Natural gas to postpone global energy crisis

Tony Hayward, CEO of BP Global

Advances in technology for extracting natural gas from shale have fundamentally changed the way countries worldwide are setting energy policy and viewing natural gas as the cleaner “bridge fuel” for the next century.

This past week at the World Gas Conference in Buenos Aires,  Tony Hayward, BP Global‘s chief executive, is quoted as stating “proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years’ supply”. Rune Bjornson of Norway’s StatoilHydro is quoted as stating “exploitable reserves are much greater than supposed just three years ago and may meet global gas needs for generations.”

Across the U.S. and Canada shale gas projects have increased natural gas reserve estimates.  The U.S. Energy Department has increased the natural gas reserve by ~40%. Natural gas production from shale basins in the U.S. and Canada have increased supplies during a recession that has reduced industrial demand. Increased domestic supplies have diminished US imports of liquefied natural gas (“LGN”) from Trinidad and Qatar and elswhere. The US Energy Department forecasts shale gas to meet half of the U.S. natural gas demand within 20 years. And meanwhile a planned LNG terminal in British Columbia changed direction from originally being a import facility to being an export facility with two long term customers in Korgas (Korea) and Gas Natural (International). Natural gas is changing the energy world.

Just how much natural gas can be extracted from shale formations around the world has yet to be determined. But it seems it is unlikely that massive shale gas plays are unique to Canada and the U.S. One could reasonably expect to see another Horn River, Haynesville or Barnett shale gas play somewhere outside North America.

Shale gas projects are underway in France and Poland while exploration is underway in other parts of the EU, Asia, Australia and in China. Some comments suggest that the amount of shale gas in the U.K. would offset or replace declining natural gas production in the North Sea. Certainly a large discovery or two in Europe would be welcome news to offset the influence of power Russia yields on the EU energy market.

And while companies are looking for the next Horn River basin in Europe or Australia, countries around the world are increasingly turning to natural gas as part of their energy strategy for meeting growing energy needs while reducing carbon emissions caused by coal and oil. Hopefully the global supply is high enough to meet the global interest and potential demand from natural gas’ new found standing as a cleaner “bridge fuel”.

In Canada and the U.S. we can nurture an era when natural gas, wind and solar power, combined with a smart grid system and increased usage of natural gas and alternative energy in the transportation network will not only meet energy demand but reduce overall carbon emissions. The plans are already underway in the U.S. championed by influential players like T. Boone Pickens and his Pickens Plan. There is a bill in Congress, the NAT GAS Act (HW 1835 and S. 1408), which will help jump-start the natural-gas-vehicle industry in the United States and has nearly 90 bipartisan co-sponsors in the House making it one of the few substantive bills in Congress with the support of both parties.

Natural gas will change the energy market and do so with economic, environmental and geopolitical impact and consequences.