natural gas

Cheap Natural Gas Heralds an Energy Revolution

by S Fred Singer

All  bets are off for the future of energy in the United States and, indeed, the  world, as the price of natural gas plummets to ever-lower values — thanks to  the development of technology that can access gas and liquids trapped in  hitherto inaccessible shale rocks.  In 2011, shale gas accounted for a  quarter of U.S. natural gas production.  But this seemingly bright future  may depend on a court decision (expected in June 2012) and, of course, on the  outcome of the November elections.

The  Economics of Natural Gas

Consider  the history of natural gas prices just in the last few years.  In mid-2008,  the spot price (at Henry Hub) reached a peak of $13 per mcf (1,000 cubic feet,  with a heat value of 1 million Btu — denoted as 1 MMBTU) — having doubled  since mid-2007.  Since then, the price has decreased sharply, dipping to $2  in mid-March, and it now stands at $2.30.  If prices decline further,  natural gas will

be  cheaper than the average steam coal, which up until now has been the lowest-cost  fuel on a heat basis.

How  realistic is such a price path?  Operators drilling for gas are also  extracting large quantities of natural gas liquids (NGL) as well as crude  oil.  As pointed out by Richard Trzupek, the profit potential lies in these  liquids, as natural gas becomes simply a byproduct.  It reminds me of the  situation in the early 1970s, 40 years ago, when “associated gas” was so cheap,  only pennies per mcf, that it was flared at the well-head.  The problem  then was the lack of pipelines to convey the gas to consumers in major  cities.

Read more: http://www.americanthinker.com/2012/04/cheap_natural_gas_heralds_an_energy_revolution.html#ixzz1rypcLmcr

 

Our view: ‘Fracking’ with care holds key to energy future

Little more than a decade ago, the United
States
was running so low on natural gas that companies were making plans to
cover the shortfall with imports of liquefied natural gas. Today, though, the
marine terminals built to dock huge LNG ships in Texas, Louisiana and Maryland
are being converted to ship gas out, not just bring it in.

This remarkable reversal of fortune is the result of a
dramatic boom in a drilling technique called hydraulic fracturing, or
“fracking,” which uses high-pressure water mixed with chemicals and sand to
crack open shale formations. This technique has brought a surprising amount of
new gas production from states as disparate as Texas, North
Dakota
and Pennsylvania — enough combined with conventional supplies to
last perhaps 100 years at current consumption rates
.

That’s game-changing, wildly underdiscussed news. Gas now
meets only about a quarter of the nation’s energy needs, much of it for home
heating and industrial use. But if estimates of shale gas reserves are correct —
and they seem to just get bigger — gas could begin to displace oil as a fuel for
vehicles and might even help unseat coal as the nation’s dominant fuel for
generating electricity. Price pressures would ease; dependence on unstable
supplies of foreign oil could decline.

But, as with other energy sources, there’s a catch, and
it’s a big one. Fracking has caused some serious problems in many of the places
where it has been used over the past several years, enough to threaten its
promising future.

Cracking open dense rock formations to extract oil and gas
requires enormous amounts of water, as much as 5 million gallons for a single
well. That can strain local water resources and create serious problems if the
wastewater that comes back to the surface isn’t carefully handled.

There have been incidents in which wastewater laden with
chemicals and radioactivity from formations thousands of feet below the surface
leaked onto adjacent properties, severely damaging them. Companies have disposed
of wastewater at sewage treatment plants that might not have been able to remove
all the fracking chemicals.

There’s also a furious battle going on between the industry
on one side, and homeowners and environmentalists on the other, over whether the fracking process has contaminated drinking water
supplies.

Read more here:

http://www.usatoday.com/news/opinion/editorials/2011-06-06-Our-view-Fracking-with-care-holds-key-to-energy-future_n.htm

Back to top

Submit your Feedback

      Sending...
x