Should the United States join OPEC?
All of this is good news, but it will come true at scale only if these oil and gas resources can be extracted in an environmentally sustainable manner. This can be done right, but we need a deal between environmentalists and the oil and gas industry to lock it in - now.
Says Hal Harvey, an independent energy expert: "The oil and gas companies need to decide: Do they want to fight a bloody and painful war of attrition with local communities or take the lead in setting high environmental standards - particularly for "fracking," the process used to extract all these new natural gas deposits - "and then live up to them."
Higher environmental standards may cost more, but only incrementally, if at all, and they'll make the industry and the environment safer.
In the case of natural gas, we need the highest standards for cleanup of land that is despoiled by gas extraction and to prevent leakage of gas either into aquifers or the atmosphere. Yes, "generating a kilowatt-hour's worth of electricity with a natural gas turbine emits only about half as much CO2 as from a coal plant," says Harvey, and that's great. "But one molecule of leaked gas contributes as much to global warming as 25 molecules of burned gas. That means that if the system for the exploration, extraction, compression, piping and burning of natural gas leaks by even 2.5 percent, it is as bad as coal."
Hence, Harvey's five rules for natural gas are: Don't allow leaky systems; use gas to phase out coal; have sound well drilling and casing standards; don't pollute the landscape with brackish or toxic water brought up by fracking; and drill only where it is sensible.
David Fuller's view These are eminently
sensible, commercial rules because the oil companies which abide by them are
much more likely to receive lucrative contracts to develop non conventional
(shale) oil and gas reserves in other countries, as well as in the USA and Canada.
The US is already paying much lower prices for natural gas than other countries, as you can see from these weekly charts for the USD-denominated NYME natural gas contract and the GBP-denominated ICE natural gas contract. It is also paying less for crude oil as you can see from the WTI contract versus Brent, both of which are quoted in USD.
One sentence in Thomas Friedman's article needs to be qualified, in my opinion:
Such an effort would support domestic oil and gas production and give the U.S. a real competitive advantage over countries forced to pay high prices for imported energy - nations such as China, European Union members, and Japan."
Japan is currently in a vulnerable position because having idled most of its nuclear industry it is now almost entirely dependent on imported coal, natural gas and oil. Most Eurozone countries are in a similar position. France is a notable exception - for now - but is talking about decommissioning its nuclear stations which provide over 70 percent of the country's energy. Moreover the Eurozone turned its back on shale gas, so far. China has abundant shale reserves of oil and gas, which it is only just beginning to tap. If China can find enough water to develop its shale resources, it too could become energy self-sufficient in the next decade.
Global shale reserves of oil and gas could easily fuel stronger GDP growth than is generally expected today, in the decades ahead. For this reason Fullermoney maintains that energy prices will be lower in the next decade than they are today, at least in real (inflation adjusted) terms. Affordable energy, an exponential rate of technological development and rapidly expending middle classes in the growth economies are three very important reasons for being long-term bullish.