Natural Gas and Politics
Frequent readers of The Hayride are well aware that we are proponents of the United States taking advantage of the enormous quantities of natural gas beneath our feet. We’ve discussed the economic impact of the Haynesville Shale on Louisiana’s economic recovery. We’ve discussed less obvious alternative uses for natural gas. And we have discussed environmentalist opposition to the recovery of gas from shale formations. But other than that focused discussion of unfounded environmental concerns, we really haven’t discussed the politics, the broader political ramifications, of the impact of natural gas recovered from shale formations.
That is a topic I have wanted to explore for some time, but today at American Thinker, I was beaten to the punch with an excellent article on that very subject. Go ahead and read it – I’ll wait.
That post, by Ed Lasky, does an excellent job discussing the political implications, and exposing the political agenda of opponents, of domestic policy on natural gas from shale. I wouldn’t begin to attempt to add to it.
Though Mr. Lasky does a great job revealing the hidden agenda of opponents to shale exploration in the United States, he only hints at the potential ramifications of such exploration in Europe and Asia. Natural gas from shale could be a monumental game changer world wide.
At this time, Europe is very much dependent on Russia for its natural gas supply. They are at the mercy of Vladimir Putin, and Vladimir is hungry for power and is not the least bit afraid of exploiting energy exports to gain it. On two separate occasions over the past several years, he has significantly reduced the gas supplies to Europe, which are shipped through the Ukraine, due to disputes with that country, and he won’t hesitate to do it again. (There’s probably an analogy that should be made regarding America’s shipments of refined crude oil products to the Middle East and Iran’s nuclear weapons program, but that would be another topic for another day.) As The New York Times noted some time back,
“New gas supplies would be welcome news to European Union officials, who have grown anxious over their increasing energy dependence on a resurgent Russia. Gazprom, the Russian state monopoly, already supplies more than a quarter of European natural gas needs.”
So this could be as big for Europe as it has been for the United States –
The first hurdle is to learn just how much shale gas might be available for recovery. Europe has numerous sites of potential interest.
“There’s a possibility that under our feet are the same kind of shale-gas deposits that you have in the United States,” said Brian Horsfield, a professor of organic geochemistry at the GFZ German Research Center for Geosciences in Potsdam, Germany. “There are many of the same types of shale formations in Europe.”
Since that statement was made, proven and estimated reserves have grown. As noted at The Economist.com
Statoil recently told the BBC that they estimated European shale potential as being “at least” 14 times the size of the Troll field, which is the largest off shore field in Europe.
How are these reserves being explored and developed? A number of joint ventures and partnerships are developing between independent gas producers in the US and counterparts in Europe. Citing another New York Times article,
European companies are buying large interests in shale fields in the United States, partly to supply the American market, but also to learn the specialized mapping and drilling techniques required for shale gas.
Several of the European companies have entered into partnerships with smaller American companies. ENI of Italy paid $280 million in May for a stake in a 13,000-acre gas field north of Fort Worth operated by Quicksilver Resources. ENI has a crew of four engineers, a geologist and a geophysicist in Texas to learn from Quicksilver personnel.
One of the biggest marriages is between Chesapeake Energy of Oklahoma City and its strategic partner StatoilHydro.
Seeking cash, Chesapeake agreed to sell Statoil a large stake in its Marcellus shale holdings, centered in Pennsylvania, for $3.9 billion last November. The two companies are looking at shale fields in China, India, Australia and other countries. Seven Statoil employees are working in Oklahoma and Pennsylvania learning to map and fracture shale, and calculate shale gas pressures, and more are coming.
“We know the shale is out there,” said Lars Erik Oino, a Statoil geologist working at Chesapeake headquarters here, as he rubbed hydrochloric acid on a shale sample to test its mineral makeup. “This could have a huge impact on the European energy situation.”
Note the comments about China, India, and Australia. This isn’t just about Haynesville, and this isn’t just about Europe. This is about a world that is no longer dependent on a few extremist countries for energy supplies.
And this isn’t just about a few renegade independent exploration and production companies, either. Recall the headlines back in December, announcing that Exxon Mobil was acquiring XTO Energy? Word on the street is that Exxon Mobil didn’t make that acquisition because of XTO’s extensive holdings in the Barnett Shale of Texas, but rather because those guys know how to get gas from shale, and Exxon Mobil wants to take that knowledge to Europe and Asia.
