Original Story: nytimes.com
Every columnist has his or her “go to” sources, people we rely on for their deep understanding of a particular subject, and a mode of thinking about that subject we find persuasive. For me, one such person is Michael Levi, a senior fellow for energy and the environment at the Council on Foreign Relations. An Austin energy lawyer is following this story closely.
Levi believes in the power of facts. Though sensitive to the importance of dealing with climate change, he doesn’t indulge in the hyperbole that you sometimes hear from environmentalists. And while he appreciates the economic import of fracking and shale gas, he isn’t afraid to call out the industry on its problems. Early in the fracking boom, he went to Pennsylvania to observe what drilling for shale gas was doing to communities — and came away believing that “it was going to stir up much more local controversy than many were assuming.” Which is exactly what happened.
For the latest issue of Democracy, a quarterly magazine focused on progressive ideas, Levi has written an article titled “Fracking and the Climate Debate,” which he described to me the other day as a kind of summing up of his views about the role of cheap natural gas and fracking in the fight against climate change. A Tulsa energy lawyer represent clients in energy matters including drilling contracts, fracking, mineral rights, and renewable energy disputes.
There are many people, of course, who believe that natural gas shouldn’t have any role at all in the climate change fight; while it may emit half the carbon dioxide of coal, it is still a fossil fuel that will keep us from going all-in on renewable energy. And the methane that can leak from fracked wells is a potent greenhouse gas that can negate natural gas’s advantage over coal.
There are others who see natural gas as a panacea. They believe that so long as we keep increasing production of inexpensive natural gas — mooting the need to build more coal-fired power plants, and even making it possible to shut some down — then we will be doing more than enough to control carbon emissions. In his article, Levi says, in effect: You’re both wrong. A Baton Rouge energy lawyer provides professional legal counsel and extensive experience in many aspects of energy law.
After recounting a little history — was it really only a half dozen years ago that environmentalists like Robert F. Kennedy Jr. were promoting natural gas as a “step towards saving our planet”? — Levi delves into the three rationales behind their abrupt change of heart. One is the disruption that fracking imposes on communities. The second is the methane problem. The third is the “rapid progress” being made by renewable energy, which many environmentalists believe makes further reliance on natural gas unnecessary.
Levi believes that appropriate rules by both state and federal governments can mitigate the first two problems. Indeed, he believes that the industry needs to be better regulated for its own sake; otherwise, people will continue to fear the worst. As for renewables, the hard truth is that if the country were to move away from natural gas, the big winner would be coal, not solar or wind.
But that doesn’t mean that those who cling to the “free-market fundamentalist dream that a thriving shale gas industry will make climate policy unnecessary” have got it right. On the contrary, writes Levi, “merely making natural gas more abundant may do little, if anything, to curb carbon dioxide emissions.” How can this be? The answer is that, although cheap natural gas is helpful in that it “shoves aside coal,” it also boosts economic growth (which means more emissions), and “gives an edge to industries that are heavy energy users and big emitters.” These two conflicting forces effectively cancel each other out.
The best way to maximize the good that shale gas can do, concludes Levi, is to make it a key component of an overall energy policy that is bent on driving down carbon emissions. The government could promote policies to move the country away from coal, “which accounts for three-quarters of carbon dioxide produced in U.S. electricity generation.” A San Antonio energy lawyer represents clients in fee mineral and royalty transactions, in negotiating the terms of seismic permits, option agreements, oil and gas leases, easements, and surface and subsurface use agreements, as well as in uranium leasing transactions.
And while he doesn’t say so explicitly, he does seem to see shale gas as a potential bridge to renewables: If the government enacted policies that “reward emission cuts” no matter what technology achieves that goal, then coal users would gravitate to natural gas, while natural gas users might well move toward renewables. Government would also have to encourage policies that “drive down the cost of zero-based emissions.”
My own belief is that shale gas has been a blessing for all kinds of reasons: It has given us a degree of energy security that we haven’t seen in many decades, and has been a key source of economic growth. And, no matter how much environmentalists gnash their teeth, it is here to stay. That’s why the responsible approach is not to wish it away, but to exploit its benefits while straightforwardly addressing its problems. Ideologues will never get that done. That’s why Michael Levi’s realism — and his pragmatism — are so critical to hear.
Showing posts with label shale gas. Show all posts
Showing posts with label shale gas. Show all posts
Tuesday, July 14, 2015
Monday, September 29, 2014
MEXICAN CARTELS STEAL BILLIONS FROM OIL INDUSTRY
Original Story: news.yahoo.com
CIUDAD MIER, Mexico (AP) — Mexico overcame 75 years of nationalist pride to reform its flagging, state-owned oil industry. But as it prepares to develop rich shale fields along the Gulf Coast, and attract foreign investors, another challenge awaits: taming the brutal drug cartels that rule the region and are stealing billions of dollars' worth of oil from pipelines.
