There are two new forms of energy that arrived in a big way in the last few years to potentially transform global energy. They are Shale oil and gas. These reserves have only become commercially viable within the last
decade, following some technological breakthroughs which allow the recovery of gas and oil from these large rock formations, sometimes many kilometres underground. This is a recovery of oil and gas from what is essentially a rock by a process known as fracking. Fracking itself has been around for a number of years but there are several innovations in the process that allowed both Shale oil and gas to be extracted in viable quantities. Add to this a significant amount of new exploration and these new reserves are truly game changing.
In America alone it has doubled the reserves of gas that are available for extraction from within continental America. It has seen the price of gas drop from $12 a unit to around three dollars a unit for the last few years. Shale Gas is simply a massive game changer that could well see the US grow very strongly in the next decade as it substantially reduces its reliance on Middle Eastern oil and provides the US cheap energy. Some predict that the US could, in the next 15 to 20 years go from importing about 15 million barrels a day from the rest of the world to only a importing about 3 million barrels a day – this at a time when the overall energy needs of the country will increase along with general growth in the economy. These massive reserves which are found in great basins under huge swathes of America are waiting, essentially untapped, to replace a significant amount of the US oil and other energy needs at potentially a much lower cost. It is also good for global warming as the carbon emissions from burning gas for energy are about half those of coal and oil.
Like wise oil reserves from these unconventional sources known as Shale or tight oil could create a paradigm shift in the oil world. Not only are new reserves being found but previously unrecoverable oil from traditional reserves could be commercially recovered thereby substantially increasing global oil reserves. One report says the US could produce 11.6 million barrels per day of crude oil and natural gas liquids by 2020, making the country the second largest oil producer in the world after Saudi Arabia, overtaking the other powerhouse of global energy, Russia. This is without doubt great news for the world’s largest energy consumer. These large increases in potential energy reserves could potentially put off peak oil but due to increases in demand for energy coming from developing countries the price of oil is likely to remain reasonably high.
Breaking the shackles of dependence on the Middle East for its energy needs will be very liberating for America both economically and Geo-politically. It will also be a paradigm shift for global geopolitics as the importance of the Middle East decreases commensurate with production increases with in the Western Hemisphere.