I am also a Senior Fellow with the International Tax and Investment Center (ITIC) where I direct their Energy, Growth, and Security Program (EGS). I advise. US shale has lapped up many of the barrels that OPEC and Russia have ceded, whether propped up by debt or not, and they very well may do so again, leaving Russia … But, critics of the process have sounded the alarm over its negative environmental impacts, including air and groundwater pollution and increasing earthquake risk. ... What might have provoked Russia to retaliate against American oil producers is the U.S. sanctions imposed on … At the same time, oil-shale mining and processing raise a number of environmental concerns, such as land use, waste disposal, water use, waste-water management, greenhouse-gas emissions and air pollution. Many shale plays are in swing states including Ohio, Pennsylvania, Michigan, and New Mexico. The hydrocarbons in oil shale can be used as an alternative to petroleum or natural gas. A: Russia may have seen no point in cutting production only to lose market share as U.S. shale producers in Texas and New Mexico take up the slack. Got a confidential news tip? Increasing attention is given to unconventional oil. Russia has become the biggest global producer of crude oil with almost no contribution from shale, a sometimes technically difficult and expensive resource to … Weaker operators perished. That didn’t really lead to a hike in price, though, because the US shale industry kept producing and exporting oil. Both price points will have major collateral damage for oil producers in the Middle East, Europe, Russia and United States including shale oil producers. Putin, for one, hates American shale, which he blames, with some good reason, on the weak price of oil in recent months. Lenient bankruptcy regulations, too, were critical as they allowed companies to shed billions of dollars in debt and restructure their operations. "In spite of all of the economic benefits, we do not need it and we will never do this," Putin said. So far, Chinese NOCs have identified over 50 billion barrels of shale oil resources and 10 billion barrels of oil-initially-in-place (OIIP) in the major conventional oil-producing basins. The EIA's short-term energy outlook does not have demand rebounding until 2022 at least. In the interim, many shale oil producers will be forced into bankruptcy. Mikhail Svetlov | Getty Images News | Getty Images, Shale Bonds: The new way oil drillers are raising capital. Output increases in the Permian Basin of Texas, as well as other major formations, have helped the U.S. become the world's largest producer of oil. © 2020 Forbes Media LLC. Following the failed negotiations between Russia-led OPEC+ countries on Friday, Saudi Arabia now intends to boost its output to over 10 million barrels per day, while offering $6 to $8 per barrel discounts to consumers in Asia and northwestern Europe – key markets for Russia’s oil exports. The same can be said with regard to Russia’s Arctic reserves, with one essential exception: the government impels Rosneft and Gazprom Neft, the only oil companies active in Russia’s … © 2020 CNBC LLC. In 2017 the EIA concluded that even at prices around $30 per barrel, some 50% of US shale deposits would still be economically viable. Demand for oil in Q1 of 2020 will decline by nearly 4.0 million bpd year-over-year, the largest such drop in history. In October 2019, Russia’s Finance Minister Anton Siluanov claimed that the country would be able to sustain the effect of the oil price drop to $20 or $30 per barrel for three years, thanks to the National Wealth Fund (currently valued at over $170 billion) and stricter fiscal regulations, which allowed Russia to balance its budget based on the lowest break-even oil price in a decade. Russian President Vladimir Putin talks during the Russia Calling! Opinions expressed by Forbes Contributors are their own. —CNBC's Natasha Turak contributed to this report. Keeping Ukraine on Russian life support will ensure the safety of Russia's gas pipelines that cross the country way to the north of Crimea. Also on Wednesday, British oil giants BP have Russia’s natural gas reserves estimate at 32.9 trillion cubic meters from 44.6 trillion in last year. The Pandemic Has Broken Shale and Left Oil Markets in OPEC Hands ... Years of breakneck growth, at the expense of crude kingpins in the Middle East and Russia, have come to … It has many financial reserves and can live with low oil prices for much longer than the Saudis and other oil producing countries. But in terms of shale gas reserves, America is not the biggest shale oil … Russia’s central bank reported last year that an oil price of $25 per barrel—a number much likelier now than when this forecast was made—would push Russia’s economy into recession. Russia doesn't need Crimea's oil