From Oil and Gas Eurasia
Gazprom has admitted it might yet adjust its attitude towards shale gas, as Russian policy makers assess new dangers to the country’s petro-dollar economy. First, Russia’s Economic Ministry warned that the increasing supply of shale gas on world markets will start hurting Gazprom’s pipeline sales to Europe in 2014. And it seems Gazprom might now be weighing the pros and cons of jumping onto the shale gas bandwagon.
By Pat Davis Szymczak, Ben Priddy
Gazprom has admitted it might yet adjust its attitude towards shale gas, as Russian policy makers assess new dangers to the country’s petro-dollar economy. First, Russia’s Economic Ministry warned that the increasing supply of shale gas on world markets will start hurting Gazprom’s pipeline sales to Europe in 2014. And it seems Gazprom might now be weighing the pros and cons of jumping onto the shale gas bandwagon.
“Gazprom had undervalued the importance of shale gas, but is starting to look at it seriously,” Dow Jones quoted Deputy Economy Minister Andrei Klepach as saying last week. Gazprom’s top managers have for years said that shale gas production would never threaten demand for Russian gas. Now, they’re not so sure.
“Shale gas production in the U.S. is already having a negative impact on gas prices in Europe and on Gazprom,” Chris Weafer, Chief Strategist at Troika Dialog, told Oil&Gas Eurasia. “Even though there is as yet no actual U.S. gas imports to Europe, the high domestic (U.S.) gas production has displaced coal as a major fuel source and that coal is finding its way into Europe and other world markets. The greater availability of cheap coal has already very significantly undermined the gas market and Gazprom’s ability to price gas.
Tallbloke's Talkshop 
But in the UK prices are almost 7 times higher than the US.
Yeah, and my supplier refuses to tell me how much of it is carbon tax.
Man, all these graphs of production volume vs current prices are so consoling to the consumer or politician uninvolved in the actual business of shale gas production. Never have so many been so confused by cost and price in a saturated market. There is not a single study anywhere on the planet that does not show that shale gas cost is higher than current pricing, not one that says that big frac-ing dependent technologies deliver gas (or oil) at prices competitive with conventional, stick-a-straw-in-it-and-suck programs.
Shale or otherwise unconventional sources of oil and gas may allow countries to become semi-self-sufficient (or less dependent on foreign deposits) in non-coal, fossil-fuel energies. But at a cost that, ironically, will benefit the Middle East and Russia if energy costs in general are alllowed to rise to cover the unconventionals’ costs of production plus profit. Subsidies are inevitable in an open market, and import tariffs in a protective one if one does not wish his dollars to maintain an Iranian or Saudi political power.
The future is bright and warm (or cool, with A/C). But it will lighten your wallet.
(I’m in the biz: why am I blogging instead of taking well calls and finding more oil and gas? Because the amount of money it takes to get that sticky molecule out of the ground and into your power station or home cooker, despite horizontal drilling and 18-stage, N2-energized gel fracs is too much for the sales prices to justify.)
Doug;
Yep. All the majors and drillers are spending more than they earn. They’re all stupider than you.
Or not.
Doug Proctor says:
September 23, 2012 at 8:15 pm
“…The future is bright and warm (or cool, with A/C). But it will lighten your wallet…
Energy supply is more about politics than economics. The real benefit of shale gas/oil is that it has the potential to allow countries without easily extractable oil to be become energy self-sufficient and not held to ransom by unfriendly countries in the middle east and ‘Russian Bloc’.
Even at a higher production cost per Therm, it is much cheaper to do home-grown, rather than making military excursions to protect supplies, as exampled by the Iraq debacle (and likely Syria soon if the ‘revolution’ looks like failing). We should do the same with home-grown food – I can easily live without cumquat’s… 🙂
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