Figures released by Petroleos Mexicanos last week show the gangs are becoming more prolific and sophisticated. So far this year, thieves across Mexico have drilled 2,481 illegal taps into state-owned pipelines, up more than one-third from the same period of 2013. Pemex estimates it's lost some 7.5 million barrels worth $1.15 billion.
Pemex director Emilio Lozoya called the trend "worrisome."
More than a fifth of the illegal taps occurred in Tamaulipas, the Gulf state neighboring Texas that is a cornerstone for Mexico's future oil plans. It has Mexico's largest fields of recoverable shale gas, the natural gas extracted by fracturing rock layers, or fracking.
Mexico, overall, is believed to have the world's sixth-largest reserves of shale gas — equivalent to 60 billion barrels of crude oil. That's more than twice the total amount of oil that Mexico has produced by conventional means over the last century.
The energy reform passed in December loosened Mexico's protectionist policies, opening the way for Pemex to seek foreign investors and expertise to help it exploit its shale fields. It hopes to draw $10 billion to $15 billion in private investment each year.
The attractiveness of the venture may hinge on bringing Tamaulipas under control.
"The energy reform won't be viable if we aren't successful ... in solving the problem of crime and impunity," said Sen. David Penchyna, who heads the Senate Energy Commission. "The biggest challenge we Mexicans have, and I say it without shame, is Tamaulipas."
One foreign oil company that had a brush with violence appears undeterred.
In early April, gunmen opened fire at a hotel in Ciudad Mier, in Tamaulipas' rough Rio Grande Valley, where eight employees of Weatherford International Ltd., a Swiss-based oil services company, were staying.
They were not injured, and Weatherford said in an email message that "Mexico continues to be a focused market for us with growing potential in 2014 and 2015."
But other potential bidders may be put off by such incidents.
Energy analyst David Goldwyn said the Mexico government is going to have to be a lot clearer about its security plan for most shale exploration and production companies, which don't have experience working in risky areas.
"What's the government going to do, what kind of protection, what is it going to allow the operators to do inside their fence line?" he said in a recent conference call with reporters.
Two rival gangs, the Zetas and the Gulf cartel, long have used Tamaulipas as a route to ferry drugs and migrants to the United States and, in recent years, diversified their business: stealing gas and crude and selling it to refineries in Texas or to gas stations on either side of the border.
At least twice a day, the gangs pull up to one of the hundreds of pipelines that crisscross the state. Workers quickly shovel down a couple of yards (meters) to uncover a pipeline and siphon their booty into a stolen tanker truck, said army Col. Juan Carlos Guzman, whose troops have raided a number of such illegal taps.
A dirt farm road led down to one site outside Ciudad Victoria, 180 miles southwest of McAllen, Texas. About a half-mile from a nearby highway, thieves had dug out a pit and inserted a large needle-like device into the pipeline. By the time soldiers arrived, the gang members had fled, and only the driver of the half-loaded gasoline truck was arrested.
The knowledge needed to tap into the pressurized pipelines leads authorities to suspect the gangs have infiltrated Pemex or co-opted company workers.
"It is impossible to do this without information on the timing and level of flows," said Marco Antonio Bernal, a federal congressman from Tamaulipas who is drafting legislation to toughen punishment for pipeline thefts.
The suspicions were reinforced earlier this month when detectives nabbed a Gulf cartel leader who was found carrying a fake Pemex employee credential, complete with his photo and a false name.
Pemex is installing more automated pipeline shut-off valves operated remotely from a control room in Mexico City. Such controls allow them to not only stop spills often caused by illegal taps but to avoid having to send workers out to unpopulated, dangerous areas to turn off valves manually.
With thousands of miles of pipeline stretching over far-flung regions of Tamaulipas, stopping oil theft is proving hard to do. Mexico has taken steps to rein in the cartels, putting military leaders in charge of the state's security and sending in soldiers, marines and federal police to patrol key cities.
Arrests and violence have taken out so many key Zetas leaders that the cartel's members have taken to camping out in the bush, dragooning Central American migrants into their ranks. They live off the land and change campsites constantly to avoid detection.
"They don't have structures. They sleep under the trees, near rivers to get water," said Gen. Mario Lopez Miguez, who commands nearly 600 soldiers at a base in the once cartel-dominated town of Ciudad Mier.
The Gulf cartel, for its part, remains in control of Tamaulipas' largest city, Reynosa, which sits across from McAllen, although the military has increased its patrols, making some residents feel safer.
