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Shale Gas: Changing The Global Energy Market

1137 words - 5 pages

It is clear today that for at least the next 20 years natural gas will be a
key energy vector in Europe. Increased consumption and reduction of
European reserves is pushing countries, governments and companies to all
find a more efficient and economically viable energy resource. Like any
major new energy source, shale gas has the ability to confer massive wealth
on some countries — and take it away from others. It has become a global
phenomenon. Extensive and successful extraction in the United States has
sparked other global regions in exploring the potential held within this
possibly new lucrative energy source. The U.S. domestic natural gas
production was previously in decline but following advances in drilling
technologies – horizontal drilling and hydraulic fracturing – production rates
have boomed. The trend is predicted to continue with the U.S Energy
Information Administration (“EIA”) forecasting that by 2035 over 50% of
onshore natural gas production will be accounted for by shale gas
(Continental Economics 2012)1.
The increase in shale gas production has changed the balance of
energy markets regionally and globally. It alters supply and demand levels,
impacting on surrounding energy sources. Just a decade ago in the United
States companies were arranging to invest in facilities for liquified natural
gas. This was to combat the rise in demand for natural gas and the realisation of diminishing domestic supplies. However shale gas boomed
changing investment and production rates in other energy sources and
locations, especially offshore Gulf of Mexico. ‘Gulf gas production has
dropped from 24% of U.S. gas production in 2001 to 9% today’2 and
predicted to diminish almost completely. This is a clear indicator how in this
region shale gas has completely shifted the primary production of natural
gas from offshore to onshore. Will this similar shift occur in Europe? It is
difficult to say as shale gas exploration is still in its infancy. In the United
States the boom in shale gas was so extensive that it is difficult to translate
the effects to the European energy market. For a similar change to occur it
will be proportional to the commercial viability and extent of success which
this unconventional energy can achieve on different soil. If we were to
predict the offshore impact of a shale gas boom then the North Sea oil and
gas market would surely be impacted. I believe that a similar decline as seen
in the Gulf of Mexico would occur similarly in the European offshore market,
resulting in reduced investment and activity in the North Sea oil and gas
industry.
The shale gas boom, termed by some “shale gas revolution”, is all well
and good for the United States. It created energy security and power.
However the question facing the European energy market is will shale gas’
success ‘across the pond’ be mirrored in Europe.
Personally such success and profitability would be difficult to translate
on to European soil. A combination of factors ranging...

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