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<nettime> US to become 'net energy exporter'
Felix Stalder on Fri, 11 Jan 2013 09:14:06 +0100 (CET)


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<nettime> US to become 'net energy exporter'



It's hard to wrap one's head around the number of possible
implications this shift in energy extraction has. One thing seems
clear, oil/gas production will not peak any time soon. So neither
the breakdown of fossil fuel civilization is taking place, or will
increased oil/gas prices drive the shift towards renewable energy
sources.

So, things are likely to continue the way they are. Not really a
sustainable path, isn't it.

Felix



US to become 'net energy exporter'
Last updated: 7 January 2013

http://www.aljazeera.com/indepth/features/2013/01/20131514160576297.html

Shale gas boom rewrites geopolitical rules, as US is set to produce
more petroleum than Saudi Arabia within a decade.

Some industry veterans believe it's the biggest development in the
energy game since 1859, when the first US oil well gushed from beneath
the earth in Titusville, Pennsylvania.

In changes that would have been unthinkable just five years ago, the
US is set to become a net energy exporter in the next few years,
thanks to the controversial process of fracking that is re-wiring
geopolitics and the world of energy.

The practice of shooting steam and chemicals into shale rock
formations to unlock energy sources previously considered marginal has
"changed the world", according to one lawyer with more than 40 years
of experience negotiating natural gas contracts.

"We are talking about increases [in natural gas production] of 15
to 20 percent per year," George Washington University law professor
Richard Pierce told Al Jazeera. "The US is now 100 percent independent
in natural gas and within the next half a dozen years [North America]
will be independent in oil. It will become a global supplier, rather
than a demander, in a hurry."

'Once-in-a-lifetime experience'

New technologies to access hard-to-reach fuels mean that, in 2012, the
United States experienced its largest rise in annual oil output since
the middle of the 19th century, according to data from the US Energy
Information Administration (EIA) released in December. Shale gas is
a fossil fuel trapped inside formations of shale rock. Some of these
formations also contain oil.

The expected 760,000 barrel-per-day increase in US crude oil
production in 2012 is the largest rise in annual output since the
beginning of US commercial oil extraction in 1859, an EIA official
said in a statement.

Fracking controversy

"This is a once in a lifetime thing we are experiencing now," Paul
Faeth, a senior fellow with the CNA research organisation, told Al
Jazeera. "The chemical industry is moving back to the US [because of
cheap gas] and demand will increase because of low prices."

The gas boom has led to about $90bn in new investments in related US
industries over the past two years, including steel manufacturing,
petrochemicals production and fertiliser fabrication, according to Dow
Chemical's calculations.

Since 2005, more than $125bn has been spent on shale extraction,
including drilling and purchasing land, by the 50 largest US oil and
gas companies, according to a study by Ernst and Young.

High prices over the past decade, the flow of petroleum from east
to west, and the gush of money the other way has allowed Russia to
re-assert its international clout and Gulf states to build up massive
sovereign wealth funds. The shale boom has the potential to derail
those trends.

In 2011, members of the Organisation of Petroleum Exporting countries
(OPEC) earned $1,026bn in net oil export revenue, a 33 percent
increase over 2010, the US Energy Information Adminisiration reported
in May. If the price of oil drops because of new supplies, or if
natural gas starts to eat into demand for traditional crude, oil-rich
nations could potentially find themselves significantly less well-off.

"There will be significant impacts for security and global politics,"
Faeth said of the shale boom.

Blue-eyed 'sheikhs'

Thanks largely to fracking, the US is set to overtake Saudi Arabia and
Russia to become the world's biggest oil producer by 2017, according
to a November report from the International Energy Agency (IEA).

Should gas-dependent leaders, including Russia's Vladimir Putin or the
Emir of Qatar, be worried? Will the wealth and power of steely-eyed
ex-KGB agents or white-robed sheikhs be overshadowed by a rebirth of
the American oil man - a new breed of Beverly Hillbilly?

"In the medium term, I think Qatar and Russia are okay," Frank Asche,
professor of risk management at the University of Stavanger in Norway,
told Al Jazeera. "Not [just] because they sell to customers on
long-term contracts, but because the infrastructure is there."

Transporting natural gas around the world is more difficult than
moving oil. Russia has pipelines running to Western Europe, while
Qatar - the world's largest natural gas exporter - has shipping
terminals in key Asian markets.

Oil has a single, global price. But because of transportation
challenges, the cost of natural gas varies widely between markets:
Japan pays more than five times as much for natural gas compared with
the US, according to some estimates. But that could change as new
reserves are found and technologies advance.

"I think we are moving closer to a global natural gas market," Asche
said. "It's only a matter of time, I think, until you see something
like a big super-tanker that can carry LNG (liquefied natural gas)
around the world."