and gas reserves; it just needs Ukraine not to have it. Instead, OPEC boosted output in order to protect its market share and drive out higher-cost competition in North America (and Iran). VTB Capital Investment Forum on November 20, 2019 in Moscow, Russia. The companies that did survive led a resurgence of a leaner and meaner U.S. shale industry. Yet Russia already pumps more conventional oil supply than Saudi Arabia at around 10.3 million barrels per day and may look to shale to maintain rather than revolutionize production. But in terms of shale gas reserves, America is not the biggest shale oil … Kerogen is a part of rock that breaks down and releases hydrocarbons when heated. In my free time, I enjoy skiing, sailing, classical music, and my two cats. Since 2011 the USA surpassed Russia to become the world’s largest producer of natural gas. Radiating out further from ground zero in the shale patch, there are the financiers. Trump has even raised the notion of relaxing some oil-sector sanctions on Russia as a way to buy Moscow’s support for bailing out shale. Sechin and other Russian oil executives view the U.S. shale industry as a parasitic newcomer to oil markets. In other words, potentials to produce shale gas and tight oil. Russia does not need a new OPEC deal right now. Shale producers , especially in the Permian Basin , have proven to … March 6 2020 Just as the coronavirus outbreak wreaks havoc on the oil market, Russia has spotted an opportunity to hurt rivals in the US shale patch. What seems apparent is that the Kremlin has been planning this aggressive move against American shale producers for a while now. Two methods have been developed to extract petroleum products from oil shale. On first look the achievement has indeed been impressive. In other words, potentials to produce shale gas and tight oil. Years of breakneck growth, at the expense of crude kingpins in the Middle East and Russia, have come to an end. Sign up for free newsletters and get more CNBC delivered to your inbox. A devastating global pandemic and a reckoning with Wall Street appear to have broken the resolve of the shale wildcatters who turned the U.S. into the world’s biggest oil producer. The pandemic has led to a dip in demand for oil, and, after failed OPEC negotiations and the subsequent price war between Russia and Saudi Arabia, oil prices have plunged. Industry analysts argue the fracking industry is supported by a wide range of interests, not least the U.S. economy and national security. Saint Basil's Cathedral on Red Square in Moscow, Russia. The U.S. Geological Survey has used a lower limit of about 40 l/t for classification of Federal oil-shale lands. As shown in the next table, in terms of shale oil reserves, the number one country as reserves of shale oil is Russia. This advance is even more significant given that the sanctions have stopped Russian oil companies from using western equipment. I am a Senior Fellow at the Atlantic Council and the Founding Principal of International Market Analysis, a Washington, D.C.-based global risk advisory boutique. Hence, this is not a purely economic measure taken by the Kremlin, but rather a geopolitical one. The kukersite deposit in the Leningrad district (fig. Russia is estimated to hold the world's largest technically recoverable shale-oil resources. Oilfield service costs dropped along with the price of crude, bringing break-even levels down with them. Oil shale is a type of sedimentary rock that is rich in kerogen. You may opt-out by. Tatarstan, in cooperation with the Federal Ministry of Natural Resources, established two scientific experimental ranges in 2015 for the development of technologies for exploiting bitumen and shale oil. Most estimates included only Western Siberian reserves, which have been exploited since the 1970s and supply two-thirds of Russian oil. Estonia and China have well-established oil shale industries, and Brazil, Germany, and Russia also utilize oil shale. Does Granholm Know DOE Is The World’s Largest Science Establishment? This oil price crash, brought on the by global black swan of novel coronavirus and COVID-19, brings an entirely new level of uncertainty in to the 2020 US elections. A devastating global pandemic and a reckoning with Wall Street appear to have broken the resolve of the shale wildcatters who turned the U.S. into the world’s biggest oil producer. Russia does not set oil prices or dump oil at below market prices, nor did it, or can it, threaten to add 1 million or more barrels of production. American companies closed their least productive wells and focused on better performing sites – a strategy known as high-grading. Yet Russia already pumps more conventional oil supply than Saudi Arabia at around 10.3 million barrels per day and may look to shale to maintain rather than revolutionize production. It needs to keep Ukraine under the thumb and beholden to Russia for its fuel supplies. All Rights Reserved. I am a Senior Fellow at the Atlantic Council and the Founding Principal of International Market Analysis, a Washington, D.C.