"The situation has gotten a lot better," said Nora Gonzalez, who runs a secondhand furniture shop near downtown Reynosa.
Still, just a few blocks away, Reynosa remains dangerous.
A reporter asking residents about the crime situation was quickly approached by a young man driving a battered car with no license plates.
"Where are you from? What are you doing here? Identify yourself," said the young man, using language similar to that of drug cartel lookouts, known as "halcones," or falcons.
"How much money are you carrying? Pull over," the man demanded, as the reporter opted to drive away.
CIUDAD MIER, Mexico (AP) — Mexico overcame 75 years of nationalist pride to reform its flagging, state-owned oil industry. But as it prepares to develop rich shale fields along the Gulf Coast, and attract foreign investors, another challenge awaits: taming the brutal drug cartels that rule the region and are stealing billions of dollars' worth of oil from pipelines.
Figures released by Petroleos Mexicanos last week show the gangs are becoming more prolific and sophisticated. So far this year, thieves across Mexico have drilled 2,481 illegal taps into state-owned pipelines, up more than one-third from the same period of 2013. Pemex estimates it's lost some 7.5 million barrels worth $1.15 billion.
Pemex director Emilio Lozoya called the trend "worrisome."
More than a fifth of the illegal taps occurred in Tamaulipas, the Gulf state neighboring Texas that is a cornerstone for Mexico's future oil plans. It has Mexico's largest fields of recoverable shale gas, the natural gas extracted by fracturing rock layers, or fracking.
Mexico, overall, is believed to have the world's sixth-largest reserves of shale gas — equivalent to 60 billion barrels of crude oil. That's more than twice the total amount of oil that Mexico has produced by conventional means over the last century.
The energy reform passed in December loosened Mexico's protectionist policies, opening the way for Pemex to seek foreign investors and expertise to help it exploit its shale fields. It hopes to draw $10 billion to $15 billion in private investment each year.
The attractiveness of the venture may hinge on bringing Tamaulipas under control.
"The energy reform won't be viable if we aren't successful ... in solving the problem of crime and impunity," said Sen. David Penchyna, who heads the Senate Energy Commission. "The biggest challenge we Mexicans have, and I say it without shame, is Tamaulipas."
One foreign oil company that had a brush with violence appears undeterred.
In early April, gunmen opened fire at a hotel in Ciudad Mier, in Tamaulipas' rough Rio Grande Valley, where eight employees of Weatherford International Ltd., a Swiss-based oil services company, were staying.
They were not injured, and Weatherford said in an email message that "Mexico continues to be a focused market for us with growing potential in 2014 and 2015."
But other potential bidders may be put off by such incidents.
Energy analyst David Goldwyn said the Mexico government is going to have to be a lot clearer about its security plan for most shale exploration and production companies, which don't have experience working in risky areas.
"What's the government going to do, what kind of protection, what is it going to allow the operators to do inside their fence line?" he said in a recent conference call with reporters.
Two rival gangs, the Zetas and the Gulf cartel, long have used Tamaulipas as a route to ferry drugs and migrants to the United States and, in recent years, diversified their business: stealing gas and crude and selling it to refineries in Texas or to gas stations on either side of the border.
At least twice a day, the gangs pull up to one of the hundreds of pipelines that crisscross the state. Workers quickly shovel down a couple of yards (meters) to uncover a pipeline and siphon their booty into a stolen tanker truck, said army Col. Juan Carlos Guzman, whose troops have raided a number of such illegal taps.
A dirt farm road led down to one site outside Ciudad Victoria, 180 miles southwest of McAllen, Texas. About a half-mile from a nearby highway, thieves had dug out a pit and inserted a large needle-like device into the pipeline. By the time soldiers arrived, the gang members had fled, and only the driver of the half-loaded gasoline truck was arrested.
The knowledge needed to tap into the pressurized pipelines leads authorities to suspect the gangs have infiltrated Pemex or co-opted company workers.
"It is impossible to do this without information on the timing and level of flows," said Marco Antonio Bernal, a federal congressman from Tamaulipas who is drafting legislation to toughen punishment for pipeline thefts.
The suspicions were reinforced earlier this month when detectives nabbed a Gulf cartel leader who was found carrying a fake Pemex employee credential, complete with his photo and a false name.
Pemex is installing more automated pipeline shut-off valves operated remotely from a control room in Mexico City. Such controls allow them to not only stop spills often caused by illegal taps but to avoid having to send workers out to unpopulated, dangerous areas to turn off valves manually.
With thousands of miles of pipeline stretching over far-flung regions of Tamaulipas, stopping oil theft is proving hard to do. Mexico has taken steps to rein in the cartels, putting military leaders in charge of the state's security and sending in soldiers, marines and federal police to patrol key cities.
