Shale gas development in North America has led to energy revival in USA. At the end of 2012, shale gas in USA was at US$4 per BTU (British Thermal Unit) on the domestic market, compared to US$18 in Asia and US$10 in Europe. This low price of shale gas makes it increasingly profitable for USA to produce electricity from gas rather than coal. As a result, the coal is being exported by USA to Europe. The low priced coal has led to a disruption of the industry in Europe and is starting to impact supply dynamics in the continent. In the face of competition from cheap American coal and reduced electricity demand in Europe, many gas-fired power stations in Europe, running below capacity, are being moth balled. Less than a decade ago the international gas market was largely shaped by US imports. Currently, USA is about to become a gas-exporting nation. This change is profoundly affecting global geopolitics. As per author Thierry Bros, this could indirectly impact Russia’s position as leading supplier to Europe. Russia’s Gazprom, until recently, supplied 30-35% of Europe’s imported natural gas. US progress towards energy autonomy indirectly changes the picture, through its knock-on effect on Qatar. Until recently, USA was a large importer of liquefied natural gas (LNG) from world number one exporter Qatar. With shale gas development, USA no longer requires these imports, a significant quantity of which, has found its way into markets in Asia and Europe. This in turn is reducing dependence of the EU on Russian gas. This shift is encouraging Russia to move from a pipelines policy to the more flexible LNG.
Interestingly, though the European Union aims to diversify away from Russian natural gas supplies, Reuters research indicates the EU's biggest provider until 2023 could easily still be Russia, as it boosts exports while EU and Norwegian output declines. Of the EU's current annual demand for 485 billion cubic metres (bcm) of gas, Russia supplies some 150 bcm. Demand could rise to 585 bcm by 2023 with the Russians supplying as much as 175 bcm, according to Reuters calculations based on data from governments and energy companies, research firms and consultancies. This means that the amount of gas from Russia is not only set to rise, but Russia's share of Europe's gas market will remain stable around 30%. Gazprom is not expected to face problems in increasing gas supplies as its reserve base is big. Russia, once Europe’s dominant gas supplier, has been losing its market share to Norway because the Scandinavian country has been more flexible with its pricing for sales volumes. Last year Norway increased its pipeline gas exports to Europe by 14%, to 100 billion cm, while. Russia's fell by 3% to just over 200 billion cm.
Russia will not focus on developing shale gas within the next decade because its vast conventional reserves are much cheaper to produce, as per Gazprom. Russia's conventional gas resources rendered developing shale gas uneconomical. Russia's shale gas reserves are unknown but the country holds more than 20% of the world's conventional gas reserves. Russia's conventional natural gas stash stands at 44.6 trillion cubic metres (cm), Cedigaz data shows. Once they start fracking, though, countries such as China, Argentina and Russia could experience new oil and gas booms. China has the largest shale gas reserves, estimated at 1,115 trillion cubic feet, followed by Argentina at 802 trillion cubic feet. In shale oil, Russia tops the list with about 75 billion barrels, according to a report by the U.S. Energy Information Administration. Australia, Poland and Algeria all have big potential. Argentina may be the first to capitalize on its shale resources with production expected as early as 2015, according to research by BCG, the Boston Consulting Group. A record 400 shale wells may be drilled beyond U.S. borders in 2014, with most in China and Russia, according to energy consultants Wood Mackenzie Ltd. While that’s a fraction of the thousands of shale wells drilled in the U.S., the number of rigs used onshore in Europe and the Asia-Pacific region has increased 10% over the past year, data compiled by oil services company Baker Hughes Inc. show. Most of those rigs are meant for shale.
The great unknown is the size of world shale gas reserves, as they are difficult to estimate.