Will the new shale plays still be producing natural gas ten to twenty or more years into the future. This topic was discussed at IHS CERA conference last week in Houston
Will the natural gas contained in America’s shale be providing energy for the next 100 years? The CERAWeek conference looks at the future of U.S. shale gas.
Although international oil companies such as ExxonMobil, Royal Dutch Shell and BP were not pioneers in the development of United States gas shales they are now working to acquire positions in Europe.
A company building a natural gas pipeline on the floor of the Baltic Sea discovered a dozen sunken ships that are thought to be between 300 and 400 years old.
Statoil has a deal with Tennessee Gas Pipeline to transport natural gas produced from the Marcellus Shale beneath Pennsylvania to New York City and parts of New Jersey. This connection to high population areas along the east coast is part of what makes the Marcellus Shale gas play so important.
An article on the Vancouver Sun website explains how most of the major oil companies are jumping into the shale gas plays of Europe. A big problem is that there are currently very few rigs there.
Early results in the Utica Shale Gas Play in Quebec, Canada has wells producing over 10 million cubic feet of gas per day. Some believe that the play could contain over 20 trillion cubic feet of natural gas.
The “Natural Gas Act” is legislation that would expand the use of natural gas as a transportation fuel by providing tax incentives for natural gas vehicles and refueling stations. Versions of the bill are in the House and Senate.
In addition to the large amount of natural gas being produced from shale there are at least three huge LNG (liquefied natural gas) projects expected to ship their first gas in 2014 and 2016.
Drilling and hydrofracking a well in one of the natural gas plays such as the Marcellus or Haynesville requires at least a million gallons of water with chemical additives and will become salty when it comes in contact with subsurface brines. An article on the Reuters website explores this problem in New York.
Imports of LNG to the continental United States rose 29 percent or 100 Bcf in 2009 to a total of 452 Bcf, according to the U.S. Department of Energy’s Office of Fossil Energy. Five countries supplied U.S. LNG imports during the year: Egypt, Trinidad and Tobago, Nigeria, Norway, and Qatar.
In 2006, the now-infamous “Lusi” mud volcano in Indonesia began erupting mud and causing big problems for locals. The eruption could have been facilitated by a gas prospecting operation there – or, the company argues, the Yogyakarta earthquake that occurred in the region. More signs point to drilling as the culprit.
An executive of Gazprom, the largest producer of natural gas in the world, says it is “unimaginable” that Europe will allow the development of its shale gas resources because of concerns with water supply contamination.
Russia has an estimated 87 trillion cubic meters of coal-bed methane distributed through coal seams in many parts of the country. Gasprom has a plan to produce 1.5 billion cubic meters of methane in 2012 from coal seams in Siberia. Gasprom is the largest extractor of natural gas in the world and the Russian government holds a controlling interest in the company.
The demand for coal could suffer significantly as climate change efforts look for cleaner energy production. Now some coal companies with significant mineral rights holdings are starting to consider going into the natural gas business.
Pennsylvania Governor Ed Rendell proposes a five percent severance tax on natural gas produced from the Marcellus Shale. Although natural gas producers are strongly opposed to the tax, many other states collect similar taxes on resource production.
In an article on the Journal of American Enterprise Institute website, Max Schultz, a senior fellow at the Manhattan Institute argues that new methods for producing natural gas (horizontal fracking) and new methods to distribute the gas (LNG) are going to transform the use of energy worldwide.
The prices paid and received for natural gas can vary significantly by state. These differences are in response to supply, demand, delivery costs and regulatory environments. The prices shown below are residential rates from 2009 but you can download current and historical prices at the Energy Information Administration website.
“To assist in the development of emerging gas shale plays in Alabama, the Geological Survey of Alabama is conducting a three-year study on the geology and development potential of gas shale in the Black Warrior basin and Appalachian thrust belt of Alabama. These areas contain a diversity of emerging gas shale plays in Cambrian through Mississippian strata.”
Some people believe that the TransCanada Pipeline is still needed – even after major shale gas plays have been discovered at many locations in the United States.
Exxon Mobil has made some very large investments in natural gas recently and some ask if this is a major change in the direction of the company. An article on the Houston Chronicle website summarizes comments on this topic by David Rosenthal, Exxon Mobil’s VP of Investor Relations.
The Department of Interior has a news item titled: “Changing the Way We Do Business”…..
“The Department of the Interior and Bureau of Land Management launched several reforms to the onshore oil and gas leasing process in an effort to improve protections for land, water, and wildlife and reduce potential conflicts that can lead to costly and time-consuming protests and litigation of leases. In addition, Secretary Salazar issued a Secretarial Order creating a new Energy Reform Team.” Quoted from the DOI website.
Although California has an improved natural gas supply situation, the state senate is still considering bills that relate to new LNG facilities that might come to the state.
A proposed pipeline to carry natural gas from the North Slope, through Canada and on to markets in Alaska and the 48 states could cost up to $41 billion. A competing project would carry the gas to a proposed LNG facility at Valdez.
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