Can fracking save the world?

If the early 21st century is the “golden age of gas,” as the International Energy Agency has declared, who will be its king? Until 2009, the answer seemed obvious: Russia. But a funny thing happened on the way to the “third Rome” that Russian nationalists view as their destiny. In that year, propelled by the technological innovations of hydraulic fracturing (or “fracking”) and horizontal drilling, U.S. gas production surpassed that of Russia. 

As crisis erupts in the Ukraine and policymakers struggle to regain our footing amidst its geopolitical aftershocks, we can indeed be grateful that the United States has surpassed Russia as the world’s largest producer of natural gas. Though largely symbolic, observers have still noted the psychological importance that the rise of shale gas and the fall of Russia from the top of the world’s “League Table” of natural gas producers has had in the offices of Gazprom and the Kremlin. Within the worldview of Russian President Vladimir Putin's and his inner circle of KGB veterans, this sort of thing might seem to matter a great deal. Meanwhile, as U.S. leaders react to the Ukrainian crisis, the call has now gone out from both Democrats and Republicans for the U.S. to wield its “gas weapon” and commence exports to Europe immediately. 

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In the world of energy infrastructure, however, the pace of change moves much slower than that of a major international crisis. The first U.S. export terminal for liquified national gas (LNG) is still under construction in Sabine Pass, Louisiana, and is not scheduled to come online until late 2015. Moreover, the contracted destination for most of the currently planned U.S. exports of natural gas is Japan, where demand skyrocketed after the Fukushima disaster and the shuttering of that country's nuclear power plants. According to BP, the 2012 average price (evening out seasonal variations) per million British thermal units (Btu) of natural gas was $16.75 in Japan, more than 50 percent higher than the average German import price of $11.03 -- and more than 600 percent higher than the U.S. benchmark Henry Hub price of $2.76 in that year. Nonetheless, even though exports to Europe will not occur anytime soon (and possibly never given the prevailing market conditions), globalizing the market can't hurt over the long term. Every cubic foot of US natural gas sold to Japan could, for example, free up another unit of gas from Qatar or the Middle East to be available for Europe to replace sources from Russia. 

In the long run, it never hurts to add to supplies. In the oil market, we have already seen the advantages that fracking and other unconventional extraction methods such as oil sands have provided to the U.S. geopolitical bargaining position. Added supplies from North Dakota and Alberta, Canada have more than made up for losses in production due to sanctions on Iran and the freeze on investment in Venezuela. This has placed enormous pressure on those regimes as they face reduced export volumes without the price increases that they rely on for buying the quiescence of their populations. 

Diffusion of fracking technology can also help. It would allow countries in central Europe tap their own shale gas reserves -- instead of maintaining or increasing their use of coal, including moist brown coal or lignite, which is even dirtier, more polluting, and carbon-intensive than the anthracite black coal we are accustomed to in the United States. 

Finally, such diffusion is likely to make its biggest impact in the world beyond Europe. The U.S. Energy Information Administration (EIA) currently estimates that the largest reserves of shale gas deposits are in neither Europe nor the United States, but in China. This represents a tremendous opportunity. If natural gas is used to replace coal in Chinese power generation, the resulting reduction in greenhouse gas emissions would dwarf any other technologically feasible step that any single country could take. 

So yes, fracking can help save the world -- so long as we are patient enough to see a decade-long process through to its end.

Shum teaches public policy at the College of Brockport, State University of New York.