Arrests and violence have taken out so many key Zetas leaders that the cartel's members have taken to camping out in the bush, dragooning Central American migrants into their ranks. They live off the land and change campsites constantly to avoid detection.
"They don't have structures. They sleep under the trees, near rivers to get water," said Gen. Mario Lopez Miguez, who commands nearly 600 soldiers at a base in the once cartel-dominated town of Ciudad Mier.
The Gulf cartel, for its part, remains in control of Tamaulipas' largest city, Reynosa, which sits across from McAllen, although the military has increased its patrols, making some residents feel safer.
"The situation has gotten a lot better," said Nora Gonzalez, who runs a secondhand furniture shop near downtown Reynosa.
Still, just a few blocks away, Reynosa remains dangerous.
A reporter asking residents about the crime situation was quickly approached by a young man driving a battered car with no license plates.
"Where are you from? What are you doing here? Identify yourself," said the young man, using language similar to that of drug cartel lookouts, known as "halcones," or falcons.
"How much money are you carrying? Pull over," the man demanded, as the reporter opted to drive away.
Wednesday, February 20, 2013
China's Shale Gas Revolution: Stalled Before Leaving The Drive
Story first appeared on Bloomberg News -
China, consuming energy at the fastest pace among major economies, has set ambitious targets to exploit its reservoirs of shale gas, the same fuel the U.S. touts as the means to energy independence. It won’t meet them.
China is producing no commercial quantities of shale gas, yet has set a target of 80 billion cubic meters by 2020, or 23 percent of total expected demand. Output in 2020 will likely be 18 billion cubic meters, according to the average estimate of seven analysts surveyed by Bloomberg. That’s more pessimistic than a year ago when the forecast was 23 billion cubic meters.
“China’s production targets are not realistic,” Chris Faulkner, chief executive officer of Dallas-based shale driller Breitling Oil and Gas Corp., which is in talks in China, said in an e-mail. “The only way China is going to be able to meet its output goals is for the government to pour money into exploration and development and ease up on the price controls.”
By dictating fuel prices in a centrally controlled economy, China has discouraged investment in shale because drillers risk losing money. The result: China National Petroleum Corp. and China Petrochemical Corp., the two largest gas producers, didn’t win exploration blocks in the last auction while companies with zero gas-drilling experience did.
Missing targets to develop the world’s biggest reserves of shale means China’s imports from foreign gas markets will be greater than anticipated. Such purchases might benefit suppliers of liquefied natural gas from Exxon Mobil Corp. to Woodside Petroleum Ltd., while bolstering supply from nations like Turkmenistan that pipe gas to China.
China is spending $17 billion a year on natural gas imports, about half in the form of liquefied natural gas. The country will open a record number of LNG receiving terminals this year, proving a boon for more than $100 billion of projects being built by companies such as Exxon Mobil and Chevron Corp. in Australia and Papua New Guinea.
The lack of shale enthusiasm was evident in December at the government’s latest and biggest auction of blocks of land containing natural gas trapped in shale rock strata. Coal miners and provincial government investment firms with no experience of shale drilling were among winning bidders. The bids by the big two gas producers and China National Offshore Oil Corp., the largest offshore oil producer, failed.
Awarding shale gas prospects to inexperienced companies in the second auction and government price controls on natural gas are likely to ensure imports continue to rise.
China imported $8.3 billion worth of liquefied natural gas last year, up 41 percent from 2011. Piped gas comes mainly from Turkmenistan.
“If you want to kick start this industry quickly from zero now, you need to either introduce a massive subsidy or allow free market forces to prevail,” James Hubbard, an analyst at Macquarie Group, said. “You’ve got 20 blocks that have just been awarded to companies no one has ever heard of.”
The government would need to increase the subsidy to 1.5 yuan (24 U.S. cents) a cubic meter from the current 0.4 yuan to effectively spur growth, Hubbard said. The 0.4 yuan subsidy is 17.5 percent of the current 2.28 yuan price that Beijing residents pay for piped gas.
“More incentives need to be introduced,” Wang Guoqiang, chairman of China-based oilfield service provider SPT Energy Group Inc., said in an interview on Jan. 29. Wang is investing more in Central Asia and the Middle East to hedge the prospect that China’s shale industry doesn’t take off.
Natural gas in New York has declined 4.9 percent this year. The fuel fell to a decade low of $1.91 per million British thermal units in April last year from a record of $13.92 per million Btu in Sept. 2005 as the U.S. ramped up commercial production of shale gas. The U.S. ousted Russia as the world’s biggest gas producer in 2009.
Futures rose 1.1 percent to $3.19 per million Btu on the New York Mercantile Exchange as of 11:52 a.m. Singapore time.
