U.S. Is Overtaking Russia as Largest Oil-and-Gas Producer

Photo: AFP

The Wall Street Journal              
Russel GOLD  and Daniel GILBERT 

The U.S. is overtaking Russia as the world's largest producer of oil and natural gas, a startling shift that is reshaping markets and eroding the clout of traditional energy-rich nations.

U.S. energy output has been surging in recent years, a comeback fueled by shale-rock formations of oil and natural gas that was unimaginable a decade ago. A Wall Street Journal analysis of global data shows that the U.S. is on track to pass Russia as the world's largest producer of oil and gas combined this year—if it hasn't already.

The U.S. ascendance comes as Russia has struggled to maintain its energy output and has yet to embrace technologies such as hydraulic fracturing that have boosted American reserves.

"This is a remarkable turn of events," said Adam Sieminski, head of the U.S. Energy Information Administration. "This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn't in a million years have dreamed about."

High energy costs hamper EU industry - Commission

REUTERS

* EU industry share of GDP sliding as U.S. re-industrialises
* Energy commissioner seeks 'industrial compact', industry summit
* Industrial growth needs to be green, high-tech

EU nations will be left far behind the United States unless they address high energy costs that are worsening the continent's industrial decline, the European Commission said on Wednesday.

To tackle the issue the Commission, the EU executive, is preparing a policy document for later this year followed by an EU summit in February 2014 focused on industry, EU sources said.

Industry Commissioner Antonio Tajani said part of the answer is an industrial compact "to address high energy prices, difficult access to credit, a drop in investments, lack of skills and red tape".

He drew a comparison with the fiscal compact signed in March 2012 by 25 EU leaders with a view to forcing euro zone countries to keep their budgets in surplus or balanced.

Economic output generated by EU industry has fallen to 15.1 percent of GDP from 15.5 percent last year, short of the 20 percent informal goal the European Union should aim for by 2020, the Commission said in a report on industrial competitiveness.

The United States, meanwhile, has been re-industrialising with the help of a cheap-energy boom following the exploitation of shale gas.

Some industry, especially the chemical sector for which gas is a feedstock as well as an energy source, has been relocating to the United States to take advantage of it.

The Commission has said natural gas prices in the European Union are roughly four times higher than in the United States. The gap could narrow, especially if the United States exports more, but that is complicated in terms of domestic politics.

Russia's Energy Bully Takes a Fall

Alexandros Petersen       Foreign Policy

Just a few years ago, Gazprom had Europe eating out of its hand. But now, the energy giant -- and Putin's power base -- looks set for hard times.

After years as Eurasia's energy bully, Russia's state-controlled natural gas monopoly, Gazprom, is getting a taste of its own medicine. Even as Gazprom seeks to build the tallest skyscraper in Europe as its new headquarters in St. Petersburg, pressure from Russia's neighbors led to a 15 percent decline in the company's profits last year, eating into the state budget. Moscow's single-minded focus on gas exports in an effort to become, in the words of President Vladimir Putin, an "energy superpower" has crippled its ability to adapt to profound changes in the global energy landscape -- from the shale gas revolution in North America to the dynamism of new market players such as Azerbaijan. Having spent the last decade making enemies in Central Europe and Central Asia, Gazprom and Russian decision-makers are now reaping what they have sown. 

Policymakers in European capitals could be forgiven for a little schadenfreude right now. Building on the legacy of Soviet gas exports to the Eastern Bloc and parts of Western Europe, Putin and his cohorts in the Kremlin have, for years, used Gazprom as a cudgel in Moscow's relations with European Union member states. Over the past decade, well over a third of EU gas imports have come from Russia, with a number of Eastern European states almost completely dependent on Gazprom. Bulgaria, for example, receives more than 95 percent of the natural gas it consumes from the company. Millions of European consumers shivered through the winters of 2006, 2008, and 2009 when Gazprom cut off supplies in order to squeeze middlemen in Ukraine, Belarus, Georgia, and Moldova who had had the temerity to buck Moscow's policies.

