Unconventional fuels have the potential for creating a new energy dynasty, from countries which have been energy importers, not producers, of the globally most popular forms of energy - oil and gas.
These energy-short democracies, for example, the U.S., most EU countries, Israel, and Japan are currently consumers of energy from the energy-rich countries run by the big guys: Russia, various Middle Eastern states, and Venezuela.
But this energy is about to change within the next decade, according to Nationa Post columnist Lawrence Solomon. (Financial Post, "The energy-short democracies will become top producers," Lawrence Solomon, Nov. 6, 2011)
Unconventional Fossil Fuels are Changing the Energy Landscape
On-going analysis, research and exploration have changed the energy landscape. For example, in the U.S., both oil and gas deposits have been uncovered in shale, rock formations that have trapped the oil or gas, which can now be extracted. The U.S. gas from this source is being developed so rapidly and in so many places, that the domestic price for natural gas has been cut in half.
It is interesting that five years ago the U.S. was about to build major terminals to import gas, now it will become a major gas exporter, in a 'reversal of fortune.' America’s Marcellus Shale formation alone — a natural gas reservoir that lies more than a mile underground beneath Pennsylvania, New York, West Virginia and Ohio — has enough gas to supply the Eastern U.S. for decades.
In the U.K., its first shale gas field was drilled earlier this year, and the deposit is close to half the size of the U.S. Marcellus Shale formation, with enough gas to fuel the entire British economy for decades. Natural gas abounds in several European countries -- France, Poland, Germany and the Netherlands, as well as in the Mediterranean. Cyprus, Greece and Israel are planning to deliver natural gas to the European mainland.
World Store of Natural Gas Estimated at 250 Years
Among the western democracies, there a number of other sources -- Australia has massive amounts of exportable natural gas, along with Canada, Brazil and others in South America. China and other Asian countries also hold vast stores of natural gas, and the the world store of natural gas has been estimated by the International Energy Agency to be enough to last 250 years.
New sources of oil are turning up in a number of countries, in addition to Canada's huge oil sands deposit, which is already providing some oil to the U.S., and will provide up to a million barrels of oil more when the controversial Keystone XL pipeline gets over its environmental hurdles and is finally in operation.
While the U.S. is a major consumer of and importer of oil, this scenario is about to change, with the revelation that the U.S. has in excess of two trillion barrels of "unconventional oil," the largest store in the world. China is next in line in terms of oil in store, with some 350 billion barrels, and then comes Israel with 250 billion barrrels, close to Saudi Arabia’s 260 billion barrels of conventional oil.
In all, there are thirty-five other countries, including 15 in Europe, which are believed to have lesser amounts of unconventional oil, a resource which is increasing as new assessments and new oil discoveries are made.
Energy Prices Will Drop as New Sources Become Available
New energy means revised pricing for the two most popular sources of energy, oil and gas. For example, as the cost of developing unconventional energy resources falls, countries like Israel, which reportedely has developed an unusually clean and efficient drilling technology, will be able to provide oil at $35 (US) to $40 (US) per barrel, which is less than half of the world's current oil price of $90-plus (US) a barrel.
As this new energy model unfolds, the democracies of the world, in particular the U.S. and European countries, will benefit significantly from their capability to extract unconventional oil and gas, because many of them will become energy exporters instead of importers, but mainly because low energy prices will spur their advanced economies.
OiI-exporting Countries Will Lose Revenue
Two countries which stand to suffer financially are Russia, a country that relies on energy exports to meet half of its federal government budget, and Iran. In a new world energy order of sustained low prices, Russia’s predicament would be dire, as would Iran's..
Russia depends on its energy exports to the EU to meet its needs for manufactured goods, for food and for the capital required to maintain its energy infrastructure. Its standard of living would plummet, and it would lose its capability to 'bully' Europe, as it has on previous occasions by threatening to withhold, and then by actually withholding, gas deliveries. A recent study funded by the U.S. Department of Energy, indicates that the market share of Russian gas exports to Western Europe could be cut in half in the coming decades, as new sources of energy come on-stream.
Iran has a high unemployment rate and low wages (millions of Iranians live on $2 (US) or less per day, as well as high inflation and an economy even more energy-dependent than Russia’s. The Iranian government would be hard-pressed to continue to re-buff efforts for its overthrow.
And finally, there is China, which is currently an energy importer with a diversified economy. Like the energy-importing democracies, China will benefit from the unconventional fossil fuels which will eventually be found. This boon will entrench China’s status as an emerging superpower and new energy riches will also promote corruption and entrench the Communist Party’s dictatorial rule. Unfortunately, the fallout from unconventional fossil fuels has a downside - corrupt governments may well become even more powerful and more corrupt, with their newfound wealth.
Sources:
- Financial Post, "The energy-short democracies will become top producers,"Lawrence Solomon, Nov. 6, 2011
Duane Sharp - I am a retired professional engineer (electronics), with over 40 years of writing experience in technology topics, with a focus on the IT ...
