Caspian Report - Issue: 08 - Fall 2014

FATIH MACIT, HOLLY REHM
10
in the 1950s. However, it was not until
the 1980s that large-scale fracking
and shale development began in
the Barnett Shale in Texas. Horizontal
drilling and fracking began to be
used in tandem in the early 1990s
and attracted the attention of the oil
and gas sector in the U.S. From there,
technological innovations and adaptations
through work on the Barnett
and Bakken plays have greatly improved
the feasibility and effectiveness
of shale gas drilling. 9
While fracking has been used in the
U.S. for decades, plans for widespread
fracking with the shale revolution
have stirred controversy. Groups
have raised concerns over environmental
issues, including contamination
of water resources, pollution
caused by mishandled and potentially
hazardous hydraulic fracturing
fluid, methane leakages, and seismic
effects, as fracking has been shown
to cause to minor earthquakes. Proponents
argue that with robust regulations
and monitoring, fracking can
be done safely and shale gas can effectively
replace more harmful fossil
fuels. Natural gas emits significantly
less carbon dioxide and sulphur dioxide
than the combustion of either
coal or oil. 10 Many also argue that natural
gas is a cleaner “transition fuel”
as countries convert from fossil fuels
to renewable energy sources.
MADE IN AMERICA: DOMESTIC
CONDITIONS FOR THE
DEVELOPMENT OF SHALE GAS
Despite other potentially large shale
formations around the world, the U.S.
remains the only country to have initiated
the widespread development
of these resources. Several arguments
have been put forward to explain the
success of the shale gas revolution in
the U.S. Robert Blackwill and Meghan
O’Sullivan sum up these arguments
succinctly in their article on the shale
revolution: “The fracking revolution
required more than just favourable
geology; it also took financiers with
a tolerance for risk, a property-rights
regime that let landowners claim underground
resources, a network of
service providers and delivery infrastructure,
and an industry structure
characterized by thousands of entrepreneurs
rather than a single national
oil company.” 11 In addition, publicprivate
partnerships in research and
development of shale technologies,
favourable policies and regulations,
established supply chains, and familiarity
with oil and gas drilling have all
contributed to the U.S. shale revolution
and enabled the effective development
of national shale resources.
The unique property rights regime in
America is also credited with helping
spur the shale revolution. In contrast
to many other countries, in the U.S.
a homeowner owns their home, the
land it sits on as well as the ground
below and any resources contained
therein. In other countries, this land
would be controlled or heavily regulated
by the state. Bypassing state
involvement, any company able to
procure an agreement with a homeowner
can begin drilling on their
land. This provides financial incentives
for landowners to permit drilling
on their land. 12 Additionally, analysts
note that oil and gas drilling has
taken place around the U.S. for
decades, acquainting the population
to drilling rigs, tankers, etc. In other
areas of the world, such as Europe,
the population is not familiar with
these activities as most production of
9.
U.S. Department of Energy, “Modern Shale Gas Development” 13.
10.
EIA, “What is shale gas and why is it important”
11.
Robert D. Blackwill and Meghan L. O’Sullivan, “America’s Energy Edge: The Geopolitical
Consequences of the Shale Revolution.” http://www.foreignaffairs.com/articles/140750/
robert-d-blackwill-and-meghan-l-osullivan/americas-energy-edge. Accessed June 13, 2014.
12.
Paul Stevens (2012) “The ‘Shale Gas Revolution’: Developments and Changes,” London,
England, 9.