Scrappy American companies are exporting their controversial drilling techniques to Asia and Europe, where "fracking" could face less regulation.

News and commentary about environmental issues.
Nov. 22 2010 10:11 AM

Shale Goes Global

Scrappy American companies are exporting their controversial drilling techniques to Asia and Europe, where "fracking" could face less regulation.

(Continued from Page 1)

China and India are betting large that shale gas can boost their economies while simultaneously reducing emissions. Both governments have signed agreements with the United States to jointly develop shale gas resources under the U.S.-led Global Shale Gas Initiative—a program launched in April 2010, seemingly to solidify the United States' position as leader of the shale gas industry. In July 2010, the state-owned China National Petroleum Corporation announced that it aims to produce 500 million cubic meters of shale gas by 2015. That number pales in comparison with U.S. shale gas development (the Department of Energy estimates the United States could produce roughly 60 times as much as China's goal), but that reveals more about the infancy of China's shale gas industry than the country's potential reserves. ConocoPhillips, Royal Dutch Shell, and BP are all working with China's state-owned oil and gas companies to explore for shale gas there.

In Europe, the situation is a little trickier. Drilling in the United States has boomed partially because companies have offered lucrative gas leases to landowners, who have been happy to lease their land. But in Europe, landowners don't profit from the mineral rights to their land—the state does, instead—so they're more likely to block companies from drilling. That still isn't stopping companies and governments from exploring reserves there—Chevron, for instance, applied for permits this year to explore shale gas deposits in Bulgaria. Developments like these in Poland and Bulgaria have Russia worried it could lose its monopoly of the European natural gas market.

Meanwhile, India and China, hungry for more natural gas, are also exploring American shale reserves. China National Offshore Oil Corporation signed a $2 billion deal with Chesapeake Energy in early November to purchase a one-third interest in Chesapeake's Texas shale fields. And India's largest oil company is focusing its investment on U.S. shale fields, spending $943 million in 2010 to purchase three U.S. shale gas fields and promising to spend $2.5 billion drilling those fields.

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Through public and private partnerships with countries in Europe and Asia, and its leadership of the Global Shale Gas Initiative, the United States could push for the global adoption of any environmental regulations put in place stateside. There's no guarantee that the United States will make such a push, given its already-tense trade relations with China. And it's still not certain whether the federal government will regulate U.S. shale gas firmly, if at all. But the opportunity for international influence is ticking away—with surging interest abroad and the prospect of regulations at home, the United States might not lead the global shale gas market for long. In the meantime, what it does with that power could determine whether the rest of the world develops shale gas sustainably and whether, domestically, natural gas becomes the bridge fuel—an intermediate, rather than ultimate solution to our energy needs—that environmentalists have always hoped it would be.

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