There is a new source of energy which is really a primary focus of the State Department right now,” said David Goldwyn, U.S. State Department Coordinator for International Energy Affairs. “And that’s natural gas”.

In an interview with Voice of America, Goldwyn says natural gas from shale is an excellent source of energy for many nations “so they’re not dependent on one country or one pipeline.”

The State Department recently hosted the Global Shale Gas Initiative to discuss expanding the safe use of shale gas. Twenty nations as well as US federal, state and local regulators met in Washington, D.C to discuss the importance of shale gas development for the 21st century.

In addition to helping the United States wean itself from its dependence on oil, the Obama administration believes that increased shale gas development will help reduce greenhouse gas emissions.

Other studies have also concluded that increased shale gas production in the United States and Canada could also help lower the price currently charged by Russia and Persian Gulf countries.

“This is not only a huge boon for energy security and economic development,” said Goldwyn, “but also, potentially for climate security if countries are able to move away from older coal plants and to natural gas instead.”

As Coordinator for International Energy Affairs at the State Department, David Goldwyn is at the center of U.S. energy security policy. His office supports initiatives that reduce U.S. dependence on foreign oil and also mitigate the impact of climate change.

Source: Natural Gas for Europe

US officials believe that developing shale gas would provide fast-growing energy sectors in these countries with a cleaner alternative to coal, according to AFP.

Aside from being an untapped natural resource that experts say could dominate the gas market by 2030, shale gas could also lead to energy independence for some.

“The main reasons for doing it are national security and climate security,” David Goldwyn, the State Department’s coordinator on international energy affairs, said of the conference. “For China and India, it’s both climate security and economic security, because they have large demand for resources and the market is volatile.”

The US has been leading the shale gas boom, becoming one of the first countries to access the unconventional gas. Last year, the United States overtook Russia for the first time in decades as the world’s top gas producer.

Over the past few months, China has reached out to shale experts in the US to learn about shale development, and India’s biggest private oil and gas company, Reliance Industries, has invested nearly 3.5 billion dollars in joint ventures for fields in the United States.

READ THE FULL ARTICLE

While Washington dithers, Pennsylvania rolls up its sleeves and gets busy.

Recent headlines are trumpeting the global promise of shale gas, while closer to home, the “big boys” are jumping into the shale pool with both feet. And their efforts are finding endorsement. None other than Ernest J. Moniz, director of MIT Energy Initiative, declared, “Much has been said about natural gas as a bridge to a low-carbon future, with little underlying analysis to back up this contention. The analysis in our study provides this confirmation – natural gas truly is a bridge to a low-carbon future.”   
 
A voice cries in the wilderness

In an article in the Wall Street Journal, Houston’s own Amy Myers Jaffe foretold that in her well-researched opinion, shale gas is poised to rock the world. Strong words, even from a petroleum optimist. Yet Jaffe, as always, has done her homework.

There are still plenty of detractors who maintain that shale plays simply are the “fad-du-jour,” capturing the imagination of a few bold independents, but certainly nothing to get excited about. But facts are facts. And the facts that purportedly will tilt this old globe on its axis are formidable. Natural gas is both abundant and economical. Natural gas emits half the carbon of coal for the same number of Btus of energy. Natural gas has the potential to defang the foreign oil cartel that has attempted to hold America hostage for years.

Natural gas is not uniquely American, so other energy-starved countries can look for the prize in their own backyards – countries like Poland, Romania, Sweden, Austria, Germany, and Ukraine, according to Jaffe. Everyone remembers the gas stranglehold Russia applied to Ukraine in the dead of winter to force its former ally to accept its terms. With widespread shale gas development, these countries and many others will not be forced to kowtow to energy blackmail again.

Interestingly, Jaffe points to China, arguing that if the country is able to develop its own domestic energy resource in the form of shale gas, it may be less beholden to the petroleum overlords on issues like human rights. The idea is that when a nation is purchasing its life blood from a bad actor, it is understandable to turn a blind eye to conditions in the vendor’s country. Seems like I have heard this argument before, only applied to America’s own insatiable thirst for illegal drugs. If we could cut off the demand, the cartels and all the coca and poppy seed growers would be out of business in a heartbeat. What a concept!

Someone is listening

Apparently, articles like Jaffe’s have not fallen on deaf ears. Another famous northeastern journal, the venerable New York Times, published a story on July 8, 2010, announcing the big boys of the business are placing their bets on the Marcellus shale. Using the opportunity to report Halliburton’s major commitment to the Pennsylvania prize in the form of a new field operations center on a 24-acre site near Williamsport, Pa., the Times developed a story on recent major shale play investments by household names here in Texas.

According to the story, the recent shift to shale gas surprised the US government, which had been resigned to importing LNG from God knows where to make up for declining supplies from our continental neighbors. After the events of the last few months, it is no surprise to me that the US government is surprised about anything. Simply tune in to C-SPAN and watch the deer-in-headlights expressions on our congressional delegates’ and administration functionaries’ faces.



While the government prefers to act on hypotheses and speculation, look at a few facts. Big Boy No. 1, who needs no further introduction, started the ball rolling with the purchase of XTO Energy Inc. for US $31 billion. Shell recently announced it would purchase East Resources Inc. for $4.7 billion. Norwegian “Krone jewel” Statoil palled up with Chesapeake Energy Corp. in a deal for $5.5 billion, and today, the companies control 1.6 million Marcellus acres. India’s giant, Reliance Industries, plunged into the pool with a $1.6 billion investment to match its partner, Atlas Energy Inc., which reportedly contributed $1.7 billion. The dominoes are falling, and despite low commodity prices, the Marcellus is starting to resemble an Oklahoma land rush.



Natural gas represents a giant step toward reduced carbon emissions and less greenhouse gas effects on our climate. If the environmental people really are serious about their cause, they could do their part to rock the world by endorsing natural gas as the fuel of the present. Endorse switching power generation to gas, along with residential heating and industrial energy use. This could have an immediate effect on our nation’s economy while starting the process of weaning us away from foreign oil. And maybe, just maybe, lead us down the path to renewable energy resources.

Source: E&P

The talks also include buying a part stake or partnering Quicksilver for one of its major projects called the Horn River Basin assets in British Columbia, the newspaper said, citing unidentified sources familiar with the development.

Quicksilver, which is estimated to have sales of $900 million this year, currently has two large shale basins with proven reserves of around 2.4 trillion cubic feet, the paper said.

Source: Reuters

“Much has been said about natural gas as a bridge to a low-carbon future, with little underlying analysis to back up this contention. The analysis in this study provides the confirmation – natural gas truly is a bridge to a low-carbon future,” said Ernest Moniz, director of the MIT Energy Initiative, in a statement.

The sudden shale boom throughout the US has changed the energy picture for the country, the Christian Science Monitor writes, and could very well be the key – if used along side other natural resources such as wind and solar sources – to reducing greenhouse emissions by 2050.

While the report sheds a positive light on shale, Moniz emphasizes the word “bridge” in his above statement.

“In a carbon-constrained world, natural gas will become a larger part of the energy mix,” he says. But in the longer term, the US will need to shift to “essentially zero-carbon” sources, so “we better not get mesmerized by gas either.”

READ THE FULL ARTICLE

Under the threat of cutting off gas supplies last Thursday, the state-run Gazprom, flexed its monopolistic stronghold on European gas when Russian President Dmitry Medvedev ordered Belarus to pay off a $200 million gas debt by week’s end owed to Russia for gas increases throughout 2009.

Mostly as a protest to these increases, but also in part due to strained relations between the two countries, Belarus refused to pay the debt saying it was prepared to give up control of its Beltransgaz pipeline and an oil refinery in exchange for the right to pay domestic Russian prices for oil and gas.

By Saturday, talks between the two countries were at an impasse, leading Russia to declare a reduction of gas exports to Belarus by 15 per cent if the debt wasn’t settled.

By Monday, that threat was a reality. Following an order from President Medvedev, Gazprom began gradually reducing gas supplies to Belarus. Belarus, for their part, said the debt would be paid in full within a two-week period and once again offered their pipeline and oil refinery, but Russian officials said they were more interested in cold hard cash rather than a barter of “pies or pancakes, cheese or butter.”

Tuesday, Gazprom Chief Executive Officer Alexei Miller said the Russian gas giant would further reduce its supplies to Belarus, totaling a 30 per cent cut.

