Maybe I can fall victim the the resource curse after all*. My farm lies (if you squint) right at the edge of a shale gas play.
If you haven't heard the buzz in the energy world, it's all-shale-gas-all-the-time.
Natural gas is up now — way up — and it's changing how we think about energy throughout the world. If its boosters are to be believed, gas will change geopolitics, trimming the power of states in the troubled Middle East by reducing the demand for their oil; save the lives of thousands of people who would otherwise die from mining coal or breathing its filthy residue; and make it a little easier to handle the challenges of climate change — all thanks to vast new onshore deposits of what is called shale gas. Using new drilling methods pioneered by a Texas wildcatter, companies have been able to tap enormous quantities of gas from shale, leading to rock-bottom prices for natural gas even as oil soars. In a single year, the usually sober U.S. Energy Information Administration more than doubled its estimates of recoverable domestic shale-gas resources to 827 trillion cu. ft. (23 trillion cu m), more than 34 times the amount of gas the U.S. uses in a year. Together with supplies from conventional gas sources, the U.S. may now have enough gas to last a century at current consumption rates. (By comparison, the U.S. has less than nine years of oil reserves.) [More]This could be a game changer. According to energy experts there could be extractable shale gas under me.
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Shale gas is not easy to uncork, and the process (fracking) stirs considerable controversy. Oddly this controversy seems to usually divide people almost exactly along the same lines as the shale gas deposits. There is nothing like unexpected windfalls - in this case - literally buried treasure - for stirring up strong emotions. (Ask anyone who has settled an estate)
But natural gas is better than coal for electricity and also fuels peaker plants that can make wind energy less unreasonable. My hunch is there is enough to frustrate energy conservation fans for several decades. But it could help shift us to hybrids and plug-ins if electricity suddenly becomes a comparative bargain and the technologies involved keep advancing.
We have two energy problems in the medium to long term, climate change and peak oil. (In the very long term, all bets are off.) Consequently, shale gas has been proposed as a temporary (a few decades) solution to both. We can—As the economics get better, coal is ripe for replacement. Big Coal won't take this lying down, so it will be curious to see how they play it. They mantra so far has been, "OK, coal is little dirty, but there is lots of it and it's here". Given a cleaner domestic choice, I think officials could use shale gas as an end run around no-win climate change arguments and energy costs. The effect on transportation fuels could be significant as well, since fewer oil-fired plants in the East and more electric vehicles could sharply decrease demand.
- use natural gas to replace liquid fuels in transportation, especially as a replacement for diesel in long-haul trucking. This is the (T. Boone) Pickens Plan, which is currently dead in the water. Pickens expressed his excitement about the PGC reports, saying that “the 2,074 trillion cubic feet of domestic natural gas reserves cited in the study is the equivalent of nearly 350 billion barrels of oil, about the same as Saudi Arabia’s oil reserves.” Pickens is selling his plan—he knows better than to spout nonsense like this. ASPO-USA commentator Tom Standing did an excellent job of analyzing the energy density issues and practicalities (e.g. compressed natural gas versus liquefied natural gas) of replacing diesel with gas. It would take decades build out the supply chain (e.g. swap petroleum gas stations for natural gas stations). Robert Rapier also wrote an analysis worth reading on this subject.
- use natural gas to replace coal in electricity generation to reduce CO2 emissions. Dr. Joseph Romm of the influential Center for American Progress is already calling the potential shale gas play a game-changer. The imminently practical idea is to ramp up under-utilized natural gas power generation capacity to replace base-load coal. Geoffrey Styles’ analysis Shale Gas and Climate Change provides an excellent overview, so I won’t repeat the details here. Even if you don’t believe we are going to make an 80% reduction in our emissions by 2050—I don’t believe it—official policy is to act as though we are going to do so. We now have the makings of a de facto moratorium on coal (and here). We seem to be unwilling to build new nuclear capacity. It is theoretically possible for wind to provide 20% of our electricity by 2030, but there are many practical, economic & political barriers to success. Thus it would behoove us to switch to natural gas at large-scales if we want to maintain a functioning electricity grid 10-15 years from now. This is my current view, but the political winds could change quickly as the Great Recession grinds on. [More]
Wonder how ethanol would pencil out with $7 corn and declining gas prices?
*Maybe not - we don't have big enough water supplies.