Drillers in China have yet to produce shale gas commercially, with Royal Dutch Shell Plc helping CNPC to sink the nation’s first horizontal well in 2011. Total SA, Europe’s third-largest oil company, said last week it was in “advanced talks” with a Chinese partner to explore for shale gas.
Cnooc Ltd. and China Petrochemical, also known as Sinopec Group, have invested more than $5.7 billion in so-called unconventional oil and gas assets overseas, yet they find their technology lacking at home.
“None of these companies have the below-ground experience of oil producers,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, said in an interview. “They need to partner with other companies to even come close to the targets.”
Two phone calls each to Sinopec and CNPC’s offices today seeking comment were not answered and no voicemail was available to leave messages.
Without unlocking shale gas reserves, China’s only option is to import more LNG.
This year, China may add five LNG terminals with an annual capacity of 15.7 billion cubic meters, the highest in a single year, the Paris-based International Energy Agency said in report last year.
Those terminals, being built by companies including Cnooc and China Petroleum & Chemical Corp., would increase the nation’s LNG import capacity by 54 percent from the current 29 billion cubic meters a year, according to the report. Another 7.5 billion cubic meters a year is under construction and will be completed by 2015. The first plant started in 2006.
China, consuming energy at the fastest pace among major economies, has set ambitious targets to exploit its reservoirs of shale gas, the same fuel the U.S. touts as the means to energy independence. It won’t meet them.
China is producing no commercial quantities of shale gas, yet has set a target of 80 billion cubic meters by 2020, or 23 percent of total expected demand. Output in 2020 will likely be 18 billion cubic meters, according to the average estimate of seven analysts surveyed by Bloomberg. That’s more pessimistic than a year ago when the forecast was 23 billion cubic meters.
“China’s production targets are not realistic,” Chris Faulkner, chief executive officer of Dallas-based shale driller Breitling Oil and Gas Corp., which is in talks in China, said in an e-mail. “The only way China is going to be able to meet its output goals is for the government to pour money into exploration and development and ease up on the price controls.”
By dictating fuel prices in a centrally controlled economy, China has discouraged investment in shale because drillers risk losing money. The result: China National Petroleum Corp. and China Petrochemical Corp., the two largest gas producers, didn’t win exploration blocks in the last auction while companies with zero gas-drilling experience did.
Missing targets to develop the world’s biggest reserves of shale means China’s imports from foreign gas markets will be greater than anticipated. Such purchases might benefit suppliers of liquefied natural gas from Exxon Mobil Corp. to Woodside Petroleum Ltd., while bolstering supply from nations like Turkmenistan that pipe gas to China.
China is spending $17 billion a year on natural gas imports, about half in the form of liquefied natural gas. The country will open a record number of LNG receiving terminals this year, proving a boon for more than $100 billion of projects being built by companies such as Exxon Mobil and Chevron Corp. in Australia and Papua New Guinea.
The lack of shale enthusiasm was evident in December at the government’s latest and biggest auction of blocks of land containing natural gas trapped in shale rock strata. Coal miners and provincial government investment firms with no experience of shale drilling were among winning bidders. The bids by the big two gas producers and China National Offshore Oil Corp., the largest offshore oil producer, failed.
Awarding shale gas prospects to inexperienced companies in the second auction and government price controls on natural gas are likely to ensure imports continue to rise.
China imported $8.3 billion worth of liquefied natural gas last year, up 41 percent from 2011. Piped gas comes mainly from Turkmenistan.
“If you want to kick start this industry quickly from zero now, you need to either introduce a massive subsidy or allow free market forces to prevail,” James Hubbard, an analyst at Macquarie Group, said. “You’ve got 20 blocks that have just been awarded to companies no one has ever heard of.”
The government would need to increase the subsidy to 1.5 yuan (24 U.S. cents) a cubic meter from the current 0.4 yuan to effectively spur growth, Hubbard said. The 0.4 yuan subsidy is 17.5 percent of the current 2.28 yuan price that Beijing residents pay for piped gas.
“More incentives need to be introduced,” Wang Guoqiang, chairman of China-based oilfield service provider SPT Energy Group Inc., said in an interview on Jan. 29. Wang is investing more in Central Asia and the Middle East to hedge the prospect that China’s shale industry doesn’t take off.
Natural gas in New York has declined 4.9 percent this year. The fuel fell to a decade low of $1.91 per million British thermal units in April last year from a record of $13.92 per million Btu in Sept. 2005 as the U.S. ramped up commercial production of shale gas. The U.S. ousted Russia as the world’s biggest gas producer in 2009.
Futures rose 1.1 percent to $3.19 per million Btu on the New York Mercantile Exchange as of 11:52 a.m. Singapore time.
