The headline in a recent Globe & Mail article “Blame technology for gas glut“ is simply a over simplified headline that wrongly singles out one part of a perfect storm and gives a negative connotation to a positive opportunity.
It is true that technology has resulted in a dramatic increase in natural gas supplies in both the U.S. and Canada. Like anything, increasing prices increase investment capital into new alternatives. When natural gas prices were in a steady appreciating trend towards their peak in 2008, investment capital poured into technology to unlock natural gas from tight shale rock formations. The capital system worked. Horizontal drilling and fracturing technologies and techniques have unlocked vast amounts of natural gas locked in shale gas formations increasing reserves in the U.S by as much as 40%, and potentially doubling Canada’s reserves – mostly in Northeast BC’s Horn River basin. Unfortunately, right when new shale gas formations were unlocking billions of feet in natural gas the recession slammed demand. Increased supply plus decreased demand equals falling prices. And supplies remain higher then demand as the U.S. continues to inject natural gas into storage facilities late in November. A time that is traditionally the begining of the winter heating season when demand begins to draw down on stock piled inventories of natural gas. (See Horn River News: “More gas then we know what to do with)
The world is facing a number of really serious problems. One of which is an energy crisis that will return to headline news to jog our memory with high oil prices and high prices at the pump. Unfortunately, when prices fell from their highs in 2008, people seems to forget about the energy crisis we are facing with peak oil. Up until technology unlocked shale gas, there was even talk of “peak natural gas”.
Solutions to our problems will be delivered by two factors: 1) Technology and 2) Profit. Something HRN has stated numerous times before. Technology is not at fault or to blame. Not literally or figuratively. Its easy to understand what the point of the article is – there is a massive supply of natural gas in the world. Everyone knows this, and has known this for the last year. But its not the problem. Its the solution. And main stream media needs to focus on this more.
So now that technology has provided part of the solution by opening up renewed opportunities in natural gas, companies – both inside and out natural gas industry – need to focus on the opportunity that such an abundance of natural gas can provide. Unfortunately, the markets and human behavior are slow to pay attention to those items that are in abundance and tend to focus on those items that are scarce. But once those items that are scarce become too expensive, industry moves towards the commodities of abundance, begin consuming and making them scarce as well. In the case of natural gas, the focus on this abundant, cleaner and more affordable fossil fuel needs to shift now. We should not wait till oil goes back to $150/barrel (though that may happen sooner then we think). Governments and industry alike should shift more of the energy mix to using cleaner natural gas.
So rather then “blame technology” we should “praise technology” for the new opportunities it brings, and for the abundance of lower carbon natural gas now available for Canada and the U.S. that we can leverage in an effort to reduce domestic carbon emissions now.
Globe & Mail: Blame technology for natural gas glut
