The world is in the midst of a natural gas explosion. Even the International Energy Agency calls it a “golden age of gas”. If such optimism proves right, the implications would not only be far greater than those of the eurozone’s debt crisis, but would also be economically positive. Never forget that ours is a civilization built on cheap supplies of commercial energy. The economic rise of emerging countries is bound to make the demand for commercial energy increase dramatically in the decades ahead. Gas matters. The increase demand for natural gas could shift world economic powers, OPEC and oil producing nations would lose their stature. Natural Gas is found all over the world including a huge new find by Israel.
The US Energy Information Administration states that “the use of horizontal drilling in conjunction with hydraulic fracturing has greatly expanded the ability of producers to produce natural gas from low permeability geologic formations, particularly shale formations.”
While some innovations date to the 1970s, the EIA notes that “the advent of large-scale shale gas production did not occur until Mitchell Energy and Development Corporation experimented during the 1980s and 1990s to make deep shale gas production a commercial reality in the Barnett Shale in North-Central Texas.” But, by now, it adds, “the development of shale gas has become a ‘game changer’ for the US natural gas market.”
Today, Chesapeake Energy is a world leader in natural gas production and recently a huge expansion hoping to be a dominant player in all liquid and liquefied fuels by 2015.
The new activity has increased dry shale gas production in the US from 0.39tn cubic feet in 2000 to 4.8tn cubic feet in 2010, or 23 per cent of US dry gas production. Vastly more is to come. The EIA estimates 860tn cubic feet of “technically recoverable” US shale gas against just 273tn cubic feet in today’s “proved reserves”. If this estimate is correct, shale gas on its own would give the US 40 years of gas consumption, at current rates.
How large are the world’s shale gas reserves? The EIA asked consultants to examine 48 shale gas basins in 32 countries. Their report estimates “technically recoverable” global shale gas resources at 6,600tn cubic feet, roughly equal to today’s proved reserves.
The largest identified resources, apart from those of the US, are in China (1,275tn cubic feet), Argentina (774tn), Mexico (681tn) South Africa (485tn), Canada (388tn), Libya (290tn), Algeria (231tn), Brazil (226tn), Poland (187tn) and France (180tn). Regions excluded from this analysis include Russia, central Asia, the Middle East, south-east Asia and central Africa. Global potential should be far larger still.
What difference might the abundance of natural gas (including of more conventional gas) make to the global energy future? In its World Energy Outlook 2011, the IEA remarks that “in all the scenarios examined… natural gas has a higher share of the global energy mix in 2035 than it does today”. Under its ‘golden age’ scenario, gas demand grows by 2 per cent a year between 2009 and 2035. Even under a more cautious scenario, which it calls “new policies”, demand grows at 1.7 per cent a year or by a total of 55 per cent over this period. As a result, gas substitutes for other fuels, particularly in electricity generation and heating.