US Shale Gas and the World Energy Power Balance
Rising U.S. natural gas production from shale formations has already played a critical role in weakening Russia's ability to wield an "energy weapon" over its European customers, and this trend will accelerate in the coming decades, according to a new Baker Institute study, "Shale Gas and U.S. National Security." The study, funded by the U.S. Department of Energy, projects that Russia's natural gas market share in Western Europe will decline to as little as 13 percent by 2040, down from 27 percent in 2009. The Baker Institute study dismisses the notion, recently debated in the U.S. media, that the shale gas revolution is a transitory occurrence. The study projects that U.S. shale production will more than quadruple by 2040 from 2010 levels of more than 10 billion cubic feet per day, reaching more than 50 percent of total U.S. natural gas production by the 2030s. The study incorporates independent scientific and economic literature on shale costs and resources, including assessments by organizations such as the U.S. Geological Survey, the Potential Gas Committee and scholarly peer-reviewed papers of the American Association of Petroleum Geologists. Oil shale, an organic-rich fine-grained sedimentary rock, contains significant amounts of kerogen (a solid mixture of organic chemical compounds) from which liquid hydrocarbons called shale oil and/or natural gas can be produced. Deposits of oil shale occur around the world, including major deposits in the United States of America.
Shale gas in the United States is rapidly increasing as a source of natural gas. Led by new applications of hydraulic fracturing technology and horizontal drilling, development of new sources of shale gas has offset declines in production from conventional gas reservoirs, and has led to major increases in reserves of US natural gas. Largely due to shale gas discoveries, estimated reserves of natural gas in the United States in 2008 were 35% higher than in 2006.
The findings of the study conclude that U.S. shale gas will reduce the energy power hold that other foreign powers may have over the US and improve national security. It will also:
Reduce competition for LNG supplies from the Middle East and thereby moderate prices and spur greater use of natural gas, an outcome with significant implications for global environmental objectives. (Natural gas is cleaner than other fuels and is an important stopgap until alternate more renewable sources are developed).
Combat the long-term potential monopoly power of a "gas OPEC."
Reduce U.S. and Chinese dependence on Middle East natural gas supplies, lowering the incentives for geopolitical and commercial competition between the two largest consuming countries and providing both countries with new opportunities to diversify their energy supply.
Reduce Iran's ability to tap energy diplomacy as a means to strengthen its regional power or to buttress its nuclear aspirations.
The economic success of shale gas in the United States since 2000 has led to rapid development of shale gas in Canada, and, more recently, has spurred interest in shale gas possibilities in Europe, Asia, and Australia.
For further information: http://www.bakerinstitute.org/publications/EF-pub-DOEShaleGas-07192011.pdf