1. U. S. Shale Gas and Global Energy Dr. James L
U.S. Shale Gas and Global Energy Dr. James L. Smith, Southern Methodist University
September 23, 2010
Hong Kong Baptist University Workshop on Electricity Reliability, Environment, and Cost
June 10, 2014

2. Today’s Presentation:
What is shale gas?
How is it affecting the US energy scene?
How will it affect global energy markets?
What are the benefits for Asian consumers and industry?

4. U.S. Gas Production (tcf)

5. Shale Beds are the Original Source of Gas

6. Fracking and Horizontal Drilling are the Keys

7. Chesapeake Energy Gas Rig -- Pennsylvania

8. Click to Play Video

9. Shale Basins are Widespread

10. Global Shale Basins
Source: U.S. Energy Information Administration

11. Technically Recoverable Shale Gas Resources
Total = 7,299 TCF
Source: U.S. EIA, June 10, 2013

12. The Contribution of Horizontal Wells
Source: U.S. Energy Information Administration

13. U.S. Shale Plays Also Attract Foreign Investors
Source: U.S. Energy Information Administration

14. KNOC Upstream Oil & Gas Projects
Source: U.S. Energy Information Administration

15. Dramatic Rise of U.S. Shale Gas Production

16. Potential Future Impact on U.S. Gas Price

17. Shale Gas Impact on U.S. Price
Source: K. Medlock, “U.S. LNG Exports: Truth and Consequence”

18. U.S. Coal Consumption for Electricity
Source: U.S. Energy Information Administration, Deutsche Bank

19. U.S. Coal Exports (net) 1,000 short tons
Source: U.S. Energy Information Administration

20. Shale Gas Pushes Coal into Export Channel
… and depresses the price.
Source: U.S. Energy Information Admin., U.S. Bureau of Labor Statistics

21. Europe & Asia Receive More U.S. Coal
Source: U.S. Bureau of Labor Statistics

22. Potential Impact on GHG Emissions

23. Gas Consumption Represents a GHG Tradeoff
As gas-based emissions rise, emissions from other fuels fall by more.
Source: U.S. Energy Information Administration

24. How to Replace Nuclear: Coal or Gas?

25. Global LNG Market Imbalance
Source: K. Medlock, “U.S. LNG Exports: Truth and Consequence”

26. Profitability of U.S. LNG Exports
Source: K. Medlock, “U.S. LNG Exports: Truth and Consequence”

27. Shale Gas: Focus on China

28. China Primary Energy Consumption

29. China: Power Generation

30. China: LNG Imports are Diversified

31. The New Russian-Chinese Pipeline Gas Deal
38 billion cubic $10/mmbtu
≈ 25% of Russian gas exports to Europe
≈ 10-15% of total Chinese gas supply by 2020

32. China’s Shale Gas Upside Potential
Source: U.S. Energy Information Administration

33. China’s Primary Shale Gas Basins
Source: U.S. Energy Information Administration

34. China Electric Power: Coal vs. Everything Else

35. Concluding Thoughts
Expanding supplies of US shale gas are pushing energy prices down, in the US and abroad.
Global arbitrage will tend to reduce (but not eliminate) the wedge between U.S. and Asian gas prices.
Shale gas is pushing coal out of U.S. power generation and into the export stream—resulting in lower coal prices but increased carbon emissions in Europe.
The U.S. shale gas revolution represents only the tip of the iceberg, with impacts likely to grow as the global abundance of shale resources is recognized and exploited.
All energy consumers (especially import-dependent consumers like Japan, Taiwan, and Korea) will benefit from the abundance of gas. Producers of competing fuels (coal and oil) will not.

36. Thank You!