Shale gas
Most of the world’s CO2 emissions stem from energy production and transport, it is critical to monitor these changes closely.
In particular, the shockwaves triggered by the shale-energy revolution unleashed in the United States are reverberating globally. With the advent of hydraulic fracturing, or “fracking,” US oil production has risen by 30%, and gas production by 25%, in just five years. Shale gas contributed almost nothing to US natural-gas supplies at the start of the century; by last year, its share had soared to 34%, with the US Energy Information Administration predicting a further rise to one-half by 2040. As a result of this bonanza, US domestic energy prices have plummeted.
The US, with all its geographical blessings, is on the road to energy self-sufficiency and is reaping clear economic benefits. Development of unconventional oil and gas supported 2.1 million jobs and contributed $74 billion in tax revenues and royalty payments to government coffers in 2012. Industrial competitiveness has soared, owing to much higher gas prices in Europe and Asia. Refiners and petrochemical companies are flocking to the US.
But this does not mean that the US can withdraw into splendid energy isolation. After all, energy is a global commodity. The effect is direct when it comes to oil prices. Although oil accounts for a smaller part of the energy mix nowadays and spare capacity is currently well ensured, chiefly by Saudi Arabia, a price shock would still have global effects – as such shocks have had in the past.
Gas prices, by contrast, vary widely across regions: from under $4/MMBtu in the US to around $10 in Europe and $15 in Asia. Until the gas market becomes more liquid and more global, this spread will remain. Nonetheless, global economic interdependence means that every country has a stake in others’ energy bills. If one region’s economy falters, all countries feel the effects.
In Europe, shale-energy resources have largely remained in the ground. Even so, the shale revolution across the Atlantic has been felt in diverse ways. For example, decreased US demand for liquefied natural gas (LNG) has allowed gas prices to come down in Europe. European utilities’ bargaining power vis-à-vis Russian gas giant Gazprom has risen considerably – despite long-term oil-indexed supply contracts.
Yet European competitiveness is in danger. European companies are still buying gas at around triple the price paid by US firms. This is unlikely to change in the near future, as liquefaction and transport costs will keep LNG prices high even if the US issues more export permits.
Finally, Europe’s energy mix is gradually shifting from the one that it needs to reach its climate-change goals. As inexpensive natural gas has eroded coal’s traditional share of electricity generation in the US, importing cheap coal from the US has become more attractive to Europe. Especially in Germany, the Energiewende (the shift away from nuclear energy following the Fukushima catastrophe in 2011) has led to an increase in coal consumption. Indeed, coal is on track to provide more than half of Germany’s electricity supply.
The EU’s position as a climate-change champion is in danger. Greenhouse-gas emissions may have dropped as a consequence of reduced production amid the economic recession, but the coal resurgence does not bode well for future targets.
Coal is king in China too, providing two-thirds of its power supply. But China’s rulers know that this situation is unsustainable. Not only is air pollution a growing source of concern, but diversification of energy sources is a crucial national-security interest.
The scale of China’s unconventional energy endowments is still relatively uncertain. But population density and water scarcity will certainly be inhibiting factors in their exploitation. China maintains robust relationships with energy producers in the Middle East, Russia, and elsewhere (including booming Myanmar) – to secure and diversify its conventional sources. Just last month, Dmitri Medvedev’s first visit to China as Russia’s prime minister resulted in a ten-year, $85 billion oil-supply deal for the state-owned energy giant Rosneft.
Natural gas, however, is the weak link. Asia’s pipeline network is far too thin, and gas prices are among the highest in the world.
That implies a potential boon to Russia’s main gas producers, especially as Europe’s energy-diversification campaign weakens export demand. Indeed, given that oil and gas revenues account for half of Russia’s federal budget, adapting to new realities is virtually an existential imperative for the Russian state. There is opportunity in Siberia’s frozen taiga, particularly the Bazhenov field, which may hold some of the largest unconventional reserves in the world. But the investment needed to develop these resources may remain in short supply in the absence of tax reforms.
The shale-energy revolution that started in the US is thus causing sweeping changes worldwide. And incorporating shale gas into the world’s energy mix could help to combat climate change by creating a bridge to a low-carbon future. So long as methane leakage is contained, CO2 emissions from natural-gas combustion can be significantly lower than those caused by reliance on oil.
Cheap energy sources, however, can eventually come at a high price, albeit with a politically tricky time lag. Simply put, the current cost of pollution is too low, while the level of urgency is high. In Warsaw and beyond, it is vitally important that the international community reaches a sufficiently high common denominator in limiting greenhouse-gas emissions. If not, we will not be able to limit the global temperature increase to a sustainable level.
Source: National Geographic
How Safe
By the 1970s America’s energy industry seemed to be in terminal decline. The oil majors had long ago gone abroad in search of richer fields. But a technique invented in the 1940s and adapted decades later by George Mitchell, a Texan oil man, could unlock the oil and gas reserves trapped in shale rock. Mr Mitchell found that by injecting water, sand and chemicals into the ground at high pressure he could fracture the rock and create pathways for the trapped oil and gas to escape. Light regulation and government subsidies have seen fracking take off in America. Shale beds now produce a quarter of the country’s natural gas, up from only 1% in 2000. By last year the price of gas in America had fallen to about a quarter of that in Europe and a sixth of that in Asia, though it has since risen.
Fracking is not without risk. As gas rises to the surface it can escape into drinking water. New York, found that four-fifths of nearby wells contained methane and that concentrations of gas in the water in nearby homes were far higher than in those further away. Poorly sealed well casings could be to blame. But similar studies of other shale beds have found no methane in nearby wells.
Some worry that the subterranean fractures could cause earth tremors
In America, where many thousands of wells have been sunk. Greens point out that fracking requires large quantities of water, though other methods of hydrocarbon extraction require similar amounts.
Drillers are doing enough to prevent methane, a particularly pernicious greenhouse gas, escaping from their wells and pipelines?????
There are also reasons for greens to support fracking. Natural gas is cleaner than fuels such as coal: America’s carbon emissions fell by 450m tonnes in the five years to 2012, partly because coal was swapped for the gas made available by fracking. In Europe, where expensive gas has led to greater reliance on coal-fired power stations, emissions have not fallen by much. Fracking can be done safely—banning it seems like an overreaction.
Most of the world’s CO2 emissions stem from energy production and transport, it is critical to monitor these changes closely.
In particular, the shockwaves triggered by the shale-energy revolution unleashed in the United States are reverberating globally. With the advent of hydraulic fracturing, or “fracking,” US oil production has risen by 30%, and gas production by 25%, in just five years. Shale gas contributed almost nothing to US natural-gas supplies at the start of the century; by last year, its share had soared to 34%, with the US Energy Information Administration predicting a further rise to one-half by 2040. As a result of this bonanza, US domestic energy prices have plummeted.
The US, with all its geographical blessings, is on the road to energy self-sufficiency and is reaping clear economic benefits. Development of unconventional oil and gas supported 2.1 million jobs and contributed $74 billion in tax revenues and royalty payments to government coffers in 2012. Industrial competitiveness has soared, owing to much higher gas prices in Europe and Asia. Refiners and petrochemical companies are flocking to the US.
But this does not mean that the US can withdraw into splendid energy isolation. After all, energy is a global commodity. The effect is direct when it comes to oil prices. Although oil accounts for a smaller part of the energy mix nowadays and spare capacity is currently well ensured, chiefly by Saudi Arabia, a price shock would still have global effects – as such shocks have had in the past.
Gas prices, by contrast, vary widely across regions: from under $4/MMBtu in the US to around $10 in Europe and $15 in Asia. Until the gas market becomes more liquid and more global, this spread will remain. Nonetheless, global economic interdependence means that every country has a stake in others’ energy bills. If one region’s economy falters, all countries feel the effects.
In Europe, shale-energy resources have largely remained in the ground. Even so, the shale revolution across the Atlantic has been felt in diverse ways. For example, decreased US demand for liquefied natural gas (LNG) has allowed gas prices to come down in Europe. European utilities’ bargaining power vis-à-vis Russian gas giant Gazprom has risen considerably – despite long-term oil-indexed supply contracts.
Yet European competitiveness is in danger. European companies are still buying gas at around triple the price paid by US firms. This is unlikely to change in the near future, as liquefaction and transport costs will keep LNG prices high even if the US issues more export permits.
