How America will pinch Russia
The Wall Street Journal could not pass by the holiday that began in the United States after the publication by the Institute for Energy Research of the Russian Academy of Sciences and the Analytical Center under the Government of the Russian Federation of the report entitled “Forecast of the development of energy in the world and Russia up to 2040 of the year”. Journalist James Marson was enthusiastic about the fact that in the coming decades, Russian oil exports could fall, and the reason for the fall would be the increase in the US production of oil shale. According to the journalist, the Energy Research Institute of the Russian Academy of Sciences has made "an unusually frank admission that the North American shale gas boom poses a threat to the Russian economy, which is fed by hydrocarbons."Referring to the Russian report, Mr. Marson сообщает to the reading public that if the “shale breakthrough” increases, by the year of 2040, Russian exports may decline by 50 million tons per year. (Last year, Russia exported 240 million tons of oil, the correspondent reminds). Such a decrease could lead to a decrease in the share of the energy industry in Russian GDP from one quarter in the 2010 year to 15% with a little in the 2040 year. Well, and a summary of the report: if we take into account the geopolitical significance of the United States, then I must say: they will in fact turn into “the most influential player in the global hydrocarbon market”.
In parallel, the other came out report: “The forecast of energy development up to 2040 of the year” - from Exxon Mobil.
Predicting the main indicators of global energy development, American analysts singled out A number of factors related to oil and gas:
- the level of energy demand in the United States and other economically developed countries will remain relatively unchanged, and the growth in global demand will be determined primarily by the energy demand of China and other non-OECD countries. It is estimated that in these countries the level of demand in 2040 will increase by almost 60% compared to 2010 year. Before 2040, global demand will increase by about 30% compared to 2010, but without the expected energy savings, its growth would have been about four times more. At the same time, the demand for energy for the operation of commercial vehicles - trucks, aircraft and ships, as well as rail transport - due to economic growth, especially in non-OECD countries, will increase by more than 70%;
- demand for oil and other liquid energy sources will grow by almost 30%, which will primarily be associated with the needs of the transport industry. This increased demand will increasingly be met by deep-sea deposits, oil sands, oil deposits in low-permeability rocks, liquefied petroleum gas and biofuels.
Regarding shale, experts at Exxon Mobil write that new technologies will affect the development of the energy sector, contributing to an increase in the global volume of energy reserves. This includes new production technologies, with the help of which it becomes possible to develop natural gas reserves in various regions of the United States sufficient to provide the population of this country for a hundred years.
According to experts at Exxon Mobil, by 2040, gas production from shale and other similar rocks will be up to 30% of the world’s gas production.
These are the bright prospects for America and in general for slate producers.
Our experts and analysts differ from Americans in that instead of uncorking champagne they sound alarm. However, this alarm is not of the quality that is about to turn into panic.
The Analytical Center under the Government of Russia and the Energy Research Institute of the Russian Academy of Sciences in the forecast for the development of energy up to 2040 have expressed concern about the situation, says Sergey Duz ("Voice of Russia"). After all, for the first time the Russian fuel and energy complex is faced with such severe restrictions on the part of external demand for energy resources. And the whole thing here in the "shale revolution." This technology has become payable only recently, with rising prices for hydrocarbons produced in the traditional way.
“It is unlikely to sell gas at the same prices. The only solution is a hard miscalculation of the economic efficiency of oil and gas projects and the correct assessment of possible risks, ”said Academician, Director of the ERI RAS Alexei Makarov.
The chief adviser to the head of the Analytical Center under the Russian government, Professor Leonid Grigoriev, notes that Russia will feel quite comfortable in the global economy. By 2040, it will even rise to fifth place from sixth in the ranking of countries by global GDP. Thirty years later, Russia will remain the most important participant in the gas market and the world's largest exporter of hydrocarbons.
