US Shale Gas Research Articles

Time-varying effects of crude oil price fluctuations on tuna fish prices

This research presents an investigation of the time-varying effects of crude oil on the price of three tuna species, namely skipjack, albacore, and yellow fin. The investigation analyses the impact coefficient of oil price fluctuation on tuna species over time with specific phases related to time points when crude oil prices fall, including December 2008 (due to the impact of the Financial Crisis), February 2016 (due to the impact of the US shale oil and gas revolution), and April 2020 (due to the impact of the global COVID-19). The analysis shows that the price of yellow fin and skipjack shows sensitivity to these phased oil price shocks but stays consistent after recovery. This research finds that the relationship between oil price and tuna price depends on specific phases of oil price fluctuations and that global crude oil price shocks could have immediate and short-term impacts on fish markets, especially during a period of financial crisis.

A Word of Caution: State-Capitalist Investment in US Shale Gas

A Word of Caution: State-Capitalist Investment in US Shale Gas

Green bonds and US shale gas prices: Evidence from a novel time-varying causality

This paper provides a new perspective on the green bond market (measured by GBI) and the US shale gas price (measured by SGPI). The leading method for testing the mutual influence between GBI and SGPI, the bootstrap subsample rolling causality test, is a novel application of research in the green bond market. The results of the novel time-varying causality test indicate that SGPI has both positive and negative effects on GBI. Based on the positive reaction of GBI, a spike in SGPI fueled greater demand for green projects, which accelerated the increase in GBI. However, this view cannot be confirmed by the negative effect due to the energy crisis. This outcome is consistent with the general equilibrium model, which underlines a certain impact of SGPI on GBI. Furthermore, the positive impact of GBI on SGPI indicates that shale gas prices can be predicted from the green bond market. Understanding the nexus between SGPI and the GBI is of practical significance for bond issuers, regulators, and investors.

A new multilayer network for measuring interconnectedness among the energy firms

In this paper, we study the connectedness among 32 energy firms listed in the United States from January 2014 to November 2022. Specifically, we construct a new linear model based on Diebold and Yilmaz's (2012, 2014) approach and Granger causality to estimate the correlation between firms. In addition, we construct a multilayer network containing information on returns, volatilities and extreme risks and measure the network's topological properties from static and dynamic perspectives, respectively. Our empirical results suggest that multilayer networks can be of great use in understanding the relationships among energy firm stocks. Some interesting points include: the oil & gas sector dominates the energy sector; we should focus more on firms with large market capitalization, which are usually strong influence points in the network; the volatility layer is more connected than the return and risk layers; and the impact of the COVID-19 on energy firms is broader and more profound than that of Brexit, the US shale gas revolution, and the US-China trade war.

The Dynamic Relationship Between Gas and Crude Oil Markets and the Causal Impact of US Shale Gas

The Dynamic Relationship Between Gas and Crude Oil Markets and the Causal Impact of US Shale Gas

Sustainable debt and gas markets: A new look using the time-varying wavelet-windowed cross-correlation approach

This paper examines the time-varying interactive linkages between the sustainable debt market and gas markets, applying unique estimation techniques, specifically the empirical mode decomposition (EMD)-windowed-cross-correlation (EMD-WCC) and wavelet-windowed-cross-correlations. To this end, we use the S&P Green Bond Index as a representative of a sustainable debt market while for the gas market, we use natural gas price indices of UK NBP (National Balancing Point), NYMEX HH (Henry Hub) and US shale gas prices. The lead/lag behavior amid green-bonds along with shale gas, also with natural gas markets has equal forces across all time scales. There exists weak cross-correlation across green bonds and shale gas markets and additionally, green bonds and natural gas markets in the short-run. Such findings imply that, from the perspective of the investors, in the short-run, green bonds have ample diversification benefits. The highest intensity of cross-correlations is observed in the longer time horizons. This evidence suggests that in the long-run the behavior of the markets is driven by its own peculiarities. Overall, our findings support the argument that green bonds with their climate-friendly properties add to the diversification benefits for investors, as a newer class of asset for portfolio investments.

Exporting global warming? Coal trade and the shale gas boom

AbstractWe examine the effect of the US shale gas boom on the international trade and consumption of coal and emissions. We estimate a structural model that links the domestic to the international coal market and use it to simulate counterfactual scenarios. Our results show that the total quantity of coal traded around the world in the absence of the boom is essentially the same as the actual. Moreover, the change in total coal consumed worldwide is also small. Although a compositional change towards coal with different heat content could have significant environmental effects, we show that this is not the case either. Hence, US coal exports simply displaced other coal exports without affecting the total CO and SO emissions. Despite the small overall effects, several countries experience a substantial decrease in their imports of US coal and the associated emissions in the absence of the boom.

