No Shale For You
Sanctions on Russian Energy Walk a Fine Line
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  • Duperray

    Only one element has been ignored: US traditional fields are exhausted this why, before 2001, production was declining and imports growing.
    But Russia has plenty of un-exhausted fields and may await 20 years before to need to frack. Plenty of time to develop fracking or simply “buy” technology by the many westerners – thirsty for money – will offer under cover.
    In a resource war, Russia has a long term edge.

    • Thirdsyphon

      Buying restricted technology isn’t really that easy; and setting up the industrial infrastructure required to produce and deploy such technology is even harder. During the Cold War, the Soviets constantly attempted to steal or reverse engineer designs for everything from civilian airliners to microchips. As far as I can tell, in spite of their best efforts, they were never less than a decade behind.

      • Duperray

        This is not always necessarily true: Remember the first Satelite was russian, so have been the first Moon craft, the first Venus landing, the first man in orbit, the first man in space vacuum, and so on. It took 9-year crash program for US to cope with.
        By 1991, when Russia opened its borders, many industrial areas were indeed late but westerners were astonished about the unsuspected technological russian advance in Materials: Its seems they focused on Materials as much as West focused upon electronics.
        In my industrial career I have often seen that it is frequently cheaper to be only technological #2, buying (chinese are copying) technology from #1.
        This way was at least selected by russian to drill holes in their arctic sea continental bed. But recent political restrictions expelled the US companies having join ventures there. Was it good for America? Certainly not.
        Russia understood that they can no longer rely upon West and have decided to develop their own technology – as per during cold war – to ensure total independance. China does the same.

        • Thirdsyphon

          The Russians most definitely had better luck in developing their own technology than they did with copying Western designs. To the very end of the Cold War, Russian military technology was able to keep pace with the West, often through wildly original solutions. The problem with prioritizing independent development of specific technologies, though, is that Russia’s economic resources can only stretch so far. This is why everything but military technology got such short shrift. Russia could and develop what were arguably the best fighter jets and rockets in the world; but this came at the price of basically the entire consumer economy. Are modern Russians prepared to make that sacrifice again?

    • f1b0nacc1

      You presume (mistakenly I believe) that those resources will have the same value in 20 years that they do today. While I don’t share the delusions of the greenies, I do believe that some alternative energy sources (nuclear power, as an example) combined with the growth of energy efficiency in transportation will tend to reduce the demand for traditional hydrocarbons over time. Then too, there is the development of other sources of hydrocarbons (alternative fields, other techniques for producing them, etc.) which will tend to reduce the value of the existing (and potential) Russian reserves.
      My point, sometimes a bird in the hand is considerably better than two in the bush, and this may be one of those times. The long game may not favor the Russians at all.

      • Duperray

        Both our prospective opinions have some degree of validity and nobody knows the future: Less than 10 years ago, everybody was lamenting about preak oil and subsequent production decline & catastrophic consequences. Then came industrial fracking !
        On the other hand, Saudi Arabia Oil Minister said “the oil of highest value is that one still in its rock bed”.
        Back to Russia, even with a theorized 10-year technological lag, they could still be safe if they actually need it only in 20 years. Presently, they don’t look in trouble to deliver on time all gas contracted with China on top of Europe’s one.
        Also, there are so many billions of persons close to poverty that the number of oil users (at West rate) can only grow making any identified oil resource value to escalate. This is at least shown by history but is not a general principle (look to Uranium which price wanders ups and downs..).
        But in the long term, Russia is unfortunately on the good side, since in view of its limited population, huge geologically poorly explored land areas, they have an edge over Europe. Only Canada is in the same good situation.

        • f1b0nacc1

          Regarding the Saudi Oil Minister’s quote….he is hardly a disinterested source, now is he?
          More to the point, however, even if we are only talking about a 10-20 year ‘gap’ in making use of the hydrocarbons, the Russians still may find that their ‘two in the bush’ are not all that valuable. As the West moves away from hydrocarbons (and to a greater or lesser extent, that is bound to happen), the ability to extract high prices for what they (the Russians) have will decline, both as a result of reduced demand and alternative (non-Russian) suppliers. Having plenty of gas to sell impoverished third-worlders at fire-sale (forgive the pun) prices is well and good, but it is a loss-leader, and the Russians might regret not having sold the same gas at much higher prices a decade earlier.
          Selling hydrocarbons in a putative 2035 where demand is reduced or your possible customer base consists of low-margin peasants is hardly a desirable scenario

          • Thirdsyphon

            I don’t claim to know the future either, but hydrocarbons will continue to have value long after we (hopefully) outgrow our need to generate energy from the stuff by setting it on fire. Oil is a vital input for manufacturing and agricultural applications as well, and it’s much harder to find good substitutes for oil in those roles than it is to find substitutes for oil as an energy source (not that finding and developing new sources of energy will be particularly easy or cheap).

          • f1b0nacc1

            Come now, take away the transportation use of oil, and our gross consumption drops dramatically. You could easily meet all of our domestic non-transportation needs with domestic production and still have a very healthy surplus to export in that scenario.

          • Thirdsyphon

            Yes, but it’s not as if we’re all going to wake up tomorrow to a world of electric cars. My concern is that we’re going to run through pretty much North America’s entire endowment of fossil fuels before we’re motivated to place our emphasis on exploiting (or, in the case of nuclear, simply committing to develop) other sources of energy.

          • f1b0nacc1

            That isn’t an entirely unreasonable concern, but I suspect that it won’t come to pass. As the various fossil fuels become more difficult to obtain (and hence more expensive), the move to replace them becomes stronger. Electric cars make little or no sense with, say $2.00/gallon gas, but are a lot more practical when gas is $5.00/gallon, and a no-brainer when it is $15.00/gallon…hence as prices for gas rise, the transition to alternative models for transportation are driven by the market (forgive the pun)….

          • Thirdsyphon

            That’s true; and that’s probably how things will play out if the market is simply allowed to take its course without intervention; but in that world, the likes of Vladimir Putin would continue to enjoy a considerable source of unearned income. For the price of oil to go down, the West (and other interested parties) would have to take affirmative steps through government policy to make this happen before the market does. . .which may or may not be possible, and may or may not even be advisable.

  • Duperray

    Another point: From decision to implementation, europeans are experts to delay any matter…

  • Duperray

    Ukraine crisis will soon or later fades away. But some consequences will remain and are big enough to alter History. In my opinion, Russia in 1991 preferred open minded cooperation with West to the same thing with China. Europe with 40B$ is well engaged in the way (my company deals with them) while US restrained to only 4B$/annum.

    Now all this is changed due to Obama leftist activist behaviour and perhaps Republicans will be more fact based (perspective only). as US is now seen as unpredictable and politically activist.

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