Over the past six years surging U.S. hydrocarbon production from shale has exceeded domestic demand in many cases – leading to the development of export infrastructure. Large volumes of natural gas liquids (NGLs) such as propane are already being exported. Natural gas exports in the form of liquefied natural gas (LNG) are about to start and the recent end to federal restrictions offers the possibility to increase crude exports if they become competitive. A critical assumption behind all these export opportunities is that the U.S. continues to be the only country (except Canada to a lesser degree) to successfully “crack the code” in shale exploitation to produce commercially significant volumes competitively. This assumption would be turned on its head if competing countries like Mexico, China, Poland, Argentina and the U.K. are able to unlock their own shale potential. Today we review RBN Energy’s first Drill Down report of 2016, which considers the many “below-ground” and “above-ground” factors that will determine whether and how quickly, shale development becomes a worldwide phenomenon.
Please be warned: The genesis for this blog and the associated Drill Down report is Chapter 18 of “The Domino Effect”, the newly published book by Rusty Braziel, and as such is intended to be a subliminal promotion for the book. The report expands upon the question posed in the title of Chapter 18: “Does the U.S. Have a Monopoly on Shale?”
Many of the world’s greatest inventors have worked their magic on U.S. soil. In 1887, Thomas Edison invented the phonograph (which led to many popular songs and RBN blog titles) in Menlo Park, NJ; in 1903, Orville and Wilbur Wright flew the first successful airplane near Kitty Hawk, NC; and in 1964, at her family’s Anchor Bar in Buffalo, NY, Teresa Bellissimo covered dozens of chicken wings in her own special sauce, thereby inventing Buffalo wings. Good ideas know no boundaries though, as evidenced by the fact that you can now find very good Buffalo wings in more exotic locales like London, Dubai and Tokyo. The question before us now, though, and the subject of RBN’s new Drill Down report, is whether successful exploitation of shale—pioneered in the late 1990s in Texas’s Barnett Shale by George Mitchell and engineers at his Mitchell Energy—can be followed up by similar successes elsewhere?
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About the song
“Born in the U.S.A.” is the title track on Bruce Springsteen’s iconic 1984 album, which has sold more than 30 million copies and is Springsteen’s best-selling album ever. Other hit singles on the album include “Dancing in the Dark” and “Glory Days.” “Born in the U.S.A.” was the first compact disc ever manufactured in the U.S.; prior to it, all CDs were made in Japan.
Comments
Great post! Houston should be exporting its expertise rather than laying off so many of its shale facturing experts. One element that deserves more attention is how our elected officials have failed to create the above-ground conditions necessary for shale development in places like Ukraine.
In April 2014, when Russia invaded Ukraine, I went on the record (facebook) saying it was about shale gas development and how it threatened Russia's power over Europe if fracturing was successful in Ukraine. Russian nationalism was just a cover story that only really applied to Crimea, and not the Donstek region. Shell and Chevron were leading the development at the time with potentially 1.2 trillion cubic meters of shale gas reserves at stake and a pipeline to Europe already in place.
Here is a detailed article verifying my initial instinct on this one (I am an energy lawyer, not an energy expert). Russia's proxy invasion caused Shell and Chevron to declare force majeure and suspend operations.
http://www.euractiv.com/sections/europes-east/russias-silent-shale-gas-victory-ukraine-317270
As more time passes, more of the world realizes that the Russian military is working for Gazprom's best interests and not in furtherance of Russian nationalism. Kudos to the Obama Administration for approving 7 new or expanded LNG terminals, most of which can aid our European allies achieve energy security by blunting Russia's dominance of the European gas market. But America can do more.
It is sad to see thousands of shale gas development experts being laid off in Houston - their reward for doing their jobs so well. Instead, these experts should be redeployed overseas by their American employers (along with their idled equipment). It is up to our elected officials to create the above-ground conditions that Rusty details. Once that is done, the men and women of Houston know how to address the below-ground conditions. All the better if Houston's energy industry makes a few dollars and keeps up employment in the process.
Exporting fracturing expertise will help Houston get through the current price drought, cement America's position as the world's energy leader, and keep Putin's Russia in check. A win-win-win.
James Cargas
Candidate for US Congress (TX-7)