– As new gas rescues the world … Burning rock, or at least the natural gas trapped within. Natural Gas is Methane, CH4, the lowest from of hydrocarbon. One of the distinct advantages of natural gas is it does not contain the impurities that is dissolved in and carried by oil deposits. So natural gas burns cleaner, by definition. It still emits CO2 in about the same proportions, but it does not emit the other pollutants that are contained in oil, after refining. There is only so much that can be done to filter out the pollutants.
Remember, CO2 is not a pollutant, no matter what the Supreme Court has to say about it. Does your breath kill, well maybe it might offend others but not kill. And the offense is the ‘other’ things contains in your breath, because CO2 is odorless and tasteless.
Oil shale is rock containing deposits of oil and is pictured above burning.
But it also contains natural gas, methane. For a long time it has been known that natural gas was contained in the oil fields, that’s what they are flaring off with those fires on top of the drilling derricks. The presence of natural gas, which is the most basic hydrocarbon CH4, is everywhere you find oil, shale or decaying plants. But how to recover natural gas in large quantities has always been a vexing problem.
Enter the new technology of hydro-fracturing or just “fracking” the rocks, which means breaking up the underground rocks with huge water pressure.
The technique of hydraulic fracturing is used to increase or restore the rate at which fluids, such as oil, gas or water, can be produced from the desired underground formation. By creating fractures, the reservoir surface area exposed to the borehole is increased. The fracture, which is kept open using a proppant(Sized particles mixed with fracturing fluid to hold fractures open after a hydraulic-fracturing treatment) such as sand or ceramic beads, provides a fluid path connecting a larger area of the reservoir to the well-pipe, thereby increasing the area from which fluids can be produced from the desired formation.
Like a whole lot of things having to do with energy, fracking has been around for decades, it started in the USA about 1947 or so, mostly to increase production in old oil wells.
Most wells today are fracked as part of their final ‘bring up’. What is new is the gas part of the fracking, where specifically 3-D computer well mapping technologies are making it easier to define where gas pockets exist and where they might be fracked and made productive. If the computer 3-D seismic imaging and graphics can identify the potential gas formations, the well can be produced. This has opened up enormous new areas for potential wells, natural gas wells. Specifically in coal and shale areas, where mining may be too disruptive to the environment.
The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and other methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.
Tony Hayward, BP’s chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years’ supply – and rising fast.
“There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources,” he said.
This is almost unknown to the public, despite the efforts of Nick Grealy at “No Hot Air” who has been arguing for some time that Britain’s shale reserves could replace declining North Sea output.
Rune Bjornson from Norway’s StatoilHydro said exploitable reserves are much greater than supposed just three years ago and may meet global gas needs for generations.
“The common wisdom was that unconventional gas was too difficult, too expensive and too demanding,” he said, according to Petroleum Economist. “This has changed. If we ever doubted that gas was the fuel of the future – in many ways there’s the answer.”
The breakthrough has been to combine 3-D seismic imaging with new fracking technologies to free “tight gas” by smashing rocks, known as hydro-fracturing or “fracking” in the trade.
The US is leading the charge. Operations in Pennsylvania and Texas have already been sufficient to cut US imports of liquefied natural gas (LGN) from Trinidad and Qatar to almost nil, with knock-on effects for the global gas market – and crude oil. It is one reason why spot prices for some LNG deliveries have dropped to 50pc of pipeline contracts.
Energy bulls gambling that the world economy will soon resume its bubble trajectory need to remember two facts: industrial production over the last year is still down 19pc in Japan, 18pc in Italy, 17pc in Germany, 15pc in Canada, 13pc in France and Russia. 11pc in the US and the UK and 10pc in Brazil. A 12pc rise in China does not offset this.
OPEC states are cheating on quota cuts. Non-compliance has fallen to 62pc from 82pc in March. Iran, Nigeria, Venezuela et al face a budget crunch. Why comply when non-OPEC Russia is pumping at breakneck speed?
The US Energy Department expects shale to meet half of US gas demand within 20 years, if not earlier. Projects are cranking up in eastern France and Poland. Exploration is under way in Australia, India and China.
Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF (trillion cubic feet). Almost a quarter is in China but it may lack the water resources to harness the technology given the depletion of the North China water basin.
Needless to say, the Kremlin is irked. “There’s a lot of myths about shale production,” said Gazprom’s Alexander Medvedev.
If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia’s great power resurgence. Russia’s budget may be in structural deficit.
As for the US, we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.
This has currency implications. If you strip out the energy deficit, America’s vaulting savings rate may soon bring the current account back into surplus – and that is going to come at somebody else’s expense, chiefly Japan, Germany and, up to a point, China.
Shale gas is undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and toxic chemicals are blasted at rocks. This is supposed to happen below the water basins but accidents have been common. Pennsylvania’s eco-police have shut down a Cabot Oil & Gas operation after 8,000 gallons of chemicals spilled into a stream.
Nor is it exactly green. Natural gas has much lower CO2 emissions than coal, even from shale – which is why the Sierra Club is backing it as the lesser of evils against “clean coal” (not yet a reality). The US Federal Energy Regulatory Commission said America may not need any new coal or nuclear plants “ever” again.
I am not qualified to judge where gas excitement crosses into hyperbole. I pass on the story because the claims of BP and Statoil are so extraordinary that we may need to rewrite the geo-strategy textbooks for the next half century.