The study predicts that domestic Chinese unconventional production will account for over a quarter of total gas supply by 2030. However, unconventional gas resources will take a significant time to develop. Therefore, meeting its gas demand will require China to import significant additional volumes of LNG and piped gas, particularly up to 2020.

“Development of indigenous unconventional gas is currently slow but we forecast significant volumes of coalbed methane, coal-based synthetic gas and shale gas to enter the market, reaching over 11 billion cubic feet per day by 2030. This will meet much of China’s incremental demand by this time. In total, unconventionals will account for over a quarter of total gas supply,” said Gavin Thompson, China gas study director for Wood Mackenzie.

Shale gas is the major growth story in China gas, he added. As China’s national oil companies increase their unconventional gas activity, they will look for partnership and technology in the initial phase of development, creating a window of opportunity for qualified foreign players. This is a near-term window of opportunity for international oil companies to gain access to China’s onshore acreage and to leverage skills honed in North America.

During the second quarter Encana Corporation announced it had signed a memorandum of understanding with China National Petroleum Corporation that outlines a framework for the two companies to negotiate a potential joint-venture investment in the development of certain lands in Encana’s natural gas plays in Horn River, Greater Sierra and Cutbank Ridge in northeast British Columbia.

While domestic Chinese conventional gas supply will continue to grow, Wood Mackenzie says it cannot keep pace with future demand in the current decade and China will need to secure significant additional volumes of imported gas in the form of both LNG and piped gas.

“China’s demand for LNG is driving Pacific LNG market growth. We now forecast China LNG demand in 2020 to be 46 million tons per annum, up from our previous forecast of 31 million tons per year. This will expand the opportunity for LNG suppliers seeking to secure markets, particularly those in Australasia. However, China’s LNG import growth will be mitigated by the emergence of indigenous unconventional gas. Consequently there will be a limited opportunity for some LNG suppliers to secure long term supply or risk seeing China disappear as a potential foundation buyer for their projects,” Thompson said.

China’s gas demand is forecast to rise from nine bcf per day in 2009 to 43 bcf a day in 2030, a compound annual growth rate of 7.5%, with strongest growth pre-2020. This strong demand growth, says Wood Mackenzie, will not purely be driven by gross domestic product (GDP).

“Demand is driven by a combination of factors, including policies to reduce the country’s growing reliance on oil imports. This is important as the gas demand story is about displacing oil products, not coal, in the industrial and residential sectors. Coal continues to dominate in power, although gas will increase its market share in wealthier coastal provinces as local government supports a cleaner fuel mix. As such, we think that industry will remain the largest gas consumer in China through to 2030,” Thompson said.

The study concludes that potential suppliers of gas to China need to rapidly engage with domestic buyers and secure contracts while the market is still available as longer term unconventional gas will constrain requirements for new LNG imports.

The move stems largely from the corporate shake-up in 2004 when former Shell CEO Jeroen van der Veer took the reigns and steered the company back to a model focused on technology and long-term development.

Over the last decade, Shell has become a world leader in liquid natural gas and has made some major headway in the shale gas sector. The transition to gas is a no brainer for the company because gas falls under what they call “the three A’s”: Acceptable, Affordable and Abundant. Acceptable because it produces the least CO2 of the fossil fuels; affordable because combined-cycle gas turbines are the cheapest form of electricity production by capital cost; and abundant in the sense that global gas reserves are much larger than oil reserves.

Though the strategy shift came before the US shale boom, the European Energy Review says the company couldn’t have been positioned any better to capitalize on what the Globe and Mail has called the “next energy game changer”:

“In many ways the unconventional gas revolution is good news for Shell’s gas-oriented strategy. It makes gas even more abundant, which increases consumers’ confidence in it as a fuel and reduces security of supply concerns. And thanks to the distribution of the tight and shale gas resources, which can not only be found in the US, but also in China, Australia and many places in Europe, the IOCs can once again get access to large resources that are not under the control of NOCs.”

But the shale gas boom isn’t necessarily all positive, the article explains. Markets still aren’t prepared to sell shale gas to the average consumer and international plays – especially in Europe – have to deal with gas strongholds by monopolies such as Russia’s Gazprom who supply much of Europe with gas.

