Roth: East meets West for energy
By Jim Roth | December 19, 2011
A massive building boom, an emerging middle class, bustling traffic, economic growth leading the world and an insatiable appetite for consuming most all forms of energy. No, I am not talking about the U.S. in the 1950s. It’s modern-day Beijing, China. Earlier this month, I traveled to Beijing on behalf of the National Energy Policy Institute with a delegation led by University of Tulsa Law School Dean Janet Levit to discuss TU’s unique LLM program and exceptional energy focus within its curriculum and its industry collaborations. We met with a number of Chinese law schools and law firms and had a chance to present to a large audience hosted by the American Chamber of Commerce offices in China.
China is in the untenable position of growing at a pace that it cannot sustain domestically. And it seems hungry to learn from our energy revolution: U.S. shale gas as a means to its energy future.
The energy industry has long been a driver of new and exciting technologies that bring about changes to national energy policy and priorities. New discoveries of unconventional shale gas have forever changed the U.S. and global energy outlooks. In just a few short years, discussions of U.S. domestic energy policy have shifted to recognize the seemingly endless possibilities for natural gas, a much cleaner and now more abundant fuel deep beneath U.S. soil. American fuel, American jobs, American energy independence … you get why it’s so important. And I believe the Chinese government is beginning to get it, too.
New technologies and processes like horizontal drilling and hydraulic fracturing have enabled natural gas developers to access previously unreachable deposits from new and more cost-effective angles. Shale gas discoveries have caused a dramatic shift in overall global natural gas supply. In 2009, shale gas accounted for 14 percent of U.S. natural gas supply. The U.S. Energy Information Administration expects shale gas to make up nearly 46 percent of total U.S. supply by 2035. This is a game changer.
China’s proved natural gas reserves have also skyrocketed, particularly in the last decade. In 1980, China’s proved reserves registered at just 25 trillion cubic feet. This year, China boasts 107 tcf of proved natural gas, and the EIA estimates that China’s technically recoverable shale gas resources are nearly a staggering 1,275 tcf.
In this age of truly global dilemmas such as greenhouse gas emissions negotiations (which have been largely fruitless), global energy security concerns, and implications of climate change, increased estimates of the amount of recoverable natural gas present nations with a new option for meeting once-unachievable goals. China ranks as the world’s leading emitter of greenhouse gases, which has been largely attributed to its 71-percent coal-based energy intensity. Today, China is installing 900 megawatts of coal-fired generation per week and is the world’s leading importer of coal as a result. Increased reliance on natural gas could play the dual role of reducing China’s need for imported coal and trimming down polluting emissions considerably. Natural gas has roughly half the carbon intensity of traditional coal. To the credit of the Chinese government, its 12th Five-Year Plan (just like the 10th and 11th) has meaningful objectives for cleaner-energy reliance and production.
This month, China announced an exciting development in the country’s domestic shale gas future. PetroChina, in partnership with Royal Dutch Shell, has discovered shale gas in China’s Sichuan province.
These developments should come as welcomed news to Beijing, particularly as the International Energy Agency has recently predicted that China will rely on foreign energy sources at a rate of 60 to 70 percent of total consumption by 2015. These and future discoveries of Chinese shale gas could have the effect of revolutionizing China’s energy mix.
The economic link between China and the U.S. is undeniable, and energy production and consumption will undoubtedly continue to be key factors in both nations’ efforts to navigate the new global economy.
We should be proud of how Oklahoman and American ingenuity has helped lead America’s oil and gas production for decades, especially unlocking America’s massive shale gas.
Jim Roth, a former Oklahoma corporation commissioner, is an attorney with Phillips Murrah P.C. in Oklahoma City, where his practice focuses on clean, green energy for Oklahoma.