NEWSLINK: Don’t Worry About U.S. Fracturing

File Photo of Blue Flame from Natural Gas

[Moscow Times – Todd Wood – February 13, 2014 – themoscowtimes.com/opinion/article/dont-worry-about-us-fracturing/494439.html]

Todd Wood, in a Moscow Times op-ed, writes that while the United States has used fracking to seize the lead in global petroleum exports, Russia has more reserves, and could expand oil field services.

Unfortunately for Russia, the U.S. has taken the lead in hydraulic fracturing technology and is now leading the world in overall petroleum exports. It is entirely possible that the U.S. will become energy independent in the next decade. The change in fortune for the world’s energy producers has been dramatic and swift, and it has upset some long term geopolitical relationships.

However, Russia is estimated to have 25 percent more reserves in shale oil and natural gas than the U.S. The deposits are simply located in places that are harder to reach and will require more effort and skill to extract. …

The United States fails to take full advantage of energy opportunities, such as with foot-dragging on the Keystone Pipeline, a scenario that could end up benefiting China as well as Russia:

Luckily for Russia, the U.S. is shooting itself in the foot. Hyped up environmental concerns have all but shut down energy exploration in California and other states, while the Obama administration is reducing exploration on federal lands. The specter of climate change has the full attention of the U.S. government, which is doing everything it can to reduce the use of hydrocarbon fuels.

Instead of fostering this nascent industrial growth, America is attempting to stifle it. The refusal of the Obama administration to approve the Keystone pipeline from Canada is just one example of this foolishness. Soon the Canadians will decide to just sell their shale oil to China.

Russia does still need to diversify its economy away from hydrocarbon-dependence:

It is well known that Russia needs to diversify its hydrocarbon-based economy, which contributed toward 50 percent of its economic growth since the turn of the century and currently accounts for 40 percent of its annual gross domestic product. The current government has founded its political legitimacy on ever rising energy production, the profits of which are returned to domestic spending.

Yet Russia still has untapped potential in fracking:

Russia should do everything it can to further the development of hydraulic fracturing technology for use in frigid climates and expand its manufacturing base. Oil field services are a natural extension of a hydrocarbon economy – the capability to extract natural gas and shale oil from arctic environments.

A focus on the Arctic, tax code reform, the need for greater competition and Russian science all could impact Russia’s efforts.  Corruption also looms, as an impediment.

Russia has a long, proud history of science and exploration. By turning the threat of cheap U.S. gas into a positive, Russia can leapfrog the competition and be a world leader in oil field services for decades to come. This will take serious effort to reduce corruption and incentivize competition for Russian and global firms in the oil field services arena. But the alternative is to be left behind …

Click here for full article: themoscowtimes.com/opinion/article/dont-worry-about-us-fracturing/494439.html

 

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