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.