* More than a third of US production is shale gas
* Cheap power reindustrialising the U.S. to Europe's cost
* Energy bonanza could redraw geopolitical map
By Alexandra Hudson
MUNICH, Feb 3 The United States is enjoying an
energy bonanza thanks to shale gas, making it a magnet for
industry, reducing import dependence and challenging Europe as
it battles to dig itself out of recession, energy officials say.
Panelists at a weekend security conference in Munich warned
Europe must develop a strategy on how to tap its own resources
in order to keep energy costs competitive, or risk seeing
power-intensive industries locate elsewhere.
"The shale gas and oil boom is already underway. As Europe
continues to debate it, North America is reaping the
advantages," said Jorma Ollila, Chairman of Royal Dutch Shell
Just a week ago Shell signed a $10 billion shale gas deal
with Ukraine - the biggest contract yet in Europe - which could
help Ukraine ease its reliance on Russian gas imports.
Ukraine is said to have Europe's third-largest shale gas
reserves at 42 trillion cubic feet (1.2 trillion cubic metres),
according to the U.S. Energy Information Administration.
Its reserves are dwarved by those of France however,
estimated to be Europe's largest at 180 trillion cubic feet.
France has banned the procedure, known as fracking which is
used to extract shale gas and which involves pumping vast
quantities of water and chemicals at high pressure through drill
holes to prop open shale rocks.
Environmentalists fear it could increase seismic risks and
pollute drinking water. U.S. officials question this and say
that thanks to the higher proportion of gas use the United
States has had its lowest carbon dioxide emissions in 20 years.
"Observing this from across the Atlantic it is really quite
remarkable that there should be a ban or a go-slow on this
development in Europe, really without any facts," said Daniel
Yergin, Vice-Chairman of IHS Cambridge Energy Research.
Fracking is used to produce a third of U.S. natural gas he
said, showing the environmental impact can be managed.
World energy market flows already reflect North America's
scramble to exploit shale oil and gas and highlight the
potential prize Europe is ignoring.
"The U.S. internal energy revolution and the radical
increases in production of oil and gas have boosted gas
production by 25 percent and seen oil import dependence drop
from 60 percent to 40 percent, and expected to decline further
to 30 percent," said Carlos Pascual, the U.S. special envoy for
While Europe retains deep environmental concerns it also
acknowledges that with the price of gas in the United States
just a third of that in Germany, its industry is already
suffering the effects.
German Economy Minister Philipp Roesler said: "Many German
firms have opted for (relocation to) the United States, saying
energy prices were the decisive factor...We are already seeing
that we are suffering with our higher energy pricesit affects
our own competiveness."
Addressing the panel in Munich European Union Commissioner
Guenther Oettinger said Europe should be in a position to
produce enough shale gas to replace its depleting conventional
gas reserves, so as not to become more dependent on imports.
A greater abundance of gas could threaten the dominance of
Russia's gas exports and pressure prices. The United States
seized Russia's spot as the world's largest gas producer in
2012, and is due to produce significantly more from 2015.
"I believe that the shale revolution is something positive,
a chance for all of us to launch technologies, intensify
competitiveness, make our countries more energy secure, and
reduce costs," said Russian Energy Minister Alexander Novak.
Russia is focusing on boosting exports to energy-hungry Asia
and developing infrastructure to transport gas eastwards.
A recent confidential study by the German intelligence
agency (BND) suggested the United States could turn from being
the world's greatest energy importer into an oil and gas
exporter by 2020, reducing its dependence on the Middle East and
thereby giving it much more freedom in policy making.
China by contrast would become much more dependent on Middle
East oil to fuel its rapid expansion.
Illustrating just how rapidly the shale revolution has taken
hold, shale gas accounted for just 1 percent of gas production
in 2005, whereas today it is a third, and by 2040 it will be 50
percent, U.S. special envoy Pascual said.
"Developing a greater capacity to reduce import dependence
does not diminish our commitment to stability," he stressed.
"It will not affect our engagement for global security,
peace and security in the Middle East."
(Additional reporting by Andreas Rinke; editing by Keiron