Author`s name Dmitry Sudakov

USA prepares shale gas bubble for feverish Europe

Mass demonstrations against the extraction of shale gas have recently been held in Romania and Bulgaria. U.S. companies actively lobby the "shale revolution" in Eastern and Central Europe. All this happens against the background of anti-Russian slogans. "Shale fever" has already struck Lithuania, Ukraine, Moldova and Poland; the U.S. is rubbing its hands.

Energy independence on Russia is currently a fashion trend in Europe's political circles. Accusing Russia's gas giant Gazprom of inflated gas prices, many European leaders rely on their own exploitation of shale deposits. We can see the supposedly positive experience in shale gas production in the U.S., which cut gas prices in the world five times, eliminated gas imports and created many jobs. The West strongly promotes this experience in the West as panacea for "Gazprom's dictatorship." 

A study conducted by Baker Institute for Public Policy at Rice University in 2011, predicted a 13-percent decline of Russia's share in the European natural gas market by 2040. "The geopolitical implications of the expansion of shale gas production in the United States will be enormous. With the arrival of liquefied natural gas to Europe - the product that was displaced from the U.S. market - the energy power of Russia, Venezuela and Iran began to weaken against the U.S. gas abundance," Amy Myers Jaffe, one of the authors of the study said two years ago. Numbers suggest that this is not the case, though. In 2009, the share of the Russian gas in Europe was 27 percent. Today, the figure has not changed much: it still remains on the level of 29-30 percent.

In the report prepared by the U.S. Energy Information Administration, it was stated that the total volume of resources of Romania, Hungary and Bulgaria made up 538 billion cubic meters. For comparison, the projected capacity of the South Stream gas project makes up- 63 billion cubic meters a year). However, in a fit of strategic partnership, Romania and the United States approved an agreement with Chevron in early April on the exploration and exploitation of gas fields in eastern Romania. According to the head of the National Agency for Mineral Resources, Gheorghe Duţu, "at the present time, no company can conduct unconventional exploration of natural resources." These licenses can be issued only with the thorough assessment of consequences for the environment and profitability of gas deposits, said Dutu. However, due to the lack of expertise, the moratorium on shale gas was lifted last week.

In response, on April 4th, protest actions were held in 28 Romanian cities within the framework of the so-called "National Day Against the Exploitation of Shale Gas." "We are against corruption in the government. We fight for healthy environment, we fight for the right to live and to receive accurate information," organizers of the protest actions said. The protests were supported in the Bulgarian border town of Dobrich. The Bulgarians took to the streets under the slogan "Two countries - one water. Two peoples - one fight." They fear that the gas production in Romania will destroy natural resources in neighboring areas, including Dobruja - the region known as the "granary of Bulgaria."

The protesters also demanded prosecutors should investigate the personal interest of the Mayor of Dobrich, Detelina Nikolova, and all officers, who accompanied her on her recent trip to the U.S.. Nikolova toured Texas, Pennsylvania and Colorado, where she met with representatives of shale gas companies. She strongly denies allegations of corruption. In Bulgaria, Chevron has not settled yet. On January 17, 2012, the Bulgarian government revoked the company a license to explore shale gas deposits in northeastern Bulgaria. Officials referred to a moratorium on shale gas and to the lack of evidence of environmental safety of the method of hydraulic fracking.

What is the essence of the technology of hydraulic fracking? At first, a vertical well is drilled, which is then split into several horizontal wells up to 2-3 km in length. Afterwards, a mixture of water, sand and chemicals is pumped into these wells. As a result of the water attack (a mini earthquake), the walls of gas reservoirs are destroyed, and the entire amount of available gas is pumped up to the surface. 

The process requires a lot of water for each well - from 5 to 19 million liters. The mixture of chemicals is a commercial secret of corporations. A resident of the shale gas village of Dimock (PA), Ray Campbell, shared a sample of tap water with Russia's Vesti TV channel. There were 27 dangerous chemicals found in the water: uranium 238 and 235, as well as some unknown chemicals. "Even lab specialists do not know what it is," Ray said. 

Environmentalists of the world are highly concerned about the fact that the exploitation of shale gas leads to severe contamination of ground, surface waters and air. In pursuit of geopolitical influence, the Americans do not tell anyone that the current price of shale gas does not include the cost of land reclamation and water treatment, not to mention insurance in case of artificial earthquakes. The Americans do not say either that shale gas producers do not pay taxes. In other words, the production of shale gas in the U.S. is subsidized by the U.S. government. To crown it all, profitable reserves are much less than geological reserves. "Obama listens to his assistants, who work to promote shale gas. In reality, the reserves will be enough for 11-12 years, not 60," Arthur Berman, a well-known expert, a former officer at AMOCO oil company said.

In 2013, there was not one single profitable shale gas well left in the U.S. Corporate expenses in 2012 to drill more than 7,000 wells in the U.S. totaled $ 42 billion. Profits from the sale of shale gas made up 32.5 billion. BP announced net losses of $ 5 billion; BG Group of Britain lost 1.3 billion, whereas the former leader of the industry - Chesapeake Energy - stands on the verge of bankruptcy. 

American analysts assert that the shale project is doomed. They see it not only as a politically motivated initiative, but also as yet another financial bubble that will grow in Europe. "The countries, where they are going to produce shale gas, will see what we saw. At first, there will be a short-lived boom, some new jobs will be created, but when the bubble bursts, there will be poor environment and devastated infrastructure left, like it happened in Dimock. This will happen to Latvia, Ireland and Ukraine," Wendy Lee, a professor at Bloomsburg University said.

The U.S. is trying to engage Eastern and Central Europe on its own resources and the resources of its partners (Norway, Saudi Arabia). America frightens everyone with Gazprom's monopoly, which actually does not exist. The "shale union" has already become a goal for Ukraine, Poland, Moldova, Lithuania, Latvia, Estonia and Great Britain. However, according to European experts, the amount of possible shale gas production in the EU in 2030 will amount to only 15 billion cubic meters a year. Optimists give a different number - 40 billion. However, this is only 3-5 percent of projected natural gas imports. Obviously, such minor additions will not change the market situation.

Gazprom does not have to care much about it at all. The company's exports to Asian countries have been growing, while the Chinese have banned the development of shale gas. China thinks strategically.

Lyuba Lulko


Read the original in Russian