The move was enough for Belarusian president Aleksander Lukashenko, who halted all transit of Russian gas to Europe via Belarus, which accounts for nearly one fifth of Russian gas exports abroad.

Belarus’s First Deputy Energy Minister Eduard Tovpinets said this halt was also due in part to an outstanding $200 million debt on Russia’s behalf for transit fees for deliveries to Europe. The Russian response was another cut in supplies, cutting deliveries by 60 per cent this time.

By Wednesday, EU Energy Commissioner Gunther Oettinger said countries throughout Europe were beginning to feel the effects of the gas war, pointing out that Lithuania had only received half its daily gas deliveries. That afternoon, Belarus said it had paid its debt to Gazprom, but demanded Russia pay up for the gas transit fees.

The crisis came to an end today when Russia made that payment, Belarus lifted the ban against Gazprom gas transport and the Russian gas monopoly announced the full restoration of gas supplies to Belarus.

The whole debacle solidified the importance of energy independence, not only in Europe but also in North America. Reducing the need for outside energy sources – such as crude oil imports in the United States – helps countries avoid external conflicts and ensures a higher degree of energy security.

With the US seeing a huge boom in unconventional resources like shale gas over the past few years, that independence could fast become a reality. The same analysts that are predicting shale gas could greatly reduce European dependence on Russian natural gas also predict that shale gas could drastically increase the US’s gas reserves, potentially leading to their independence.

Estimates say that shale gas represents 100 years of energy supply in the US alone at current consumption rates.

A 2009 New York Times article called shale “the biggest energy innovation of the decade” and just last month the Globe and Mail called shale gas “the next energy game changer.”

SOURCE:
Natural Gas For Europe

Alok Agarwal, cheif financial officer at Reliance Industries, says that the US is a hotbed of activity for shale gas and its industries right now, and is the key to reducing dependence on oil and energy from areas such as the Middle-East.

‘‘Shale gas represents a growing source of energy and is expected to constitute 20% of the overall gas production in the US over the next 10 years,” he tells The Economic Times.

READ THE FULL ARTICLE.

Thanks to developments in the shale gas industry, countries like the United States are accessing more of their own resources at home instead of relying on giant multinational gas giants to provide them with fuel.

Spectator writer George H. Wittman also shows how European countries are on their way to securing energy independence thanks to shale gas. Developments in Poland, Austria, Germany, Sweden, France and Romania are inviting exploration from companies such as ExxonMobil and ConocoPhillips who have already started test drilling in Eastern Europe and slowly breaking away from the stronghold of Russian gas giant Gazprom.

READ THE FULL ARTICLE

According to a recent report by industry expert John-Laurent Tronche appearing in the Fort Worth Business Press, during the first three months of 2010, there were more than $2 billion of Marcellus Shale deals, including foreign investments–a record for unconventional oil and gas plays.

The Marcellus Shale is a formation of marine sedimentary rock located in much of the Appalachian Basin of eastern North America. The rock formation is named for a distinctive outcrop near Marcellus, New York. The Marcellus Shale runs across the New York’s Southern Tier and Finger Lakes regions, northern and western Pennsylvania, eastern Ohio, western Maryland, most of West Virginia and extreme western Virginia. In eastern Pennsylvania, the Marcellus bedrock lies across the Delaware River into New Jersey. Consequently, the shale is relatively close to some of the largest consumer and industrial markets for energy in the United States.

On April 21, Mumbai-based Reliance Industries Ltd. bought a 40% interest in shale gas acreage owned by Atlas Energy, Inc., based near Pittsburgh, Pennsylvania, as part of its $1.7 billion joint venture with Atlas. Reliance is the largest private sector company in India. The reported terms of the deal were $340 million in cash on closing and an additional $1.36 billion to fund part of Atlas’s drilling costs over 5 ½ years. Atlas’ announcement emphasized that Reliance’s inbound investment would result in a significant number of well-paying jobs for Pennsylvanians. Atlas reported that Reliance also obtained the right to acquire a 40% interest in new parcels plus a right of first refusal should Atlas elect to sell additional acreage in the future. Reliance is paying approximately $14,000 an acre, which is the highest price to date for Marcellus acreage.

