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American Shale E&P Growth Threatens Global Energy Independence

By Gary HuntCommoditiesSep 02, 2012 03:18AM ET
www.investing.com/analysis/american-shale-e-p-growth-threatens-global-energy-independence-134876
American Shale E&P Growth Threatens Global Energy Independence
By Gary Hunt   |  Sep 02, 2012 03:18AM ET
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The growth of oil and gas exploration in shales begun in North America is setting off a global race for shale E&P development and threatens to turn the old conventional energy order on its head.

Based primarily on the phenomenal growth of domestic energy production from shale E&P in the United States, the world is waking up to realize that we are not running out of oil or natural gas.

As in every revolution there are both opportunities and risks. Here in America our politicians are promising energy independence from development of domestic resources. This, more accurately, should be interpreted as an end to energy dependence upon OPEC for oil imports by substituting a more broadly competitive global marketplace with many suppliers. Energy independence is more accurately energy inter-dependence as the world adapts to the concept of truly competitive energy markets.

Global Shale
Global Shale

The shale revolution is underway and every nation wants part of the action but success threatens to diminish the market power of OPEC making global energy markets truly interdependent and highly competitive. The growth potential and wide geographic distribution of technically recoverable oil and gas resources from unconventional shale deposits around the world is setting the stage for an E&P rush to develop those resources.

  • For China, the potential from a shale gas revolution is profound. US EIA estimates that China has more than 1,275 trillion cubic feet (tcf) of technically recoverable natural gas compared to an estimate for the US of 862 tcf. Developing this domestically available shale potential can assure that China has the secure energy resources to sustain its economic growth and better yet more widely distribute the benefits of the growth into the rural areas of the country.
  • For Israel and other nations in the Eastern Mediterranean, a 2010 USGS study of the discovered oil potential off the coast of Israel, Syria, Lebanon and Gaza suggest that there may be as much as 1.7 billion barrels of recoverable oil and 122 trillion cubic feet of natural gas and 5 billion barrels of natural gas liquids. If developed that is enough resource to make each of these nations or prospective nations energy independent and likely net exporters. This, of course, also adds to the ongoing regional tension with new opportunities for energy development disputes.
  • For nations like those who comprise OPEC, plus Russia, Iran and Venezuela the shale revolution potential is terrifying because it undermines the cartels they have developed and erodes their pricing power with profoundly adverse effects on their economies. Russia is particularly threatened by US-backed unconventional gas technology, as evidenced by their support for ‘fear-mongering’ concerns on environmental and health problems related to hydraulic fracturing-related practices. Russia also is unfamiliar with US fracking technology, and is keen on trying to understand more regarding it and its potential for expanding Russian energy resources.
North America is the center of the shale revolution leveraging American technology in perfecting 3D seismic technologies for E&P discovery and assessment, horizontal drilling to gain access to the resource, and hydraulic fracturing to release the tight oil and gas and allow economic recovery. A debate about how America should take advantage of this shale E&P opportunity is both timely and prudent in this presidential election
US-Leads-in-non-OPEC-oil-growth
US-Leads-in-non-OPEC-oil-growth

America has Always Had plenty of Oil, but Not the Will to Produce It. This shale oil and gas production growth in North America is in addition to the already substantial conventional oil and gas resources in place and being tapped to meet American energy needs. We have never lacked for energy resources. What we lack, so far, is the political will to put them to full productive use. Today, our desperate need to get the Us economy growing again creating jobs is changing that for the better.

The USGS estimates the technically recoverable conventional petroleum resources from 70 locations not counting Federal offshore locations total more than 32 billion barrels of crude oil, 291 trillion cubic feet of conventional natural gas deposits and more than 10 billion barrels of natural gas liquids.

Gaining access to American technology, skills equipment and expertise is making the United States and Canada a magnet for foreign direct investment in the energy sector and the vendors that serve it. Developing abundant, reliable, low cost access to energy resources in the US will revitalize American’s industrial base and bring strategic industries, manufacturing and jobs home after a decade of outsourcing. We can accelerate that growth and the repatriation of jobs by making changes in our tax laws, regulatory environment, and business-friendly attitudes to welcome the foreign direct investment and more importantly get American companies to bring their production back home.
American Shale E&P Growth Threatens Global Energy Independence
 
American Shale E&P Growth Threatens Global Energy Independence

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