Skip to comments.Shale Plays Rock Geopolitical Boat
Posted on 05/30/2012 6:03:30 AM PDT by Recon Dad
The game-changing development of shale oil and gas in the United States has motivated countries around the world to tap potentially massive resources.
Shale will alter the energy security picture for major end-use markets, limiting individual producer petro-power and creating a more competitive marketplace for LNG and potentially enabling further market liberalization in Europe and elsewhere, said Amy Myers Jaffe.
What has changed is that now we have this huge potential of resources that are exactly where the demand centers are, explained Jaffe, director, Energy Forum at the Baker Institute, Rice University. That changes not only the geopolitics of oil and gas, but also the business model that companies are going to follow.
One example of a change in geopolitics involves petrodollars. Think about the economic impact of shipping all those dollars to Saudi Arabia. Where do they put those dollars? she asked participants on May 23 at the seventh annual Mayer Brown conference on Global Energy: The New Frontier.
This money comes flooding into the stock market with all of you. Theres a bubble and you lose everything you own, she said with a laugh. How many times has that happened -- at least four times.
When you pay $5 at a gasoline station, imagine if that money stays here with new jobs in Pennsylvania instead of in the Middle East. It would make a real difference to your and my quality of life just to have that money stay here. It certainly is true that it matters to have the production be here, she emphasized.
And, that wave of U.S. production is washing over other areas in the world as well. Even though the European shale hasnt been developed yet, just having U.S. shale be developed already has Gazprom on the run. You already have some gas-on-gas pricing from Russia to Europe. The market share of Russia in non-FSU Europe is falling and could be below 13% by 2040.
Its really changed the techno-power aspect of international dialogue, and its also created opportunities for IOCs and independents in terms of negotiating strength, Jaffe said.
One more aspect of the impact in Europe is that the ride back to liberalization is a possible natural outcome. There are lots of barriers to having that happen, she continued. But, well be seeing a lot more liberalization on the European continent.
Shale plays are having an impact on how countries are approaching resource development. The nationalization of YPF by the Argentine government, for example, fits in the context of huge shale resources.
Jaffe explained that Argentina was willing to privatize YPF when the government thought there were hardly any resources left in a poor, picked-over basin.
When suddenly they realized there were billions of barrels of oil and gas equivalent in the ground, then they werent so enthusiastic about not having a national oil company. Thats my interpretation of why that happened, she added.
The Baker Institute has been doing a study on estimated ultimate recovery (EURs) in shale plays around the world. If you look at Argentina, its very, very attractive. There are a lot of companies down there now -- Shell, Exxon and a few others, she said.
Mexico is another country that could be a major shale player if the country decides to reform the sector. They are talking about creating a new entity to do shale gas. If they do that, it would be a game-changer. Im not saying its going to happen, but at least they are talking about it, Jaffe noted.
In the Middle East and North Africa, the Jordanians want to pursue their shale. Morocco believes they have shale. Oman is looking for shale, she continued.
Chinas shale market is expected to grow slowly and provide 15% of the domestic market. However, there are three challenges for developing Chinas shale resources: 1) in many areas, there are problems with water resources; 2) there is a lack of infrastructure; and 3) some of the shale is in mountainous areas where it is not easy to drill, she explained.
In the U.S., the industry now realizes that oil is not limited to the Bakken formation. People are developing the technology and becoming more sophisticated at it. The results we are seeing in the Eagle Ford are quite substantial, she stated.
Some people say that by next year, were going to have 1.0 million barrels per day (MMb/d) of oil production onshore in the U.S. just between the Eagle Ford and Bakken, she said.
However, there are more oil plays than that. The list includes: Bakken in North Dakota; Permian, Avalon, Bone Springs, Wolfcamp and Eagle Ford in Texas-New Mexico; Utica in Ohio; Marcellus in Pennsylvania; Niobrara in Colorado-Wyoming; Sunniland in Florida; Tuscaloosa Marine in Louisiana; Mississippi Lime in Oklahoma; and Monterrey basin in California.
