Diane Francis, Financial Post Published: Saturday, March 27, 2010
Producing natural gas from shale is going to replace cap and trade as the new green issue in U.S. politics.
Gas is dramatically cleaner than other fossil fuels and so much has been tapped in deep-shale formations in North America that it may eventually black out gasoline, nuclear and coal plants.
Shale gas is the game-changer and has suddenly become possible due to a disruptive technology — expensive, horizontal drilling, then fraccing or atomizing the shale at depths of one mile or more.
There has been much noise by independent oil companies touting their finds, and skepticism. But no longer because the world’s major oil companies are buying them up quickly.
This is why it’s a game-changer. The majors buying shale gas also control most of the U.S. gasoline stations, which means they can bring about the gasification of transportation fuels and power generation.
The idea of using compressed natural gas instead of gasoline was the brainchild of Calgary’s Jim Gray of Canadian Hunter in the 1980s. It’s inexpensive to retrofit a car to use gas and easier on engines.
But the idea went nowhere because gasoline chains weren’t interested and governments weren’t concerned about the environment or about the cost of oil imports.
Shale gas supporters include ExxonMobil Corp., Royal Dutch Shell PLC and ConocoPhillips and those three are the biggest gasoline station marketers in the United States.
The deal to watch is ExxonMobil’s US$41-billion purchase of XTO Energy Inc., due to close in June. The backroom politics are ferocious over shale gas and pits Big Oil against two unlikely bedfellows, environmentalists and the coal lobby. Both have been making a fuss over alleged negative impacts on water supplies as a result of the production of shale oil deposits near population centres in New York and Pennsylvania states.
But most shale gas is in remote areas and deeper levels where water isn’t an issue. And Canada has as much shale gas as the United States.
Here are recent developments:
1. Besides ExxonMobil’s big bet, Royal Dutch Shell and China’s biggest oil company are spending billions of dollars buying shale and coal seam companies in Australia with a view toward converting it into LNG and shipping to China.
2. EnCana Corp. just inked its deal, worth up to $1.2-billion, with Korea Gas Corp. to ship LNG to Korea from British Columbia.
3. EnCana just announced it will double gas production over five years despite sagging prices, zeroing in on shale gas.
4. Imperial Oil Ltd. and its Mackenzie Valley gas pipeline partners announced last week a postponement of the project for five more years. That gas, and Alaska’s, may never be shipped in North America but will more likely be bought by Asians then converted into LNG for shipment home.
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on May 28th, 2010 at 2:16 pm
Here is an excerpt from a letter that might have some relevance to this post. The letter was sent to the President on his visit to Youngstown May 18, 2010:
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No, we do not make much steel here anymore, but God has blessed us with something almost as good: natural gas, and some 168 trillion to 516 trillion cubic feet of it in Eastern Ohio and Western Pennsylvania. It is 1500 feet below our feet in a gas reserve known as the Marcellus Shale.
A drilling technique developed two years ago has double the production of gas wells. Indeed, it has even resurrected dead wells and brought them back to life at twice their original capacity.
To accomplish this we must pump a million gallons of water in each well. The problem is that when the water is pumped out, it is salty. Since we cannot dump the brine on the ground, we have been hauling it away for treatment. Some of it is treated here in Warren, Ohio, at the city’s water treatment plant.
Just two weeks ago, however, a ray of hope appeared. Researchers at the University of California, Berkeley, discovered an inexpensive metal catalyst for generating hydrogen from
brine. This catalyst is 70 times cheaper than the finicky platinum one which is used now. For more information, see http://news.sciencemag.org/sciencenow/2010/04/catalyst-brings-cheap-hydrogen-f.html
It appears that this new catalyst can make it possible for us to turn the brine from our gas wells into hydrogen. The hydrogen in turn can be injected into ground-up woodchips, grass, or such other bio-matter to make diesel fuel. The hydrogen can also be mixed with other fuels to enhance their thermo efficiency. In the near future the hydrogen can even power our cars, trucks and trains. And let us not forget that presently the cheapest way to make hydrogen is from natural gas, of which we should soon have plenty.
There are legitimate concerns, however. Farmers near the gas wells fear that the new drilling technique will contaminate their water supply. We respect their worries and want no part of any contamination. We are thus seeking guidance from your Department of Energy to help us minimize the risk of this happening. After all, clean water is our most vital natural resource.
On the other hand we will be foolish not to utilize all available technology to tap into our enormous gas reserves. Doing so will provide jobs and fund our cities. Hopefully, it will also bring back our young people who have left for opportunities elsewhere. Our sons and daughters do not live here anymore. Neither do their friends. Yet, it was our schools and cities that invested in their education and upbringing.
To be sure, tapping our gas resources is important to all of us, young and old. It is also important to your Administration’s goal of energy independence. The Marcellus Shale holds enough natural gas to supply the entire United States for 20 years.
With the same dedication that we had made all kinds of steel the past hundred years, we are now ready to shift gears to make all kinds of energy — from our very own soil, using our own wits and efforts.
Please join us.