There were a number of posts this week on the continuing shale oil and gas boom in several parts of the world and most importantly its impact on Russia.

UPI  Energy Resources noted shale could redefine the US economy. Research company IHS says the shale oil and natural gas sector in the United States could contribute nearly $500 billion to the U.S. gross domestic product by 2035. Daniel Yergin, author of the report, said: “The United States currently has the highest rate of growth in crude oil production capacity in the world and is virtually self-sufficient in natural gas, except for some gas from Canada. This is a stark contrast from when, prior to the unconventional revolution, it was expected that the U.S. would soon become heavily dependent on gas imports.” Oil production from shale for 2012 is expected to reach 2 million barrels per day and reach 4.4 million bpd by 2020. For shale gas, production could account for as much as 75% of the natural gas production in the country — about 76 billion cubic feet per day — by 2035. See also Energy Tribune Shale Gas Transforming US Economy.

Businessweek looked at the expected impact of low natural gas prices in the US on transportation fuel costs. Simply put: “Drivers are next in line to benefit from the U.S. shale boom.” Several companies are pursuing gas-to-liquid technologies to exploit the oversupply of shale gas and some are saying they can make automobile fuel with a production cost of $1.50 to $2.00 per gallon or half the current price of gasoline and diesel.

The Telegraph explored the impact of the shale gas revolution on the US manufacturing industry and the negative consequences for Europe. “A study by the American Chemistry Council said the shale gas bonanza has reversed the fortunes of the chemical, plastics, aluminium, iron and steel, rubber, coated metals, and glass industries. “This was virtually unthinkable five years ago,” said the body’s president, Cal Dooley.” And the US state of Pennsylvania is already planning its first electrical power plants fueled by the Marcellus Shale reported AOL Energy.

AOL Energy asked: Is Natural Gas Killing Solar? With the North American price of natural gas is at a 10-year low and some say becoming “permanently cheap” because of the massive shale gas finds in the US and Canada, there are those who think the shale gas boom will significantly defer the transition to solar and other renewable energy sources. Low cost natural gas is making it more difficult for solar to compete in the generation of electricity. The author of this post believes the concern to be “overblown” and sets out his reasons why, including the continual fall in solar panel costs. “Even if natural gas is permanently cheap, solar is also at unprecedented and permanently cheap price points. All indications are that solar will continue to get cheaper in the future…At current price points solar is very competitive when compared to retail electric rates, but isn’t yet truly competitive at wholesale electricity pricing – but the race is far from over.”

KNOE reported the Marcellus Shale reserves in the Eastern US are larger than expected while Energy & Capital said the US Geological Survey finds the Utica Shale, which lies below and to the west of the Marcellus Shale, shows very promising results. The Marcellus reserves lie below parts of the states of Pennsylvania, West Virginia, Ohio and New York and run north into the Canadian province of Quebec. Standard & Poor’s projects the Marcellus could contain “almost half of the current proven natural gas reserves in the U.S”.

AOL Energy examined the Benefits and Risks Associated with Increased US Natural Gas Use (with video).

Reuters wondered if U.S. shale could mean cheap global crude oil by 2020.

Meanwhile Pravda predicted US shale gas will strike a devastating blow on Russia’s Gazprom and Businessweek added the US shale gas drilling boom rattles Russia. “Like falling dominoes, the drilling process called hydraulic fracturing, or fracking, is shaking up world energy markets from Washington to Moscow to Beijing. Some predict what was once unthinkable: that the U.S. won’t need to import natural gas in the near future, and that Russia could be the big loser.” Some are also saying Gazprom’s days of dominating European energy markets are gone. Today, U.S. gas prices are four times less than those of Gazprom and any US exports to Europe would begin to back the Russian company out of that part of the world. From The Examiner Russia vs United States in natural gas market we find that Gazprom has started to sign up Asian markets for its natural gas as it fears the potential impact of US and Australia exports to that region. The Voice of Russia chimes in with Shale gas and oil revolution reshaping world economy and politics. See also Energy Tribune US Shale’s Seismic Shaking of Gazprom (and Putin).

The Atlantic Sentinel added that European shale gas also poses a threat to Gazprom. Russia currently supplies about 25% of the continent’s gas needs and its share in the imports of former Soviet satellite states in Eastern Europe is much higher. Poland, which imports more than 80% of its natural gas from Russia, has among the most promising shale gas reserves in Europe. Ukraine, also heavily dependent on Russia, is drawing up plans to develop its shale gas reserves. European shale reserves are less accessible than North America’s while countries lack the necessary infrastructure and hydraulic fracturing equipment to boost domestic production. Over the long term, the mere abundance of natural gas in Europe jeopardizes Russia’s export opportunities. “Because oil and gas sales constitute the backbone of the Russian economy, an increase in Europe natural gas production would be extraordinarily detrimental to the country as well as its government. Taxes and income from fossil fuels provide up to 60 percent of the state’s revenue. The Kremlin is a majority shareholder in energy giant Gazprom which alone accounts for 12 percent of Russia’s exports.”

Worried by shale gas, Putin calls for new energy strategy was the headline from New Europe. Russian President Vladimir Putin has called on Russian gas monopoly Gazprom, which supplies about a quarter of Europe’s gas demand through a pipeline network, to reconfigure its strategy to adapt to the growing threat from shale gas. “”We must take in account the current developments and have a clear view how the situation will develop not only in the next two to three years, but through the next decade, The priorities should be supplies to the domestic market, our own economy and our enterprises, as well as diversification of markets to account for the prospective Asian segment and means of delivery,” Putin told a meeting on 23 October of a Kremlin energy policy commission.

For its part, Gazprom has no interest in developing Russia’s shale gas given that country’s abundance of domestic conventional natural gas reserves reported UPI Energy Resources.

Rice University’s Center for Energy Studies has a report on The Geopolitics of Natural Gas.

Reuters told us that the UK expects to know more about its shale gas estimates by the end of this year. The Bowland formation covers a huge area with potentially significant recoverable reserves, extending beyond  Lancashire to the Isle of Man, north Wales, south Cumbria and the East Midlands.Substantial recoverable gas could enhance Britain’s energy security, offset declining North Sea output, and reduce import dependence.

Australia has begun its shale gas production we learned from UPI Energy Resources. Australian oil and gas company Santos Ltd. has launched the country’s first commercial shale gas well in the Cooper Basin in South Australia. The U.S. Energy Information Administration estimates that ”technically recoverable” shale gas resources in Australia could be as much as 396 trillion cubic feet.

 

 

 

 

 

 

 

 

 

 

 

 

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