Great shale revolution

How the global fuel market has changed

The global gas market has radically changed in the last year: the creation of shale gas production technology, the colossal reserves of which were discovered first in the USA and Canada, and now in Europe, reduced the energy map of the world

In early April, Poland announced that large reserves of shale gas were identified in the country - about 1.36 trillion cubic meters. Their development will begin in May the largest American oil and gas production company Conocophillips. If these data are confirmed by exploration, the total gas reserves in the EU will grow by 47%immediately. Poland will not only completely close its fuel needs, but can also become one of the largest gas suppliers for Europe.
Estonia announced the development of seats, the development of strata, Holland, France, Sweden, and Germany has already begun the development of the reserves. Accordingly, the need of Europe in Russian gas, which is supplied there by Gazprom, will decrease significantly over the next 10 years. According to the director of macroeconomic research of the State Unitary Enterprise of the State Unitary Enterprise, Sergei Aleksashenko, if all European shale gas reserves are confirmed, Gazprom risks losing 25-30% of its European exports (80–100 billion cubic meters per year).

Outdated formulas

Literally before our eyes, if not a great energy revolution, then at least a serious coup. A year ago, a truly absurd situation took place in the European market: the economies of all countries experienced tremendous financial difficulties due to the crisis, which made them save literally every penny, and the price of Russian blue fuel, according to the formulas prescribed in long -term contracts with Gazprom, took off to a record level - $ 500 per thousand cubic meters. Even then, there was talk that the world will certainly find cheaper alternative sources of raw materials - it was assumed that this is a matter of decades. The world coped with this task in less than a year.
“High gas prices have made shale gas production with an economically appropriate enterprise,” explained Mikhail Korchekin, general director of the East European Gas Analysis consulting company. “In just a few years, the United States has improved vertical drilling technology, due to which the resource is mined, and previously considered low -inspection shale gas deposits turned into commercially attractive assets.”
The average cost of shale gas production in the United States is less than $ 180 per thousand cubic meters, the expert says. This is three times higher than the cost of extraction of Russian natural gas. But in America, companies that were able to reduce their costs to $ 100 due to new technologies and gained experience are already working in America. Therefore, the cost of mining the resource will decrease, and the extraction of production will grow: if in 2007 34 billion cubic meters were obtained in the United States, then in 2009 90 billion were already increased. At the same time, gas reserves in the United States grew from 36.8 trillion cubic meters to 52–58 trillion cubic meters.
It is curious that under these conditions, Gazprom still cherishes a dream to capture up to 20% of the American gas market in the next 4-5 years. However, America now does not at all need gas imports, but threatens to become its main exporter. According to the results of 2009, the United States became the new world leader in gas production (625 billion cubic meters), squeezing Russia from the first place in the first place in Russia (583 billion cubic meters).
“Back in 2005, US experts and US authorities said that America was about to turn into the largest consumer of natural gas, because its own reserves in the United States were close to exhaustion. However, the opening of shale gas deposits and the reducing of production technology led to the energy revolution in the North America market. Nobody expected such a development scenario, ”said Edward Chou, senior researcher at the Center for Strategic and International Research in Washington, in the interview of The New Times.
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Gazprom must revise the principles of gas pricing for gas

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Now the “great shale path” of America threatens to repeat Europe. The gas market experts say that the use of progressive American technologies in the Old World will increase gas reserves 9 times that can be technically extracted from the subsoil. According to VP analysts, in the next few years, about 14–17 trillion cubic meters can be added to the already explored European reserves of shale gas.

Myths and realities

It is clear that such a development of events threatens to sharply weaken the European positions of Gazprom. The leaders of the Russian gas company react to the sudden threat of redistribution of the market with irritation, arguing that “too many myths have been folded about the production of shale gas” (deputy chairman of the board of Alexander Medvedev).
Indeed, many preliminary forecasts about shale gas production have yet to be confirmed by deep geological intelligence: “Around the shale topic there is a great sensation raid,” says Edward Chow. “And although representatives of the world's largest oil and gas producing companies express optimism regarding the future extraction of non-traditional sources of natural gas, it is necessary to wait for detailed results of research in reserves of this resource.”
According to preliminary estimates, Canada and the United States have the largest shale gas deposits (23% of global volume). This means that America ceases to be the largest importer of natural gas and will be able to independently provide the current level of hydrocarbons due to non -traditional sources, according to various estimates, for 120-200 years.
Another factor that affects the development of shale gas is the cost of ordinary, natural gas. If prices for it go down, which does not exclude Edward Chow, then there will be much less incentives for the development of deposits for governments and companies.
At the same time, even if at the initial stage of the development of European deposits the cost is at $ 180-200 per thousand cubic meters, for many EU countries it will still be more profitable to invest in their own shale gas than to purchase blue fuel from Russia for $ 500 or even $ 230–240 per thousand cubic meters, as it was in 2009.
“The cost of gas at the Shtokman field is $ 270 per thousand cubic meters. Who needs this gas if in the USA the price of natural gas is already half as much? " - Mikhail Korchekin asks the question. Slanted gas intelligence will increase the share of world hydrocarbons, and Russian reserves will reduce: “It’s scary not that we will lose a share in global gas reserves, but that our deposits are one of the most expensive in the world and are not competitive for investors,” says the expert.

The future of Gazprom

The gas market is on the threshold of cardinal changes: if before that for 10 years, blue fuel only did what has grown in price, now it is quite obvious that the gas would be cheaper for a long period. The new shale deposits, and the active expansion of liquefied gas trade, and the rapid market transfer to spot contracts (with immediate payment and delivery at current exchange prices) work. Gazprom, accustomed to shoot cream in the last decade from the ultra -high price energy conjuncture, is in an extremely difficult situation. The results of 2009 demonstrated this with all the clarity: it turned into a monopoly for a sharp drop in gas production and its sale, the collapse of the shares and an increase in the total debt of the concern to $ 60 billion.
Gazprom should revise the principles of gas pricing: today the price is tied to the cost of oil, while Western companies are guided by the ratio of demand and supply, - Edward Chow believes. - Gazprom contracts are concluded for very long terms (25-30 years), which prevent him from quickly responding to changes in the global gas market. Therefore, the hydrocarbon market in Europe turns out to be very inflexible and is actually not a market in a classic definition. ”
“Gazprom”, if he does not want to disappear from the list of business facilities at one point, a serious update will have to be ahead. The irony of fate: not “evil” liberals and “insidious” oligarchs and not even an omnipotent “world backstage”, but modest Poland and Estonia with their unknown reserves of shale gas, push him to this.

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