The pro-drillers are all a twitter about recent articles which claim Russia is “bankrolling” a plan to end shale gas. Run for your lives, the Russians are Coming! Where’s Joe McCarthy when you need him?
Not surprising, the pro-drillers hyperventilating and salivating over the article failed to read past the headline or the first couple of paragraphs.
Experts Believe Russia Is Bankrolling A Plan To End Shale Gas, Kevin Begos, Associated Press | Oct. 1, 2012, 10:12 AM
Excerpt (emphasis added): Like falling dominoes, the drilling process called hydraulic fracturing, or fracking, is shaking up world energy markets from Washington to Moscow to Beijing. Some predict what was once unthinkable: that the U.S. won’t need to import natural gas in the near future, and that Russia could be the big loser.
“This is where everything is being turned on its head,” said Fiona Hill, an expert on Russia at the Brookings Institution(1), a think tank in Washington. “Their days of dominating the European gas markets are gone.”
Reading further down the article:
Excerpt (emphasis added) : But one top Gazprom executive said shale gas will actually help the country in the long run. Sergei Komlev, the head of export contracts and pricing, acknowledged the recent disruptions but predicted that the U.S. fuels wouldn’t make their way to Europe on any important scale.
“Although we heard that the motive of these activities was to decrease dependence of certain countries on Gazprom gas, the end results of these efforts will be utterly favorable to us,” Komlev wrote in an email to the AP. “The reason for remaining tranquil is that we do not expect the currently abnormally low prices in the USA to last for long.”
In other words, if the marketplace for natural gas expands, Russia will have even more potential customers because it has tremendous reserves.
Komlev even thanked the U.S. for taking the role of “shale gas global lobbyist” and said Gazprom believes natural gas is more environmentally friendly than other fossil fuels.
Excerpt (emphasis added): James Diemer, an executive vice president for Pace Global, an international consulting company based in Virginia, believes that shale gas costs more to extract than the current market price. Pace, which recently released a report called “Shale Gas: The Numbers vs. The Hype,” has been studying shale gas for Gazprom and other clients.
The article alludes to rumors of Russia backing environmental groups, but gives no specifics as to which groups or amounts of financial backing or who in Russia is involved. It’s basically a splashy headline to sell papers.
Because the Sky is Pink, let’s take a look at another article:
Shale gas: the view from Russia | by Dmitry Orlov | May 8, 2012 | Energy Bulletin
The official shale gas story goes something like this: recent technological breakthroughs by US energy companies have made it possible to tap an abundant but previously inaccessible source of clean, environmentally friendly natural gas. This has enabled the US to become the world leader in natural gas production, overtaking Russia, and getting ready to end of Russia’s gas monopoly in Europe. Moreover, this new shale gas is found in many parts of the world, and will, in due course, enable the majority of the world’s countries to achieve independence from traditional gas producers. Consequently, the ability of those countries with the largest natural gas reserves—Russia and Iran—to control the market for natural gas will be reduced, along with their overall geopolitical influence.
If this were the case, then we should expect the Kremlin, along with Gazprom, to be quaking in their boots. But are they? Here is what Gazprom’s chairman, Alexei Miller, recently told Süddeutsche Zeitung: “Shale gas is a well-organized global PR-campaign. There are many of them: global cooling, biofuels.” He pointed out that the technology for producing gas from shale is many decades old, and suggested the US turned to it out of desperation. He dismissed it as an energy alternative for Europe.
Gazprom – Europe Recent History
At the height of winter, in January 2009, Russia cut off natural gas supplies to Ukraine, and therefore much of Europe, as tensions mounted between the two nations over gas prices.
Supplies were resumed about a month later after Ukraine agreed to up the subsidized rates it was paying — and overall disruption was kept to a minimum .
However, the cut-off highlighted just how dependent Europe was on Russian Gas, and is still dependent as around 40 per cent of Europe’s gas imports come from Russia.
To make things more interesting the European Commission’s Competition Commission has launched an antitrust investigation into Gazprom (Russia’s Natural Gas Corporation).
Gazprom faces EU anti-competition probe | BBC News | September 4, 2012
The commission said it was concerned Gazprom “may be abusing its dominant market position”.
It will look at whether the firm restricts the free flow of gas across member states, prevents diversification of supply, and prices gas unfairly.
Gazprom said: “Let them investigate.”
The commission said that, if established, Gazprom’s practices “may constitute a restriction of competition and lead to higher prices and deterioration in security of supply.
“Ultimately, such behaviour would harm EU consumers.”
The probe follows inspections by the commission of gas companies in many EU countries in September 2011.
Per FTI Consulting (2) Russian, the EU and Energy (2011)
Emphasis added: page 3 – In order to reach the goals set forth in the Energy 2020 strategy and the Energy Roadmap 2050, Europe must find a way to wean itself off Russian energy dependence. The Energy 2020 strategy commits European leaders to acquire 20 percent of their energy needs from renewable sources such as biomass, hydropower, wind, and solar. The ultimate goal, as outlined in the Energy Roadmap, is reducing carbon emissions by over 80 percent by 2050. These are lofty goals, and cannot be presently accomplished with the course that Europe is set on. The first step is to avoid getting locked in to Russian energy supplies, a task made difficult by the lack of viable, large-scale alternatives. However, Europe does contain a natural resource that has been, until recently, uneconomical to harness.
SHALE POTENTIAL: Shale gas in itself is not a path to energy independence, as long-term production in Europe is unproven. Even in the United States, the leader in shale gas production, output data goes back only 20 years. This being said, shale gas provides Europe with a transitory energy source that will first diversify its energy sources, and second, allow for breathing room to move towards the Energy Roadmap 2050 goals and the ultimate goal of developing renewable sources of energy as the primary sources. Although Europe has not produced a drop of LNG domestically, the EU’s gas supply has already benefited from shale gas. Cheap natural gas destined for an oversupplied US market has re-routed to Europe, providing competition for the more expensive Russian supply. This greater availability of cheaper short-term and spot market gas means that renegotiations of terms between Gazprom and its European customers will be more frequent and Europe will have more bargaining power in determining the price, volume, and length of these energy contracts.
There is no clear-cut path that will magically lead Europe to energy independence by the middle of the century. The European Union as a whole and each member state individually must begin to lay the groundwork needed to achieve this goal now. The first step of this process is breaking free of Russian energy dependence, diversifying energy imports, and utilizing available alternative domestic sources. With these projects underway, the European Union will have the breathing room needed to begin implementing policy to further the goals outlined in the Energy Roadmap.
The Directive 2009/28/EC on renewable energy, implemented by Member States by December 2010, sets ambitious targets for all Member States, such that the EU will reach a 20% share of energy from renewable sources by 2020 and a 10% share of renewable energy specifically in the transport sector.
It also improves the legal framework for promoting renewable electricity, requires national action plans that establish pathways for the development of renewable energy sources including bioenergy, creates cooperation mechanisms to help achieve the targets cost effectively and establishes the sustainability criteria for biofuels.
On 31 January 2011, the European Commission (EC) presented its Communication showing that the 2020 renewable energy policy goals are likely to be met and exceeded if Member States fully implement their national renewable energy action plans and if financing instruments are improved. It also stresses the need for further cooperation between Member States and a better integration of renewable energy into the single European market. Estimates indicate that such measures could lead to 10 billions Euros savings each year.
Renewable energy in the EU: which countries are set to reach their targets? | Ami Sedghi | Tuesday 19 June 2012 | guardian.co.uk
Energy obtained from renewable sources is estimated to have contributed to 12.4% of the European Union’s (EU) overall energy consumption in 2010, up from 11.7% in 2009, according to latest figures published this week.
Sweden had the highest share of renewable energy in total consumption at 47.9% in 2010. Latvia, Finland and Austria all recorded results of over 30%. Malta, Luxembourg, the UK and the Netherlands lagged behind with the lowest shares in 2010.
The estimates by Eurostat, released during the EU Sustainable Energy Week (18 to 22 June 2012) which promotes energy efficiency and renewable energy, show how far some countries have still to go to reach their individual targets. The bar chart above shows the share by country for 2010 and also the 2020 objectives.
Targets were set for all member states by the 2009 Directive on renewable energy. The EU target for 2020 is to establish a 20% share of total energy consumption from renewable sources. Factors such as the different starting points, renewable energy potential and economic performance of each country are taken into account in the targets.
If Russia has anything to “fear”, it’s not from US Shale gas, it’s from the same thing which has US Oil/Gas corporations shaking – TRULY CLEAN and RENEWABLE energy sources.
Meanwhile, Gazprom has just signed a 20 year deal with Gail India LTD.
Under the terms of the agreement, GAIL will receive 2.5 million tonnes of LNG sourced from Gazprom’s own production facilities and global trading portfolio, they said in a statement.
The price GAIL pays the Russian gas giant will be based on an oil-indexed formula and the gas will be delivered to Indian LNG import terminals at Dahej, Dabhol and Kochi.
“We are looking forward to working together with GAIL to help meet India’s expanding gas demand whilst securing a long-term market for Russian gas,” Vitaly Vasiliev, CEO of Gazprom Marketing & Trading, said.
Gazprom operates the Sakhalin-2 LNG plant, the only such enterprise in Russia, with annual production of 10 million tonnes. It plans to double LNG capacity by building another plant in the Pacific port of Vladivostok.
Given PIOGA’s roll out of “green slime” PR project, and now attempting to connect concerned citizens to “Russia” with all the imagery that invokes is just another step in the PR game and show the extent of the Natural Gas industry’s desperation to change public perception.
(1) Brookings Institution: On its website the organization traces its origins “to 1916, when a group of leading reformers founded the Institute for Government Research (IGR), the first private organization devoted to analyzing public policy issues at the national level. In 1922 and 1924, one of IGR’s backers, Robert Somers Brookings (1850-1932), established two supporting sister organizations: the Institute of Economics and a graduate school bearing his name. In 1927, the three groups merged to form the Brookings Institution, honoring the businessman from St. Louis whose leadership shaped the earlier organizations.”
Initially centrist, the Institution took its first step rightwards during the depression, in response to the New Deal. In the 1960s, it was linked to the conservative wing of the Democratic party, backing Keynsian economics. From the mid-70s it cemented a close relationship with the Republican party. Since the 1990s it has taken steps further towards the right in parallel with the increasing influence of right-wing think tanks such as the Heritage Foundation.
(2) FTI CONSULTING has strong ties to Energy-in-Depth/IPAA. See: Energy-in-Depth Series.