Hydraulic diffusivity estimations for US shale gas reservoirs with Gaussian method: Implications for pore-scale diffusion processes in underground repositories

This paper first presents so-called unified Gaussian solutions for the spatial advance of diffusion transients triggered by a sudden change in pressure, molecular mass concentration and/or temperature. The mathematical description with a Gaussian solution for the pressure transient is similar to that for molecular diffusion and quantifies the diffusion of pressure into the reservoir space due to a change in molecular density initiated at the well intervention point. The resulting pressure gradients due to the pressure transient quantify, via Darcy's Law, the fluid-particle velocity resulting from that gradient everywhere in the reservoir. Also based on the Gaussian pressure transient, a Gaussian decline curve fitting formula is derived, uniquely scaled by the hydraulic diffusivity. The physics-based, Gaussian decline curve equation was utilized to match 30-year production data from 68 counties in four major US shale gas plays to compute their hydraulic diffusivities. The average hydraulic diffusivities of Marcellus, Haynesville-Bossier, Barnett and Utica shale are 7.43 × 10−9 m2 s−1, 7.9 × 10−9 m2 s−1, 12.3 × 10−9 m2 s−1, and 59.0 × 10−9 m2 s−1, respectively. The empirical history-matched estimates of the pressure-gradient-driven diffusion rates in shale are similar or faster than the shale diffusion-rates measured in the laboratory. It can be assumed that the empirical diffusion rate accounts for the integrated effects of Darcy and non-Darcy flow. Computation of the Gaussian Péclet number in gas plays confirms that the advective flux is much faster than the combined Fickean and non-Fickean mass transport rates. The implications for gas recovery from shale formations, and secure disposal of nuclear waste in the subsurface shale repositories (wellbores and cavities) are discussed. In particular, our field estimations being faster than the laboratory diffusion rates calls for caution because mass transport from leaking containers at disposal sites would diffuse several orders of magnitude faster than suggested by the slower laboratory rates.

The Role of Institutional Backgound for US Shale Gas Production Boom : Did the Boom Affect the Cointegration of World Crude Oil Markets?

The purpose of this paper is to suggest unique institutions leading to shale production boom in USA as of 2010 and explore that the shale-boom consequently influences synchronicity in international crude oil markets. It is suggested that fiscal incentives, private ownership of mineral rights, and competitive conditions in natural gas industry by deregulation were bases of the shale production boom in USA unlike other countries even with large oil and gas reserves. In addition, a cointegration test for multiple periods identified by Bai and Perron (2003) finds that US crude oil market was decoupled from the world crude markets from 2011 to 2016, when coincides with the shale production boom. In conclusion, this paper provides three implications: (1) institution matters for encouraging market production, (2) nature of international oil markets was changed during US shale gas production boom period, (3) sub-periods analysis based on structural changes in time-varying market is essential for more accurately testing cointegration of international crude markets.

Energy Security, International Investment, and Democracy: The Case of the United States Shale Oil and Gas Industry

ABSTRACT Proponents of the US shale oil and gas industry argued that American citizens’ economic prosperity and national security were at stake if the industry was not rapidly expanded. Following copious amounts of a certain type of “patriotic” rhetoric, the industry grew rapidly. Simultaneously, foreign ownership of US shale industry infrastructure occurred in tandem with calls for new policies and laws to limit US citizens’ democratic rights with regard to the industry’s activities. As a result, we argue that the development of the US shale industry has weakened national security by creating negative security externalities and eroding democratic values. We offer implications for other democratic societies rich in natural resources.

Impact of US Shale Gas on the Vertical and Horizontal Dynamics of Ethylene Price

The rise of shale resources in the United States is changing the petrochemical industries. Ethylene, the first building block of petrochemical products, is becoming the first target to be hit by the shale boom, and its shifting price dynamics needs to be explored. This study analyzes the transition of ethylene prices from crude oil to natural gas (vertical price dynamics) and investigates widening gaps among regional ethylene prices (horizontal price dynamics). To do this, we detect structural changes in cointegrating relationships and derive time-varying cointegration equations. In addition, for the long- and short-run dynamics, this study established and estimated an error correction model (ECM), with controlling, time-varying cointegrations. This study develops econometric studies by applying time-varying cointegration to nonenergy uses of fossil fuels. Thereby, our results discover that the feedstock structure of US ethylene is moving from crude oil to natural gas and that the comovement of US and Japanese prices is getting intensified.

