American led ‘Shale Boom’ hurting Shtokman (Russian) feasibility
December 6, 2011 1 Comment
In the beginning…, Shtokman had intended on selling much of their estimated 3.8 trillion cubic metres of natural gas and 37 million tons of gas condensate to the United States. This position was later revised as planning came to fruition, the Shtokman Development AG (Norway, France, and Russia) was pulled together, and it was then decided that must of the gas would be in fact sold to Europe. The lastest plan assumes a series of gas pipelines that connect with Europe via the Nord Stream pipeline (half of which has already been commissioned). Europe was predicted to have demanded much gas for the years that stretched past Shtokman’s commissioning date of 2017. Now that the Western world in its entirety seems to have tripped with low forecasted GDP growth rates for the foreseeable future, the increasingly uneconomical Shtokman project seems to be becoming just that – ‘Increasingly Uneconomical’.
That was then. This is now. The market is starting to feel the effects of the shale boom that is occurring across America. The incentives just don’t line up for Shtokman anymore. The world is producing more and more shale gas. The United States (as reported by the IHS) has seen shale gas production reach 34 percent of total production from a measly 1 percent in 2000. This figure is assumed to grow to 60 percent by 2035. The success of American shale since 2000 has triggered a rise in shale development in Canada, along with interest in those shale properties in Europe, Asia and Australia. This is of course almost entirely due to the new technologies that have been developed over these past years. As new gas comes to market, the price of natural gas comes down. The price will be effected by the sheer acknowledgement that massive previously unreachable reserves are now reachable. Take Statoil’s word for it;
The gas market in Europe is challenging, and the main reason for this is the shale gas revolution in the US. It has had an enormous impact on the global gas and LNG industry
Jan Skogen, President of Statoil Operations in Russia
The 3 heads of Norway’s Statoil, Russia’s Gazprom, and France’s Total have still been voicing their concerns over potential issues surrounding profitability. A continuation of gas booms across the globe are only going to hurt Shtokman Development AG’s bottom line.