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DE RUEHC #1742 3021725
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R 291704Z OCT 09
FM SECSTATE WASHDC
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INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEKJCS/SECDEF WASHINGTON DC

UNCLAS STATE 111742 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EPET
SUBJECT: ASSESSING THE POTENTIAL FOR INTERNATIONAL SHALE 
GAS DEVELOPMENT 
 
¶1. This cable is an action request, see paragraph 7. 
¶2. Summary: Recent technological advances in natural gas 
production could have a significant impact on international 
energy security and climate change.    Natural gas from 
so-called unconventional sources, in particular production 
from hydrocarbon rich shale rock, known as "shale gas," is 
one of the most quickly expanding trends in U.S. oil and gas 
exploration, with significant international potential.  The 
Department and Washington interagency community are working 
to assess the international potential for shale gas 
development, and where USG outreach efforts could be best 
directed.  The Department is asking that posts assess the 
state of shale gas development and/or potential for 
development in their host country and report their findings 
to Washington.  End Summary. 
BACKGROUND 
¶3.  Over the past several years U.S. energy companies have 
been producing large amounts of gas from shale, with gas 
production increasing 7.5% in 2008 alone, leading the 
Department of Energy to increase estimates of U.S. gas 
reserves by 35%. While the U.S. was previously projected to 
import increasing amounts of liquefied natural gas (LNG), we 
now have a surplus of gas, with prices at record lows.  LNG 
that would have come to the U.S. is being diverted to Europe 
and elsewhere. 
¶4.  The Washington interagency community is very interested 
in the potential for shale gas development internationally. 
On August 27 David Goldwyn, the Coordinator for International 
Energy Affairs, held an interagency seminar with private 
sector representatives to discuss the potential international 
impact of shale gas.  Since that meeting, unconventional gas 
has been getting increased attention from both the energy 
industry and trade press.  Action addressee posts are among 
the countries identified in an October 5 presentation by 
Cambridge Energy Research Associates as having the most shale 
gas potential outside of North America.  Significant 
potential for production of shale gas and other forms of 
unconventional gas (coal bed methane and tight gas) exists 
abroad, and could have important implications, particularly 
in China and India (climate change) and Europe (energy 
security).  Shale gas production could help both China and 
India meet their burgeoning energy needs, potentially 
displacing future coal supplies.  Natural gas (with half the 
CO2 footprint of coal) is expected to play a vital role in 
meeting U.S. and global energy needs and helping ease the 
transition to a low-carbon economy.  Shale gas exploration is 
underway in various countries in Europe, which could boost EU 
natural gas production and help Europe diversify its energy 
supplies.  The U.S. Geological Survey is beginning to work 
with foreign partners on mapping the potential of shale gas, 
and we are looking at how we can assist them with this work. 
¶5. The key technological drivers of shale gas development 
have been the refinement of horizontal drilling and hydraulic 
fracturing technologies.  Horizontal drilling is the 
technology which enables the drilling of non-vertical oil and 
gas wells that can better reach hydrocarbon bearing 
formations.  Hydraulic fracturing is a process by which 
water, chemicals, and sand-like substances are pumped at high 
pressure into the well to "fracture" the rock and release 
hydrocarbons.  These technologies enable industry to produce 
more natural gas from the shale formations economically, and 
with fewer disturbances to surface environments.  A more 
thorough primer on shale gas development can be found on the 
DOE website at 
http://fossil.energy.gov/programs/oilgas/publ ications/ 
naturalgas general/Shale Gas Primer 2009.pdf. 
¶6. There are environmental concerns associated with shale gas 
that could delay its progress, mainly related to land use, 
water use (hydraulic fracturing uses large quantities of 
fresh water) and concern that production chemicals could 
affect groundwater.  Production techniques are improving, 
however, and hopefully will be able to address these 
concerns.  While these issues are being addressed, shale gas 
is already having profound implications for global energy 
markets. 
ACTION REQUEST 
¶7.  As resources and workload permit, posts are asked to 
provide (via cable or email) any information they can obtain 
about the potential for unconventional gas development in 
their host country.  This may simply involve querying the 
Ministry of Energy as to unconventional gas development in 
the country, but could include talking to relevant government 
geological research organizations or commercial energy 
contacts about the potential for shale gas production.  If 
post assesses that there is no potential for unconventional 
gas development in the host country, no response is 
necessary.  Please direct your response and questions to 
EEB/ESC/IEC Energy Officer Alex Greenstein. 
SUGGESTED QUESTIONS 
¶8.  The below list of questions is intended as a guideline 
for issues that may be relevant to post reporting on shale 
gas development and is not exhaustive: 
-- Are there gas-bearing shale formations in the host country? 
-- Are energy companies actively exploring for shale gas? 
-- What kind of geologic data is available?  What kind of 
surveys have been done to assess the presence of gas bearing 
shale? 
-- What is the regulatory environment for oil and gas 
development?  What are the relevant host-government policies 
with regard to land use and water use? 
-- Is there sufficient infrastructure to support shale gas 
development?  Are there international energy companies 
operating in-country?  Is there the capacity to build and 
maintain drilling rigs?  Are oilfield service companies 
active in the host country? 
-- What is the host country's energy mix, and what is natural 
gas's role?  Is there significant potential for expanding 
natural gas utilization in the power or transportation 
sectors? 
CLINTON