Shale gas will change face of N America energy - study

10 March 2010 17:35  [Source: ICIS news]

Shale gas to be game changerHOUSTON (ICIS news)--A study released on Wednesday places shale-derived natural gas as a “game changer” for North America, providing potential for a more diverse portfolio of energy sources and near-term cuts in carbon-dioxide (CO2), but also presenting long-term challenges.

The US chemicals industry relies heavily on natural gas as a petrochemical feedstock and power fuel.

The recent expansion of natural gas resources provides more than 100 years of consumption at current rates, according to a study by IHS Cambridge Energy Research Associates (CERA).

“As recently as 2007 it was widely thought that natural gas was in tight supply, and the US was going to become a growing importer of gas,” said CERA chairman Daniel Yergin.

By 2030, growing demand from power generation will double natural-gas demand to 40 bcf/day, the study said.

Replacing coal-fired power generation with natural gas will result in lowered emissions, CERA said.

However, water has emerged as the top environmental issue, particularly as development of shale gas moves from traditional oil and gas producing areas to more densely populated areas, the study said. 

Environmental issues stem from the disposal and treatment of produced water as well as water used in hydraulic fracturing, a key technique in extracting gas from shale.

While additional federal regulation of hydraulic fracturing is now being debated, oil and gas drilling operations are tightly regulated or managed by states, the study said.

Simply replacing coal-fired generation with natural gas-fired units will not, however, meet the often-discussed 80% emission reduction target by 2050, CERA said.

Such a target will require non-carbon emitting technologies, such as nuclear and renewable power as well as significant advances in carbon capture and storage (CCS).

The stringency of any future carbon reduction legislation and the viability of CCS technology, which has yet to be demonstrated at scale, are two major uncertainties facing natural gas’s future in the generation fuel mix, the report concludes.

“This new abundance of natural gas provides a crucial additional ‘shock absorber’ for supplies, providing greater flexibility to react to disruptions and market imbalances,” said CERA chief energy strategist David Hobbs.

More than 100 groups participated in the study, including US and Canadian government agencies, consumers, oil and gas companies, gas and electric utilities, environmental and other non-governmental organisations, as well as financial institutions.

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