Natural Gas — The Coming of a Golden Age?

 

With easy-to-access oil on the decline, nuclear power in the cold box following Tokyo Electric Power’s Fukushima plant disaster, and coal still tarred as a dirty fuel, could this be natural gas’ moment to shine?

The International Energy Agency (IEA) seems to think so. As part of its World Energy Outlook 2011, it is predicting that global natural gas use may increase by more than 50% by 2035 and jump over coal as the second-most used fuel behind oil.

The North American shale gas boom and expansion of LNG trade have increased supplies in the near-term and bolstered the prospect of larger amounts of future gas supply.

While lower gas prices and the rising use of gas as a transportation fuel (see the Pickens Plan) are major factors, the primary driver behind the new assumptions about increased gas use are based on growing demand for the fuel in China, which has 16 of the world’s 20 most polluted cities. According to IEA’s chief economist, Fatih Birol, about half the reductions in carbon-dioxide emissions will derive from more gas use and less coal use in China. Chinese gas demand, now about 100 billion cubic meters a year (the same as Germany) will become equal to that of the entire European Union by 2035. Unconventional gas would account for 40% of the 1.8 trillion-cubic-meter gain in consumption.

The production of gas from unconventional sources is currently experiencing a boom in the US, particularly in shale plays such as the Marcellus, Barnett, Haynesville, and Eagle Ford, with numerous big players engaged (including Exxon Mobil, Anadarko Petroleum, Chesapeake Energy, and EOG Resources).

However, there is a gloomy scenario that may take the glister off the proposed golden age of gas. Fracking. The production of gas from shale deposits requires large volumes of water and chemicals to hydraulically fracture the rock in order to release methane trapped in the strata. Mitigating the environmental impact of shale production is an issue where the industry is still struggling to win over the public (although the gas companies swear that fracking is safe).

My sense is that there will be no golden age of natural gas, at least in the US, if the cleaner-burning fuel improves air quality while contaminating water tables during the extraction process. The degree and depth of new US federal regulations regarding fracking remains uncertain and is making gas exploration and production companies nervous.

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Photo by Tod Baker used under a Creative Commons license.
Stuart Hampton

British editorial veteran Stuart Hampton has been covering oil and gas companies for Hoover's since the Neogene-Quaternary period. Well, actually, since the early 1990s. For the best overview of the oil industry and its history he recommends Daniel Yergin's "The Prize." You can also follow Stuart on Twitter.

Read more articles by Stuart Hampton.

Comments

  1. I have been a president of an exploration and production company for 30 years…the US oil and gas industry has been fracking wells since 1940….only recently have there been reports that fracking is harmful to the environment. A properly drilled well has little or no risk of contaminating the water table. My company drills and fracks natural gas shale wells and we use no chemicals at all. We drill with air…and use no water mixed with chemicals to frack our wells.

  2. Stuart Hampton says:

    @Dan,

    You make valid points. I have expressed my skepticism about the alleged harmfulness of fracking in my previous blogs on this subject, and have been hammered by environmentalist readers for my opinion.

    But the fact is that the oil and gas industry has not yet convinced enough of the public that fracking is harmless. How do I know? Because of state and federal regulations being considered to better monitor and control fracking activities.

    As it is, it seems to me that air-based (water and chemical free) fracking technology such as that used by your company should give you a great competitive advantage in this time when facts are still in dispute.

    Good luck.

  3. Greetings from the Barnett Shale says:

    @Dan: We are told repeatedly by your industry that fracking has been conducted safely for 40 years or even longer by some. However, we know for a big FACT that what we are talking about here is “unconventional” shale gas drilling.

    Fracking of conventional wells is quite different than unconventional shale gas drilling. Are your wells being drilled “vertically”? Natural gas in shale plays can be extracted from vertical wells in some cases as we have learned.

    The public is trying to understand this issue…and when industry folks make statements with great emphasis that is very sad to to those of us who are trying so hard every day to educate the public about what is going on in their communities. It seems that the ‘misleading’ is part of the effort to get it done.

    I would like to recommend Dr. Anthony Ingraffea’s, December 16, 2010 lecture, “The Facts On Fracking,” for anyone reading this who would like to get a very educated, but clear explanation of unconventional shale gas drilling. Here’s the link:

    http://www.archive.org/details/The_Facts_on_Fracking_by_Dr._Anthony_Ingraffea

    I would also like to know what gas operator you represent, Dan. We would like to know about the use of air instead of the chemical concoction that makes up .5% of the fracking fluid used by the majority of the shale gas operators ~ fracking fluid that is mixed with the 5-7 Million Gallons of Water forced down the horizontal wellbore hydraulically. We know of not one gas operator utilizing “air only” for fracking in our area. So, please, Dan, enlighten us.

    I hope you realize that there are still a lot of other issues surrounding shale gas exploration and extraction. Property rights issues (when one chooses not to sign with a particular operator and how the shale gas operators can “force” joining their pooled unit) and gas gathering pipelines going in so close to neighborhoods and homes without any say in any of it by local authorities or property owners ~ are but two of these serious issues in the Barnett.

  4. Stuart Hampton says:

    @Greetings from the Barnett Shale,

    Thanks for you input.

    You certainly touch on some key issues (public health and safety, and property rights) that directly affect communities in the Barnett Shale play.

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