Methane hydrates, much more than shale gas
We continue our journey aboard the Nautilus submarine. While we skirt Norway, Captain Nemo shows us the seabed. They are rich in methane hydrates, he says, as are the bottoms of all the continental shelves of the world. This is methane trapped in ice for tens or hundreds of millions of years.
Until 1930, they weren't even known to exist. For 40 years it was thought that their presence was limited to some areas of the mainland and only in the seventies it was discovered that the seabed along the coasts, before the oceanic slope, were full of them. However, no one ever thought it possible to exploit them.
In the first half of the 2050s Greenspan mentioned them a few times. America, in those years, was seriously concerned about the shortage of natural gas that was envisaging. Prices continued to rise and federal authorities estimated that, in XNUMX, the United States could only meet half of its gas needs. Greenspan tried to instill some hope and explained in a couple of speeches that in the second half of the XNUMXst century and in the XNUMXnd, once many energy sources started to deplete, it would somehow be possible to exploit the potential of hydrates of methane and those of nuclear fusion. However, it was more of a hope than a prediction.
The very fast Nautilus has meanwhile entered the icy waters of the Arctic and is heading east. We pass the archipelago of Novaija Zemlja, the New Earth where the Soviet Union conducted its most devastating nuclear tests, and enter the vast Kara Sea, a million square kilometers large.
Nemo shows us the porthole. See the bubbles rising to the surface? It's methane. The entire Kara Sea floats on an ocean of methane trapped in ice. It is the largest fossil formation on the planet and dwarfs Persian Gulf oil by comparison. Moreover, estimates of methane hydrates range from two to ten times the global set of traditional fossils (coal, oil, gas). Russia is sitting on head-spinning wealth.
There is a problem though, says Nemo. At the end of the Permian, 250 million years ago, an asteroid allegedly struck central Siberia. The earth's crust of the whole area was upset and liquefied for large stretches. For a long time, central Siberia became the epicenter of extraordinary volcanic activity. Lava poured into the Arctic and the heat melted the ice, releasing the methane that was already trapped there. Methane creates a much more dangerous greenhouse effect than carbon dioxide, which also worries us so much. The result was a rise in temperature of 6 degrees and the extinction of 90 percent of living species.
Bent over the monitor, Nemo recalls a series of videos dedicated to arctic methane from YouTube. Some of these start with some kind of disclaimer. If you're prone to depression, they say, don't continue with the vision. Obviously we continue with even greater interest. In practice, they explain to us, it is already too late. Global warming is already accelerating the melting of ice and more and more methane is rising to the surface. The more methane released into the atmosphere, the hotter it gets. The hotter it gets, the more the ice melts, releasing more methane. A vicious circle. Calculations follow on the time, little, that remains before extinction.
The Nautilus quickly skirts the coasts of Rodina, the great and sacred Russian motherland, crosses the Bering Strait and re-emerges in the sea of Japan. Nemo shows us flotillas of Japanese and Korean researchers who, with the help of some German scientists, are studying the seabed. It looks like a James Bond movie. They're actually collecting data on methane hydrates.
After Fukushima, Japan shut down its nuclear power and was forced to import large quantities of gas. Gas bought from Qatar and Russia turned Japan's mythical current account surplus into a deficit and was decisive in inducing Tokyo to abandon, perhaps forever, the strong yen line.
In 2013, the Japanese began experimental extraction of methane from the seabed. We proceed with great caution to be sure that the gas is captured without releasing some of it into the atmosphere. The results are encouraging so far and Japan expects to start a commercial scale activity as early as next year. The declared objective is the complete energy independence of the country.
What seemed like a dream for the next century ten years ago is therefore already a reality, albeit at an early stage. The gas shortage that was feared for the world a decade ago risks becoming even more overabundance as one of the biggest buyers prepares to withdraw from the market.
Meanwhile, other sources of energy are also reporting an overabundance. Putin and Hollande tour emerging countries to sell nuclear power plants below cost in order to keep the sector on its feet. The cost of solar is in free fall and the American West is now dotted with increasingly large and efficient plants. Denmark advances in wind power head on, with the aim of making it the only source of electricity. As for fossil fuels, just look at the prices of coal, oil and gas in recent months to understand how much supply has grown in the presence of stable demand.
Energy sources, which until a few years ago were dominated by cartels and oligopolies, are today an open and highly competitive market. Where there is competition, margins are lowered and consumers, not shareholders, take advantage of the benefits.
Of course, low prices will push weaker producers out of the market and, over time, restore a balance between supply and demand. There will eventually be a price recovery, but it will be weak and short-lived, because at higher prices a large amount of supply will start pouring back into the markets.
We are therefore not very excited by the rebound in oil in the last few hours and continue to focus on the sectors that benefit from the fall in crude oil (luxury cars, airlines, tourism, consumption).
Even Greece, for the moment, doesn't worry us too much. Germany does not want Greece to leave the euro as this could cause systemic damage. It is therefore Merkel, not Tsipras, who finds herself in the most difficult situation today. America asks you to let Tsipras win in exchange for a less pro-Russian attitude on the part of Athens. However, giving in to Greece means encouraging Podemos in Spain and moving Italy and France to frondist positions. Giving in, on the other hand, also means paying a high price in relation to German public opinion, which instead asks not to give in an inch.
The solution, as always, will be to let the ECB do the dirty work.
