The New Map: Energy, Climate, and the Clash of Nations

by Daniel Yergin

“America’s New Map” tells the story of the unanticipated shale revolution that is transforming America’s place in the world, upending world energy markets, and resetting global geopolitics. Together, shale oil and shale gas have proven to be the biggest energy innovations so far in the twenty-first century.

The United States has surged ahead of Russia and Saudi Arabia to become the world’s number one producer of both oil and gas, and is now one of the world’s major exporters of both.

Though targeted for bans by some politicians, the shale revolution has fueled America’s economic growth, enhancing its trade position, generating investment and job creation, and lowering utility bills for millions of consumers. The supply chains supporting shale reach all across the United States, into virtually every state, creating jobs even in New York state, which prohibits shale development within its borders, owing to environmental opposition.

But the geopolitical consequences for the United States, now that it is almost self-sufficient, are apparent in new dimensions of influence, increased energy security, and greater flexibility in foreign policy. Yet there are limits to this newfound self-assurance, for energy remains a globally-interconnected industry and these consequences are still only part of the overall nexus of relations among nations. Moreover, shale was already in search of its next “revolution” when coronavirus sent it spinning into a new crisis.

“Russia’s Map” is about the tinder created by the interaction of energy flows, geopolitical competition, and the continuing contention over the unsettled borders that resulted from the collapse of the Soviet Union three decades ago—and from Vladimir Putin’s drive to restore Russia as a Great Power. Russia may be an “energy superpower,” but it is also economically dependent on oil and gas exports. Today, as in Soviet times, those exports are stoking fierce debate about the possible political leverage over Europe that may come in their wake. Yet, any potential leverage has been dissipated by changes in both the European and global gas markets.

The consequences of the abrupt transformation of the Soviet Union into fifteen independent countries remain uncertain, nowhere more so than between Russia and Ukraine, where conflict over natural gas has been central.

At the same time, Russia has “returned” to the Middle East and is “pivoting to the east,” to China. Moscow and Beijing are united in asserting “absolute sovereignty” and their opposition to what they decry as American “hegemony.”

China needs energy, and Russia needs markets.

“China’s Map” is rooted both in what it calls the “Century of Humiliation” and in its tremendous gains in global economic and military power over the last two decades, and by the energy needs of what will become the world’s largest economy (and, by some measure, already is). China is expanding its reach in all dimensions: geographically, militarily, economically, technologically, and politically. The “workshop of the world,” it now seeks to move up the value chain and become the global leader in the new industries of this century. China is also asserting its own map for almost the entirety of the South China Sea, the most critical oceanic trade route in the world, and now the sharpest point of strategic confrontation with the United States. Energy is an important part of that claim.

The “WTO consensus” that goes back to the beginning of this century has broken down. Criticism of China is one thing that unites divided Democrats and Republicans in the United States, and the national security establishments in both countries increasingly focus on the other as the future adversary. Yet the two countries are more integrated economically and more interdependent than many recognize, as the 2020 coronavirus outbreak unhappily demonstrated; and they are mutually dependent on global prosperity. But that reality counts for less as calls grow louder for “decoupling” between the world’s two largest economies, accompanied by growing mistrust, which has been amplified by the coronavirus crisis, one

of the lasting consequences of which will be greater tension between the two countries.

The map of the modern Middle East was laid down during and after the First World War, in the vacuum resulting from the collapse of the Ottomans and yet based on the provincial lines left behind by the Ottomans. The maps have been challenged ever since—by pan-Arab nationalism and political Islam, by opposition to the state of Israel, and then by jihadists such as ISIS, who want to replace the very idea of a “nation-state” with a caliphate. One of the biggest challenges in the region today comes from the rivalry between Sunni Saudi Arabia and Shia Iran for preeminence, now made more complex by Turkey’s new bid for that role, reclaiming a lineage going back to the Ottomans. But also defining for the region are the four-decade confrontation between the United States and Iran and the prevalence of weak governance in many countries.