Finally, Europe’s energy mix is gradually shifting from the one that it needs to reach its climate-change goals. As inexpensive natural gas has eroded coal’s traditional share of electricity generation in the US, importing cheap coal from the US has become more attractive to Europe. Especially in Germany, the Energiewende (the shift away from nuclear energy following the Fukushima catastrophe in 2011) has led to an increase in coal consumption. Indeed, coal is on track to provide more than half of Germany’s electricity supply.
The EU’s position as a climate-change champion is in danger. Greenhouse-gas emissions may have dropped as a consequence of reduced production amid the economic recession, but the coal resurgence does not bode well for future targets.
Coal is king in China too, providing two-thirds of its power supply. But China’s rulers know that this situation is unsustainable. Not only is air pollution a growing source of concern, but diversification of energy sources is a crucial national-security interest.
The scale of China’s unconventional energy endowments is still relatively uncertain. But population density and water scarcity will certainly be inhibiting factors in their exploitation. China maintains robust relationships with energy producers in the Middle East, Russia, and elsewhere (including booming Myanmar) – to secure and diversify its conventional sources. Just last month, Dmitri Medvedev’s first visit to China as Russia’s prime minister resulted in a ten-year, $85 billion oil-supply deal for the state-owned energy giant Rosneft.
Natural gas, however, is the weak link. Asia’s pipeline network is far too thin, and gas prices are among the highest in the world.
That implies a potential boon to Russia’s main gas producers, especially as Europe’s energy-diversification campaign weakens export demand. Indeed, given that oil and gas revenues account for half of Russia’s federal budget, adapting to new realities is virtually an existential imperative for the Russian state. There is opportunity in Siberia’s frozen taiga, particularly the Bazhenov field, which may hold some of the largest unconventional reserves in the world. But the investment needed to develop these resources may remain in short supply in the absence of tax reforms.
The shale-energy revolution that started in the US is thus causing sweeping changes worldwide. And incorporating shale gas into the world’s energy mix could help to combat climate change by creating a bridge to a low-carbon future. So long as methane leakage is contained, CO2 emissions from natural-gas combustion can be significantly lower than those caused by reliance on oil.
Cheap energy sources, however, can eventually come at a high price, albeit with a politically tricky time lag. Simply put, the current cost of pollution is too low, while the level of urgency is high. In Warsaw and beyond, it is vitally important that the international community reaches a sufficiently high common denominator in limiting greenhouse-gas emissions. If not, we will not be able to limit the global temperature increase to a sustainable level.
Source: DFM News
How Safe
By the 1970s America’s energy industry seemed to be in terminal decline. The oil majors had long ago gone abroad in search of richer fields. But a technique invented in the 1940s and adapted decades later by George Mitchell, a Texan oil man, could unlock the oil and gas reserves trapped in shale rock. Mr Mitchell found that by injecting water, sand and chemicals into the ground at high pressure he could fracture the rock and create pathways for the trapped oil and gas to escape. Light regulation and government subsidies have seen fracking take off in America. Shale beds now produce a quarter of the country’s natural gas, up from only 1% in 2000. By last year the price of gas in America had fallen to about a quarter of that in Europe and a sixth of that in Asia, though it has since risen.
Fracking is not without risk. As gas rises to the surface it can escape into drinking water. New York, found that four-fifths of nearby wells contained methane and that concentrations of gas in the water in nearby homes were far higher than in those further away. Poorly sealed well casings could be to blame. But similar studies of other shale beds have found no methane in nearby wells.
Some worry that the subterranean fractures could cause earth tremors
In America, where many thousands of wells have been sunk. Greens point out that fracking requires large quantities of water, though other methods of hydrocarbon extraction require similar amounts.
Drillers are doing enough to prevent methane, a particularly pernicious greenhouse gas, escaping from their wells and pipelines?????
There are also reasons for greens to support fracking. Natural gas is cleaner than fuels such as coal: America’s carbon emissions fell by 450m tonnes in the five years to 2012, partly because coal was swapped for the gas made available by fracking. In Europe, where expensive gas has led to greater reliance on coal-fired power stations, emissions have not fallen by much. Fracking can be done safely—banning it seems like an overreaction.
No comments:
Post a Comment