The world’s reserves of shale gas will frack the Middle East

We’re on the cusp of a geopolitical watershed.

The oil states of the Middle East will lose their guaranteed cash cow as world-wide stocks of shale gas are both plentiful and wide spread

Prince Alwaleed bin Talal, the billionaire Saudi investor, made a telling intervention in his country’s domestic politics last week, with an open letter arguing the U.S. shale gas revolution threatened its economy.

His point was a simple one, and well made. If America needs less Saudi oil, that can only be bad news for the nation exporting the stuff. It better start diversifying into other industries — and fast.

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But the same point can surely be made about a lot of other countries. It is not just the U.S. that happens to have a lot of shale gas; it is just the first country to start exploiting it on a large scale. And Saudi Arabia is far from the only country dependent on energy exports to keep its economy afloat. There are plenty of others.

In truth, shale gas is going to re-arrange the winners and losers in the global economy. And as that happens, investors will need to rearrange their portfolios as well.

Like any major new energy source, shale gas has the ability to confer massive wealth on some countries — and take it away from others. So how will that play out over the next decade?

It is certainly interesting that we have seen a total dominance of the oil-rich states and we are about to see it decline during our life time.

Peak oil wasn’t so much about running out, it’s more about finding new technologies to extract vast new reserves of natural resources.

Countries such as Saudi Arabia can try and diversify into new industries, but in truth, if that were easy they would have done it by now. Iran will be in a lot of trouble, and so will Libya, and Gulf states such as Qatar. You wouldn’t want to bet too much on Dubai prospering if it is not the financial hub of one of the world’s wealthiest regions any more.

Nigeria and Venezuela will be under pressure. Norway is the world’s sixth largest oil exporter: it has sensibly saved a lot of that wealth, but it will be hard to remain one of the world’s richest countries if that industry goes into decline. Russia might have its own shale gas, but it is oil exports that keep it afloat.

Many of those countries have regimes that will collapse if the economy runs into serious trouble. Will the governments of Saudi Arabia, Iran, Russia, Nigeria or Algeria survive a serious economic depression?

Call me a pessimist, but I can see the beginnings of a whole set of fresh armed conflicts there.

It is mostly good news though, as long as you’re not mostly dependent on export earnings from crude oil right now.  The world continues its expansion of technology and industry without the Chicken Little future the Green Taliban would like you to have believed had arrived a decade or two ago.

I think I’ll go for another drive.

 


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  • Travis Poulson

    Yikes, NZ has been wiped off the map…..

    • Steve (North Shore)

      Good, nowhere for the Greens to protest. They can fuck off to another country

    • LabTested

      No. They just called us (a) LEGEND, rather than drawing some squigly lines

  • Michael Wagener

    the other victim of the abundance of shale gas is the coal industry. why burn coal when gas is cheaper and cleaner?

    • Honcho

      Not all of coals uses are for power generation, most of new zealands deposits for instance are hard coking coals, used in the production of steel.

      • Michael Wagener

        sure. But taking away a significant usage of a resource drops the value significantly.

        • Muffin

          the reduction in the cost of the coal might actually drop the cost of steel and which should have a flow on effect to most of the economy……..loose there/gain here

        • philbest

          And one day all someone will work out how to utilise all that near-free coal cleanly, and/or humanity will no longer be bothered about “carbon emissions”.

    • AnonWgtn

      Did I not understand that we have enormous Shale fields in Southland ?

      • Col

        And oil.

  • conwaycaptain

    And the Anti Everything Party (The Greens) will not want fracking in NZ or anything to help the country.

    • Travis Poulson

      It’s been in Taranaki for years, so they’ve already lost that battle.

    • bristol

      Yep. Frack ’em, I say!

    • Oiler Boiler

      Fracking is only a problem in shallow deposits. The deposits in NZ are deep – 2 to 30km deep. Fracking at that depth has no impact on water tables and doesn’t cause ground tremors. Plus in NZ we don’t always need to pump in chemicals due to makeup of ground. We mostly use pressurised hot water.