Director of the Institute of National Energy Sergey Pravosudov, talking about mining from shale, said: “The problem is that the productivity of wells drops very quickly. That is, after fracturing over 1-2 years, gas recovery is reduced by 70-80%. Therefore, you need to drill constantly, blow up huge underground arrays. This leads to earthquakes that do not like the local population. The United States is still deciding the issue due to the fact that shale gas is being extracted in sparsely populated territories. But the larger the scale, the greater the environmental problems. The soil turns into scorched earth. It looks like a lunar landscape. Few would agree to that. ”
And the head of the energy program of Greenpeace Russia, Vladimir Chuprov explains: “It is reliably known that first of all one of the negative consequences of shale gas production is the pollution of groundwater. This is a hydraulic fracturing technology, when a highly toxic fluid is pumped into the ground. As a result, it fills the pores, displacing the gas and ensuring its inflow into the well. At the same time, this liquid enters the groundwater. This is the first. And secondly, as a result of hydraulic fracturing, a part of the gas scattered in the soil does not enter the well, but leaks into the atmosphere and increases the greenhouse effect. According to some estimates, shale gas production, by its negative impact on the environment, is comparable to coal production. For these two reasons, scientists oppose shale gas. ”
For one hydraulic fracturing, notes Sergey Duz, a mixture of water (by the way, 7500 tons), sand and chemicals is used. Waste polluted water accumulates in the mining area. Shale gas production leads to significant pollution of groundwater with toluene, benzene, dimethylbenzene, ethylbenzene, arsenic.
Sergey Pravosudov gives an economic breakdown of shale production in the United States. He points out that today shale gas is sold in the United States at a price below cost. The cost price is 150-180 dollars per thousand cubic meters, and sales are for 100 dollars. As a result, companies reduce drilling. By the end of 2013, the expert predicts a drop in shale gas production - and not a simple drop, but a landslide. To this he adds that, if three or four years ago 1400 drilling units worked for shale gas, then on March 2013 of the year they were smaller than 400. This shows how much of the fall is waiting for Americans in the near future. As for Europe, the expert believes that there is not a single productive gas well.
Nevertheless, Russian speakers are sounding the alarm. In the text the report not only the baseline scenario of the world economy and fuel markets development was developed, but also the extreme versions of the baseline scenario (“shale failure”, “shale breakthrough”).
In the “failure” scenario (sad for the USA), the book price of oil compared to 2040 is forecast to reach 130 dollars per barrel (the dollar is equal to the dollar of 2010 of the year). Gas prices will also soar: up to 378 dollars per thousand cubic meters in Europe, 448 dollars - in Japan, 480 - in the PRC. The spot price of gas in the United States will reach 430 dollars per thousand cubic meters. In this scenario, experts say, those who can lose in the "shale breakthrough." The balance of power in the oil and gas market will actually remain. By 2040, the Russian Federation will significantly increase oil and gas production: up to 535 million tons and 980 billion cubic meters. m. United States, on the contrary, lose - and also "significantly." According to the scenario, mining there in the shale will fall by the year 2020; America will return to the ranks of countries importing natural gas. Moreover, gas will be expensive there: about halfway between its cost in Europe and the Asia-Pacific Region. OPEC will increase oil production (by 220 mln. Tons) and will (again, “significantly” - by 20-30 dollars per barrel) affect world oil prices. Parallel to these processes, mining will develop in the Asia-Pacific region: after all, with high oil prices, deep-water offshore projects will also become profitable. As a result, China will increase.
Another “breakthrough” scenario, in which the authors of the 2040 report focus on, is built on the assumption that this very “breakthrough” is an accomplished fact. The argument in favor of this statement is the statistics: over the past 5 years, oil production from shale plei increased from 8 mln. Tons (2007) to 100 mln. Tons (2012), and shale gas production - from 40 billion cubic meters to 250 billion cubic meters (same period). However, scientists note (see p. 65 report) that there are a number of factors hindering production growth: a relatively high cost range; high water consumption; environmental risks; neoprobyvannost technology for the extraction of oil produced by intra-layer retorting. But that's why it is a “breakthrough” scenario, to assume: there will be technologies that can remove the existing restrictions (for example, a cheap anhydrous method of breaking a hydraulic layer). Experts predict the use of this method in 2020.
As a result, deposits from China, Mongolia, Jordan, Israel and other countries will be commissioned. Problems with the environmental component of production will be removed. The cost of shale production worldwide will reach the level of costs in the United States (no more than 80 dollars per barrel of oil and 150 dollars per cubic meter of gas). After 2020, active development will begin not only of low-permeability oil reservoirs, but also of shale (kerogen) oil.
The realization of the “breakthrough” scenario, say the speakers, will increase the production of “unconventional” oil in the world by 2040 million tons, and gas - by 117 billion cubic meters by 222. m compared to the baseline scenario. This may well shift oil and gas prices down. True, our experts do not foresee a significant drop in oil prices. However, some global players in the market will get additional opportunities to influence, and some will lose their positions.
Win here, of course, the United States. In the first place - due to the production of own oil (by 70 million tons more than in the baseline scenario), secondly - due to the production of its own gas (slightly less than in the baseline scenario - due to increased production in the PRC). "This fact, given the overall geopolitical significance of the United States, actually turns them into the most influential player in the global hydrocarbon market," it is written on the page of the 69 report.