You can see its a pretty long list, and its not a Texas-Louisiana play. We have northwest Pennsylvania, Ohio, Florida and California, she emphasized.
Total technically recoverable resources are estimated at 60 billion barrels. If that turned out to be a correct estimate, that would support 2.0 MMb/d, and that is really world class. Were talking about a big resource.
The U.S. could be relatively self-sufficient by 2025. Shales could add 3.0 MMb/d. The Gulf of Mexico could add 2.0 to 3.0 MMb/d and raising automobile standards to 54 mpg could shave off 4.0 MMb/d. Were talking about very low levels of imports to the U.S.
In a reference case, the Baker Institute estimated that U.S. shale gas production will exceed 50% of total production by 2030. The strongest long-term production is in the Marcellus and Haynesville shales, followed by the Barnett, Eagle Ford and Fayetteville shales.
In Canada, shale is expected to reach one-third of natural gas output by the 2030s, Jaffe said.
The institute has run computer models of liquefied natural gas exports through 2040. Weve run computer simulations. The computer never ships U.S. gas to Asia. Bottom line is that your project from Horn River is what gets exported. Something will be exported. Whether it is from the Gulf Coast is another question, she continued.
IIRC, I read an article a few months ago that Israel may even be able to get on this gravy train.
Imagine a world where almost all countries could produce enough oil to meet their own energy needs. Wow. The geopolitical ramifications are enormous.
BTW, regular was at $3.21 in my area on Memorial day. My daughter got back to Seattle from her visit with us the day before and said at Safeway there it was at $4.28.
That’s quite a disparity in price.
I work in the industry. There is enough gas and oil around the world for hundreds of years. The distribution of this energy means less reliance on one region over another.
The danger is with an explosive middle east and the rise of radical islam, a sudden elimination of oil profits from arab countries could turn the people towards radicals for salvation......a pattern seen throughout history.
Looking at Saudi Arabia I'd say that horse left the barn a long time ago.
(I've been an o/g junkie for a long time. One of my life long regrets not being in this industry)
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The Golden Age Of Gas
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Then we have:
IEA: Global best practices needed in shale gas boom
May 29, 2012
I read an article a few months ago that Israel may even be able to get on this gravy train.
Israel has hit the jackpot in NG off their coast (Tamar & Leviathan) and has vast shale resources on land.
At stake is who will win control over an energy prize of over 122 trillion cubic feet of natural gas, and more 1.8 billion barrels of recoverable oil according to estimates of the US Geologic Survey. The trigger has been the successful exploratory drilling completed by an Israeli American consortium, Noble Energy, Inc of Houston, Texas and Israeli partner Delek Group, which in 2009-2010 discovered more than 26 billion cubic feet of natural gas in several fields offshore in Israels Exclusive Economic Zone (EEZ) off shore in the Eastern Mediterranean.
The Tamar, Leviathan smaller gas field discoveries offshore have the potential of achieving energy independence for Israel and creating a major export market across the Mediterranean in the EU. Coupled with the onshore development of more than 260 billion barrels of oil to be developed from shale formations in the Shfela basin, these natural gas discoveries will transform Israels economy, that is, if threats by Israels Arab neighbors and Turkey permit its secure development with allies Cyprus and Greece, who would share in important gains.
......thanks, the future looks very bright, a new era is upon us.
I believe the future is very bright, but others see it differently.
Shale boom at risk over environmental issues - IEA
The IEA’s report shows how the shale gas industry, which has already dramatically altered the energy landscape in the US, stands at a tipping point that will determine how it spreads across the rest of the world.
“If the social and environmental impacts aren’t addressed properly, there is a very real possibility that public opposition...will halt the unconventional gas revolution in its tracks,”...
They are so used to pissing money away that they won't be able to stop until they have pissed it all away.
over 122 trillion cubic feet of natural gas, and more 1.8 billion barrels of recoverable oil according to estimates of the US Geologic Survey
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Although I have seen the 122 TCF used in other publications, I have not found it on the USGS where it is attributed.
I find the number to 24.4 TCF or 690 Billion Cubic meters.