The shifting geopolitics of the shale gas boom

Many from within the environmental lobby and “green” community seem to have already made up their minds to remain dead-set in their opposition to the practice of hydraulic fracturing, which is just plain weird — because the attitude amounts to cutting your nose off merely to get really spiteful with your face. Regardless of the wealth, jobs, and economic growth for which hydrofracking is single-handedly responsible (such mundane material don’t tend to sway the real eco-radicals), the natural gas boom has also been a major player in 2012 marking the United States’ lowest carbon emissions in two solid decades.

And if that doesn’t do it for you, there is an entirely other reason to get behind the natural gas boom: The stuff is everywhere (just this week, Australia figured out that they have a shale source probably larger than Canada’s oil sands), and allowing for further exports and supporting global development has the potential to redraw the geopolitical map and break up some of the influence currently afforded to Russia and the Middle East for their own robust energy production operations.

For example, Russia is the dominant source of natural gas to Europe, providing 50% of European gas.  That dominance provides Russia tremendous political leverage, which it has shown to be very willing to use.  In the recent past, it shut off supplies to the Ukraine after a price dispute and cut deliveries to other countries during bitterly cold winters.  Diversifying Europe’s sources of natural gas would allow central and eastern Europe to fully prosper without the threat of a shut off hanging over their heads.

Before his exit from the Senate, Sen. Lugar suggested that, as well as LNG exports spelling a total win for our economy, they could also come in handy as a geopolitical weapon — and at this exact moment in time, the U.S. is one of the few countries with the infrastructure and technology to really compete on that scale (which is why it makes exactly zero sense that certain protectionist-leaning niche interests and their Congressional allies are still trying to hold up the American companies’ applications for LNG exports). Other countries and companies around the world are exploring whether they wouldn’t like to get in on the economic bounty afforded by shale oil and gas, too… and Russia isn’t partial to that at all.

Russia has demanded that Ukraine pay billions of dollars for failing to import an agreed amount of gas.

The move came just as Kiev has taken a significant step to break free from its reliance on costly Russian gas imports.

The bill was presented as Ukraine signed a deal with Royal Dutch Shell to exploit “unconventional” gas reserves in shale and sandstone that could ultimately involve $10bn-plus in investment, according to a senior official in Kiev.

The Russian demand threatens to cause a third high-profile energy dispute between the former Soviet states after Russia twice cut off gas supplies to Ukraine since 2006 amid squabbles over prices.

Economic benefits, environmental benefits, and the potential to put a damper on Russia and the Middle East’s bullying chokeholds on regional energy markets? What exactly isn’t to like here?

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