China will also win - due to a decrease in import volumes relative to the baseline scenario, caused by the development of its own shale deposits after 2020.
The developed countries of Europe will lose from the “breakthrough”: the volumes of their own European oil will be ousted from the market, projects for the exploitation of fields on the North Sea shelf will not be introduced, energy dependence on suppliers will grow, etc.
OPEC member countries will also lose. A “shale breakthrough” will generally weaken the cartel - to the extent of depriving it of the possibility of influencing the policy of oil prices.
Of course, the CIS countries will also lose. The implementation of the “breakthrough” option for the Russian Federation will result in a decrease in 2020 of oil production by 50 million tons compared to the baseline scenario and a decrease in exports due to the narrowing of a niche in the Asian market. Gas exports will also decline - by 70 billion cubic meters than in the baseline scenario. The CIS will be the most sensitive to this scenario, experts say.
Thus, it can be concluded that only the “shale failure” scenario is favorable for Russia, under which “breakthrough” technologies obviously will not appear at all, and the prices for oil and gas will rise significantly. Russia's winnings will be accompanied by a loss to the United States, which will be forced to return to the ranks of gas-importing countries (and it has become more expensive).
Famous analyst El Murid пишет:
“Even a cursory and initial acquaintance with this document looks very depressing. The report clearly and unequivocally acknowledges the existence of the shale boom problem in the United States, no matter how the head of Gazprom Miller tries to belittle his importance. The report quite unequivocally speaks about the deterioration of general forecasts for Russia: “... This study revealed great risks for the Russian economy and energy as a result of transformations of world energy markets: a decline in oil and gas export volumes and export revenues relative to planned indicators, a slowdown in the country's GDP growth, deterioration of all key parameters of the Russian fuel and energy complex ... "The report acknowledges the depressing inefficiency of investment projects in Russia, citing" ... the results of the analysis by foreign and Russian and specialists of the cost of domestic energy projects, which regularly showed a multiple increase in their prices compared with world peers, and often the capacity of the constructed facilities was lightly loaded for years ... "
The analyst continues:
“Naturally, the Report also presents constructive proposals for resolving the situation. However, the authors of the Report could not say what should be said: any arrangements for urgent exit should be started with personnel decisions. ”
Why could not? El Murid seems to have not read the report to the end. Not without reason, he mentioned the “fluent and initial acquaintance” with the document.
At the end of the report, on the 93 page, it’s pretty clear, if in general terms, it says:
“The main condition for improving the competitiveness of the Russian fuel and energy complex is a radical improvement in the quality of state and especially corporate governance ...”
You see: the "main" condition.
Further, the authors advise to attract foreign partners to resource consortium (especially in the eastern part of Russia, on the shelves and "unconventional" fields). Foreign investments will go into the country, and with them advanced technologies. In the case of “Rurik”, it is likely that there will be “tight cost control” as well as “performance” (here, obviously, there is a transparent hint that ours cannot control or pleasantly surprise with the results). “Additional guarantees of product sales” will also be received. Well, and something positive will happen along the way.
As general measures to counteract the influence of any “breakthroughs” there, the experts suggest “a radical increase in the investment efficiency of the Russian fuel and energy complex and the energy efficiency of the economy as a whole”. Giant investment of the Russian fuel and energy complex is referred to in the report as “waste” (see p. 93). It is proposed to reduce the cost of investment projects and carefully evaluate their economic efficiency and risks. Another measure of "efficiency improvement" is "a broad study of the prospects for external and domestic energy markets."
The chief adviser to the head of the Analytical Center, Leonid Grigoriev, mentioned above, described the forecast for the 2040 report as moderately non-optimistic. “We don’t draw catastrophic scenarios and don’t want to scare people,” Tatyana Nikolova quotes him."Gosbuk"). - But it is impossible to build national energy plans all the time, based on the bright expectations of a general increase in energy consumption, with which we will supply everyone at high prices. It is necessary to lay oneself on surprises and proceed from the moderate rates of economic growth in the world in the foreseeable future. ”
However, the expert did not say anything new. Russia has long been sitting on the raw needle. Today oil in Russia gives about 30% of export earnings, gas - 12%, oil products - 28%. Total export of fuel and energy products of Russia was at the end of last year 69,8%.
In the case of the implementation of the technological “breakthrough” scenario, Russia will have a chance to get off the needle. A blessing in disguise. Let's not let America pinch us, eh guys?
Observed and commented on Oleg Chuvakin
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