The Shale Gale Advantage
- Published: Thursday, 30 January 2014
- Author: Maurice Smith
In another indication of how the dividends of horizontal drilling and multistage fracturing has rippled through the North American economy, giving it a competitive advantage as other jurisdictions struggle to duplicate its success, the International Energy Agency has warned the European Union will not be able to compete on energy costs for at least another two decades.
While we have heard a lot about the resurgence in those sectors that are energy- or petrochemical-intensive in recent years due to the surging oil and gas production brought about by multistage horizontal fracking, now we are seeing competing jurisdictions begin to calculate the real cost of dealing with that new reality, and perhaps asking how they can speed up their own shale boom.
As reported in the Financial Times (Energy price gap with the US to hurt Europe for ‘at least 20 years’), Europeans face natural gas import prices about three times the U.S. level and industrial electricity costs about twice as high, a structural situation that could last much longer than was previously thought.
While Great Britain appears ready to embrace the shale gale, other countries, like France, have banned application of the technology while some with early promise, like Poland, have been disappointed in initial efforts to tap the resource.
IEA chief economist Fatih Birol did note, however, that it was not Europe’s low-carbon initiatives that has created the disparity, but rather the high cost of imported power sources. Rather than see it as a struggle between being competitive and fighting climate change, he said the continent can address the problem in other ways that may include greater energy efficiency as well as using nuclear power and even boosting shale gas production.
While it’s too soon to say how successful other jurisdictions will be in tapping the resource--such as China, which is thought to have world-leading shale potential but lacks North America's infrastructure and expertise—it is no longer too soon to conclude the shale boom has greatly benefitted not only producers but the entire economy in its birthplace of North America.