Too early for shale gas boom in Turkey: chief economist

World Bulletin

It would be a big surprise if Turkey experienced a significant turnaround in shale gas production, similar to that in the US, in the short term, the International Energy Agency's (IEA) chief economist said at a conference on Friday in İstanbul, adding that it is too early to say whether shale gas production will be financially viable for the country.

Speaking on the sidelines of the 19th Energy and Environment Fair and Conference (ICCI), Fatih Birol said Turkey has “golden opportunities to be a crucial player in global energy markets within the next five years.”
“The issue of shale gas production is very new in Turkey. There are serious studies in this regard; however, we have not yet learned whether this type of unconventional energy will be competitive enough in Turkey,” Birol explained.

The IEA official added that despite early feasibility studies, it is not still clear if the cost of shale gas extraction will be cheaper when compared to simply importing natural gas from suppliers in the region. “We would welcome a US-like shale gas revolution in Turkey in the short term; this, however, would be a big surprise for us,” he added.

Excitement over the prospect of trillions of cubic meters of shale gas in Turkey has kept the country's agenda busy in recent years as these estimates mean that Turkey, which is almost completely dependent on foreign countries for fuel resources, could finally be energy independent.

The Dark Side of Energy Independence

The New York Times                Benjamin Alter and Edward Fishman      

JUST as the world was writing off America as a declining power, the country now finds itself on the cusp of realizing one of its longstanding goals: energy independence.

A wave of new technologies has made it possible to extract oil and gas from shale rock formations, and the results have been astonishing. By some estimates, the United States is on track to overtake Saudi Arabia as the world’s largest oil producer as early as 2017, start exporting more oil and gas than it imports by 2025, and achieve full energy self-sufficiency by 2030.

American politicians in both parties have long dreamed of energy independence — not only for its potential economic benefits, but also because it could free the United States from the vicissitudes of the outside world.

Last March, President Obama said that new energy sources and technologies would make America “less dependent on what’s going on in the Middle East.” The Romney campaign, meanwhile, argued that energy independence would mean that “the nation’s security is no longer beholden to unstable but oil-rich regions halfway around the world.”

But that is a fantasy. While the latest energy revolution will be a boon to America’s economy, it will in no way allow the United States to turn its back on the rest of the world. 

Shale gas tempts cash-strapped Europe

Paul Ames     GlobalPost.com

It's been more than 20 years since the last coal was dug out of the ground by the once-thriving mining communities of Belgium's Campine region.

Now there's hope of new riches beneath the area's sandy heathland.

The Campine is one of dozens of regions across Europe believed to be sitting on significant reserves of shale gas — the underground fuel that has revolutionized energy supply in the United States over the past decade.

"The potential in Europe could be huge," says Professor Richard Davies, a specialist at Britain's Durham University and advisor to the industry. "We've got all the right sort of rocks."

Shale gas now accounts for more than 20 percent of US natural gas production, up from barely 1 percent in 2000. By the 2030s, it's share is expected to be over 50 percent.

The United States is on course to become self-reliant in gas. Its heating bills are already four times lower than European levels.

Now prospectors are sharpening their drills in Europe and some governments are hoping for a US-style shale bonanza.

There are estimates that Britain could be sitting on enough reserves to meet its gas needs up to the end of the century.

Unconventional gas in Europe: Frack to the future

The Economist

SHALE gas and oil are propelling America to energy self-sufficiency and giving its economy a handy boost. Europe’s shale-gas deposits are said almost to match those across the Atlantic (see map). Will the old continent soon enjoy the same benefits?

The mismatch between the hope and reality for European shale gas was neatly summarised by a deal sealed on January 24th that will allow Shell to probe Ukraine for unconventional gas. Ukrainian politicians talked of a $10 billion investment. Shell took a more cautious line. The firm certainly hopes to find plenty of gas in eastern Ukraine. But it will first do some seismic testing and sink 15 test wells. If the results are disappointing it could, like ExxonMobil in Poland, walk away.

