DOE-Commissioned Study Highlights Role that U.S. Can Play in Helping Other Countries Responsibly Develop Shale Resources
Climate Change Insights 2016-12-05
Last week, Rice University’s James Baker’s Institute for Public Policy released a Department of Energy-commissioned study entitled “Shale Gas and U.S. National Security.” Consistent with other recent studies, the report concluded the new U.S. domestic shale development offers significant benefits, including reduced liquefied natural gas (LNG) imports and lower natural gas prices.
The report also found that new U.S. shale development can limit Iran and Russia’s share of the global natural gas market, and therefore, reduce these countries’ ability to use their resources as a political tool. According to the report, U.S. production is already affecting global markets; LNG supplies previously intended for the U.S. are now being diverted to Europe and Asia. This development is lowering natural gas prices for Europe, while also providing these countries with an alternative to Russian pipeline supplies. The report argues that these developments represent a “major paradigm shift” and can allow for Europe to more aggressively influence Russia’s foreign policy.
The study’s “reference case” assumes, however, that all known global shale gas resources can be developed with existing commercial technologies and open tendering practices. As noted by the study, one potential impediment globally to development is water scarcity. For instance, the study argues that water scarcity could make production in Western China cost prohibitive. With its increasing demand for natural gas, China’s reliance on supply from Russia will likely be heightened, particularly if shale development in China is limited.
As the report notes, there is fortunately a role for the U.S. to play in helping countries develop technologies to manage water impacts of shale development. Last year, the State Department launched the Global Shale Gas Initiative to help countries responsibly develop their shale resources. The initial meeting last August included 50 delegates from 20 countries, including China, Poland, India and Chile. The meeting also included U.S. producers and service companies, and representatives from 13 federal agencies, including EPA, Department of Energy and the Bureau of Land Management. This initiative can help provide these countries with information on practices to reduce the overall environmental footprint of development, particularly focusing on technologies to recycle and reuse water.
This initial meeting was an important first step, but it’s important that the State Department continue to devote time and resources into the Global Shale Gas Initiative. Federal agencies are reassessing their priorities as they prepare for significant budget cuts. Helping other countries responsibly develop their shale resources, which can reduce the influence on countries like Russia and Iran, should be an important priority, and the State Department should remain committed to programs like the Global Shale Gas Initiative that can help achieve this goal.