Nevertheless, one thing is for sure: “It should be kept in mind that very soon Shell will not be an oil tanker anymore. It will become a floating LNG vessel.”

READ THE FULL ARTICLE

The United States has enough shale gas that prices can range in a comfortable zone for the next few decades. Enough exists to make planning for future electricity generation easier for utilities. Five years ago, the U.S. government believed 140 trillion cubic feet of natural gas existed in North America. This year, a private industry estimate pegs the supply at more than 1,000 trillion cubic feet. As oil continues to spill out of the Gulf of Mexico seabed, the United States slowly is waking up to a new energy future. Renewable fuels are still part of the future, but natural gas can add decades to the time needed for wind, solar and other renewables to increase in efficiency and come down in price.

Enough natural gas can be found domestically that the United States has little need now for liquefied natural gas terminals to receive foreign natural gas. LNG supplies will go to other markets, such as China. The world has enough shale gas that natural gas cartels are unlikely to form. Even Europe has enough shale gas to wean itself off Russian supplies. This perspective comes from a recent Wall Street Journal article by Amy Myers Jaffe of the James A. Baker III Institute for Public Policy at Rice University.

“We have a lot of gas to (drill),” Jaffe said recently in San Antonio during a symposium on shale gas held by "http://www.stmmltd.com" target=_new>South Texas Money Management Ltd. Other symposium speakers detailed how the shale gas revolution is bringing gobs of income to South Texas landowners. One of the best new shale gas plays, called Eagle Ford, stretches from the Texas-Mexico border to the Gulf Coast. La Salle and McMullen counties reportedly are among the hot spots for shale gas exploration and drilling. Landowners, who may have paid, say, $200 per acre, receive thousands of dollars per acre for leases, plus royalties.

Natural gas prices now fluctuate above $4 per thousand cubic feet. The Baker Institute projects natural gas prices will stay below $7 through 2040, although some spikes could occur briefly. It wasn’t long ago that natural gas prices soared above $14.

SOURCE:
Neftegaz: “Natural Gas As A Major Ressource For Our Energetic Future”

We’ve always known the potential of shale; we just didn’t have the technology to get to it at a low enough cost. Now new techniques have driven down the price tag—and set the stage for shale gas to become what will be the game-changing resource of the decade.

I have been studying the energy markets for 30 years, and I am convinced that shale gas will revolutionize the industry—and change the world—in the coming decades. It will prevent the rise of any new cartels. It will alter geopolitics. And it will slow the transition to renewable energy.

To understand why, you have to consider that even before the shale discoveries, natural gas was destined to play a big role in our future. As environmental concerns have grown, nations have leaned more heavily on the fuel, which gives off just half the carbon dioxide of coal. But the rise of gas power seemed likely to doom the world’s consumers to a repeat of OPEC, with gas producers like Russia, Iran and Venezuela coming together in a cartel and dictating terms to the rest of the world.

The advent of abundant, low-cost gas will throw all that out the window—so long as the recent drilling catastrophe doesn’t curtail offshore oil and gas activity and push up the price of oil and eventually other forms of energy. Not only will the shale discoveries prevent a cartel from forming, but the petro-states will lose lots of the muscle they now have in world affairs, as customers over time cut them loose and turn to cheap fuel produced closer to home.

The shale boom also is likely to upend the economics of renewable energy. It may be a lot harder to persuade people to adopt green power that needs heavy subsidies when there’s a cheap, plentiful fuel out there that’s a lot cleaner than coal, even if gas isn’t as politically popular as wind or solar.

But that’s not the end of the story: I also believe this offers a tremendous new longer-term opportunity for alternative fuels. Since there’s no longer an urgent need to make them competitive immediately through subsidies, since we can use natural gas now, we can pour that money into R&D—so renewables will be ready to compete without lots of help when shale supplies run low, decades from now.

To be sure, plenty of people (including Russian Prime Minister Vladimir Putin and many Wall Street energy analysts) aren’t convinced that shale gas has the potential to be such a game changer. Their arguments revolve around two main points: that shale-gas exploration is too expensive and that it carries environmental risks.

I’d argue they are wrong on both counts.

Take costs first. Over the past decade, new techniques have been developed that drastically cut the price tag of production. The Haynesville shale, which extends from Texas into Louisiana, is seeing costs as low as $3 per million British thermal units, down from $5 or more in the Barnett shale in the 1990s. And more cost-cutting developments are likely on the way as major oil companies get into the game. If they need to do shale for $2, I am willing to bet they can, in the next five years.

When it comes to environmental risks, critics do have a point: They say drilling for shale gas runs a risk to ground water, even though shale is generally found thousands of feet below the water table. If a well casing fails, they argue, drilling fluids can seep into aquifers.

They’re overplaying the danger of such a failure. For drilling on land, where most shale-gas deposits are, the casings have been around for decades with a good track record. But water pollution can occur if drilling fluids are disposed of improperly. So, regulations and enforcement must be tightened to ensure safety. More rules will raise costs—but, given the abundance of supply, producers can likely absorb the hit. Already, some are moving to nontoxic drilling fluids, even without imposed bans.

But the skeptics aren’t just overstating the obstacles. They’re missing two much bigger points. For one thing, they’re ignoring history: The reserves and production of new energy resources tend to increase over time, not decrease. They’re also not taking into account how quickly public opinion can change. The country can turn on a dime and embrace a cheaper energy source, casting aside political or environmental reservations. This has happened before, with the rapid spread of liquefied-natural-gas terminals over the past few years.

In short, the skeptics are missing the bigger picture—the picture I think is the much more likely one. Here’s a closer look at what I’m talking about, and how I believe the boom in shale gas will shake up the world.

One of the biggest effects of the shale boom will be to give Western and Chinese consumers fuel supplies close to home—thus scuttling a potential natural-gas cartel. Remember: Prior to the discovery of shale gas, huge declines were expected in domestic production in U.S., Canada and the North Sea. That meant an increasing reliance on foreign supplies—at a time when natural gas was becoming more important as a source of energy.

Even more troubling, most of those gas supplies were located in unstable regions. Two countries in particular had a stranglehold over supply: Russia and Iran. Before the shale discoveries, these nations were expected to account for more than half the world’s known gas resources.

Russia made no secret about its desire to leverage its position and create a cartel of gas producers—a kind of latter-day OPEC. That seemed to set the stage for a repeat of the oil issues that have worried the world over the past 40 years.

As far as I’m concerned, you can now forget all that. Shale gas will breed competition among energy companies and exporting countries—which in turn will help economic stability in industrial countries, and thwart petro-suppliers that try to empower themselves at our expense. Market competition is the best kryptonite for cartel power.

For one measure of the coming change, consider the prospects for liquefied natural gas, which has been converted to a liquid so it can be carried in a supertanker like oil. It’s the easiest way to move natural gas very long distances, so it gives a good picture of how much countries are relying on foreign supplies.

Before the shale discoveries, experts expected liquefied natural gas, or LNG, to account for half of the international gas trade by 2025, up from 5% in the 1990s. With the shale boom, that share will be more like one-third.

In the U.S., the impact of shale gas and deep-water drilling is already apparent. Import terminals for LNG sit virtually empty, and the prospects that the U.S. will become even more dependent on foreign imports are receding. Also, soaring shale-gas production in the U.S. has meant that cargoes of LNG from Qatar and elsewhere are going to European buyers, easing their dependence on Russia. So, Russia has had to accept far lower prices from formerly captive customers, slashing prices to Ukraine by 30%, for instance.

But the political fallout from shale gas will do a lot more than stifle natural-gas cartels. It will throw world politics for a loop—putting some longtime troublemakers in their place and possibly bringing some rivals into the Western fold.

Again, remember that as their energy-producing influence grew, nations like Russia, Venezuela and Iran became more successful in resisting Western interference in their affairs—and exporting their ideologies and strategic agendas through energy-linked deal-making and threats of cutoffs.

