Shale gas is great news for world

By Robert J. Samuelson

You probably have never heard of oilman George Mitchell, but more than anyone else, he has changed the global energy outlook.

In 1981, Mitchell’s small petroleum company faced dwindling natural-gas reserves. He proposed a radical idea: drill deeper in the company’s Texas fields to reach gas-bearing shale rock more than a mile down. Because the gas was tightly packed, most engineers believed it was too costly to extract profitably. But after nearly two decades of trying, Mitchell proved doubters wrong. The result: The world has far more available natural gas than anyone suspected.

The BP oil spill cast a cloud over almost all energy news. Well, shale gas is good news.

Until recently, scarce U.S. natural-gas reserves suggested increasing dependence on expensive foreign supplies of liquefied natural gas. No more. Next, natural gas emits about 50 percent less carbon dioxide, the major greenhouse gas, than coal. Substituting gas for coal in electricity plants could temper emissions. Finally, shale gas in Europe and Asia has huge geopolitical implications. It could reduce dependence on Russian natural gas and frustrate any gas cartel mimicking OPEC.

The Potential Gas Committee is a group of geologists who regularly estimate future U.S. gas supplies. In 2000, the group’s estimate equaled about 54 years of present annual consumption; by 2008, it was almost 90 years. “This isn’t the end,” says Colorado School of Mines geologist John Curtis. Globally, one study estimated the recoverable supply at 16,200 trillion cubic feet, more than 150 times today’s annual world gas use.

Natural gas provides about a quarter of U.S. energy use: for home heating, electricity generation and factories. This will probably increase, but the emerging shale boom faces two problems. The first is hype.

Shale gas has many virtues, but gains will come at the margin. It isn’t a panacea for every ailment.

Consider the impact on oil imports. In theory, natural gas – compressed or converted into a liquid – could replace oil in some vehicles. But natural gas now fuels only about 120,000 of roughly 250 million U.S. cars, vans, trucks and buses. At today’s prices, natural gas is competitive with oil, but there’s a chicken-and-egg problem: Drivers won’t use it without filling stations; companies won’t build stations without drivers.

So fuel switching will likely focus on heavy-duty trucks with regular routes that require few stations. If 500,000 heavy-duty trucks changed to natural gas, oil consumption would drop almost half a million barrels a day, estimates Michael Eaves of Clean Energy, a builder of natural-gas filling stations. That’s about 5 percent of U.S. imports. The impact is large because trucks travel about 100,000 miles a year and get only about 5 miles to a gallon, says Eaves.

Similar qualifications apply to the substitution of natural gas for coal in electricity generation.

The potential seems enormous, because many gas-generating units are underutilized. But practical problems intrude. Coal is the low-cost fuel; coal-fired and gas-fired plants often serve different markets. On balance, present gas-fired plants might reduce coal-fired electricity by 5 percent to 9 percent, a Congressional Research Service study estimated. Future gas plants might expand this.

The second threat is overregulation. Environmentalists are split. Some favor shale gas as a “bridge fuel” until non-carbon energy expands. Others argue gas drilling will threaten drinking water supplies; that was a theme of Gasland, a film shown on HBO. The charges seem overblown. As the BP spill reaffirmed, all drilling requires regulation. There are environmental issues. But onshore drilling has proceeded for decades without polluting water supplies. In shale gas, thousands of feet typically separate shale deposits from water tables.

George Mitchell’s persistence made shale gas a huge geological gift. Only fools would discard it.

Robert J. Samuelson writes for Newsweek and the Washington Post Writers Group.

Source: Columbus Dispatch

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Posted by admin on August 1st, 2010. Filed under Natural Gas, Shale Basins. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry