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    The Impact of Shale Gas Technology on Geopolitics



Dr. Daniel Fine of MIT discusses how new technology in extracting gas will impact geopolitics and the environment Dr. Daniel Fine of the Mining and...

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The Impact of Shale Gas Technology on Geopolitics

Dr. Daniel Fine of MIT discusses how new technology in extracting gas will impact geopolitics and the environment

Dr. Daniel Fine of the Mining and Minerals Resources Institute at MIT addressed Fletcher students at a talk sponsored by the International Security Studies Program and offered his insights into how the development of new technology will allow the United States to tap vast, previously inaccessible, resources of natural gas that will impact everything from the price of gasoline to the ability of Chinese companies to buy equity in Russian natural gas fields.

The United States has a monopoly on “hydro-fracking” technology. The technology, short for hydraulic fracturing, releases natural gas trapped in shale deposits by injecting the deposits with high-pressure water mixed with sand and small amounts of chemical additives.

According to Dr. Fine, the “cloud over gas” used to be “do we have enough gas?” In 2003, Federal Reserve Chairman Alan Greenspan declared that the United States did not have enough natural gas, and that it would be necessary to import liquid natural gas (LNG). This, said Dr. Fine, was clearly a mistake in the light of the new hydro-facing technology, not only because importing LNG poses a security risk to the United States, but because tapping natural gas from shale represents an economic “bonanza” in “the most [economically] repressed parts of the country:” western New York, western Pennsylvania and West Virginia, areas which suffer from high rates of unemployment, and are estimated to host 490 trillion cubic feet of natural gas. The thousands of jobs that could be created in these areas could stand in the way of President Obama’s pursuit of subsidies for renewable energy.

Substitution away from imported gas by the United States will impact Russia, the world’s largest exporter of natural gas, where gas production is controlled almost exclusively by government-run Gazprom. Moreover, Chevron has signed an agreement with Poland to search for and extract natural gas there, and similar arrangements have apparently been made in Romania. “When Chevron announces that they have gas [in Poland],” Dr. Fine said, “then Russia is shut out,” and will no longer be able to act as a near-monopoly supplier of gas in Eastern Europe.

Seeing the threat to Russia’s interests, Dr. Fine suggested that Putin has de facto “joined the friends of the Earth,” claiming that hydro-fracking will lead to problems with water supply. Beyond that, however, Dr. Fine pointed out that Gazprom has recently acquired the largest gas field in Russia that was not already under its control, and that the location of this field, outside of Irkutsk, near the border with China, gives a clear indication of the direction that Russian policy is headed.

“China is moving towards a gas economy rapidly” to get away from the images and problems associated of coal, said Dr. Fine. China is well aware that its reliance on coal, and the emissions associated with it, not only present an environmental and health threat to its own population, but that China is vulnerable to increasing attacks from Western environmentalist groups as climate change becomes a more prominent political issue. China does not have large gas deposits of its own, and so, Dr Fine suggested, will want to take advantage of Russia’s weaker position vis-à-vis Europe, to demand not only lower gas prices, but also the ability to purchase equity in Russian gas fields, something China has not yet been allowed to do.

Returning to address some of the environmental concerns surrounding shale gas extraction, Dr. Fine said that, in light of the jobs that will be created , and in light of the economic advantages of natural gas—which is cheaper than either coal or nuclear power, and far less expensive than any current renewable technology—it will be politically difficult for any administration to challenge shale gas unless it can be conclusively shown to have adverse environmental effects that outweigh the benefits. Shale gas wells, Dr. Fine said, are only used when an impermeable rock layer surrounds them, so that none of the estimated 5.5 million gallons of water used for extraction can seep into the groundwater. In addition, most wells can recycle their water, and ultimately, “use less water than an average golf course.”

Finally, Dr. Fine predicted that we are not, in fact, entering an era of “peak oil,” that with the new production coming from the Iraqi oilfields, and with new natural gas deposits replacing other petroleum fuels, we can expect to see a decline in world oil prices. He predicted that on April 1, 2017 in Medford, Massachusetts, gasoline will cost barely over $1/gallon at the pump. Whether that prediction proves true or not, it certainly provides something to think about.

By Elspeth Suthers for The Fletcher School

Source: Tufts University