energy self sufficiency, and by increases in productivity that auger further re shoring of manufacturing production.