Fault Lines: Fracking in America

In the short-term, when prices are dependent on geography, the
US is hardly alone in tapping into shale formations for domestic
consumption. Other states that traditionally imported much of their
gas, including Australia, Argentina, South Africa, Poland and China
are also looking to cash in on the shale boom. But for now, the US is
benefiting the most from the recent gas gush.

Water 'crisis'

Environmentalists and some analysts, however, caution that jubilant
predictions from a country that consumes some 25 percent of the
world's oil will run into environmental constraints including global
warming and a lack of fresh water.

"There is no question that fresh water is going to be a serious
concern… the water crisis will be the next big crisis people will have
to confront everywhere in the world in the next few decades," Pierce,
the energy lawyer and professor, said. "Limits on fresh water, to a
certain extent, will be the determining limit on fracking capability…
how serious a limit is hard to say."

Extracting gas from one well through fracking takes about five million
gallons of water, the equivalent of between 800 and 1,300 truckloads,
said energy consultant Faeth. Over its lifespan, an average well
produces more than 4 billion cubic feet of gas equivilent - enough
energy to power about 16,000,000 homes for one day. Mixed with
chemicals, much of the water ends up contaminated after being used in
the fracking process. One well will often need to be fracked up to 18
times, drastically increasing water contamination.

"The industry is not that transparent; we don't know exactly how much
water is being used in different places," Lorne Stockman, research
director of advocacy group Oil Change International, told Al Jazeera.
"Public discomfort with the fracking boom is growing, especially in
states like Ohio… I can't say if it will come to a head."

Despite concerns about water quality, energy companies and supporters
of unconventional gas extraction say the process is good for the
environment, as it means "dirty" coal could be replaced by gas in
power plants and other facilities.

The jury is still out on whether that's correct.

A study released in the journal Nature earlier this month found that
fracking operations in Utah and Colorado leak about nine percent of
the total methane contained in the wells. Methane, the chief component
of natural gas, is a far worse contributor to global warming compared
with carbon dioxide, and the figure of nine percent claimed by the
study is higher than previously thought.

"The methane emissions matter a lot in the broader scheme of things,"
Faeth said. "If the study is right, the impacts of unconventional
gas [on the climate] would not be positive compared to coal… [For
environmental problems] gas will not be the long-term solution."

The fracking process, which forces steam and chemcials into rock
formations, has also been known to cause earthquakes in Ohio, the UK
and other regions.

Pressure on renewables

The gas boom could actually hurt sustainability in the long-term, as
investment capital needed to finance research into solar, geothermal
and wind energy is diverted to drill for gas in middle America.

"You can't separate climate change from discussions about global
security. We have far more oil, gas and coal than we can afford to
burn if we are going to avoid catastrophic climate change."

- Lorne Stockman, Oil Change International

If natural gas prices remain reasonably stable, banks can get a
guaranteed return on capital invested in extraction, making the
shale game a reasonably safe bet that is popular with Wall Street.
New, renewable technologies, on the other hand, often take years of
research before they come to market and a return on investment is
not guaranteed. Often pioneered by small start-ups, the next energy
game-changer could miss out on funding opporunities, as the big
players are busy tapping shale deposits.

In some respects, the industry has been a victim of its own success in
the short-term; natural gas prices in some areas are down more than 50
percent since the middle of 2008, due to new supplies coming into the
market.

"In the power sector, cheap gas has hurt renewables to some degree,"
Faeth said.

Through 2013, analysts do not expect a lot of wells to be drilled
in new fields, as producers focus on oil development and exploiting
existing wells. This slight downturn, however, is unlikely to last for
too long.

If prices stay low, power plants and petrochemical facilities are
likely to buy more gas to fuel their industries, thus leading to more
demand and higher prices. The key element over the long-term is that
major reserves have been unlocked in an area previously thought to
have hit its "peak" production, analysts said.

'Leave it in the ground'

Traders in New York and wildcat drillers in Pennsylvania might be
celebrating the newly minted resources, as are security hawks who
relish the idea of reducing US energy dependency on the Middle East.

But there is near-universal consensus among scientists and
policymakers that these new resources should be left in the ground.

"No more than one-third of proven fossil fuels can be consumed prior
to 2050 if the world is to achieve the two degrees Celsius goal" -
the limit for averting catastrophic climate change - according to
International Energy Agency data released in November. The IEA is
hardly Greenpeace, and predictions from the IEA, an industry-backed
body, should be taken seriously, environmentalist campaigners said.

Leaving massive amounts of cheap natural gas untouched, however, will
be nearly impossible for politicians in the US and beyond who are
keen to jumpstart recession-battered economies and end dependence on
foreign energy sources.

"The advantages gained geopolitically [for the US] by these new
sources are small compared to the disadvantages of remaining dependent
on oil as a source of energy given the threat of climate change,"
Stockman said.

"You can't separate climate change from discussions about global
security. We have far more oil, gas and coal than we can afford to
burn if we are going to avoid catastrophic climate change."





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