American Shale Gas is Revolutionizing European Energy Security

For the last three decades, the story of European energy security has been a steadily growing dependence on Russian natural gas. From the time when the Trans-Siberian Pipeline first started delivering gas to Europe in 1983, countries of Europe have grown steadily more dependent on Russian gas. The integration of the former Eastern Bloc into the EU over the last two decades made the problem even more acute, as 40 years of infrastructure was built in order to foster dependence between the Soviet Union and its satellite states. By 2009, Russia was exporting 4.5 trillion cubic feet of gas into Europe, about 25% of Europe's total gas consumption.

The result of that dependence is that Russia has been able to exert its status as a monopolistic energy supplier. Gas shut-offs to Ukrainian pipelines (through which most of Europe's supplies travel) in the winters of 2005 and 2009 caused widespread misery across Eastern Europe as power and heat were shut down in countries like Bulgaria and Romania that are almost totally dependent on Russian imports. Gazprom, and the Russian state, have not been afraid to threaten the stability of these supplies to gain geopolitical power and extract foreign policy concessions.

Now, however, new supplies of shale gas from the United States are reshaping this equation.A new report out from Rice University's Baker Institute, "Shale Gas and US National Security" (pdf) by Kenneth Medlock, Amy Meyers Jaffe and Peter Hartley highlights how increased US production of gas is already undercutting Russia's geopolitical power of European energy. It states that "Russia’s natural gas market share in Western Europe will decline to as little as 13 percent by 2040, down from 27 percent in 2009."

Even without any significant production of shale gas in Europe (yet), a glut of gas produced in the United States is changing Europe's geopolitical energy equation.

Over the last ten years, the United States has gone from essentially zero in 2000 to over 10 billion cubic feel per day by 2010. The graph at left shows how this revolution has affected total US gas production.

This production increase has been enough to change the US from a net importer of gas to a net exporter. Where once the US had been scrambling to build Liquefied Natural Gas (LNG) terminals in the early part of the decade, now those same terminals are being used to export gas. This has freed other large producers, most notably Qatar, to change their exports from the United States to places like Europe or Japan. Not only has this reduced prices, it also has given Europe the redundancy it needs to free itself from Russian gas dominance.

For years, US policy on building energy security in Europe was to foster competition with Russian gas. The focus of this policy was to build a gas pipeline through the 'Southern Corridor' from the Caspian Sea through Turkey and up through the Balkans. It is ironic that now the United States is the exporter that could provide the competition to Russian gas that Europe needs.