President Obama is pulling out the stops in his campaign to enlist the efforts of Europeans in the drive to keep Putin and Russia under control. Rather than a war of tanks and bombs, the weapons he proposes to use are trade and energy. He laid out his challenge in a major speech in Brussels.
It was clear Obama had no intention of being drawn into rash action or any kind of dangerous confrontation with Putin over Ukraine. "This is not another cold war that we're entering into. The United States and Nato do not seek any conflict with Russia," Obama said. "Now is not the time for bluster … There are no easy answers, no military solution."
While a major policy shift will take time to become effective, a transatlantic resolve was hardening to break European dependence on Russian energy supplies, with Obama for the first time stating that America's shale gas bonanza could be part of the solution for Europe's vulnerabilities.
But he also told the Europeans that they, too, would need to bear the political risks of fracking to develop their own shale deposits in order to build up indigenous energy reserves. At a 65-minute lunchtime US-EU summit, Europe asked Obama to share America's shale gas revolution by facilitating US gas exports to help counter the stranglehold Russia exerts on the continent's energy needs.
This seems like a good time to take a closer look at the global situation with natural gas and the complex political agendas that are swirling around it. The very basic question of how much gas is there and who has it turns out to be complicated. Estimates of energy resources are measured in terms of "proven reserves". What constitutes proof can get controversial.
The Economist offers a useful overview of the situation.
AROUND 45% of the world's recoverable natural-gas reserves are "unconventional", comprised mainly of shale gas, and also tight gas and coal-bed methane. The International Energy Agency (IEA) reckons global gas demand will increase by more than half between 2010 and 2035, and unconventional gas will make up 32% of the total supply, up from 14% today. While Russia and the Middle East hold the largest reserves of conventional gas, available sources of unconventional gas are spread across the world, and can be found in countries that are currently net importers, such as China and America. But the ease of accessibility will vary from well to well. Extracting shale gas (which is trapped between layers of shale rock) and tight gas (found in sandstone) involves bombarding the rock with water and chemicals, a technique known as "fracking". This is more expensive than the methods used to produce conventional gas. Costs differ between countries, too. China's shale-gas and coal-bed methane industries are subsidised to the tune of 3 cents per cubic metre. Elsewhere there is less government support. France and Bulgaria have banned fracking for environmental reasons.
This what world rankings look like when the various possible sources are combined.
This makes it clear that by any measure Russia's reserves of natural gas are far more extensive than those of any other nation. Almost all of those presently identified are in the conventional more easily accessible form. What is less clear is the ranking of the US. Placing it as a distant second rank behind Russia requires the inclusion of shale deposits.
Beginning with the Arab oil boycotts of the 1970s we have seen repeatedly how the leverage of energy resources can be used to move political mountains. The events of 9/11 and the fear of terrorism were put to various purposes. One of them was the drive for American energy independence and the impetus that gave to off shore drilling with the slogan of drill baby drill. It appears that we now have the same sort of campaign to make Europe energy independent of Russia.
Can U.S. natural gas rescue Ukraine from Russia?
Can American natural gas rescue Europe and Ukraine from the clutches of Russia? Not likely. Especially not soon.
But many members of Congress are pressing the Obama administration to use energy as a diplomatic weapon and to speed permits for natural gas export terminals to ease Europe’s and Ukraine’s heavy reliance on Russian supplies.
It isn’t that easy. The cost of getting U.S. gas supplies to Europe and the lack of infrastructure on both sides of the Atlantic are major obstacles. Plus, Asian customers are offering higher prices. Opponents of gas exports (including consumer groups and petrochemical companies) say that some businesses and politicians are using the Ukraine crisis as an excuse to export. Proponents, by contrast, complain that the Energy Department is dragging its feet.
This article is well worth reading in full. It offers a detailed picture of the competing economic interests involved. It gives background on the prominent role being played by Sen. Mary Landrieu which does a lot to explain how she wound up on Putin's sanction list.
The basic policy thrust of the Obama administration is to isolate Russia economically to limit their power to influence events in Europe and the Middle East. In doing that the plan is to isolate their vast natural gas reserves that are a major source of political leverage. The proposal is that the rest of the world turn to more costly and environmentally risky sources. Obama is casting himself as the Cheerleader In Chief of the world wide fracking movement. The people who have been hoping to persuade him to be an ally of environmental protection seem likely to find that they have been barking up the wrong tree.