Energy crisis is postponed as new gas rescues the world

Discussion in 'General Discussion' started by Quigley_Sharps, Oct 14, 2009.

  1. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    <!-- google_ad_section_start -->Energy crisis is postponed as new gas rescues the world<!-- google_ad_section_end --> <hr style="color: rgb(255, 255, 255); background-color: rgb(255, 255, 255);" size="1"> <!-- / icon and title --> <!-- message --> <!-- google_ad_section_start -->By Ambrose Evans-Pritchard
    Published: 5:47PM BST 11 Oct 2009

    Engineers have performed their magic once again. The world is not going to run short of energy as soon as feared. America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all.

    The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.

    Energy bills could hit £2,000

    Tony Hayward, BP's chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years' supply – and rising fast.

    "There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.

    This is almost unknown to the public, despite the efforts of Nick Grealy at "No Hot Air" who has been arguing for some time that Britain's shale reserves could replace declining North Sea output.

    Rune Bjornson from Norway's StatoilHydro said exploitable reserves are much greater than supposed just three years ago and may meet global gas needs for generations.

    "The common wisdom was that unconventional gas was too difficult, too expensive and too demanding," he said, according to Petroleum Economist. "This has changed. If we ever doubted that gas was the fuel of the future – in many ways there's the answer."

    The breakthrough has been to combine 3-D seismic imaging with new technologies to free "tight gas" by smashing rocks, known as hydro-fracturing or "fracking" in the trade.

    The US is leading the charge. Operations in Pennsylvania and Texas have already been sufficient to cut US imports of liquefied natural gas (LGN) from Trinidad and Qatar to almost nil, with knock-on effects for the global gas market – and crude oil. It is one reason why spot prices for some LNG deliveries have dropped to 50pc of pipeline contracts.

    Energy bulls gambling that the world economy will soon resume its bubble trajectory need to remember two facts: industrial production over the last year is still down 19pc in Japan, 18pc in Italy, 17pc in Germany, 15pc in Canada, 13pc in France and Russia. 11pc in the US and the UK and 10pc in Brazil. A 12pc rise in China does not offset this.

    OPEC states are cheating on quota cuts. Non-compliance has fallen to 62pc from 82pc in March. Iran, Nigeria, Venezuela et al face a budget crunch. Why comply when non-OPEC Russia is pumping at breakneck speed?

    The US Energy Department expects shale to meet half of US gas demand within 20 years, if not earlier. Projects are cranking up in eastern France and Poland. Exploration is under way in Australia, India and China.

    Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF (trillion cubic feet). Almost a quarter is in China but it may lack the water resources to harness the technology given the depletion of the North China water basin.

    Needless to say, the Kremlin is irked. "There's a lot of myths about shale production," said Gazprom's Alexander Medvedev.

    If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia's great power resurgence. Russia's budget may be in structural deficit.

    As for the US, we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.

    This has currency implications. If you strip out the energy deficit, America's vaulting savings rate may soon bring the current account back into surplus – and that is going to come at somebody else's expense, chiefly Japan, Germany and, up to a point, China.

    Shale gas is undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and toxic chemicals are blasted at rocks. This is supposed to happen below the water basins but accidents have been common. Pennsylvania's eco-police have shut down a Cabot Oil & Gas operation after 8,000 gallons of chemicals spilled into a stream.

    Nor is it exactly green. Natural gas has much lower CO2 <nobr style="font-weight: normal; font-size: 100%; color: darkgreen;" id="itxt_nobr_22_0">emissions[​IMG]</nobr> than coal, even from shale – which is why the Sierra Club is backing it as the lesser of evils against "clean coal" (not yet a reality). The US Federal Energy Regulatory Commission said America may not need any new coal or nuclear plants "ever" again.

    I am not qualified to judge where gas excitement crosses into hyperbole. I pass on the story because the claims of BP and Statoil are so extraordinary that we may need to rewrite the geo-strategy textbooks for the next half century.<!-- google_ad_section_end -->
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  2. ghrit

    ghrit Bad company Administrator Founding Member

    Nat gas is in low demand these days, storage is almost full. And the recent spot market prices have dropped. Drilling in PA has fallen to the lowest level in two years. However, the shale is there, and will be for a long time. It isn't the easiest gas to get, but it is pipeline quality at the well head. The real reason for dropping imports is reduced demand.

    We have the technology for these (horizontal and deep, pushing 7000 vertical feet) wells, and the northern European countries and Russia are engaged in learning it.

    "They say" we have enough up here in the Marcellus for 60 years if this is the only source tapped. I have my doubts about that, but there is a LOT of it there.
  3. Al Bundy

    Al Bundy Monkey++

    It still boggles my mind that canned fart vehicles don't get produced in any kind of volume. Kind of a different system to work on but not that much different.
  4. gunbunny

    gunbunny Never Trust A Bunny

    A lot of rockcrawling competition vehicles use LP, and a 20lb cylinder is equivalent to 5 gallons of gasoline when used in these 4x4's. I'm also supprised that there isn't a move to make LP powered vehicles.
  5. Al Bundy

    Al Bundy Monkey++

    I'm a GM master tech. We did produce some cars and trucks with CNG systems, but the company sublet to install and design the systems went under. Too bad, they work rather well.
  6. Tango3

    Tango3 Aimless wanderer

    Wow hadn't heard of the magic shale gas technology.

    Lp forklifts run in most plants regular 4cylinder internal combustion engine with a a slightly strange carburetor... the infrastructure is in place, theres no reason cars could not be converted except maybe scaling up the delivery infrastructure
  7. Minuteman

    Minuteman Chaplain Moderator Founding Member

    I'm all for NG vehicles. The only big problem is retro-fitting delivery methods. That's been the crux of all of these alternative fuel scenarios. The cost to change from gasoline filling stations to anything else is staggering.
    But NG is the ONLY viable alternative energy source that is anywhere near being able to cut into our massive consumption of oil.
    I hate to be devils advocate but we have to look at the big picture. Natural gas is a finite resource also and the more we utilize it the faster it also will deplete. NG wells have incredibly short life spans compared to oil wells and they are much more expensive to drill. Ergo the price of NG has to be high to provide the financial incentive for companies to drill for and produce it. Part of the recent slump in drilling activity in Pa, TX, LA, and N. Dakota was the result of the economic slowdown and a slump in the price of NG. The cost to produce was not profitable at $2 - $3 per 1000 cu/ft. It needs to get up to at least the $6-$10 range to spur inestment and production. How that translates to price per gallon of gasoline I don't know. I would assume that it would not be much cheaper than say $3-$4 a gallon gasoline.
    It would provide a bridge to something else but it cannot replace oil. And remember that reserve figures are put out primarily for investors and are notoriously over inflated.
  8. Al Bundy

    Al Bundy Monkey++

    Don't forget human waste as a resource. 6 billion people = lots of methane gas, and obviously renewable.
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