Nexen announces Q1 results and ongoing success in Horn River Basin
April 29, 2010
Nexen Inc. announced first quarter cash
flow of $538 million ($1.03/share) and quarterly earnings of $185
million ($0.35/share). The Company has a number of key areas they are
focusing on including the Horn River Basin where they have finished
drilling their eight-well shale gas program and realized on further cost
improvements.
The Company summarized their success in the Horn River stating:
We have finished drilling our eight-well program and continue to make significant progress on lowering costs and gaining access to the shale reservoir on our substantial Horn River shale gas position in north-east British Columbia. We plan to complete these wells in the second half of the year with 18 fracs per well. First production is expected before year end, ramping up to 50 mmcf/d.
Substantial cost savings and productivity improvements were realized with this drilling program and our average drilling days per well were under 25 days, down 35% over our previous pad. We currently expect that with an 18 well program we could reduce our all-in costs even further to under $0.6 million per frac.
As previously announced, we estimate our Dilly Creek lands in the Horn River basin contain between 3 and 6 trillion cubic feet (0.5 to 1.0 billion barrels of oil equivalent) of recoverable contingent resource, assuming a 20% recovery factor. Our production results to date, together with those of our competitors, indicate that recovery factors will be higher. Additional production history will determine recovery factors and further appraisal activity is required before we can finalize resource estimates.
?I am pleased with the progress we are making in shale gas,? said Romanow. ?We are successfully executing our drilling plans and bringing unit costs down. With a substantial land position and favorable land tenure terms, we are in excellent position to control the pace of development and maximize the value of this resource.?
Centrica joins controversial shale gas hunt
Sunday, 11 April 2010 11:43 Daily Mail
Centrica hopes shale gas exploration will expand its US presence
United States. British Gas owner Centrica is entering the controversial shale gas business as part of its strategy to double the size of its North American operation, Direct Energy, to a turnover of ?12.2 billion within five years.
It is likely that the energy giant will either enter a joint venture or acquire a company with the skills to extract the gas from soft shale rock found in North America.
Chris Weston, Direct Energy's new chief executive, told analysts last month: 'We are interested in shale gas - it is a phenomenon.'
In the past four years the gas market has been transformed by new technology allowing access to vast reserves trapped in shale in Texas, Pennsylvania and the Rocky Mountains.
US gas reserves have risen by a third almost overnight and the Department of Energy believes shale gas could meet half the country's gas demands within two decades. Some optimists predict the US will become a gas exporter.
But environmentalists say pumping water into the rocks to extract the gas could contaminate the water table.
Centrica is prepared to invest about ?1.5 billion over the next few years in the US, where it has five million customers.
Reported by Cristina Gallardo, write to cristina.gallardo@ordons.com
Shale gas plays seen reshaping research, relationships
Bob Tippee, OGJ Editor
HOUSTON, Mar. 25 -- As they reshape markets for natural gas in North America, shale plays also are changing research priorities and business relationships.
Shale gas, said Jonathan Lewis, senior vice-president of Halliburton?s drilling and evaluation division, is ?fundamentally changing the energy landscape in North America and is doing so with unprecedented speed.?
Citing the surging share of North American gas supply coming from shales, Lewis told the RMI Oilfield Breakfast Forum that reservoirs once considered unconventional now attract enough activity, such as horizontal drilling and fracturing, to be considered conventional.
He acknowledged that the new supplies, combined with growing volumes of LNG available in trade, create a ?somewhat bearish picture for gas prices, certainly in the near term.? But he said ?considerable opportunity? remains to lower the costs of developing shale-gas reserves.
Stressing the complexity and relatively limited understanding of shales, Lewis pointed to desorption as a field of research in which advances can greatly improve recovery and economics.
Other likely areas of technical and scientific progress he cited for shale development are basin-scale modeling, formation evaluation, drilling optimization, underbalanced drilling, borehole steering, multilateral completions, and collection of data in real time.
Lewis also predicted a ?new generation? of numerical simulation techniques and said that, beyond science and technology, shale plays are encouraging new ?operations optimization and collaboration? as operators seek ways to ?drive waste and idle time out of the process.?
