***MISCELLANEOUS*** OFFSHORE DRILLING

***MISCELLANEOUS***

OFFSHORE DRILLING

Other forms of drilling don’t solve – regulatory freedom, mineral rights, and construction costs mean only fracking is cost-competive

Closer examination of each of these objections, however, suggests that most of these reservations are misplaced. Certainly, according to the most recent estimates, the United States does not have the largest reserves of shale gas of any state in the world. As noted above, US estimates all fall below 1,000 tcf. China is estimated to have 1,115 tcf, and large reserves are also identified in Argentina (802 tcf ), Algeria (707 tcf ), Canada (573 tcf ) and Mexico (545 tcf ).54 There are also shale resources in the Middle East and Russia which have still not been comprehensively assessed. Despite these figures, several factors suggest that the United States could benefit disproportionately from its reserves. The first point, with specific reference to its European competitors, is that shale gas development in the United States has far fewer regulatory hurdles to cross—as it does, indeed, compared to other types of fossil fuels in America. Fracking is exempt from key regulatory provisions in the 2005 Energy Policy Act—widely seen as a concession to Dick Cheney’s inter- vention—and in the United States, unlike the majority of developed countries, the mineral rights for developing shale gas belong to landowners, resulting in far less public opposition than would be seen in a country where the state owns the mineral rights. The actual construction cost of a shale gas well is also significantly cheaper in the United States than in other developed countries. A shale gas well can cost up to $14 million to sink in Europe, but less than a third of that in some US shale plays, where shale gas is often located closer to the surface than it is in Poland, for example; and there is a far greater availability of fracking rigs in the US.56 The impact of other countries holding large shale reserves is also partly moderated by the fact that Mexico and Canada, likely to be two of America’s greatest competitors in shale gas production, are both members of NAFTA and integrated parts of the North American market and economic zone as a whole. The development of these economies would also disproportionately benefit the US economy as opposed to its emerging global rivals; and if more countries looked to Canada or Mexico to meet their energy needs than to Saudi Arabia or Russia, this would be to the advantage of the United States.