Monday, February 15, 2010

More on International Shale and Implications

Bloomberg.com published an article last week based on a research report by JP Morgan about the potential for European shale and the impact of North American shale gas on the world market.  The unknowns about the potential for European shale gas abound, but it's not keeping the major oil companies from striking deals for large quantities of acreage across Europe.  It's becoming a minor drama with the question of whether or not Europe can become more energy self-sustaining and the impacts to Russia's Gazprom (which recently suspended its Arctic Shtokman field by three years because of demand-related unknowns). 

One thing that I keep thinking is that with the potential for shale gas worldwide and the development of monster projects in Australia, Qatar, Papua New Guinea, the world likely will be well/over-supplied with natural gas.  What that means to us in the U.S. is that we will have to eat our own cooking.  In other words, there likely won't be a good export market for U.S. shale gas, especially over the Atlantic, the closest point of departure for most shale gas.  We will not be able to over-produce and have the export market absorb the excess.  Demand in the U.S. will have to increase to support the potential level of production from shale fields.

No comments: