The balance of energy power is shifting and possibly a lot faster than many people realise, warns Five-Quarter Energy CEO Harry Bradbury.
And the pendulum weight is gas . . . shale gas.
We’ve all witnessed the dramatic events in the US, which five years ago was wondering where future large-scale gas supplies were going to come from and how much they would cost.
Suddenly, thanks to the shale gas revolution, which has also delivered a large oil dividend, the world’s greediest economy is now talking about energy self-sufficiency and re-industrialisation, fuelled by bountiful cheap hydrocarbon energy.
“They’re a long way down that road and intending to go even further towards energy independence, mostly through the use of shale gas,” says Bradbury, whose consultancy firm describes itself as “‘big picture thinkers” in hydrocarbons.
More important than the cheap gas per se is its impact . . . huge positive economic impact now gathering momentum Stateside.
Not only that, Bradbury believes that Middle East energy sages, who have been treating this as a short blip and that the US will eventually have to come to heel because shale gas won’t last, have called it wrong.
“The macro-economic picture that’s emerging from this is that, for long as America is in this privileged position with the kind of oil and gas pricing that it now has, it will indeed usher in a new era of manufacturing, including resurrecting industries thought to be long gone and unable to ever again compete with China and elsewhere,” says Bradbury.
The impacts have been so enormous already that companies outwith the US, and especially European, are now looking to shift operations.
“They are now looking at the States as the venue of choice, and that includes European petrochemicals interests.
“Even though some think the US will become the next exporter of gas, overtaking Opec and Russia, I don’t think that’s the real picture.
“The real picture is that Americans recognise that adding value through its manufacturing industries is the real and huge advantage; not selling cheap gas overseas.
“Simultaneously, the States can clearly demonstrate that, not only can it reduce environmental emissions, which it has, it can reduce power and gas pricing at a stroke, it can sustain an independent energy policy and it can manufacture competitively.
“The obvious conclusion to draw is that other countries which a few years ago you would not have put onto the unconventional hydrocarbon map . . . like Argentina, France, Poland, Sweden and notably China . . . are in fact well endowed. And that includes the UK.”
Bradbury argues that it doesn’t take much nous for such countries to say to themselves, hang on, why should we carry on paying Opec-related prices when we can use our own resources, create new industries, build/rebuild manufacturing?
“Therefore, the likely trend in about five years in my view is that when China accelerates its programme for shale and coal . . . it is doing this now . . . and combines this with other resources that it has, this will deliver the same advantages that the US is already enjoying.
“That means that we will get to a point where the balance of energy power that we’re accustomed to will change rapidly and global supply and demand chains that exist between different countries today may have to be redrawn.
“This will have a knock-on impact into Europe where there is currently significant resistance to the idea of shale gas exploitation.”
“If you’ve got $3 per Btu in the States and $10-12 in Europe and $16-18 in Asia, that’s unsustainable. And nor can Opec compete against the US.”
Bradbury agrees with Energy that, from a UK perspective we ought to be looking at different sources for unconventional gas.
Not only that, but we must not bow down to the NIMBYs that currently threaten progress with onshore unconventionals.
And he warns that it is time the Great British public realised just what a slippery slope the UK is on. If they really knew, perhaps some would remove their blinkers.
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