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They say you know people by their enemies and this recent clip from Russia Today shows that Gazprom are very glad to see the recent problems of shale, while still clinging on to the 2008 conventional wisdom of shale as very expensive to produce:

The shale revolution stemmed from high gas prices,” said Konstantin Simonov, director of the National Energy Security Fund. “The main question right now is how will the shale gas industry survive now that gas prices are $100-150, which is one quarter what they were in 2005, when shale development began?”

Mr Simonov is correct in that prices today are much lower. But as just one example shows shale  development costs also drop:

The proliferation of low-cost shale production has pushed gas prices to the lowest levels in a decade, which put even more pressure on the economic viability of remote fields like Horn River.

If Canada can commercialise remote fields, why don’t Gazprom stop whining and join the shale train? Because for now it’s easier  to detract from shale in hope that the following won’t happen:

Another potential plus of shale, of course, is stopping countries’ reliance on Russia, which supplies most of Europe with natural gas. Many are already saying that if shale deposits are found in Europe, Moscow will lose the benefit of selling resources to other countries. However, the inhabitants of the Gazprom tower do not seem to be losing any sleep over this supposedly miraculous fuel. “We’re watching the situation, and we think that locally it’s very viable, but it will remain a local gas supply,” said Gazprom spokesperson Sergey Kupriyanov. “It’s impossible to extract gas at a loss for long. And if you look at the shale gas suppliers right now, you’ll see that most of them are losing money.”

Gazprom will soon have to face reality, before reality faces them. A good place to start is to study shale today, not to use the past as indicator of the future as many so gas “experts” in Europe do. That completely misses the inflection point of shale:  From now on everything is different. Get with the program or get squashed.

But in the meantime, Gazprom shows that not only do they care about costs to the  consumer, they are also a green champion for Europe.

And though the Obama administration has hailed shale as an environmentally friendly alternative to natural gas, recent studies have put this under question. Several scandals have already broken out in the US because of the effects of shale gas development on the environment and people’s health. “Shale gas is extracted by hydro fracking,” said Konstantin Simonov. “That means special chemicals are added to the water to break up the rock formations. The components of these chemicals are kept secret by the companies in the United States, who claim it’s a commercial secret. But that water, laced with chemicals, ends up in drinking water. So shale gas development poses a serious threat to the environment and health.” The United States may have outdone Russia in gas production in recent years. But like any seeming miracle cure, shale gas may prove yet another false and dangerous economy.

I’m not a paranoid person, but there are plenty who are.Many of them are in the leave it in the ground/ shale is permanently evil school who think that all companies are systematically unable to ever provide safe extraction. So there are plenty of paraonoid people in Europe who notice the similarities between Gazprom’s and Gasland’s message. But I’m not one of them.  I don’t think either group is smart enough.

No Hot Air, 25 April 2011