Feb 13

Shale gas could be paving the way for an oil-less society

By Trevor J. Murphy shale gas No Comments »

A recent article for PriceOfOil.org suggests current developments in both the oil and natural gas sectors could be heralding the “final chapters of the oil age.”

On the heels of a world economic crisis, the shift from oil to other energy sources is proving to be an entrenched reality across the globe.

Coupled with announcements by oil giants such as BP and industry analysts such as the International Energy Agency that the global demand for oil is on the verge of peaking, other energy resources – like shale gas – are taking over.

A major reason people are abandoning oil is its price. The Organization of the Petroleum Exporting Countries (OPEC) has warned that the slow pace of global economic recovery in 2010 would lead to a subdued improvement in oil demand this year.

Though the global economy suffered over the last year, oil prices remained stagnant while people were forced to cut costs wherever possible, in some cases causing them to look elsewhere for energy sources.
The allure of “cleaner” gas is also drawing people to gasses like shale because it does not emit as much pollutants into the air when consumed nor does it use as much energy, water and resources to extract.

The shift is causing major problems for the oil industry.

This week French oil giant Total said more closures to refineries around the world due to “fuel product overcapacity,” and last month Russian gas mogul Gazprom announced plans to re-evaluate a large Arctic gas extraction project because of the boom in shale gas (read Russian Gas Giant Feeling The Effects of Shale Gas).

SOURCES:
PriceOfOil.org: “Is an oil-less recovery on its way?”
PriceOfOil.org: “Peak Demand Will Happen Before Peak Supply”
Reuters: “An oil-less recovery dims the future for oil”

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Jan 29

Russian Gas Giant Feeling the Effects of Shale Gas

By Trevor J. Murphy energy independence 1 Comment »

The exponential potential for shale gas exploration overseas and the shale boom in the United States is forcing one of Europe’s gas giants to re-evaluate what was once considered to be a largely ambitious gas extraction project in the Arctic.

Gazprom, Russia’s biggest gas company and Europe’s biggest gas supplier, said this week they would have to reassess its plan to develop the 3.8 trillion cubic meter Shtokman gas field in the Barents Sea.  Together with partners Statoil and Total, Gazprom has planned to send as much as 90 per cent of Shtokman’s extracted natural gas to the North America, but the company admits that alternative gas suppliers and quickly developing markets for shale gas in the US and abroad is putting Shtokman development plans in jeopardy.

Andrew Neff, an energy analyst at HIS Global Insight says shale gas is “playing havoc” with Gazprom’s prices and projects.

“The potential spread of the shale gas production revolution to Europe, which is believed to have significant untapped reserves of its own, would clearly have a profound impact on Gazprom’s production and marketing strategy,” he told The Guardian.

In an interview with Russia Today television in December, a Gazprom spokesman called shale gas “a joke” and dismissed concerns that a growth in the production of shale gas would pose a threat to the company’s foreign sales.

But the reassessment of the Shtokman fields demonstrates that Gazprom is now taking the threat of shale gas and energy independence very seriously.

Over the past two years, gas exports and revenues fell dramatically for Gazprom. While high monopolistic prices and European dependency on the Moscow-based company certainly played a role in causing country’s to look elsewhere for gas, the role of shale and the desire for energy independence by some countries in Europe such as Poland has undoubtedly been affecting Gazprom.

Oddgeir Danielson, an oil and gas expert in the Norwegian Barents Secretariat, said the repeated postponement of the Shtokman project illustrates current uncertainties in that market and highlights Gazprom’s conflict with shale.

Directors at Shtokman Development will meet again on February 5, 2010 to agree on a new marketing plan for the offshore field. There is a possibility the directors may also delay a final investment decision on the venture.

SOURCES:
Alaska Dispatch: “Gazprom eating crow on shale gas?”
Barents Observer: “Gazprom might abandon Shtokman”
The Guardian: “BP chief hails American breakthrough in gas supplies from shale rocks”
The Moscow Times: “Shtokman Meeting to Consider Gas Buyers”
Business Insider: “Gazprom: Shale is a joke, and it can’t possibly compete with gas”

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