As recently as 2007, the United States seemed headed towards ever greater fossil fuel import dependence, as domestic oil and natural gas production dwindled and consumption continued to grow. Five years later, the landscape looks dramatically different. An explosion in natural gas production from shales has overturned paradigms and sparked bold talk of LNG exports. While less remarked-upon, unconventional oil production has followed suit, helping to boost liquids output 20% from 50-year lows and vaulting North Dakota ahead of Alaska to become the nation’s second-largest oil producer. A new order is emerging in the coal market as well, with efforts underway to ship cheap, low-sulfur coal from the western U.S. to China.

The new role for the U.S. as a hotbed of production and technology development for unconventional resources, a reduced import market, and a possible key exporter of natural gas and coal raises a host of political, economic, and environmental questions. The goal of this conference is to contribute to insightful and data-driven dialogue on these pressing (and often politically-charged) issues by bringing together academics, policymakers, industry experts, and other stakeholder groups.

Session topics will include: (1) the environmental and economic impacts of proposed exports of Powder River Basin coal to China; (2) which will happen first: major LNG exports from the U.S. or shale gas development at scale outside of the U.S. (and especially in China); (3) the changing role of the U.S. in the global oil market, and its geopolitical and economic implications; (4) the cases for and against pipelines connecting Canada’s oil sands with U.S. refineries; and (5) the trajectory of future natural gas demand from the U.S. transportation and power sectors.  

Each session will feature a presentation by an academic or industry expert summarizing the state of knowledge on the topic and pointing out major unresolved issues. Discussants from the policymaking and stakeholder communities will then provide their perspectives on the presentation. This will be followed by an opportunity for audience comment and discussion.

In recent years, natural gas prices in the United States have gone from historic highs of over $12 per mmBtu in the summer of 2008, to under $2.50/mmBtu in 2012. While demand side factors – such as the crisis in global financial markets – were partially to blame, many would argue that the real story is on the supply side, where increased production of shale gas – a form of unconventional natural gas trapped in leafy shale rock – drove gas prices down across the continent. The impact of low gas prices was felt in the form of cheap electricity, heating, and feedstocks to consumers and industry, which in turn bolstered the economic recovery. As an added bonus, cheap gas displaced dirty coal in power generation, reducing carbon emissions and pollution.

It is no wonder then, that when a recent U.S. Energy Information Administration publication on world wide reserves of shale gas crowned China as the holder of the world’s largest shale gas reserves, many inside and outside the Middle Kingdom were intrigued and enthralled by the possibilities of what shale gas could mean for China – in terms of climate, pollution, quality of life – and what it could mean for the broader international gas trade.

In this upcoming EWG talk, we will highlight some of the current activities and future plans for unconventional gas development in China. We will focus on the political, institutional, and commercial forces at play, and discuss some of the potential upsides and pitfalls that China will encounter on the road to realizing its unconventional gas potential.

State-owned oil and natural gas companies, such as Saudi Aramco, Petróleos de Venezuela and China National Petroleum Corp., own 73 percent of the world's oil reserves and 68 percent of its natural gas. They bankroll governments across the globe. Although national oil companies superficially resemble private-sector companies, they often behave in very different ways.

Oil and Governance: State-Owned Enterprises and the World Energy Supply (Cambridge University Press, 2012), a new book commissioned by Stanford University's Program on Energy and Sustainable Development, explains the variation in performance and strategy for such state-owned enterprises. The book, which Mark Thurber co-edited and contributed to, also provides fresh insights into the future of the oil industry and the politics of the oil-rich countries where national oil companies dominate.

Though national oil companies have often been the subject of case studies, for the first time multiple case studies followed a common research design, which aided the relative ranking of performance and the evaluation of hypotheses about such companies' performance. Interestingly, some of the worst performing of these operations belong to countries quite unfriendly to the United States. Mark will also discuss the industrial structure of the oil industry, and the politics and administration of national oil companies. One result of the dominance of this structure for oil markets is that high prices often lead to lower supplies and low prices lead to increased production -- the opposite response of private companies.

To view seminar video, click here.

This is apart of the Weekly Energy Seminar series managed by the Precourt Institute for Energy and the Woods Institute for the Environment at Stanford.

PESD associate director Mark Thurber addressed MBA students in the Stanford-Tsinghua Exchange Program (http://www.gsb.stanford.edu/cgbe/globalexperiences/step.html) on the global manufacturing ecosystem and China’s niche within it.

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