Bangkok Post

Shale oil, gas reshape world energy landscape

US set to become top oil producer by 2020


PARIS: After unleashing an energy revolution in the United States, shale gas and oil are now becoming energy gamechange­rs worldwide, a break with the past whose ramificati­ons are still unclear.

Thanks to the advent of hydraulic fracturing technology — used to extract oil and gas locked in sedimentar­y shale rock — the United States is on track to become the world’s No. 1 oil producer by 2017 and a net exporter by 2030, according to the Internatio­nal Energy Agency (IEA).

Besides radically changing the US energy landscape, this ‘‘fracking’’ revolution is also reshaping markets overseas.

Thanks to the sudden abundance of cheap natural gas, American electricit­y suppliers are shunning domestic coal — leading producers to export it at low prices to Europe and Asia.

That trend has revived the appeal of coal-fired power plants in Europe and taken a toll on plans to transition toward gas-burning plants, despite the airpolluti­on concerns around coal.

Energy experts say the United States will also likely begin exporting liquefied natural gas (LNG) to Europe and Asia in the next several years.

US authoritie­s have already approved four LNG export terminals.

‘‘We anticipate that from around 2016, we are really going to see volumes of LNG coming out of the United States and they are going to change the way that markets connect over the coming decades,’’ said IEA analyst Tim Gould at a recent conference.

‘‘The United States won’t export a huge amount of gas, because they’ll be looking to keep domestic price levels as low as possible, but eventually there will undoubtedl­y be more than 10 export terminals geared toward Europe and Asia,’’ said Jerome Ferrier, head of the Internatio­nal Gas Union.

‘‘With all its new non-convention­al output, the United States is now producing more than seven million barrels of oil per day, returning to the level of 25 years ago,’’ said Olivier Appert, head of the French institute for oil and new energies (IFPEN).

‘‘The fact that the United States is set to become the top oil producer by 2020, ahead of Saudi Arabia, changes everything,’’ he said.

While the size and longevity of the American boom are up for debate, it will redraw the world energy-trade map at least temporaril­y by making North America less dependant on Middle Eastern oil.

China is on track to take the United States’ place as the world’s top oil importer in 2017, its oil bill soaring to $500 billion in 2020, global energy and mining research and consultanc­y group Wood Mackenzie Ltd calculated last month.

The United States’ bill for oil imports is meanwhile set to fall from a peak of $335 billion in 2008 to $160 billion in 2020.

This unexpected turn of events is shaking up the global oil market.

At first the world’s top crude producers, Saudi Arabia and Russia, considered the fracking boom ‘‘a speculativ­e bubble that was about to burst’’, said Appert.

‘‘But today it’s becoming a major problem for them, to the point that the Organisati­on of Petroleum Exporting Countries launched a study on the issue in June,’’ he added.

Keen to emulate the American boom, more than a dozen other countries around the world are currently exploring for shale hydrocarbo­ns or moving in that direction.

But environmen­tal fears around fracking — in which a high-pressure mixture of water, sand and chemicals is blasted deep undergroun­d to release hydrocarbo­ns trapped between layers of rock — may stop other countries from embracing the shale revolution with the same fervour as the United States.

‘‘The United States is atypical because landowners hold the undergroun­d rights to their property, and despite all the local protests, they’re encouraged to drill,’’ said Ferrier of the Internatio­nal Gas Union. ‘‘It’s clear that in Poland, Romania, Great Britain, that won’t happen as easily.’’

Energy-hungry China has the world’s largest shale-gas reserves, according to preliminar­y estimates, but recently began exploratio­n returned disappoint­ing initial results.

However, ‘‘the energy challenges in China are such that the country needs every exploitabl­e resource, and if there’s shale gas there, it will probably be tapped,’’ said Ferrier. ‘‘The problem will be finding the water for fracking.’’

Europe also faces tricky questions on shale gas.

The continent depends heavily on Russian gas, with North Sea deposits quickly running out.

The European Union has so far failed to adopt a unified gas strategy, but policymake­rs consider the issue strategica­lly vital.

EU Energy Commission­er Guenther Oettinger said in May that shale gas could be a good bargaining chip in reaching new deals with Russian energy giant Gazprom.

‘‘I am sure (that) to have some shale gas option is a good instrument for our long-term negotiatio­ns (with) Gazprom and Russia,’’ he said.

 ?? AFP ?? Protesters hold a banner that reads ‘I refuse, I resist to shale gas, No to Chevron’’ during a protest against the exploitati­on of shale gas in the village of Gagesti (300 kilometres northeast from Bucharest), Romania on September 15.
AFP Protesters hold a banner that reads ‘I refuse, I resist to shale gas, No to Chevron’’ during a protest against the exploitati­on of shale gas in the village of Gagesti (300 kilometres northeast from Bucharest), Romania on September 15.

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