Mark Perry at Carpe Diem is a conservative economist who often editorializes on the shale revolution. I appreciate his cheerleading as to the changed landscape stateside. But the world is different outside of America. Investors must be sure they stay grounded in reality, while economists sometimes become distracted. Mr. Perry recently linked four articles and editorialized. I have comments:
1. “The Ukraine…enough gas to fire the eastern European nation for 100 years or more.” While I believe the gas is there, Ukraine does not have the mature oil and gas services industry present in the US. Look at the dislocations in south Texas and North Dakota with a developed industry. Ukraine shale will not be altering the region’s supply balance this decade.
2. As for Shell’s feasibility and design work on a potentially huge, $10 billion, 2 million gallon per day Gas-to-Liquids (GTL) facility in Louisiana, using natural gas feedstock, the price tag is huge but not the output.
3. “Britian may have enough offshore shale gas to catapult it into the top ranks of global producers, energy experts now believe, and while production costs are still very high, new U.S. technology should eventually make reserves commercially viable.” Offshore shale gas? That will not get by the green crowed; deep inside the article the reader may note the costs are ridiculous.
4. “…export surplus U.S. gas. For global energy markets, that is a change of potentially huge proportions.” The global LNG market is about 27 bcf a day and the US drillers could crash the pricing if given the chance.
Source: Carpe Diem