Drillers in China have yet to produce shale gas commercially, with Royal Dutch Shell Plc helping CNPC to sink the nation’s first horizontal well in 2011. Total SA, Europe’s third-largest oil company, said last week it was in “advanced talks” with a Chinese partner to explore for shale gas.
Cnooc Ltd. and China Petrochemical, also known as Sinopec Group, have invested more than $5.7 billion in so-called unconventional oil and gas assets overseas, yet they find their technology lacking at home.
“None of these companies have the below-ground experience of oil producers,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, said in an interview. “They need to partner with other companies to even come close to the targets.”
Two phone calls each to Sinopec and CNPC’s offices today seeking comment were not answered and no voicemail was available to leave messages.
Without unlocking shale gas reserves, China’s only option is to import more LNG.
This year, China may add five LNG terminals with an annual capacity of 15.7 billion cubic meters, the highest in a single year, the Paris-based International Energy Agency said in report last year.
Those terminals, being built by companies including Cnooc and China Petroleum & Chemical Corp., would increase the nation’s LNG import capacity by 54 percent from the current 29 billion cubic meters a year, according to the report. Another 7.5 billion cubic meters a year is under construction and will be completed by 2015. The first plant started in 2006.
Friday, February 8, 2013
The U.S. Shale Gas Revolution
Story first appeared on Fox Business News -
The United States is enjoying an energy bonanza thanks to shale gas, making it a magnet for industry, reducing import dependence and challenging Europe as it battles to dig itself out of recession, energy officials say.
Panelists at a weekend security conference in Munich warned Europe must develop a strategy on how to tap its own resources in order to keep energy costs competitive, or risk seeing power-intensive industries locate elsewhere.
"The shale gas and oil boom is already underway. As Europe continues to debate it, North America is reaping the advantages," said Jorma Ollila, Chairman of Royal Dutch Shell .
Just a week ago Shell signed a $10 billion shale gas deal with Ukraine - the biggest contract yet in Europe - which could help Ukraine ease its reliance on Russian gas imports.
Ukraine is said to have Europe's third-largest shale gas reserves at 42 trillion cubic feet (1.2 trillion cubic meters), according to the U.S. Energy Information Administration.
Its reserves are dwarfed by those of France however, estimated to be Europe's largest at 180 trillion cubic feet.
France has banned the procedure, known as fracking which is used to extract shale gas and which involves pumping vast quantities of water and chemicals at high pressure through drill holes to prop open shale rocks.
Environmentalists fear it could increase seismic risks and pollute drinking water. U.S. officials question this and say that thanks to the higher proportion of gas use the United States has had its lowest carbon dioxide emissions in 20 years.
"Observing this from across the Atlantic it is really quite remarkable that there should be a ban or a go-slow on this development in Europe, really without any facts," said Daniel Yergin, Vice-Chairman of IHS Cambridge Energy Research.
Fracking is used to produce a third of U.S. natural gas he said, showing the environmental impact can be managed.
SHALE SCRAMBLE
World energy market flows already reflect North America's scramble to exploit shale oil and gas and highlight the potential prize Europe is ignoring.
"The U.S. internal energy revolution and the radical increases in production of oil and gas have boosted gas production by 25 percent and seen oil import dependence drop from 60 percent to 40 percent, and expected to decline further to 30 percent," said Carlos Pascual, the U.S. special envoy for energy affairs.
While Europe retains deep environmental concerns it also acknowledges that with the price of gas in the United States just a third of that in Germany, its industry is already suffering the effects.
German Economy Minister Philipp Roesler said: "Many German firms have opted for (relocation to) the United States, saying energy prices were the decisive factor...We are already seeing that we are suffering with our higher energy prices it affects our own competiveness."
Addressing the panel in Munich European Union Commissioner Guenther Oettinger said Europe should be in a position to produce enough shale gas to replace its depleting conventional gas reserves, so as not to become more dependent on imports.
RUSSIA UNAFRAID
A greater abundance of gas could threaten the dominance of Russia's gas exports and pressure prices. The United States seized Russia's spot as the world's largest gas producer in 2012, and is due to produce significantly more from 2015.
"I believe that the shale revolution is something positive, a chance for all of us to launch technologies, intensify competitiveness, make our countries more energy secure, and reduce costs," said Russian Energy Minister Alexander Novak.
Russia is focusing on boosting exports to energy-hungry Asia and developing infrastructure to transport gas eastwards.
A recent confidential study by the German intelligence agency (BND) suggested the United States could turn from being the world's greatest energy importer into an oil and gas exporter by 2020, reducing its dependence on the Middle East and thereby giving it much more freedom in policy making.