In 2006 and 2007, disputes with Ukraine led Russia to cut off supplies, leaving customers in Kiev and Western Europe briefly without fuel in the dead of winter. That cutoff effectively shifted Ukraine’s internal politics: The country turned away from the pro-NATO, anti-Moscow candidate and toward a coalition more to Moscow’s liking.

It looked like the U.S. and Europe would see their global power eclipse as they kowtowed to their energy suppliers. But shale gas is going to defang the energy diplomacy of petro-nations. Consuming nations throughout Europe and Asia will be able to turn to major U.S. oil companies and their own shale rock for cheap natural gas, and tell the Chavezes and Putins of the world where to stick their supplies—back in the ground.

Europe, for instance, receives 25% of its natural-gas supply via pipelines from Russia, with some consumers almost completely dependent on the big supplier. In the wake of Russia’s strong-arming of Ukraine, Europe has been actively diversifying its supply, and shale gas will make that task cheaper and easier.

Shale-gas resources are believed to extend into countries such as Poland, Romania, Sweden, Austria, Germany—and Ukraine. Once European shale gas comes, the Kremlin will be hard-pressed to use its energy exports as a political lever.

I would also argue that greater shale-gas production in Europe will make it harder for Iran to profit from exporting natural gas. Iran is currently hampered by Western sanctions against investment in its energy sector, so by the time it can get its natural gas ready for export, the marketing window to Europe will likely be closed by the availability of inexpensive shale gas.

And that may lead Tehran to tone down its nuclear efforts. Look at it this way: If Iran can’t sell its gas in Europe, what options does it have? Piping to the Indian subcontinent is impractical, and LNG markets will be crowded with lower-cost, competing supplies.

It’s admittedly a long shot, but if the regime acts rationally, it will realize it has a chance to win some global goodwill by shifting away from nuclear-power efforts—and using its cheap natural-gas supplies to generate electricity at home.

Overall, the Middle East might get a bit poorer as gas eats into the market for oil. If the drop in revenue is severe enough, it could bring instability.

Shale-gas development could also mean big changes for China. The need for energy imports has taken China to problematic nations such as Iran, Sudan and Burma, making it harder for the West to forge global policies to address the problems those countries create. But with newly accessible natural gas available at home, China could well turn away from imports—and the hot spots that produce them.

The less vulnerable China is to imported oil and gas, the more likely it would be to support sanctions or other measures against petro-states with human-rights problems or aggressive agendas. Moreover, the less Beijing worries about U.S. control of sea lanes, the easier it will be for the U.S. and China to build trust. So, domestic shale gas for China may help integrate Beijing into a Pax Americana global system.

With natural gas cheap and abundant, the prospects for renewable energy will change just as drastically. I have been a big believer that renewable energy was about to see its time. Prior to the shale-gas revolution, I thought rising hydrocarbon prices would propel renewables and nuclear power into the marketplace easily—albeit with a little shove from a carbon tax or a cap-and-trade system.

But the shale discoveries complicate the issue, making it harder for wind, solar and biomass energy, as well as nuclear, to compete on economic grounds. Subsidies that made renewables competitive with shale gas would get more expensive, as would loan guarantees and incentives for new nuclear plants. Shale gas also hurts the energy-independence argument for renewables: Shale gas is domestic, just like wind and solar, so we won’t be shipping those dollars to the Middle East.

But that doesn’t mean we should stop investing in renewables. As large as our shale-gas resources are, they’re still exhaustible, and eventually we will still need to transition to energy that is cleaner and more plentiful. So, what should we do?

First, avoid the urge to protect coal states and let cheaper natural gas displace coal, which accounts for about half of all power generated in the U.S. Ample natural gas for electricity generation could also make it easier to shift to electric vehicles—once again helping the environment and lessening our dependence on the Middle East.

Then, I think we still need to invest in renewables—but smartly. States with renewable-energy potential, such as windy Texas or sunny California, should keep their mandates that a fixed percentage of electricity must be generated by alternative sources. That will give companies incentives and opportunities to bring renewables to market and lower costs over time through experience and innovation. Yes, renewables may seem relatively more expensive in those states as shale gas hits the market. And, yes, that may mean getting more help from government subsidies. But I don’t think the cost would be prohibitive, and the long-term benefits are worth it.