-based global risk advisory boutique. Output increases in the Permian Basin of Texas, as well as other major formations, have helped the U.S. become the world's largest producer of oil. Russia has the biggest shale oil reserves in the world. I cover energy, security, Europe, Russia/Eurasia & the Middle East, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Michigan Economic Development Corporation With Forbes Insights, Climate, Energy, And Essential Infrastructure In Texas, How Interior Sec. We want to hear from you. And then there's the return of US shale oil, which has also offset OPEC's cuts. In July 2013, the Russian Natural Resources Ministry made official estimates of reserves available for the first t… China’s shale gas industry has moved at a faster clip, going from 120 mmcfd in 2014 to 1450 mmcfd in 2019. These developments break the de facto Russian-Saudi oil cartel, jeopardize the U.S. shale patch, and endanger President Donald J. Trump’s re-election bid. U.S. shale energy production is on course to overtake the output of Russia’s entire oil and gas sector by 2025, influential new forecasts have shown. Russia has made yet another technological breakthrough thanks to the Western sanctions: it has developed its own technologies for the exploration and production of hard to extract shale oil. I advise law firms and corporations, and once helped to get a famous Russian oligarch out of Putin’s jail. Since 2017, OPEC has cooperated informally with Russia, one of the world’s three biggest oil producers alongside the United States and Saudi Arabia, to … These developments break the de facto Russian-Saudi oil cartel, jeopardize the U.S. shale patch, and endanger President Donald J. Trump’s re-election bid. Nominee Haaland Can Support Biden’s Climate Agenda Even In Her Own Fracking-Happy New Mexico. According to the company’s benchmark Statistical Review of World Energy, it’s Iran, who climbed to the top of the global standings, … Earlier this week, the U.S. Energy Information Administration (EIA) said in a monthly forecast that U.S. crude oil output from seven shale formations was projected to rise to a … Russia has made yet another technological breakthrough thanks to the Western sanctions: it has developed its own technologies for the exploration and production of hard to extract shale oil. Hydrocarbons are substances made entirely of hydrogen and carbon. Russia refused to participate in production cuts that would reduce output by some 1.5 million barrels per day (bpd). Radiating out further from ground zero in the shale patch, there are the financiers. Democrats win as it gives them more incentive to go green as American Oil has very little options to replace shale. Moreover, sanctions imposed on Russia from 2014 included transfer of technology to shale-oil projects (Department of the Treasury (US), n.d.). Russia has the biggest shale oil reserves in the world. Years of breakneck growth, at the expense of crude kingpins in the Middle East and Russia, have come to an end. What might have provoked Russia to retaliate against American oil producers is the U.S. sanctions imposed on Rosneft less than a month ago for transporting Venezuelan oil, which is seen in Washington as propping up the Maduro dictatorship. This advance is even more significant given that the sanctions have stopped Russian oil companies from using western equipment. Saudi oil minister Ali Naimi tried (and failed) to do something similar in 2014 and 2015 to the US fossil fuel industry, but this time things are different:  the downward pressure on demand for oil caused by the global coronavirus outbreak and slowdown in global economic activity means we are in a whole new ball game. It is all because of US unconventional shale oil and gas. There are also vast sums of oil beneath the ground in North Dakota, where the Bakken shale oil play sits. ", "These technologies destroy the environment," he explained via a translation, before adding that the areas affected by the extraction process were typically left in a "precarious situation.". Others have suggested a limit as low as 25 l/t. "You can rest assured that Russia shall always be a responsible actor in the global energy market," Russia's Putin said on Wednesday. 