Pittsburghers should keep up with the news out of Russia, a big natural gas producer and a key fuel source for Europe. Britain is fretting about its reliance on this resource and the capricious supply coming from the east:
Since coal is too dirty, nuclear plants are too slow to build and renewables are of only limited use, investors are turning towards more gas plants, encouraged by rollercoaster power prices that make planning long-term and expensive projects difficult. Gas plants are cheap to build (though expensive to run), so they seem ideal for a market with a murky future, like Britain’s. The first sizeable new power station in Britain for half a decade—built in 2008 at Langage, near Plymouth, by Centrica, a big energy firm—is gas-fired, and there are plenty of others on the drawing board. The Department of Energy and Climate Change reckons that three-quarters of the fossil-fired power stations already planned are to run on gas.
The UK's energy portfolio looks to be increasingly tied to the situation in Russia. The article suggests to me that global demand for gas should be on the upswing. Right now, there appears to be a glut. (See the Knowledge Problem post) But that isn't stopping Russia from investing in the infrastructure to deliver more of the fuel.
Which brings me to Turkey, another country that Pittsburghers should closely track. Russia is trying to cozy up with Turkey and gain a strategic advantage:
Under the deal Mr. Putin obtained Thursday, Gazprom will be allowed to proceed with seismic and environmental tests in Turkey’s exclusive economic zone, necessary preliminary steps for laying the South Stream pipe, Prime Minister Erdogan said at a news conference.After the meeting, Mr. Putin said, “We agreed on every issue.”The trans-Anatolian oil pipeline also marginally improves Russia’s position in the region. The pipeline is one of two so-called Bosporus bypass systems circumventing the straits between the Black Sea and the Mediterranean, which are operating at capacity in tanker traffic.
The Bosporus choke point is already dangerous and Turkey would like to see much less pressure on that sea lane. The United States and Russia have been competing for control of the alternative route, making that drama one of the most captivating geopolitical subplots. Regardless, instability in Turkey will now have a greater impact on drilling in the Marcellus Shale:
"Early success from our Marcellus activities indicates this play possesses some of the most compelling economics in our onshore portfolio," Anadarko Chief Executive Jim Hackett told investors on the company's second-quarter earnings conference call.
Bad news out of Russia or Turkey will only make the "play" more attractive.