Still, I don’t believe we should set national mandates—which would get prohibitively expensive in states without abundant renewable resources. Instead of pouring money into subsidies to make such a plan work, the federal government should invest in R&D to make renewables competitive down the road without big subsidies.

In the end, what’s important to understand is that shale gas may be the key to solving some of our most pressing short-term crises, a way to bridge the gap to a more-secure energy and economic future.

The trade deficit has crippled our economy and shows no signs of abating as long as we remain tethered to imported energy. Why ship dollars abroad where they can destabilize global financial markets—and then hit us back in lost jobs and savings—when we can develop the resources we have here in our own country? Shall we pay Vladimir Putin and Mahmoud Ahmadinejad to develop our natural gas—or the citizens of Pennsylvania and Louisiana?

By Amy Meyers Jaffe for The Wall Street Journal

Ms. Jaffe is the Wallace S. Wilson Fellow for Energy Studies at the James A. Baker III Institute for Public Policy at Rice University and co-author of “Oil, Dollars, Debt and Crises: The Global Curse of Black Gold.”

SOURCE:
Natural Gas For Europe: “How Shale Gas Is Going To Rock The World”

After a year in which Gazprom lost market share in Europe and saw its export revenues shrink on weaker demand and lower prices, the Russian gas giant held its first board of directors meeting in 2010 recently and focused on a review of the company’s near-term export strategy.

Gazprom is expecting a rebound in European gas demand this year — or at least an increase its own gas exports to that market — but is warily eyeing the impact of the surge in U.S. gas production on gas markets in both North America and Europe.

Rising shale gas production in the United States is rapidly changing the export outlook for Gazprom, forcing it to review and perhaps revise its plans for major production and export projects such as the Shtokman LNG project.

It also coming off a year in which Gazprom not only saw its gas exports to Europe fall but lost market share in the continent to competitors. Last year was not kind to Gazprom, beginning with a commercial price dispute with Naftogaz Ukrainy that mushroomed into a two-week gas supply halt to 18 countries, and ending with the Russian company negotiating with its major European import partners on the delicate matter of “take-or-pay” penalties for their reduced offtakes below minimum annual levels. In between, Gazprom saw the bubble burst on rising European gas prices (although a recovery is under way) and was forced to shut in some gas production, as well as push back timetables for several major new fields, including the Bovanenkovskoye field in the Yamal Peninsula.

This year is off to a better start, if only because the company managed to avoid a New Year’s gas dispute with Ukraine. A political deal reached in November by Russian and Ukrainian politicians to reduce Ukraine’s gas import obligations in 2009 and 2010 (in the context of that country’s sharp economic contraction and subsequent weaker gas demand) helped reduce the risks of a new confrontation.

Gazprom is confident Naftogaz will pay its gas bill by the deadline, avoiding triggering a potential politically tinged dispute between the two firms. In an effort to put the past behind it, Gazprom has reportedly written off the 4.5 Bcm of gas (worth US$1 billion) that it was not able to deliver to Europe via Ukraine last year as a result of the January dispute.

Gazprom said its declaration of force majeure during the January 2009 dispute with Ukraine absolved it of having to deliver this gas to Europe, which — in the overall context of Europe’s weaker total gas demand last year—actually allowed the Russian firm’s import partners to reduce the size of their fines under take-or-pay principles. Preliminary operational results for Gazprom showed it supplied Europe with 140.2 Bcm of gas in aggregate, down 12.3% year-on-year, with European importers together taking 8 Bcm of Russian gas below minimum required levels under take-or-pay. Germany’s E.ON has agreed to pay Gazprom US$140 million for its own unused gas last year.

For the past few months, Gazprom has touted the signs of a recovery in European gas demand, and its own production has picked up. A cold winter heating season in Europe has provided Gazprom with a needed shot in the arm in terms of increased demand for its gas, but forecasts still point to the overall weakness of European consumption for the next few years as economic growth remains largely flat.