China by contrast would become much more dependent on Middle East oil to fuel its rapid expansion.
Illustrating just how rapidly the shale revolution has taken hold, shale gas accounted for just 1 percent of gas production in 2005, whereas today it is a third, and by 2040 it will be 50 percent, U.S. special envoy Pascual said.
"Developing a greater capacity to reduce import dependence does not diminish our commitment to stability," he stressed.
"It will not affect our engagement for global security, peace and security in the Middle East."
The United States is enjoying an energy bonanza thanks to shale gas, making it a magnet for industry, reducing import dependence and challenging Europe as it battles to dig itself out of recession, energy officials say.
Panelists at a weekend security conference in Munich warned Europe must develop a strategy on how to tap its own resources in order to keep energy costs competitive, or risk seeing power-intensive industries locate elsewhere.
"The shale gas and oil boom is already underway. As Europe continues to debate it, North America is reaping the advantages," said Jorma Ollila, Chairman of Royal Dutch Shell .
Just a week ago Shell signed a $10 billion shale gas deal with Ukraine - the biggest contract yet in Europe - which could help Ukraine ease its reliance on Russian gas imports.
Ukraine is said to have Europe's third-largest shale gas reserves at 42 trillion cubic feet (1.2 trillion cubic meters), according to the U.S. Energy Information Administration.
Its reserves are dwarfed by those of France however, estimated to be Europe's largest at 180 trillion cubic feet.
France has banned the procedure, known as fracking which is used to extract shale gas and which involves pumping vast quantities of water and chemicals at high pressure through drill holes to prop open shale rocks.
Environmentalists fear it could increase seismic risks and pollute drinking water. U.S. officials question this and say that thanks to the higher proportion of gas use the United States has had its lowest carbon dioxide emissions in 20 years.
"Observing this from across the Atlantic it is really quite remarkable that there should be a ban or a go-slow on this development in Europe, really without any facts," said Daniel Yergin, Vice-Chairman of IHS Cambridge Energy Research.
Fracking is used to produce a third of U.S. natural gas he said, showing the environmental impact can be managed.
SHALE SCRAMBLE
World energy market flows already reflect North America's scramble to exploit shale oil and gas and highlight the potential prize Europe is ignoring.
"The U.S. internal energy revolution and the radical increases in production of oil and gas have boosted gas production by 25 percent and seen oil import dependence drop from 60 percent to 40 percent, and expected to decline further to 30 percent," said Carlos Pascual, the U.S. special envoy for energy affairs.
While Europe retains deep environmental concerns it also acknowledges that with the price of gas in the United States just a third of that in Germany, its industry is already suffering the effects.
German Economy Minister Philipp Roesler said: "Many German firms have opted for (relocation to) the United States, saying energy prices were the decisive factor...We are already seeing that we are suffering with our higher energy prices it affects our own competiveness."
Addressing the panel in Munich European Union Commissioner Guenther Oettinger said Europe should be in a position to produce enough shale gas to replace its depleting conventional gas reserves, so as not to become more dependent on imports.
RUSSIA UNAFRAID
A greater abundance of gas could threaten the dominance of Russia's gas exports and pressure prices. The United States seized Russia's spot as the world's largest gas producer in 2012, and is due to produce significantly more from 2015.
"I believe that the shale revolution is something positive, a chance for all of us to launch technologies, intensify competitiveness, make our countries more energy secure, and reduce costs," said Russian Energy Minister Alexander Novak.
Russia is focusing on boosting exports to energy-hungry Asia and developing infrastructure to transport gas eastwards.
A recent confidential study by the German intelligence agency (BND) suggested the United States could turn from being the world's greatest energy importer into an oil and gas exporter by 2020, reducing its dependence on the Middle East and thereby giving it much more freedom in policy making.
China by contrast would become much more dependent on Middle East oil to fuel its rapid expansion.
Illustrating just how rapidly the shale revolution has taken hold, shale gas accounted for just 1 percent of gas production in 2005, whereas today it is a third, and by 2040 it will be 50 percent, U.S. special envoy Pascual said.
"Developing a greater capacity to reduce import dependence does not diminish our commitment to stability," he stressed.
"It will not affect our engagement for global security, peace and security in the Middle East."
Tuesday, May 29, 2012
Shale Gas Boom at Risk
Story first appeared in The Wall Street Journal.
Global exploitation of shale gas reserves could transform the world's energy supply by lowering prices, improving security and curbing carbon dioxide emissions, but the industry might be stopped in its tracks if it doesn't work harder to resolve environmental concerns, the International Energy Agency said Tuesday.
The IEA's report shows how the shale gas industry, which has already dramatically altered the energy landscape in the U.S., stands at a tipping point.
