Shale Gas Shifting Global Energy Map
Location: New York
Date: 2013-05-14
Pick up a newspaper, turn on the radio or tune into the
nightly news broadcast and you're bound to hear a reference to shale
gas and its impact on the shifting global energy map.
“The United States is enjoying an energy bonanza thanks to shale
gas, making it a magnet for industry, reducing import dependence and
challenging Europe as it battles to dig itself out of recession,"
wrote Reuters's Alexandra Hudson this February.
The International Energy Agency (IEA) forecasts that natural gas
could eventually displace oil as the largest single fuel in the U.S.
energy mix by 2030. Predictions such as these make it clear that
shale gas is one of the most rapidly expanding trends in domestic
oil and gas exploration and production, however, it should be noted
that the U.S. shale gas boom is still in its relative infancy and
certain questions remain.
Shale gas refers to gaseous hydrocarbons that are trapped in
fine-grained sedimentary rock. Directional drilling techniques
combined with hydraulic fracturing (or fracking) allow greater
access to reserves in shale basins. Studies estimate that up
to 80 percent of natural gas wells drilled in the next decade will
require hydraulic fracturing to properly complete well setup.
However, at this time there is continued debate over the potential
impact of this activity on the environment, particularly groundwater
contamination.
The hydraulic fracturing process has revitalized the U.S. oil & gas
industry and has helped increase employment in the sector by 53%
over the last 7 years, according to the American and Common Wealth
Foundation. ??
The World Economic Forum has recently released an updated study on
energy and economic growth in the U.S., which shows that shale gas
is essential to both: The shale gas industry alone employs
600,000 people in this country and the oil and gas sector is
projected to grow at 6.9 percent through 2015.
Technologies developed to produce shale gas have been transferred to
the production of oil-rich shales with great success. In
addition to further expanding employment opportunities, the transfer
of these advancements offers the U.S. access to cheaper domestic oil
and could reduce the need for imports from the Middle East.
Shale gas also presents many opportunities to those offering project
financing solutions. As the country continues to shift away
from coal and towards natural gas as fuel for new power stations,
financing will be needed to support the development of these natural
gas-fired power plants.
Financing will also play an important role in developing the
necessary infrastructure for the U.S. to export natural gas in the
form of liquefied natural gas (LNG).
Matthew Brown of Bloomberg commented in January that “As many as 16
applications for LNG export projects from Texas to Maryland and
Oregon are being considered by the U.S. Department of
Energy...Buyers from Tokyo to London are seeking supplies in the
U.S., where prices are less than a third of those in Europe and a
fifth of Asian costs." For these purposes, large,
capital-intensive gasification facilities, pipelines and vessels
need to be constructed to support the expansion of the LNG
industry.
Overall, the development of shale gas on a global basis has the
potential to boost worldwide gas supplies and help reduce market
costs. For the U.S., the shale gas boom is still perhaps only
a potential game changer, however, if realized, the economic
benefits will be significant.
Kirk Edelman, is Chief Executive
Officer, Project & Structured Finance -- Energy President and CEO,
Siemens Financial Services, Inc.
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