Gazprom remains optimistic the demand situation in Europe is not that bad in revealing its 2010–12 European export plan. It expects gas exports to Europe will rise to 160.8 Bcm this year, followed by additional increases to 163.5 Bcm in 2011 and to 170.9 Bcm in 2012.

Gazprom’s optimism on the recovery in European gas demand is tempered by the sobering realization that the U.S. gas market may no longer be in play. Even as it launched a gas-trading subsidiary in the Houston and set about securing regasification capacity in North America in order to deliver LNG supplies, Gazprom is learning that its ambitious plans to secure 10% of the U.S. gas market are no longer feasible in the context of the ongoing shale gas “revolution” in the United States. The boom in shale gas and unconventional gas production in the U.S. has caught most of the industry, including Gazprom, off-guard, as what only recently appeared to be a golden opportunity for it has all but evaporated.

Indeed, as the U.S. has quickly gone from being a potential major market for LNG imports to self-sufficiency, those LNG supplies are increasingly finding their way to Europe. Thus, the shale gas boom in the U.S. has the effect of a double whammy on Gazprom, not only curtailing its marketing options in the U.S. but also affecting its business in Europe.

Weaker demand in Europe and increased LNG supplies in the Atlantic basin translated to a gas glut and a major arbitrage last year between spot gas prices in Europe and Gazprom’s oil-indexed gas prices in its long-term contracts with its import partners. European firms took advantage of this arbitrage, reducing their offtakes of Russian gas and causing Gazprom to lose market share.

Gazprom’s solace in losing market share in Europe last year was in insisting on penalties under take-or-pay principles, but its board of directors is well aware that this money is merely a sticking plaster on a wound that may require a tourniquet. Already, Gazprom is being forced to the negotiating table by its import partners seeking lower overall gas prices in their long-term contracts, and the its cherished oil-indexation pricing formula is under attack as a result. Gazprom deputy CEO Alexander Medvedev acknowledges that the firm has made several “modifications” to long-term contracts in consultation with its European partners, but it seems unlikely that those will be the last.

The continued march of the unconventional gas revolution is forcing Gazprom to rethink its marketing strategy. The redirection of LNG supplies from North America to Europe is creating havoc with Gazprom’s pricing formula as well as its investment timetables for key production and infrastructure projects, not to mention costing the company important market share. Gazprom may be reconsidering plans to invest heavily in the Shtokman gas field, a project originally focused on delivering LNG supplies to the U.S., but even the pipeline component to Europe may now be in jeopardy. Similarly, the shale gas revolution is altering the equation for Gazprom in terms of its strategy for developing fields such as Bovanenkovskoye on the Yamal Peninsula.

The potential spread of the shale gas production revolution to Europe, which is believed to have significant untapped reserves of its own, would clearly have a profound impact on Gazprom’s production and marketing strategy as well.

SOURCE:
Pipeline & Gas Journal: “America’s Gas Shale Market Forces Gazprom To Rethink Strategy”

The United States has a monopoly on “hydro-fracking” technology. The technology, short for hydraulic fracturing, releases natural gas trapped in shale deposits by injecting the deposits with high-pressure water mixed with sand and small amounts of chemical additives.

According to Dr. Fine, the “cloud over gas” used to be “do we have enough gas?” In 2003, Federal Reserve Chairman Alan Greenspan declared that the United States did not have enough natural gas, and that it would be necessary to import liquid natural gas (LNG). This, said Dr. Fine, was clearly a mistake in the light of the new hydro-facing technology, not only because importing LNG poses a security risk to the United States, but because tapping natural gas from shale represents an economic “bonanza” in “the most [economically] repressed parts of the country:” western New York, western Pennsylvania and West Virginia, areas which suffer from high rates of unemployment, and are estimated to host 490 trillion cubic feet of natural gas. The thousands of jobs that could be created in these areas could stand in the way of President Obama’s pursuit of subsidies for renewable energy.

