Coming up to this time of year I'm starting to think about the big stories of a year where shale started busting out all over. The problem with getting stories of the year is that many of them, like UK shale, Argentina gas and oil, Bakken oil  and US LNG exports might have hit the conventional media this year but are a year or two old to my readers.

But this story is definitely up there for story of the year. In fact, it's not too early to say this could be the story of the decade.

While I've noted how gas producers who depend on oil index pricing might live to regret it one day, I didn't think that the Saudis becoming nervous over shale oil was a story for another year or so. But ahead of schedule, while too many European policy makers live in the past, Saudi Arabia gets real in understanding the significance of shale gas. When's Europe's turn?  We can't begin to underline the significance of this story as put in the first two paragraphs

 Saudi Arabia's state energy company said on Monday that its dominant role in world oil supply had been altered by large new reserves in North America, sapping the urgency to develop the kingdom's own reserves.

The speech by Saudi Aramco's chief executive was the first from the globe's top oil exporter to acknowledge that unconventional oil was set to shift the energy balance of power and cut U.S. dependence on Middle East crude.

I mention Europe because European energy experts and their peak oil pals have been obsessing about Saudi oil production as the source rock of any discussion on energy for many years. Will  the Saudis taking shale seriously mean they need a crash course in shale instead of ignoring it?  I've said it before and I'll say it again: Energy experts and their models of decades worth of charts are irrelevant in the shale era. Whatever you once knew about energy underwent an inflection point in 2002: Everything that happened before no longer applies.The future will not be a continuation of the past.

This article gets better and better in showing how seriously the Saudis see shale

 The abundance of resources and the more 'balanced' geographical distribution of unconventionals have reduced the much-hyped concerns over 'energy security' which once served as the undercurrent driving energy policies and dominated the global energy debate," Khalid al-Falih said.

The Saudis understand the key impact of shale is that it makes all energy local.  BTW for all the shale conspiracy theorists out there: What possible profit could Saudi Arabia gain by telling us that energy security is no longer an issue?

Looking through this story I can't really cut it into the good parts. This entire story just continues to amaze.  Especially important is how while most observers in Europe either obsess about shale gas for the wrong reasons or have barely heard about it, the world's largest oil producer knows this is all about oil:

 For years oil markets, nervously watching pressure on limited spare production capacity, have obsessed over Saudi Arabia's supply cushion as the last defense against prices spiraling higher.

"A few years ago, much of the global energy debate was based on the premise of acute resource scarcity and its economic and political ramifications," Falih said.

"Rather than supply scarcity, oil supplies remain at comfortable levels, even given rising demand from fast-growing nations like China and India," he added.

What needs to happen know is to stop being amazed and to start thinking. Geo politics for starters: Does this mean the US withdrawing from the world?  Will the US be a society transformed by energy production into a new economic powerhouse?  Will Europe let itself get transformed by local energy?  What will this do to global capital flows? Let's not forget that the City of London was built on petrodollars for example. Energy independence could be a short term problem for countries like Algeria and Russia who export little else but energy.  Etc etc etc...get thinking, start acting.  Everything you ever knew about energy is wrong. Get over it.

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