Saudis Fresh Prince Freaks Out About U.S. Fracking
Posted 07/30/2013 06:22 PM ET
Alwaleed calls for diversification. AFP/Getty Images View Enlarged Image
Energy: A Saudi prince has warned that his oil-reliant nation is under threat because of fracking technology being developed in the U.S. and spreading around the world. OPEC is now caught between Riyadh and a hard place.
Indicative of the panic rippling through the Organization of Petroleum Exporting Countries over the U.S.-led fracking boom, billionaire Saudi Prince Alwaleed bin Talal says his Gulf Arab kingdom needs to reduce its reliance on crude oil and diversify its revenues, lest the era of gold-plated toilets come to an end.
In an open letter to his country's oil minister Ali al-Naimi and other government heads, published on Sunday via his Twitter account, Prince Alwaleed said demand for oil from OPEC member states was "in continuous decline" as a result of the technology that has unleashed vast deposits of oil and natural gas worldwide.
In a report earlier this month, OPEC forecast demand for its oil in 2014 would average 29.61 million barrels per day (bpd), down 250,000 bpd from 2013. It cited rising non-OPEC supply, especially from the U.S.
The latest threat to OPEC's fossil fuel dominance comes from Britain, where the British Geological Society significantly increased its estimate of the amount contained in the country's shale rocks to 1,300 trillion cubic feet. Experts said this could translate into enough to supply the U.K. with natural gas for 25 years.
A June 10 report by the U.S. Energy Information Administration assessed 137 shale formations in 41 countries outside the U.S. The EIA's "Technically Recoverable Shale Oil Resources" data put global reserves at 287 billion barrels of shale oil, 335 billion if U.S. reserves are factored in.
The world's three top reserves of shale oil are Russia (75 billion barrels), the U.S. (48 billion barrels) and China (32 billion barrels).
The report states that the world has an estimated 6,634 trillion cubic feet (tcf) of recoverable shale gas, 7,795 tcf if U.S. reserves are added to the mix. The top three shale gas recoverable reserves are found in the U.S. (1,161 tcf), China (1,115 tcf) and Argentina (802 tcf.)
The shale oil threat means Saudi Arabia will not be able to raise its production capacity to 15 million bpd, Prince Alwaleed argued. "Our country is facing a threat with the continuation of its near-complete reliance on oil," the prince said, especially as 92% of the budget for this year depends on oil.
Alwaleed's warning comes almost simultaneously with a landmark study released this month dispelling another myth — that fracking is environmentally unsafe to our water supplies. Such charges have been the only real threat to the continuing fracking boom.
That opposition was fueled by the recent anti-fracking "Promised Land," a film financed by a company owned by the United Arab Emirates that falsely claimed that fracking poisons groundwater to the point that it becomes flammable.
The fact is that shale formations in which fracking is used are thousands of feet deep. Drinking-water aquifers are generally only a hundred feet deep. In between is a lot of solid rock. That there's no danger was confirmed by the study done by the National Energy Technology Laboratory in Pittsburgh.
Eight new horizontal wells in Pennsylvania's Marcellus Shale formation were monitored seismically. One was injected with four different man-made tracers at different stages of the fracking process, which involves setting off small explosions to break the rock apart.
Drilling fluids tagged with unique markers were injected more than 8,000 feet below the surface, but were not detected in a monitoring zone 3,000 feet higher. That means the potentially dangerous substances stayed about a mile away from drinking water supplies.
Fracking is safe and productive. Which is why there's no joy in Riyadh. The mighty Saudis have struck out. Let them pound sand.