      • EX RNZN RM1

        Thanks for the insight but will the boy MP understand what you have said.

  • maninblack

    this is great news.
    I would like to see the price of fuel come down though.. 60 bucks to fill my tote tank in my boat.. considering the high percentage of that is tax.. its to much!!

    • Muffin

      you can claim the excise tax back on fuel used on boats and farm tractors etc, basically anything that doesn’t go on the road

      • BigDes

        Only petrol tractors tho muffin!

        • Muffin

          True, now try finding the form to submit it with….. It’s not well advertised

  • conwaycaptain

    US becomes a net exporter of energy therefore they will reduce their trade deficit and therefore what they owe the rest of the world.
    The ME countries will have to get their people to work which they don’t do much of at the moment as they rely on Govt jobs!!!!
    The ME countries will become weaker as they wont have all that money coming in and they will then start warring between themselves.
    China will become self sufficient in Oil and therefore less money to tye ME. Energy costs drop therefore the cost of living will also.

    • Patrick

      The day the West no longer relies on the ME cannot come too soon. The corrupt Islamists need to be cut off. Too many young men & women have been killed under the guise of introducing democracy to the ME. Cut them off, leave them fight amoungst themselves.

      • Muffin

        back living in caves and chopping each others heads off within a generation I’d say

        • Patrick

          Just a quick move back to the caves then – they are already fond of cutting off each others heads & limbs.

  • Cadwallader

    How long will it be until the Greenie weirdos start farting on about “peak” shale gas?

  • Sir Cullen’s Sidekick

    I have just now submitted a research paper to Sheep that fracking causes earthquakes….Sheep is going to publish that. Also Sheep will officially ban fracking in NZ when he takes over the government in 2014.

    • Patrick

      Scientific evidence produced by the IPCC indicates that fracking reduces testicle size in humans. Therefore Labour will support fracking as a “backdoor” to introduce their manban.

  • cows4me

    Maybe when the money runs out some of these countries will either have to grow up and treat their people right or slid back into the stone age and total disintegration. Many of the leaders and their regimes must be worried, who’s going to pay for the bodyguards, the armies, the weapons. The next wealth will come from food and water.

    • philbest

      I see no essential difference between Arabia and Somalia apart from the oil.

  • Oiler Boiler

    I grew up with a father who was a big cat in the Taranaki Oil industry. He still has involvement. He says there is so much oil around its not funny. There just isn’t a desire to suck it all out at once. Shale Oil is massive. But Canada and Russia have something even bigger – oil in their sands….. it’s massive. Can be scraped off and separated.
    The oil reason the liquid treacle has been used to date is that it’s easy to pull out.

    • cows4me

      Quite true, the oil is there, the price is to cheep to develop..

      • Steve (North Shore)

        please dont make me laugh, it hurts (pneumonia)

  • Col

    I thought we could get a few of those Muslim girls who fart, that would be safe for them here, and the Greens would be happy as it is truly natural?

    • Conrad

      Have you ever met A-Rabs? I’d like to be nice but its quite difficult to give them substantive credibility. Thick as shit.
      Ask the Iranians what the think of the Arabs. The Persians (Iranians) were a massive empire once and have culture and a sophisticated society. They hate the Arabs. Arabs fucked them by supporting Saddam in Iraq-Iran war when Iranians were chemical bombed.
      Arabs make dumb short term decisions. Like when they supported the Iranians. And like spending money on lavish palaces and things that don’t matter. Now with their pants about to pulled down we can see proof of that.
      They aren’t bright.

      • Col

        Well the Arabs never had wealth, they just happen to have oil under there feet, bit like someone winning lotto with a low IQ and blowing the lot.

      • philbest

        They did build up a bit of an empire a few centuries ago when fanaticism in hand-to-hand fighting with swords, and horsemanship, mattered. They are still sore about losing as soon as technology started to matter at all. It is BS that “we started it” with the Crusades.

  • Monty

    What is even better is that this map does not include the frackable stuff under the ocean. This is all land based. Me thinks the concept of peak oil has move out about 500 years. Oh dear green Taliban will be furious.

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