Rising U.S. natural gas
production from shale formations has already played a critical role in
ability to wield an “energy weapon” over its European customers, and
this trend will accelerate in the coming decades, according to a new Baker
Institute study, “Shale Gas and U.S. National Security.” The study,
funded by the U.S. Department of Energy, projects that Russia’s natural gas
market share in Western Europe will decline to as little as 13% by 2040, down
from 27% in 2009.
“The geopolitical repercussions of expanding U.S. shale gas production are going
to be enormous,” says Amy Myers Jaffe, the Wallace S. Wilson Fellow for
Energy Studies and one of the authors of the study. “By increasing
alternative supplies to Europe in the form of liquefied natural gas (LNG)
displaced from the U.S.
market, the petro-power of Russia,
Venezuela, and Iran
is faltering on the back of plentiful American natural gas supply.”
The study concludes that timely development of U.S.
shale gas resources will limit the need for the United
States to import LNG for at least two to three decades,
thereby reducing negative energy-related stress on the U.S. trade
deficit and economy. By creating greater competition among gas suppliers in
global markets, shale gas will also lower the cost to average Americans of
reducing greenhouse gases as the country moves to lower carbon fuels.
The Baker Institute study dismisses the notion, recently debated in the U.S. media,
that the shale gas revolution is a transitory occurrence. The study projects
that U.S. shale production will more than quadruple by 2040 from 2010 levels of
more than 10 billion cubic feet per day, reaching more than 50% of total U.S.
natural gas production by the 2030s. The study incorporates independent
scientific and economic literature on shale costs and resources, including
assessments by organizations such as the U.S. Geological Survey, the Potential
Gas Committee, and papers of the American Association of Petroleum Geologists.
“The idea that shale gas is a flash-in-the-pan is simply
incorrect,” says Kenneth Medlock III, the James A. Baker III and Susan G.
Baker Fellow for Energy and Resources Economics and co-author of the study.
“The geologic data on the shale resource is hard science and the
innovations that have occurred in the field to make this resource accessible
are nothing short of game-changing. In fact, we continue to learn as we
progress in this play, and it is vital that we understand and embrace the
opportune circumstances that shale resources provide. U.S. policymakers should not get
diverted from the real opportunities that responsible development of our domestic
shale resources present.”
Other findings of the study include that U.S. shale gas will:
- Reduce competition for LNG
supplies from the Middle East and thereby
moderate prices and spur greater use of natural gas, an outcome with
significant implications for global environmental objectives.
- Combat the long-term
potential monopoly power of a “gas OPEC.”
- Reduce U.S. and Chinese dependence on Middle East natural gas supplies, lowering the
incentives for geopolitical and commercial competition between the two
largest consuming countries and providing both countries with new opportunities
to diversify their energy supply.
- Reduce Iran’s
ability to tap energy diplomacy as a means to strengthen its regional
power or to buttress its nuclear aspirations.
The study is available on line at http://www.bakerinstitute.org/publications/EF-pub-DOEShaleGas-07192011.pdf/view.