A mere ten years ago, very few professionals paid meaningful attention to energy’s fringy folks fiddling with hydraulic fracking technologies. It’s too bad more of us didn’t, because the US energy renaissance unleashed by the fracking revolution has had global ramifications that continue to be felt from Houston to Riyadh and from Moscow to Caracas (see my piece “Saudi Sows Budget Busts” HERE). At least in the short run, the world has more than adequate oil to feed the voracious energy appetites of the emerging market’s middle class consumers. Might this fact have been visible to those focused on the fringe?
What are the fringy folks fiddling with today? Methane hydrates! This flammable ice is effectively gas trapped by water crystals under the seabed (see a short primer from the US Geological Survey HERE). The magnitude of the hydrocarbons contained in these resources is also enormous: methane hydrates are believed to contain between 100 and 3 million times more energy than America consumes annually. It’s also global, with deposits near some of the world’s largest energy importers (see map below). Harvesting flammable ice is no trivial undertaking and has yet to be perfected…but then again, nor was fracking 15 years ago.
So what? The global distribution of flammable ice also offers the prospect of significant geopolitical disruption. Meaningful volumes of methane hydrates are believed to be near China, Japan, India, Indonesia, Pakistan, and Turkey, for instance. How might energy independence embolden these currently energy-dependent countries? It’s not surprising to me that energy-deficient Japan has been a leader in developing methane hydrate production capabilities (see HERE). How might $40 oil change Russia, the Middle East, or the US consumer?
Today’s wild and wacky ideas contain tomorrow’s obvious needle-movers, so it’s worth paying attention to the fringy folks fiddling with flammable ice! They must just make today's energy shale revolution look like a warm-up act for the main event: lighting ice on fire!