It is too early to tell whether Europe’s shale beds will really prove as bountiful as America’s. Only a handful of test wells have been sunk. Exxon may have quit Poland, the country where exploration has gone furthest, but other firms are having more joy. Determining which countries might enjoy a bonanza of cheap gas is highly speculative, a recent report by Deutsche Bank points out: many things are in flux, including extraction technologies and production rates.

Turkey's shale gas hopes draw growing interest

TPAO's shale gas drilling area Sarıbuğday-1 in southeast Turkey

Orhan Coskun and Evrim Ergin     Reuters


Several firms eye exploration licences, official say
Southeastern region around Diyarbakir main prospect
Major reserves could reduce reliance on imported energy


ANKARA/ISTANBUL (Reuters) - Turkey is hoping to find shale gas reserves big enough to help reduce its energy import dependency and is in talks with foreign firms about widening exploration after encouraging early signs, industry officials said on Monday.

The government is hoping that major shale gas reserves lie in basins in its southeast, east and western Thrace regions and officials say several firms, including smaller players already looking for conventional oil and gas, are keen to explore.

With domestic gas consumption rising and its geographic location meaning it is also well-placed to supply international markets, major exploitable reserves could be a game changer for Turkey's economy and highly lucrative for whoever finds them.

"We are keen to exploit this method and we must make economic use of shale gas," Energy Minister Taner Yildiz told Reuters, saying it would be a priority for the near future.

Shell is drilling for shale gas in the region around the southeastern city of Diyarbakir, while Canadian firm TransAtlantic Petroleum is also active in the region.

Turkey holds its breath for shale gas and syngas

AA

Turkey’s anticipation to be freed of soaring import dependency due to rising energy consumption feels more realizable as shale gas reserve searches and synthetic gas production continue

New findings are spurring hopes in Turkey’s search for new energy resources, following the energy minister’s recent announcement that indications of possible shale gas resources had been found in the Central Anatolian provinces of Ankara, Konya and Kırşehir.

Both the rising domestic gas consumption forcing import dependency and Turkey’s geographic location linking it as a supplier to international markets suggest that the discovery of major reserves could be a great relief for the Turkish economy.

Turkey has been anticipating the normalization of world energy markets, which have recently seen significant price divergences. However, in the meantime it is also seeking to benefit from the reserve potentials in its southeastern, eastern and western regions, Energy Minister Taner Yıldız said during Turkey’s International Shale Oil and Gas Conference held in Ankara.

Shell has been drilling around the southeastern city of Diyarbakir for shale gas, but Turkey has also accelerated its operations in Central Anatolia.

America: The Next Energy Superpower?

Anthony FENSOM*     THE DIPLOMAT

This year, the U.S. will likely surpass Russia and Saudi Arabia as the largest liquids fuel producer in the world.  

From previously challenging the “tyranny of oil,” newly inaugurated U.S. President Barack Obama enters his second term in office as leader of a potential oil and gas superpower.

According to BP’s Energy Outlook 2030, unconventional sources will make the United States virtually energy self-sufficient by 2030, largely thanks to the shale gas revolution.

“The U.S. will likely surpass Russia and Saudi Arabia in 2013 as the largest  liquids producer in the world (crude and biofuels) due to tight oil and biofuels growth…. Russia will likely pass Saudi Arabia for the second slot in 2013 and hold that until 2023. Saudi Arabia regains the top oil producer slot by 2027,” the London-based oil and gas giant said.

The U.S. Energy Information Administration (EIA) has forecast that the nation could become a net exporter of liquefied natural gas (LNG) as early as 2016, and a net exporter of total natural gas (including via pipelines) by 2020.

For the Asia-Pacific region, potential U.S. gas exports could undercut higher priced gas from Australia and elsewhere, resulting in lower fuel bills for major importers such as Japan and South Korea.

However, fast-growing China and India are expected to become even more reliant on imports to satisfy domestic demand, BP said in its report.