is back in the news recently after Obama hearted the shale gale in his
("Recent innovations have given us the opportunity to tap large
reserves, perhaps a century's worth of reserves...in the shale under
our feet,"), and Daniel Yergin (full disclosure: he wrote The Prize)
has a lengthy piece in the WSJ
along with an interview in which he says a bunch of stuff.
It turns out that the US and Canada also had a 100 year supply of
natural gas in 2001:
is also plentiful. An estimated 2,449 trillion cubic feet
of reserves in the United States and Canada is enough to meet today's
demand for 100 years."
In the interim there was a panic in 2005:
need to declare a national crisis," Andrew N. Liveris, the chief
executive of the Dow Chemical Company, said in recent testimony
the Senate. Dow, the nation's largest chemical maker, has shut 23
plants in the United States in the last three years in places like
Somerset, N.J.; South Charleston, W.Va.; and Elizabethtown, Ky., as it
shifted production to Kuwait, Argentina, Malaysia and Germany, where
natural gas is cheaper.
demand destruction," Mr. Liveris said. "Dozens of plants around the
country have closed their doors and gone away, and are never coming
"There's still a shortage of drilling rigs. We skipped a
generation-and-a-half of rigs in the United States."
back to 100 years of supply, and have returned to the feast stage of
natural gas cycle. Unless this time
is different, then the NG scene will not always be this rosy.
This 100 year statistic which was derived from the
Potential Gas Committee's (PGC) 2009 report. Nowhere in the PGC's press
release was a 100 year figure mentioned, but the intense need for
journalists to find a soundbite gave birth to the centennial stat.
These articles gave none of the caveats that the PGC's director gave in
Curtis cautioned, however, that the current assessment assumes neither
a time schedule nor a specific market price for the discovery and
production of future gas supply. “Estimates of the Potential Gas
Committee are ‘base-line estimates’ in that they attempt to provide a
reasonable appraisal of what we consider to be the ‘technically
recoverable’ gas resource potential of the United States,” he
I had clarified the situation in an article
a year ago, although apparently not, and a frequent rejoinder to
any talk about renewables or [insert x] remains to point to the
shale. More discerning types will know that when it comes to energy, it
is the flow that is much more
important than the stock. To
that end, it will be noted that the flow of the other NG components is decreasing,
if shale lives up to expectations, the outcome will merely be
a very gradual increase in total gas production.
reasonably large if. The chief critic is Art Berman, much maligned
his skepticism. The main disputed variable is the decline rate of
wells, which is dictated by the "b-exponent". It has a major influence
on the economics of shale as shown by a slide from one of Art's recent presentations:
levelised cost of shale is closer to $8/MMBtu, this will have a large
bearing on the competitiveness of renewable generation, since the
natural gas price accounts for approximately 75%
of the levelised cost of nat gas fired generation. As the recently
released World Economic Forum's Green
Investing 2011 shows, onshore
wind in some cases is competitive with nat gas, and a significant
increase in gas costs would mean that many more locations would be:
Investing report introduces an interesting new term "Policy Premium" to
indicate "the amount governments overpay
for renewable energy generation above the rates required for investors
to earn a standard return". This premium is very high in the US
relative to other countries, which if reformed and coupled with a
higher gas price would be doubly positive for onshore wind.
suggest that there is still energy policy after shale gas, and rather
than going full retard about it solving the world's energy problems for
the next 100 years, hopefully bets will be hedged.
Some Realism on Shale Gas was posted on AltEnergyStocks.com.