The Middle East has been shaped, of course, not only by the maps of frontiers but by different kinds of maps—of geology, of oil and gas wells, of pipelines and tanker routes. The oil and gas, and the revenues and riches and power that flow from them, remain central to the identity of the region. Yet the oil price collapse that began in 2014 has fed into a new debate about the future of oil. Not much more than a decade ago, the world worried about “peak oil,” the idea that oil supplies would run out. The focus has shifted to “peak demand”: how long consumption of oil will continue to grow and when it will begin to decline. Will oil lose its value and importance in the decades to come? The demand collapse for oil in 2020 has further fueled the urgency for oil exporters to diversify and modernize their economies, which Abu Dhabi had begun in 2007 with its Vision 2030, and which Saudi Arabia is now trying to do in double time.

If there is one major factor leading to the idea that demand, not supply, is the future constraint, it is related to the junction of climate policies and technology. The one market that seemed to be guaranteed for oil for a very long time was transportation and, specifically, the automobile. No longer, not on the “Roadmap” to the future. For oil now faces a sudden challenge from the New Triad: the electric car, which uses no oil; “mobility as a service,” ride-hailing and ride-sharin...

The debate over how rapidly the world can and must adjust to a changing climate, and how much it will cost, is unlikely to be resolved in this decade. But the endeavor will take on greater urgency as public opinion becomes more aroused and new policies seek to implement “net zero carbon.”

The Paris Agreement of 2015 galvanized the march toward a lower carbon future. Indeed, in terms of energy and climate, there are two distinct eras: “Before Paris” and “After Paris.” Yet, while energy transition has become a pervasive theme all around the world, disagreement rages, both within countries and among them, on the nature of the transition: how it unfolds, how long it takes, and who pays. “Energy transition” certainly means something very different to a developing country such as India, where hundreds of millions of impoverished people do not have access to commercial energy, than to Germany or the Netherlands.

Solar and wind have become the chosen vehicles for “decarbonizing” electricity. Once “alternatives,” they are now mainstream. Yet, as their share of generation grows larger, they confront the challenge of “intermittency.” They can flood the grid with electricity when the sun shines and the wind blows, but then almost disappear when the day is cloudy or there is only a murmuring breeze. This points to major technological challenges: to

maintain grid stability and find ways to store electricity at large scale for periods...

“Climate” will be a profound determinant of the new map of energy. Here I build on the s...

The focus in the pages of this book is on how the momentum of climate policies—powered by research and observation, by climate models, and by political mobilization and regulatory power, social activism, financial institutions, and deepening anxiety—will transform the energy system. “Net zero carbon” will be one of the great challenges of the decades ahead, not just politically but also in how people live their lives and in the costs of achieving it.

The Prize is a sprawling canvas about geopolitics and oil over almost a century and a half, and that certainly is part of the narrative of The New Map.

Now the fragmenting of globalization becomes part of this story.

For the coronavirus has fueled a retreat that had already begun from globalization and from the international institutions and cooperation that have underpinned it. In 2008–2009, international collaboration was key to conquering the financial contagion. A dozen years later, such cooperation at the governmental and international level in fighting the contagion of the virus was notable by its absence. What had been talk of “decoupling” had turned into a rolling back of the supply chains that have been a foundation of a $90 trillion global economy. More broadly, borders go up, nationalism and protectionism rise, and the generally free movement of people becomes less free. One consequence of the global economic misery from the pandemic of 2020 could be greater prevalence of fragile and failed states, which would create new security challenges that, at some point, would

reach beyond their borders. Yet governments would be hampered in responding to domestic and international needs, whether around security or health or energy and climate, by the huge debt and fiscal armor th...

But the journey on the road to the future had commenced well before the coronavirus crisis, not only with renewables and electric vehicles, but also with the shale revolution that has transformed the energy position of the United States,...

The test area would be the Barnett Shale,

hydraulic fracturing, later much better known as “fracking,” which uses cocktails of water, sand, gel, and some chemicals injected under high pressure into rocks that would break open tiny pores and liberate the gas. Hydraulic fracturing is a technology that had been developed in the late 1940s and has been commonly used in conventional oil and gas drilling ever since.

But here the fracking was being applied not to a conventional reservoir but to the shale itself.

Mitchell Energy cut its spending and slashed its workforce. The company sold The Woodlands for $543 million.

attack one of the biggest costs—that of guar.

Guar, mostly imported from India, is derived from the guar bean. It is used extensively in the food industry to assure consistency in cakes, pies, ice cream, breakfast cereals, and yogurt. But it has another major use—in fracking, in a Jell-O-like slosh that carries sand into the fractures to expand them. But guar and the related additives were expensive.