“Exploring petroleum inside source kitchen”: Shale oil and gas in Sichuan Basin

The Sichuan Basin is rich in shale oil and gas resources, with favorable geological conditions that the other shale reservoirs in China cannot match. Thus, the basin is an ideal option for fully “exploring petroleum inside source kitchen” with respect to onshore shale oil and gas in China. This paper analyzes the characteristics of shale oil and gas resources in the United States and China, and points out that maturity plays an important role in controlling shale oil and gas composition. US shale oil and gas exhibit high proportions of light hydrocarbon and wet gas, whereas Chinese marine and transitional shale gas is mainly dry gas and continental shale oil is generally heavy. A comprehensive geological study of shale oil and gas in the Sichuan Basin reveals findings with respect to the following three aspects. First, there are multiple sets of organic-rich shale reservoirs of three types in the basin, such as the Cambrian Qiongzhusi Formation and Ordovician Wufeng Formation-Silurian Longmaxi Formation marine shale, Permian Longtan Formation transitional shale, Triassic Xujiahe Formation lake-swamp shale, and Jurassic lacustrine shale. Marine shale gas enrichment is mainly controlled by four elements: Deep-water shelf facies, moderate thermal evolution, calcium-rich and silicon-rich rock association, and closed roof/floor. Second, the “sweet section” is generally characterized by high total organic carbon, high gas content, large porosity, high brittle minerals content, high formation pressure, and the presence of lamellation/bedding and natural microfractures. Moreover, the “sweet area” is generally characterized by very thick organic-rich shale, moderate thermal evolution, good preservation conditions, and shallow burial depth, which are exemplified by the shale oil and gas in the Wufeng-Longmaxi Formation, Longtan Formation, and Daanzhai Member of the Ziliujing Formation. Third, the marine, transitional, and continental shale oil and gas resources in the Sichuan Basin account for 50%, 25%, and 30% of the respective types of shale oil and gas geological resources in China, with great potential to become the cradle of the shale oil and gas industrial revolution in China. Following the “Conventional Daqing-Oil” (i.e., the Daqing oilfield in the Songliao Basin) and the “Western Daqing-Oil & Gas” (i.e., the Changqing oilfield in the Ordos Basin), the Southwest oil and gas field in the Sichuan Basin is expected to be built into a “Sichuan-Chongqing Daqing-Gas” in China.

Using global isotopic data to constrain the role of shale gas production in recent increases in atmospheric methane

The accelerated increase in global methane (CH4) in the atmosphere, accompanied by a decrease in its 13C/12C isotopic ratio (δ13CCH4) from −47.1‰ to −47.3‰ observed since 2008, has been attributed to increased emissions from wetlands and cattle, as well as from shale gas and shale oil developments. To date both explanations have relied on poorly constrained δ13CCH4 source signatures. We use a dataset of δ13CCH4 from >1600 produced shale gas samples from regions that account for >97% of global shale gas production to constrain the contribution of shale gas emissions to observed atmospheric increases in the global methane burden. We find that US shale gas extracted since 2008 has volume-weighted-average δ13CCH4 of −39.6‰. The average δ13CCH4 weighted by US basin-level measured emissions in 2015 was −41.8‰. Therefore, emission increases from shale gas would contribute to an opposite atmospheric δ13CCH4 signal in the observed decrease since 2008 (while noting that the global isotopic trend is the net of all dynamic source and sink processes). This observation strongly suggests that changing emissions of other (isotopically-lighter) CH4 source terms is dominating the increase in global CH4 emissions. Although production of shale gas has increased rapidly since 2008, and CH4 emissions associated with this increased production are expected to have increased overall in that timeframe, the simultaneously-observed increase in global atmospheric CH4 is not dominated by emissions from shale gas and shale oil developments.

Energy endowments and the location of manufacturing firms

This paper provides empirical evidence on whether individual firms choose to structure their production globally to exploit international differences in energy resources and prices. We use the US shale gas revolution as a quasi-natural experiment to analyse two extensive margins of adjustment by heterogeneous UK firms. First, we consider whether energy intensive UK firms have established new affiliates in the US in response to the shale gas shock. Second, we explore within-firm plant-level adjustments to consider whether the energy price gap increases the propensity for firms that have US operations to shut down their energy intensive UK plants. We find evidence in support of these two margins of adjustment. Taken together, these results suggest that multinational firms have relocated energy intensive production from the UK to the US due to the endowment-driven energy price gap.

