Here’s a stark example of the transformative power of shale: a Gulf petrostate is mulling American gas imports. The United Arab Emirates lays claim to the world’s seventh-largest proven reserves of natural gas, but it’s finding it difficult to resist the allure of cheap American shale gas. The FT reports:
Although countries such as Saudi Arabia, the UAE and Kuwait sit on plentiful gas reserves, they have historically made little attempt to exploit them, relying instead on “associated gas” from oil production to meet domestic needs. […]Last year the UAE announced it would begin building the region’s first permanent terminal for liquefied natural gas tankers, and the country’s energy minister says the country is now looking at investing in North American gas projects in order to secure cheap supplies. […][UAE’s Energy Minister Suhail Mohammed al-Mazrouei said] “there is a logic to have a [gas] contribution from the US and Canada. What is that contribution, whether it is 10 per cent or 5 per cent we don’t know, it is premature to say, but there is a logic.”
To reflect: we’re talking about exporting energy to a petrostate. That’s crazy. And it’s not just the UAE that’s clamoring for American gas; Europe would like an alternative to Gazprom gas, and Asia is desperate for a cheaper source. To reach any of these customers, American gas will need to be liquified, shipped, and then turned back into a gas at its end destination. That series of processes is expensive—it can add about $5 per mBTU—but given America’s gas glut (and subsequent low, low price per mBTU), the economics can still make sense.As America knows well, importing energy makes one to some extent beholden to the interests of the one selling you the oil or gas helping to power one’s country. This healthier energy trade balance brings with it all sorts of knock-on geopolitical benefits, none of which would be possible without fracking. The shale revolution rolls on.