This was the SH Griffin #4 in Dish. The team was still using water to replace most of the guar, but this time they fed in the sand more slowly.

The new technique needed a name. They didn’t want to just call it “water fracking.” That would have been too prosaic, even boring. So they called it “slick water fracturing.”

2002, Devon bought Mitchell for $3.5 billion. “At that time,” said Nichols, “absolutely no one believed that shale drilling worked—other than Mitchell and us.”

But shale drilling needed another technology to be economic. This was horizontal drilling.

It allowed operators to drill down vertically (today, as much as two miles) to what is called the “kick-off point,” where the drill bit turns and moves horizontally through the shale. This exposes far more of the rock to the dril...

While there was experience with horizontal drilling, the technology did not become more prevalent until the late 1980s and early 1990s. This was the result of advances in measurement and sensing, directional drilling, seismic analysis, and in special motors that would do a remarkable thing—a mile or two underground, they would propel the drill bit forward once it had made its ninety-degree turn and started moving horizontally. And it required on...

slick water fracturing with horizontal drilling—to liberate natural gas imprisoned in the shale.

The race was to lease as much promising acreage as possible from ranchers and farmers and then begin the process of proving up the resource. All shales, it was soon learned, were not the same; some were more productive than others. One wanted to find the “sweet spots,” the potentially most productive acreage, before anyone else. The advance men of this particular revolution were the thousands of “land men” who knocked on screen doors and left notes in rural mailboxes and got landowners to trade their heretofore worthless mineral rights in exchange for the possibility of future royalties—and maybe riches.

greatest shale gas play of all, the mighty Marcellus, a thick bedrock a mile or more underground that stretches beneath western New York down into Pennsylvania and Ohio and on into West Virginia. It also reaches into Canada. The Marcellus shale would turn out to be the second-largest gas province in the world—and possibly the largest. And another shale formation called the Utica lay below parts of the Marcellus. What particularly drove the independents to move as fast as possible was that great motivator known as price. “After decades of being cheap and plentiful,” the Wall Street Journal reported, “U.S. natural gas is the most expensive in the industrialized world.” High prices motivated a lot of experimentation, investment, and risk taking that would not have been undertaken at lower prices. It involved mastering a production

profile that differed from that of conventional gas (and then oil). Initial output from a new well was high, but then declined much more rapidly than in a conventional well before leveling off. This created the need to continue drilling new wells in what came to be described as a manufacturing process.

The year 2008 was the moment when the bell rang. That year, U.S. natural gas output went up instead of down, as had been the general expectation.

2011, the Potential Gas Committee, which analyzes physical resources for the United States, projected recoverable gas resources 70 percent higher than it had a decade earlier.

The numbers have continued to go up. By 2019, the Potential Gas Committee’s estimate for recoverable natural gas reserves was triple what it had been in 2002. Gas production was rising so fast that it became known as the “shale gale.” As gas moved from shortage into oversupply, the inevitable happened: prices plummeted. The combination of abundant supply and low price changed the overall U.S. energy mix, with gas’s share of total U.S. energy rising.

The most decisive change was in the electric power sector. King Coal had long been the dominant source for electric power, a position that had been bolstered by government policies in the 1970s and 1980s, which promoted coal as a secure domestic source of energy and restricted the use of natural gas for electric generation (because at that time, too, the country was thought to be running out of gas). In the 1990s, before shale, gas never accounted for more than 17 percent of generation. But, with the arrival of shale, gas was highly competitive on price, and environmental opposition had made it virtually impossible to build a new coal-fired plant in the United States.

As late as 2007, coal generated half of U.S. electricity. By 2019, it was down to 24 percent, and natural gas had risen to 38 percent. That was the main reason why U.S. carbon dioxide (CO2) emissions

dropped down to the levels of the early 1990s, despite a doubling...

Any thought of expensive LNG imports had been banished. The challenge was no longer how to eke out scarce new supplies, but rather how to find markets for the growing abundance of i...

According to that dogma, oil molecules were much larger than gas molecules, and thus would not be able to fit through the tiny pores that fracking would create in the rock.

That was not the only reason for skepticism. There was also the almost universal conviction that America’s day as a petroleum producer was fast ebbing away. By 2007, U.S. oil production would be down to 5.1 million barrels per day, little more than half of what it had been at the beginning of the 1970s. Meanwhile, net oil imports had risen to almost 60 percent of consumption.