Natural gas exploration offers not just an opportunity for economic recovery in north Louisiana and elsewhere. Natural gas from shale could be the key to a major redistribution of political power globally, and to greatly loosening the reins of power now in the hands of Vladimir Putin, Hugo Chavez, and OPEC. It’s a game changer we need to experience. If you didn’t read Mr. Lacky’s piece when I invited you to, read it now, and tell your representatives to the federal government to get out of the way of this opportunity.
Filed under: China, Economics, Economy, Energy, Foreign Policy, Haynesville Shale, Iran, Louisiana, National, Venezuela
Excellent piece, and the best news about the coming shale gas revolution (it's actually already here, but the implications haven't completely come in yet) is what it will do to world's power structure.
Oh, yeah, it's here. Our job is to make sure it isn't taken away from us on the domestic front, and that it's fully capitalized on internationally. This is the vehicle by which we can pull the rug from under the extremists who control the world's energy supplies, and thus their threat to political stability.
Good night, Vladimir. Good night, Hugo. Good morning, John Boy.
Ed Lasky here-and thank you for the kind words, Michael.
Thank you for reading it, for your piece, and for the inspiration to go ahead and write what I'd been pondering for a few weeks.
And I apologize for misspelling your name in the last paragraph!
Mike, thanks for pushing this topic to the forefront of those of us that read "The Hayride". But as you touched on, the real issue is energy independence so that we can elimate that as a decision criteria for foreign diplomacy. What stands in the way of a comprehensive, dynamic energy plan that can be explained to the public so that they can understand the energy issue…..because if we continue to do this piecemeal there are few who can put the picture together themselves….and we will continue to lurch between the debates of NG, Oil, Coal, nuclear and renewable sources….in other words very little will be done. Yet now is the time, over the next 3 years to make this the central issue that it is for the continued prosperity of the world…and the development of the third world.
I was visiting my wife's country (Colombia), four summers ago, and they have converted a significant percentage of their cars to run dual fuel CNG/gasoline. It is very inexpensive, proven technology. Good old fashioned internal combustion. No "chicken/egg problem" if there is no filling station for compressed natural gas, you can switch to unleaded via a solenoid switch on the dash!! More people take the leap ( $1500-$2000 to install conversion kit and CNG tanks), thus more service stations are willing to invest in compressors/tube banks, a virtuous circle. Why they can do it in a supposedly underdeveloped country but not here blows my mind. It results in a better balance of trade, job creation for mechanics and compressor salespeople, high paying jobs immediately. Also, lower emissions and the cars perform great (no discernible difference in power, actually greater driving range if you top off with both fuels simultaneously). Finally, it is not so complicated that your average mechanic can't maintain/install it (like some other technologies). I'd love to see us use the shale gas in our cars and put more nuclear and wind on the grid, it would free up our foreign policy options to boot.
Indeed. Not only that, we could convert all our fleet vehicles (18-wheelers, police cars, gov't vehicles, buses and everything else which tends to refuel at a central location) to CNG within a couple of years and move better than 20 percent of our usage away from foreign oil at a tremendous cost savings. This is already happening to a reasonable extent without help; imagine what could happen if state and local governments would offer, say, a tax incentive for conversion kits to businesses for their vehicles and make the decision to use CNG for their own vehicles.
This would be a great opportunity for Louisiana to take the lead.
[...] is generated using natural gas that they purchase from Russia, vulnerabilities from which we have examined here [...]
CNG conversion kits are eligible for the same 30%/50% tax rebates as are solar panels, Scott. They're just not as well advertised, because nobody is opening conversion centers in abandoned Circle K's as they are solar installation businesses.
[...] Guy never shuts up, right? Don’t forget, this is the Markey from Waxman-Markey. As in, the clown who wrote that cap-and-trade bill which would annihilate Louisiana’s economy. And he’s also the guy who’s trying to impose federal regulation of hydraulic fracturing, the state-regulated process which has made available the vast potential riches of the Haynesville Shale natural gas field and could revolutionize America’s – and the world’s – economy. [...]