8) is burned as fuel in the Slansky electric power plant near St. Petersburg. The US shale boom was a factor behind the recent oil price collapse that toppled the Brent crude benchmark from a mid-2014 high of $115 a barrel to … The U.S. Department of Energy was not immediately available for comment when contacted by CNBC on Wednesday. Advocates of fracking, the fossil fuel extraction process used in the U.S., say it vastly expands natural gas supply — a cleaner fuel than crude oil — and cuts costs for consumers. Get this delivered to your inbox, and more info about our products and services. Even if Trump does not save the shale industry it's still going to take years to kill off the 10+ million BOPD we produce from shale. To date, Europe’s anti-shale gas policies have played into Russian hands. Beyond electricity in the Balkan northwest, oil shale is non-commercial in the Russian Federation at the current time. There have been widely varying estimates of proven oil reserves in Russia. Russia’s move looks to be a calculated one – both a response to U.S. sanctions and designed to target the U.S. shale industry, which is currently under significant financial distress. The oil shale … In 2005, the Russian Ministry of Natural Resources estimated that another 4.7 billion barrels (0.75×10 m ) of oil exist in Eastern Siberia. Each time OPEC has constrained … Global Business and Financial News, Stock Quotes, and Market Data and Analysis. Commercial grades of oil shale, as determined by their yield of shale oil, ranges from about 100 to 200 liters per metric ton (l/t) of rock. Russian President Vladimir Putin has sharply criticized nations like the U.S. for ignoring the environmental impact of shale oil and gas production, describing it as a "barbaric" process that the Kremlin has no interest in pursuing. The conventional oil resource base is still very large, but there are doubts about how much is economically recoverable. Moreover, Russia's system of oil taxation means its producers don't reap much from higher oil … Furthermore, the 25% plunge in oil prices, with its negative impact on American shale producers, is likely to complicate the perspective of re-election for Donald Trump, who has championed the oil and gas sector, growth of the domestic economy, and employment. You may have seen the headlines being generated the past couple days by the oil “price war” going on in the Eastern Hemisphere, causing global stock markets to plunge. So far, Chinese NOCs have identified over 50 billion barrels of shale oil resources and 10 billion barrels of oil-initially-in-place (OIIP) in the major conventional oil-producing basins. Increasing attention is given to unconventional oil. Russia is estimated to hold the world's largest technically recoverable shale-oil resources. As the Kremlin was willing to sacrifice the Saudi-Russia relations, the bond between Mohammed Bin Salman and Vladimir Putin is now obviously broken, which is likely to bring about severe strategic implications in Syria and elsewhere in the Middle East. Technological improvements across every phase of well development, including the use of advanced imaging technology to identify geological sweet-spots, led to substantial productivity gains at lower cost. But the success may be short-lived. Tatneft and Royal Dutch Shell have a joint venture that covers some twelve different tar sands deposits on a block, with the ultimate goal of 100 000 bpd in a few years time. The kukersite deposit in the Leningrad district (fig. According to the company’s benchmark Statistical Review of World Energy, it’s Iran, who climbed to the top of the global standings, … U.S. shale energy production is on course to overtake the output of Russia’s entire oil and gas sector by 2025, influential new forecasts have shown. As shown in the next table, in terms of shale oil reserves, the number one country as reserves of shale oil is Russia. A: Russia may have seen no point in cutting production only to lose market share as U.S. shale producers in Texas and New Mexico take up the slack. The $60-$90 per barrel (bbl) break-even prices that shale drillers had grown accustomed to no longer existed. 8) is burned as fuel in the Slansky electric power plant near St. Petersburg. ... OPEC has the cheapest oil and Russia's production will only decline slowly. Although none of his rivals can claim to be ardent supporters of the fossil fuel industry, the 45th President may now have to campaign harder in places such as Texas, Pennsylvania, Ohio and Michigan, where the shale industry is concentrated. For 22 years, I was the Heritage Foundation’s leading Russia/Eurasia and international energy expert. Russia Targets U.S. Shale With Oil Price War. Also on Wednesday, British oil giants BP have Russia’s natural gas reserves estimate at 32.9 trillion cubic meters from 44.6 trillion in last year. The firm’s interventions span international security, economics, law, politics, terrorism, and crime and corruption. A devastating global pandemic and a reckoning with Wall Street appear to have broken the resolve of the shale wildcatters who turned the U.S. into the world’s biggest oil producer. 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