Substitution away from imported gas by the United States will impact Russia, the world’s largest exporter of natural gas, where gas production is controlled almost exclusively by government-run Gazprom. Moreover, Chevron has signed an agreement with Poland to search for and extract natural gas there, and similar arrangements have apparently been made in Romania. “When Chevron announces that they have gas [in Poland],” Dr. Fine said, “then Russia is shut out,” and will no longer be able to act as a near-monopoly supplier of gas in Eastern Europe.

Seeing the threat to Russia’s interests, Dr. Fine suggested that Putin has de facto “joined the friends of the Earth,” claiming that hydro-fracking will lead to problems with water supply. Beyond that, however, Dr. Fine pointed out that Gazprom has recently acquired the largest gas field in Russia that was not already under its control, and that the location of this field, outside of Irkutsk, near the border with China, gives a clear indication of the direction that Russian policy is headed.

“China is moving towards a gas economy rapidly” to get away from the images and problems associated of coal, said Dr. Fine. China is well aware that its reliance on coal, and the emissions associated with it, not only present an environmental and health threat to its own population, but that China is vulnerable to increasing attacks from Western environmentalist groups as climate change becomes a more prominent political issue. China does not have large gas deposits of its own, and so, Dr Fine suggested, will want to take advantage of Russia’s weaker position vis-à-vis Europe, to demand not only lower gas prices, but also the ability to purchase equity in Russian gas fields, something China has not yet been allowed to do.

Returning to address some of the environmental concerns surrounding shale gas extraction, Dr. Fine said that, in light of the jobs that will be created , and in light of the economic advantages of natural gas—which is cheaper than either coal or nuclear power, and far less expensive than any current renewable technology—it will be politically difficult for any administration to challenge shale gas unless it can be conclusively shown to have adverse environmental effects that outweigh the benefits. Shale gas wells, Dr. Fine said, are only used when an impermeable rock layer surrounds them, so that none of the estimated 5.5 million gallons of water used for extraction can seep into the groundwater. In addition, most wells can recycle their water, and ultimately, “use less water than an average golf course.”

Finally, Dr. Fine predicted that we are not, in fact, entering an era of “peak oil,” that with the new production coming from the Iraqi oilfields, and with new natural gas deposits replacing other petroleum fuels, we can expect to see a decline in world oil prices. He predicted that on April 1, 2017 in Medford, Massachusetts, gasoline will cost barely over $1/gallon at the pump. Whether that prediction proves true or not, it certainly provides something to think about.

By Elspeth Suthers for The Fletcher School

LNG is liquefied natural gas, a clear, colourless, non-toxic liquid that forms when natural gas is cooled to around -160ºC. This shrinks the volume of the gas 600 times. In its liquid state, LNG is a clear liquid with a density about half that of water. LNG is odorless, colorless, non-corrosive and non-toxic. LNG has been produced domestically and imported into the United States for more than three decades.

Where does it come from?

Indonesia, Algeria, Malaysia, Qatar, Trinidad, Egypt and Australia are currently the leading exporters of LNG. Russia and Iran also have the greatest potential.

The LNG Industry

Worldwide there are 17 LNG production and export terminals, 41 import terminals and 141 LNG ships altogether handling approximately 120 million metric tons of LNG every year.

LNG in the United States

The United States has the highest number of LNG facilities in the world. There are currently 113 active LNG facilities across the U.S. with a higher concentration of facilities in the northeast region. Among this number are 58 facilities to liquefy and store natural gas, 39 facilities that are used for LNG storage only, four facilities that received imported LNG and regasify it for domestic use, and one export terminal in Alaska. Currently, LNG imports account for less than three percent of the total U.S. consumption of natural gas.

With domestic U.S. gas prices falling and demand for LNG in Europe growing, and drawing investment away from the U.S., LNG has largely dropped off of the U.S. energy debate agenda. LNG is unlikely to be a major player in 2009, although local protests against LNG projects will continue.

CERA’s Robert Ineson told an industry conference in Houston that the consultancy was cutting its prospects for U.S. LNG imports “from 3.2 billion cubic feet per day as of last fall to 2.6 bcfd now,” a nearly 19% reduction. That was close to a contemporaneous EIA forecast of a 16% reduction in LNG imports for the year.

-Caroline Keddy