Epistemological dominance and ignorance of the comparative advantages of China's shale gas: Evidence from international scientific journals

This paper reports on a critical discourse analysis on a collection of international scientific journal articles, which are a critical edge of social epistemology. At the textual surface, the analysis finds that China's shale gas (SG) is compared most frequently with coal and energy imports but rarely with conventional natural gas (CNG) and coalbed methane (CBM), representing a prominent structure of epistemological dominance and ignorance. Situated in this structure there are four prevailing, albeit defective, reasoning forms. The prevalence of those forms suggests that there is a “knowledge deficit” on the comparative advantage of China's SG. This deficit concretely refers to that, the attention paid to the comparative advantage of China's SG toward CNG and CBM, the number of lifecycle-comparisons between energies, and the knowledge about the US shale gas boom, are significantly insufficient. China's energy mix, air quality and energy dependence, the conspicuousness of energy burning, and the nature of human thinking are interwoven factors of this deficit. The epistemological structure and thus the “knowledge deficit” are unfavorable for optimizing China's SG strategy and may delay natural gas' penetration into China's energy mix. This paper, especially its mental model representation, is awareness/introspection provoking to researchers and policy makers. • How the comparative advantages of China's SG is analyzed in international scientific journals is examined. • China's SG is compared most frequently with coal and energy imports but rarely with CNG. • Biases existed behind epistemological dominance and ignorance of comparative advantages. • It is advised to improve thinking and change the discursive strategies on China's SG development.

Quantifying the social equity state of an energy system: environmental and labor market equity of the shale gas boom in Appalachia

A fundamental societal concern in energy system transitions is the distribution of benefits and costs across populations. A recent transition, the US shale gas boom, has dramatically altered the domestic energy outlook and global markets; however, the social equity implications have not been meaningfully assessed and accounted for in public and private decision making. In this study, we develop and demonstrate a systematic approach to quantify the multi-dimensional equity state of an energy system, with a focus on the shale gas boom in the Appalachian basin. We tailor variants of standard equity metrics as well as develop new empirical and analytical methods and metrics to assess spatial, temporal, income, and racial equity as it relates to air quality, climate change, and labor market impacts across the natural gas supply chain. We find moderate to high spatial inequities with respect to the distribution of production (Gini coefficient (η) = 0.93), consumption for electric power generation (η = 0.68), commercial, industrial, and residential end use (η = 0.72), job creation (η = 0.72), and air pollution-related deaths (η = 0.77), which are largely driven by geographically-fixed natural gas abundance and demand. Air quality impacts are also regressive, such that mortality risk induced by natural gas activity generally increases as income decreases; for example, mortality risk (m) (in units of premature mortality per 100 000 people) for the lowest income class (<$15 000; m = 0.22 in 2016) is higher (18%–31%) than for the highest income class (>$150 000; m = 0.27 in 2016). These risks are higher for white (m = 0.30 in 2016) than non-white (m = 0.16 in 2016) populations, which is largely a result of the demographics of rural communities within the vicinity of natural gas development. With respect to local labor market impacts within producing counties, we find marginal declines in income inequality (2.8% ± 1.0%) and poverty rates (9.9% ± 1.7%) during the boom, although household income increases for the wealthiest and decreases for the poorest. At a systems-level, there is an implied air quality-employment tradeoff of 3 (<1 to 7) job-years created per life-year lost; this tradeoff varies spatially (−1100 to 4400 life-years lost minus job-years created), wherein the job benefit outweighs the air quality costs in most producing counties whereas in all other counties the reverse is true. We also observe temporal inequities, with air quality and employment impacts following the boom-and-bust cycle, while climate impacts are largely borne by future generations. Cross-impact elasticities (ε), which measure the sensitivity between different types of impacts, reveal that employment increases are sensitive to and coupled with increases in air and climate impacts (ε = 1.1 and ε = 1.3, respectively). The metrics applied here facilitate the evaluation and design of countervailing policies and systems that explicitly account for social inequities mediated through energy infrastructure, supply, and demand. For example, in future energy system transition, such equity metrics can be used to facilitate decisions related to the siting of low-carbon infrastructure such as transmission lines and wind turbines and the phase-out of fossil fuel infrastructure, as well as to demonstrate changes in distributional tradeoffs such as the decoupling of environmental and employment effects.

