Back in the old days, or at least the last century days of drill, baby, drill gas and oil were considered to be so rare that nowhere was too far away to find it, and wherever that was no self respecting oil or gas company would let polar bears, newts or indigenous people stop them extracting it.
But shale gas is so abundant that we can see the rise of a new phenomenon: the choosy gas driller. We remarked on that recently when Chesapeake Oil walked away from drilling in the NYC watershed part of the Marcellus Shale in upstate New York. Aubrey McLendon said simply that "we don't need the brain damage".
I was reminded of this by news out of Canada, where the emergence of shale plays in the Eastern US and Canada has led to choosy buyers.
emergent economic forces don’t care about the mountains and are progressively challenging the traditional west-to-east flow of natural gas. In fact, the whole character of where North Americans get their natural gas is undergoing realignment of seismic proportion. Recent events provide indications of how the dynamics are changing
Alberta has traditionally been the Canadian Oil and Gas patch. But the emergence of the Marcellus Shale has changed a lot: Gas from the Marcellus Shale doesn't have to pay 3000 miles of transport fees to reach markets that are next door. Marcellus drillers can charge a premium over Barnett or Haynesville gas but the customers make money anyway.
Everyone's a winner. Apart from some gas transporters. Which may explain why National Grid is eager to join in as the final link in CCS, transporting CO2 from power station to depleted gas field. In the UK, if there were significant shale finds, National Grid might even get shut out of transporting them since the local grids were sold off. Local grids could transport shale finds the short distance to generators, CHP or larger end users.
In Europe, if shale is produced in Poland or Northern Germany why generate electricity in Berlin, Hamburg or Warsaw with gas imported from Russia, Norway or Nigeria? Shale is so abundant that it may well be under most people's feet. Not only will this make energy security risk meaningless or disrupt capital flows, it will make energy simultaneously cheaper and more precious.
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