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| Economy | ||
| US: net exporter of natural gas? | ||
| 2011-06-12 | ||
| by Christopher Mims Less than a decade ago, major American energy companies were investing billions in constructing new terminals for importing liquefied natural gas — the cooled, dense state of methane that makes it economical for it to be transported by ship. Today, some of those same companies are contemplating spending billions to retrofit those facilities in order to export LNG. What happened in the interim? Natural gas boomed in the U.S., thanks to major discoveries of unconventional gas deposits in shale rock and new extraction techniques. In 2011, the U.S. Energy Information Administration raised its estimate for “technically recoverable” natural gas reserves in the U.S. from 353,000 billion cubic feet to 827,000 billion cubic feet. At $4 for every million BTU, natural gas isn’t that much more expensive than coal, which trades at a little over $2 per million BTU but produces twice as much greenhouse gas and significantly more air pollution. Despite increased demand and a push to replace coal-fired power with natural gas, the U.S. is suffering what experts call a “gas glut.” “The real problem for shale gas is demand — they don’t know where to put all of it,” says Ben Schlesinger, an independent consultant to the natural gas industry. Meanwhile, Europe is paying two to three times the prices in the U.S., and countries that are entirely dependent on LNG, including Japan, Taiwan and South Korea, are paying even more — between $20 and $30 per million BTU. Europe also has security and political reasons for wanting access to U.S. gas. Its current primary source, Russia, has shown a willingness to use Europe’s dependence as a bargaining chip. In three of the past five winters, Russia has cut off the supply of gas to some part of Europe in a dispute over prices and other issues. Currently there are plans for up to three LNG export terminals on the U.S. gulf coast, and one on the Pacific coast of Canada, in Kitimat. Historically, the only LNG export facility in the U.S. was in Kenai, Alaska. LNG ships bound for Japan have departed from the terminal since the 1960s, but it’s slated to be shut down in the near future. If the first two export plants in the U.S., both converted import facilities, come online by 2015 as projected, they would be the first constructed in the U.S. in 40 years. Whether or not the U.S. will become “the next Qatar,” which is the largest exporter of natural gas in the world, will depend on a number of factors. Together, these variables will determine whether investors think LNG export terminals are worth the risk, and whether or not the U.S. will even be capable of sending its bounty overseas. First, U.S. gas consumption must remain low. That means no “Pickens Plan” for using our natural gas reserves to fuel our trucking fleet, and no quick changeover from coal to natural gas for energy production. Second, we have to continue to drill at the rapid pace set over the past few years. More than half the natural gas consumed in the U.S. today comes from wells drilled in the last three years, and unconventional wells deplete rapidly, unlike conventional gas fields.
“The increase [in unconventional natural gas production] has been so dramatic it’s amazing,” says Schlesinger. Ten years ago, production was a tenth what it is today, and fracking technology is evolving rapidly. If current trends in the U.S. continue — slow turnover of old power plants, reduced demand due to efficiency — it’s likely that much of that gas will be sent overseas as LNG.
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| Posted by:Steve White |
| #13 You start NG conversion with buses, taxis and other vehicle fleets that can be refueled at one location. Once the ball starts rolling it happens really fast. It only took about 5 years for every gas/petrol station in Perth to have an NG pump for vehicles. |
| Posted by: phil_b 2011-06-12 22:52 |
| #12 We need to...get off of foreign oil. The faster we move towards energy independence the better off the country will be. Screw OPEC. I think grid powered electric vehicles are a dumb idea The idea strikes me the same way. The intial cost of the Volt or the Leaf seems too high and the range of travel is too limited. If a battery could deliver a range of 500-600 miles or so, it might be attractive. |
| Posted by: JohnQC 2011-06-12 18:12 |
| #11 1 million BTU's is pretty much the same as one thousand cubic feet (MCF) of natural gas. 30 years ago I paid about $2 / MCF for my natural gas. Last month my bill was $14.62 / MCF. The 'trading cost' for the gas was $5.89 / MCF, all other costs were added on by the public utilities commission and the gas distribution company. 'Trading cost' is one thing, and cost to the consumer quite something else. |
| Posted by: Anguper Hupomosing9418 2011-06-12 14:17 |
| #10 Diesel engines / transport trucking industry accounts for a big chunk of US oil consumption. NG is not the fuel for them, but does work for buses & most US autos (except for a lack of distribution facilities aka 'natural gas stations'. The Fischer-Tropsch process needs a lot of energy to make it work, this is where abundant nuclear power might become very useful, should the US ever get un-stuck from stupid. |
| Posted by: Anguper Hupomosing9418 2011-06-12 14:07 |
| #9 That means no "Pickens Plan" for using our natural gas reserves to fuel our trucking fleet That really is the most immediate and sensible new use for NG. Every gallon of diesel displaced is oil the US does not have to import. |
| Posted by: Zebulon Thranter9685 2011-06-12 12:44 |
| #8 US natural gas is less than $30 for the equivalent energy of a barrel of oil. That should be used in this country for gas to liquids fuel production or to upgrade coal, shale and tar sands oil that goes for $100 per barrel. The only place surplus natural gas should be exported is to Canada to increase oil sands production. But good luck with that as Barack the Red shuts down coal fired electricity plants and won't even issue permits for oil drilling, let alone sources of unconventional oil. |
| Posted by: Zebulon Thranter9685 2011-06-12 12:38 |
| #7 Gas to liquids or coal to liquids Most vehicles on the road in here in Perth are powered by NG. No need to covert gas to liquids. I think grid powered electric vehicles are a dumb idea, but if powered by home NG electricity they make a bit more sense, especially in cold climates. |
| Posted by: phil_b 2011-06-12 08:24 |
| #6 Let's watch how the Democrats hose this up. Fracking paranoia - that's how they are 'hosing this up.' |
| Posted by: Glenmore 2011-06-12 08:13 |
| #5 I'd get one of the home electricity generators but in Perth we only need to heat our homes for less than 4 months a year. So there isn't the same benefit you would get in a colder climate. |
| Posted by: phil_b 2011-06-12 03:08 |
| #4 I see local natural gas cogen plants, with generators making electricity, and using the rejected heat for heating or absorption chillers. It is more efficient to transport natural gas than going from a thermal power plant and going over transmission lines. We need to utilize this blessing of natural gas wisely to get off of foreign oil. Gas to liquids or coal to liquids (e.g. Fischer-Tropsch process) can eliminate the need for foreign crude oil, and rejected heat from the process can be captured for district heating. |
| Posted by: Alaska Paul 2011-06-12 03:03 |
| #3 In 2011, the U.S. Energy Information Administration raised its estimate for "technically recoverable" natural gas reserves in the U.S. from 353,000 billion cubic feet to 827,000 billion cubic feet. If I was a gamblin' man, I'd bet that the guy at the EIA who wrote this report has on his speed-dial the guy over at Interior who drafts proposals for designating tracts of land as undrillable, un-mineable (sp?) "National Monuments". |
| Posted by: Ricky bin Ricardo (Abu Babaloo) 2011-06-12 02:52 |
| #2 agreed phil-b |
| Posted by: Water Modem 2011-06-12 02:15 |
| #1 People should generate their own electricity from NG at home. Link |
| Posted by: phil_b 2011-06-12 01:32 |