Life cycle greenhouse gas emissions of China shale gas

Having the largest shale gas reserve in the world, China is vigorously developing its shale gas resources. In this work, a hybrid life cycle inventory is used to estimate upstream greenhouse gas (GHG) emissions and evaluate the atmospheric environmental effects of China’s shale gas development. A comprehensive GHG emission model of the preproduction phase is constructed by considering green completion, methane emission from flowback water, indirect emissions from materials upstream material manufacturing, and Monte Carlo simulation. Results indicate that the upstream GHG emission of 230 shale gas wells is 18.8 g CO2eq/MJ. During the preproduction phase (from well pad preparation to well completion), indirect GHG emissions from upstream material manufacturing are substantial and account for 78%. The estimation of GHG emissions in preproduction phase presents considerable uncertainty (39%–79%) due to the uncertainty of constructing the pad preparation process and the estimated ultimate recovery. In preproduction phase, the GHG emission of China shale gas is estimated to be approximately 4.18 g CO2eq/MJ (95% CI: 2.57 to 7.47 g CO2eq/MJ), which is higher than that of the US shale gas.

Modeling the Geopolitics of Natural Gas: LNG Exports From the US to Eastern Europe

In the course of the crisis in the Ukraine, most leading politicians in Eastern European countries, such as Poland, the Baltic States and Ukraine itself, identified the high dependency on natural gas imports from Russia as a threat to energy security. Hopes of independence through extraction of domestic shale gas resources, which evolved after the US shale gas revolution and the substantial resource estimations for Polish shale gas (published by the EIA in 2011 and updated 2013), are more topical than ever. However, there are several factors, which dim the hope for repetition of the US “shale gas revolution” in Eastern Europe. First, international companies such as Shell, ExxonMobil or Chevron withdrew from Poland and Ukraine due to poor exploration results. Additionally, because of environmental legislation and population density, the obstacles for commercial shale gas production within Europe, compared to the US, are very high. In this paper, the Global Gas Model (GGM) (Egging, 2013) is used to simulate future patterns of the Eastern European gas supply. Shale gas scenarios show that Poland and the Baltic States would lower their dependency with an annual production of 8 bcm (Poland) and 2 bcm (Baltic States) because of their relatively low natural gas consumption. This means, conversely, that a failing production of shale gas would lead to ongoing dependence on natural gas imports. In Ukraine, however, a potential shale gas production of 5 bcm/a does not have major consequences with respect to an annual consumption of up to 60 bcm. As for LNG scenarios, US LNG exports do barely reach the Eastern European gas market in the Base Case scenario. Only in the projected period between 2035 and 2040 Poland receives 4.9 bcm of US LNG. However, the Polish natural gas market is sensitive to provided subsidies. A 30% subsidy on transportation increases the total amount of exported LNG to Poland up to 8 bcm. In contrast, the Ukrainian and Baltic natural gas market, however, barely react to subsidies from the US. A minimum of 60% is needed to export US natural gas under economically rational conditions to both regions. Modeling results show that the increasing natural gas demand in Ukraine, the Baltic States and Poland is in need of either domestic shale gas production or an increase of pipeline or LNG imports.

米国のシェールオイル・ガスはどこまで増大するのか：技術的背景を探る

米国のシェールオイル・ガスはどこまで増大するのか：技術的背景を探る

Analysis of long-term natural gas contracts with vine copulas in optimization portfolio problems

In Europe gas is sold according to two main methods: long-term contract (LTCs) and hub pricing. Europe is moving towards a mix of long term and spot markets, but the eventual outcome is still unknown. The fall of the European gas demand combined with the increase of the US shale gas exports and the rise of Liquefied Natural Gas availability on international markets have led to a reduction of the European gas hub prices. On the other side, oil-indexed LTCs failed to promptly adjust their positions, implying significant losses for European gas mid-streamers that asked for a re-negotiation of their existing contracts and obtained new contracts linked also to hub spot prices. The debate over the necessity of the oil-indexed pricing is still on-going. The supporters of the gas-indexation state that nowadays the European gas industry is mature enough to adopt hub-based pricing system. With the aim of analyzing this situation and determining whether oil-indexation can still be convenient for the European gas market, we consider both spot gas prices traded at the hub and oil-based commodities as possible underlyings of the LTCs. We investigates the dependence risk and the optimal resource allocation of the underlying assets of a gas LTC through pair-vine copulas and portfolio optimization methods with respect to five risk measures. Our results show that European LTCs will most likely remain indexed to oil-based commodities, even though a partial dependence on spot hub prices is conceded.