Two months earlier, on February 16, Anadarko reported that it had signed its joint-venture agreement with Mitsui E&P USA LLC, a subsidiary of Japan’s Mitsui & Co., Ltd. According to Oil and Gas Eurasia, Mitsui paid $1.4 billion for its share in the venture. Anadarko stated that Mitsui will earn a 32.5% interest in Anadarko’s Marcellus Shale assets by funding nearly all of its development costs through 2013. On a per acre basis. Mitsui paid slightly less than Reliance did for its deal. According to The Wall Street Journal, an RBC Capital Markets study calculated the 2010 average price for an acre in Marcellus Shale at $5,650.

The trend is continuing. In the first week of May, Dallas, Texas-based independent energy business EXCO Resources signed a Marcellus Shale joint venture for $950 million with BG Group, Plc, a natural gas company based in Reading, England. BG Group is an integrated natural gas company with operations across five continents. Under the terms of the transaction as disclosed by EXCO, BG Group acquired a 50% interest in EXCO’s Marcellus Shale assets, principally in Pennsylvania and West Virginia. The operations of the joint company will be based in Pittsburgh. Under the terms of the deal, EXCO and BG will each participate in further acreage that the other acquires in the same region. These global partners have a history. In June of 2009 BG Group has acquired an interest in EXCO’s shale gas resources in Texas and Louisiana for $1.3 billion.

The 2010 cross-border transactions added momentum to the investment that has been building since November 2008. In that month Oklahoma-based Chesapeake Energy Corp. formed a joint venture with Norway’s StatoilHydro for the exploration and development of natural gas in the Marcellus region. In that deal, Chesapeake sold a 32.5% interest in its Marcellus Shale assets for $3.375 billion and retained 67.5% working interest. Statoil paid $1.25 billion at closing and agreed to fund 75% of Chesapeake’s share of drilling and completion expenditures until its $2.125 billion obligation has been funded.

SOURCE:
USA Inbound Deals: “International Players Vie to Invest in Marcellus Shale Projects”

Below are major shale gas sector acquisitions since 2009:

MARCH 2009:

– Independent Canadian oil exploration firm TriStar Oil & Gas and Crescent Point Energy Trust agreed to buy Talisman Energy Inc‘s lands in the prolific Bakken shale region of Saskatchewan and Montana for C$720 million ($567 million).

MAY 2009:

– Talon Oil & Gas LLC bought 60 percent of Denbury Resources Inc‘s natural gas assets for $270 million.

– Independent oil and gas company Quicksilver Resources Inc. agreed a joint venture with Italian energy giant Eni to develop its Barnett shale properties in Texas.

As part of the deal, Eni agreed to buy a 27.5 percent stake in Quicksilver’s Alliance leasehold interests in the Fort Worth basin for $280 million.

JUNE 2009:

– British gas producer BG Group paid Dallas-based Exco Resources Inc $1.3 billion for an interest in shale gas resources in Texas and Louisiana.

The companies said each would own 50 percent of a venture to which EXCO is contributing 120,000 acres of land in the Haynesville shale gas area and associated gas infrastructure.

NOVEMBER 2009:

– Denbury said it would buy Encore Acquisition Co for $3.2 billion, creating a company with 426 million barrels of oil equivalent in proved reserves.

The acquisition would allow Denbury to leverage its enhanced-oil-recovery business into Encore’s properties in Wyoming, Montana, and North Dakota, and would give it a large stake in the Bakken shale on the U.S.-Canada border.

DECEMBER 2009:

– Ultra Petroleum Corp said it would pay about $400 million to an unnamed private company to buy 80,000 net acres in the burgeoning U.S. Marcellus Shale region, giving it about 250,000 net acres and a potential for 1,800 net drilling sites.

FEBRUARY 2010:

– Canada’s Progress Energy Resources Corp agreed to buy certain northeast British Columbia Foothills assets for about C$390 million ($366.2 million) from Suncor Energy.

APRIL 2010:

– British gas producer BG Group said it would pay $950 million to buy a 50 percent interest in shale gas assets in Appalachia from EXCO Resources.

By Carl Bagh for Reuters. May 11, 2010

SOURCE:
Reuters: “Key Shale Gas Deals Since 2009″