It’s time to get real about the prospects for shale oil and gas development transforming global markets, U.S. Energy Secretary Ernest Moniz said yesterday.
At an event organised by Columbia University’s Center on Global Energy Policy, Moniz cautioned that while newly expanded estimates of physical resources are real, and he noted U.S. natural gas production has eased pressure on European liquefied natural gas imports.
But expectations about future unconventional resource development and trade growth in the rest of the world should be tempered.
It’s a big unknown, how much and when, but certainly if the world’s unconventional gas resources are developed aggressively — nominally, resource in place in China is bigger than the U.S. for shale, Argentina has got some very attractive looking reservoirs, Eastern Europe.
Now a lot of this was very enthusiastic a few years ago. A few below-ground realities and above-ground realities have taken a little bit of the bloom off the rose in some places, but again there is the potential for dramatically shifting the flows of natural gas globally, that will play out over next decade.
Moniz actually played down the potential for shale oil development to remake markets even further.
I think sometimes, especially on the oil side, the assumptions about big geopolitical shifts just because of that tend to be perhaps overplayed. I would note for example that we get very little of our imported oil from the Middle East. It doesn’t change our security posture in that part of the world. I mean that’s just a fact right? There are many reasons — one is we have many more security equities than just oil, but secondly the U.S. has unique national security and foreign policy responsibilities in the global order. And to the extent to which our key allies are subject to strong energy security problems, that inevitably influences our freedom of action in national security and foreign affairs.
So I think it’s a much more complicated story. Bottom line: if unconventional resources are developed strongly over the next decade there is no doubt global markets will change, shifts will be different, infrastructure requirements will be different, and we’ll se how that plays out.