Caspian Report - Issue: 08 - Fall 2014

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FATIH MACIT, HOLLY REHM 6 THE U.S. SHALE GAS REVOLUTION AND PERSPECTIVES FOR LNG EXPORTS FATIH MACIT SENIOR FELLOW, CENTER ON ENERGY AND ECONOMY, HASEN HOLLY REHM THE PAUL H. NITZE SCHOOL OF ADVANCED INTERNATIONAL STUDIES (SAIS), JOHNS HOPKINS UNIVERSITY
The aim of this report is to analyse the dynamics behind the shale gas revolution in the U.S. and to generate some perspectives on future U.S. LNG exports to European or Asia-Pacific markets. INTRODUCTION The shale gas developments in the U.S. have revolutionised global energy markets over the past two decades. In its 2009 report, Energy Information Administration stated that the dependence of the U.S. on imported natural gas will increase over the coming decades, and prices will rise. Since 2009, things have changed significantly, and we are now talking about potential U.S. LNG exports to European and Asia-Pacific markets. Between 2008 and 2013, the U.S. was able to increase its natural gas production by almost 117 billion cubic meters (bcm), but the consumption of natural gas has increased by only 78 bcm. The immediate impact of this boom in natural gas production has been cost: the price per thousand cubic feet of natural gas dropped below $2 in the second quarter of 2012. At that time, the LNG spot price in Asia was around $16.5 and the average price in Germany was around $11. Even today the price per thousand cubic feet of natural gas in the U.S. is one-third of the price in Asia-Pacific markets. These numbers reveal the scale of the natural gas revolution. The aim of this report is to analyse the dynamics behind the shale gas revolution in the U.S. and to generate some perspectives on future U.S. LNG exports to European or Asia-Pacific markets. First of all, the report will provide a summary of the origins of the U.S. shale gas revolution, and discuss the domestic conditions that enabled this scenario. We will also provide a brief analysis on the economic benefits of the shale gas revolution for the U.S., particularly in relation to the economic recovery following the 2008 global financial crisis. Lastly, we will consider the prospects for LNG exports to Europe and Asia-Pacific, specifically whether those exports will become a game changer in these markets. THE U.S. SHALE GAS REVOLUTION In its most recent report on the gas market, the International Energy Agency (IEA) asserts that the U.S. will remain the unchallenged leader in unconventional gas development. 1 The unconventional and shale gas boom in the U.S. has taken many by surprise and been a boon for the country’s oil and gas industry. The 7 CASPIAN REPORT, FALL 2014 1. IEA (2014) “Medium-Term Gas Market Report 2014”, Paris, France, 78.
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Page 4 and 5: Dear Readers, CASPIAN REPORT 2 It i
Page 6 and 7: CASPIAN CASPIAN REPORT 4 06 FATIH M
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Page 22 and 23: MANFRED HAFNER 20 THE SOUTHERN GAS
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Page 30 and 31: MANFRED HAFNER 28 by the Shah Deniz
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Page 34 and 35: MANFRED HAFNER 32 THE ESTABLISHMENT
Page 36 and 37: MATTEO VERDA 34 LNG MARKET: TRENDS
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Page 46 and 47: MUBARIZ HASANOV 44 AN OVERVIEW OF E
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THE SOUTHERN GAS CORRIDOR - WINDOW
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NINO KALANDADZE 58 become comprise
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NINO KALANDADZE 60 This picture mak
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NINO KALANDADZE 62 Security policy.
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NINO KALANDADZE 64 There are benefi
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NINO KALANDADZE 66 tion of Crimea b
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RADU DUDAU 68 THE UKRAINE CRISIS: L
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RADU DUDAU 70 RUSSIA HAS FREQUENTLY
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RADU DUDAU 72 Russia, which depends
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RADU DUDAU 74 WHAT INTERNATIONAL LA
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RADU DUDAU 76 THE NEAR FUTURE WILL
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RADU DUDAU 78 THE UKRAINIAN GOVERNM
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RADU DUDAU 80 parliament decided to
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Black Sea Serpents’ Island. RADU
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RADU DUDAU 84 (where Russia holds v
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RADU DUDAU 86 IN TERMS OF ENERGY, A
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WHY RUSSIA SIGNED A MAJOR GAS CONTR
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MESUT HAKKI CASIN 90 I will focus o
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Russian President Vladimir Putin sh
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Figure II: Russian energy infrastru
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Kazakhstan President Nursultan Naza
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MESUT HAKKI CASIN 98 economic devel
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Figure IV: China’s gas import sou
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THANOS DOKOS, THEODORE TSAKIRIS 102
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ARZU YORKAN 114 TURKEY’S RENEWABL
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ARZU YORKAN 116 is 12 th in the wor
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Figure 4: Solar Energy Potential At
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ARZU YORKAN 120 Figure 8: The share
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ARZU YORKAN 122 THE STRATEGY PAPER
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ARZU YORKAN 124 TURKEY HAS NOT YET
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CASPIAN
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THE EU AGREEMENT ON THE 2030 FRAMEW
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EU Commission President Jean Claude
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ROMAN RUKOMEDA 132 THE PHANTOM OF R
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Russia’s gas giant Gazprom CEO, A
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CASPIAN CALL FOR PAPERS 136 Caspian
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Caspian Report - Issue: 08 - Fall 2014

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