The advent of shale gas is not only a game-changer regarding power generation but also a game-changer in the area of energy and geopolitics. The Russian dominance in the European gas markets is being threatened and they are now joining forces with various environmental groups in an unholy alliance to restrain the development of shale gas production in Europe.
But in the long-term I expect Russia will join the shale-gas movement. They have larger resources of oil and gas bearing shales than most others.
Wall Street Journal (Associated Press):
The Kremlin is watching, European nations are rebelling, and some suspect Moscow is secretly bankrolling a campaign to derail the West’s strategic plans. It’s not some Cold War movie; it’s about the U.S. boom in natural gas drilling, and the political implications are enormous. Like falling dominoes, the drilling process called hydraulic fracturing, or fracking, is shaking up world energy markets from Washington to Moscow to Beijing. Some predict what was once unthinkable: that the U.S. won’t need to import natural gas in the near future, and that Russia could be the big loser.
“This is where everything is being turned on its head,” said Fiona Hill, an expert on Russia at the Brookings Institution, a think tank in Washington. “Their days of dominating the European gas markets are gone.”
Any nations that trade in energy could potentially gain or lose. ……..
The story began to unfold a few years ago, as advances in drilling opened up vast reserves of gas buried in deep shale rock, such as the Marcellus formation in Pennsylvania and the Barnett, in Texas.
Experts had been predicting that the U.S. was running out of natural gas, but then shale gas began to flood the market, and prices plunged.
Russia had been exporting vast quantities to Europe and other countries for about $10 per unit, but the current price in the U.S. is now about $3 for the same quantity. That kind of math got the attention of energy companies, and politicians, around the world.
Some European governments began to envision a future with less Russian natural gas. In 2009, Russia had cut off gas shipments via Ukraine for nearly two weeks amid a price and payment dispute, and more than 15 European countries were sent scrambling to find alternative sources of energy.
The financial stakes are huge. Russia’s Gazprom energy corporation, which is state-controlled, had $44 billion in profits last year. Gazprom, based in Moscow, is the world’s largest producer of natural gas and exports much of it to other countries.
But last month Gazprom halted plans to develop a new arctic gas field, saying it couldn’t justify the investment now, and its most recent financial report showed profits had dropped by almost 25 percent. ……
…….. watchers in Europe already believe Russia is bankrolling environmental groups that are loudly opposing plans for fracking in Europe, which could cut down on Russia’s natural gas market.
“I’ve heard a lot of rumors that the Russians were funding this. I have no proof whatsoever,” she said, noting that many critics give the rumors credence because Gazprom owns media companies throughout Russia and Europe that have run stories examining the environmental risks of fracking.
Gazprom dismissed such conspiracy theories, saying that “nothing could be more out of touch with Gazprom’s inherent interests,” because the shale boom promotes gas as an abundant, affordable energy source.
http://online.wsj.com/article/APa101793a7eb4445dad3f3f797b5faa45.html
Tags: Gazprom, Hydraulic fracturing, Natural gas, Russia, Shale gas
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