If the social and environmental impacts aren't addressed properly, there is a very real possibility that public opposition will halt the unconventional gas revolution in its tracks, according to Natural Gas Expert Witnesses.
The industry can win public support if it follows a set of "golden rules," including the careful choice of drilling sites to avoid earth tremors, using the highest standards of well design to avoid groundwater contamination, properly disposing of waste water and eliminating emissions of polluting gases from the well head, the IEA said.
For companies involved in the industry, this is an immediate issue that could have global implications. Adopting the rules would only add around 7% to operating costs.
Shale gas has only recently become a major energy source as a process called hydraulic fracturing, which releases gas from impermeable rock, has become more widespread. It has produced a natural gas boom in the U.S., driving prices to 10-year lows, but is only beginning to spread elsewhere.
But opposition is significant, particularly in Europe, from groups concerned about the risks of water contamination, earth tremors or the release of greenhouse gases. Hydraulic fracturing has been banned in France and Bulgaria and temporarily halted in the U.K.
Environmental group Greenpeace, which opposes all exploitation of unconventional gas reserves, criticized the IEA for failing to propose specific procedures for preventing many of the environmental hazards.
But the head of sustainability at the £142 billion ($222.7 billion) asset manager Scottish Widows Investment Partnership and a past critic of the shale gas industry, said the IEA's recommendations would make a big difference if widely adopted.
If its blueprint is followed, the IEA said that between 2010 and 2035 natural gas could be by far the fastest growing fuel, with consumption increasing by 50% to overtake coal as the second largest source of energy.
Countries that were net importers of natural gas in 2010 are likely to be the biggest winners as they increase domestic energy production, while natural gas prices would be around 30% lower in most major markets, the IEA said.
However, if lack of public acceptance stifles the industry at an early stage, global emissions of carbon dioxide would actually be 1.3% higher as coal would make up a greater share of global energy supplies, it said.
The IEA doesn't have any powers to enforce its recommendations on shale gas drilling, and it will be up to the governments of each country to determine how to regulate the industry, said Ms. Van der Hoeven.
Leaders of the Group of Eight leading nations agreed earlier this month to review the IEA's recommendations.
Global exploitation of shale gas reserves could transform the world's energy supply by lowering prices, improving security and curbing carbon dioxide emissions, but the industry might be stopped in its tracks if it doesn't work harder to resolve environmental concerns, the International Energy Agency said Tuesday.
The IEA's report shows how the shale gas industry, which has already dramatically altered the energy landscape in the U.S., stands at a tipping point.
If the social and environmental impacts aren't addressed properly, there is a very real possibility that public opposition will halt the unconventional gas revolution in its tracks, according to Natural Gas Expert Witnesses.
The industry can win public support if it follows a set of "golden rules," including the careful choice of drilling sites to avoid earth tremors, using the highest standards of well design to avoid groundwater contamination, properly disposing of waste water and eliminating emissions of polluting gases from the well head, the IEA said.
For companies involved in the industry, this is an immediate issue that could have global implications. Adopting the rules would only add around 7% to operating costs.
Shale gas has only recently become a major energy source as a process called hydraulic fracturing, which releases gas from impermeable rock, has become more widespread. It has produced a natural gas boom in the U.S., driving prices to 10-year lows, but is only beginning to spread elsewhere.
But opposition is significant, particularly in Europe, from groups concerned about the risks of water contamination, earth tremors or the release of greenhouse gases. Hydraulic fracturing has been banned in France and Bulgaria and temporarily halted in the U.K.
Environmental group Greenpeace, which opposes all exploitation of unconventional gas reserves, criticized the IEA for failing to propose specific procedures for preventing many of the environmental hazards.
But the head of sustainability at the £142 billion ($222.7 billion) asset manager Scottish Widows Investment Partnership and a past critic of the shale gas industry, said the IEA's recommendations would make a big difference if widely adopted.
If its blueprint is followed, the IEA said that between 2010 and 2035 natural gas could be by far the fastest growing fuel, with consumption increasing by 50% to overtake coal as the second largest source of energy.
Countries that were net importers of natural gas in 2010 are likely to be the biggest winners as they increase domestic energy production, while natural gas prices would be around 30% lower in most major markets, the IEA said.
However, if lack of public acceptance stifles the industry at an early stage, global emissions of carbon dioxide would actually be 1.3% higher as coal would make up a greater share of global energy supplies, it said.
The IEA doesn't have any powers to enforce its recommendations on shale gas drilling, and it will be up to the governments of each country to determine how to regulate the industry, said Ms. Van der Hoeven.
Leaders of the Group of Eight leading nations agreed earlier this month to review the IEA's recommendations.
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