The shale revolutionThe global industrial map may need redrawing. The U.S.-led phenomenon of shale gas development and production, which has turned the country into one of the world’s fastest-growing producers of natural gas, has revitalized industrial activity in the U.S. and is sending positive reverberations across the global economy. Discoveries of shale gas fields and development of advanced drilling technologies have sharply boosted natural gas extraction in the U.S., helping to pump up industrial activities in steelmaking and petrochemicals in the country. Shale gas production created jobs for 800,000 people and also contributed to the U.S. economy, growing faster than an expected 2 percent in the third quarter along with a recovery in housing markets.
Shale is a fine-grained sedimentary rock that can be a rich source of petroleum and natural gas. It has been largely neglected because it was deemed commercially unviable. But thanks to research and development and success in technologies like hydraulic fracturing and horizontal drilling, shale gas fields became the major source of energy output for the U.S. over the last decade. The shale boom is restricted to the U.S. so far because of complexities in delivery and export restrictions by the U.S. government. But once it turns into an international phenomenon, it will likely reshape and revitalize the global energy market as well as related industries like shipbuilding. Shale gas now accounts for 25 percent of the U.S. natural gas output and will likely be 49 percent by 2035. Energy authorities predict shale gas will replace coal as the second-largest energy source in the U.S. and will likely change U.S. energy output with gas taking up 27 percent following petroleum’s 32 percent share.
Shale gas is now at an early stage of development. It is primarily used instead of coal for heating and industrial power. But it is rapidly being used as transportation fuel and a raw material for petrochemicals. It is gaining more interest as a next-generation energy source than solar and hydraulic power due to its economic and commercial potential.
The shale revolution could be a double-edged sword for Korea. We could be helped by cheaper import costs for oil and coal. But in the longer run, Korean companies will have to face strong competition from U.S. counterparts rejuvenated by the gas renaissance.
We should do more than merely envy the U.S. shale gas success. We should jump on the bandwagon in global development of shale fields and take pre-emptive actions to use the boom in a favorable way for our economy.