The efforts have increased collaboration between operators and service companies, Lewis said. They also have increased the use of packaged services, such as drilling and completion, and of incentives in contracts.
Growth industry
Another speaker called emergence of natural gas as ?the new growth industry? and restructuring of the oil services industry two important trends of the next few years.
G. Allen Brooks, managing director of the investment banking firm Parks Paton Hoepfl & Brown, said the restructuring results from expansion of activity by national oil companies, the ?struggle? by international oil companies ?to find a new business model,? the movement of gas into its role as a transition fuel, and politics and taxation.
In the longer term, Brooks said, alternative fuels and the ?green revolution? might have more effect than now is expected.
?Energy efficiency, alternatives, and things like that will have a bigger role than we think,? he said after calling politics ?the shark in the swimming pool.?
Contact Bob Tippee at bobt@ogjonline.com.
To access this Article, go to:
Statoil Increases Stake In US Marcellus Shale
Friday, 26 March 2010 12:46 Dow Jones Newswire
Stockholm. Norwegian energy giant 
Statoil (STL.OS) Friday said it has signed an agreement with Chesapeake Energy Corp. (CHK: 22.43, 0, 0%) that will add approximately 59,000 net acres to Statoil's current 600,000 net acre positions in the Marcellus Shale.
The cost to Statoil is $253 million, with an average acreage cost of $4,325 an acre, it said.
Andy Winkle, vice president for the Marcellus Asset, said Statoil "will continue to build a long-term position in what we expect will become a legacy asset."
As part of Statoil's joint venture agreement with Chesapeake formed in 2008, Statoil has the right to periodically acquire its share of leasehold that Chesapeake continues to acquire in the Marcellus Shale.
Eureka! U of Texas converts coal to crude for $28.84 a barrel
March 18, 2010 ? Leave a Comment
Researchers at the University of Texas have announced they can convert coal to crude for under $30 with no emissions from the lowest grades of coal. The technology is described as using "micro-fluidic reactors" that convert coal to synthetic crude at a fraction of the cost incurred with traditional conversion methods.
Mr. Rick Billo, University of Texas- dean of engineering is quoted:
"We're improving the cost every day. We started off some time ago at an uneconomical $17,000 a barrel. Today, we're at a cost of $28.84 a barrel."
Like other oil alternatives technologies and sources, research attracts investment capital when oil prices are high or in scarce supplies and scientists have been converting one fossil fuel to another for many years. Most notably, during WWII, Nazis Germany converted coal to crude as oil supplies were being squeezed by advancing Allied forces. China built the world's largest coal to crude conversion plant in 2008 to take advantage of coal reserves and meet growing energy demands. Most methods of converting coal to crude have always come at a high cost and have released CO2 into the atmosphere that are even higher then oil liquefaction processes. In order to avoid these carbon emissions, CO2 capture and sequestration could be employed but that further adds to the cost.
Canada there are an estimated 10 billion tonnes of proven and recoverable coal which represents more energy then oil, oil sands, and natural gas combined. Coal is abundant worldwide with an estimated 1 trillion tonnes which is the equivalent of 4 trillion barrels of oil. The largest amount of proved and recoverable coal is in the U.S.
If the University of Texas has created the technology they claim, the implications would be massive. There is enough coal in the world to power the global economy for centuries. However, the crude produced from the process is still a fossil fuel with C02 emissions when burned.
We are already seeing growing natural gas reserves in North America start to change the way this abundant resource can be better utilized in order to reduce carbon emissions and reduce U.S. dependence on oil from "unfriendly" regimes and the geopolitical changes that shale gas may bring about. If the U.S. could become completely oil independent with clean coal to crude conversion, the world will be a vastly different one then we live in today.
Globe & Mail: Texas university has eureka moment for coal-to-gas
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"Unconventional gas revolution? hot topic at conference" Posted: 15 Mar 2010 11:32 AM PDT According to the Fort Worth Business Press, the hot topic of discussion at the 29th IHS CERA Week in Houston was natural gas. The Horn River News focuses on the great opportunity that shale gas is presenting North American and the world in meeting growing energy demands with a lower carbon natural gas solution. While the U.S. has seen an estimated 40% increase in the estimated natural gas reserves due to shale discoveries, Canada may see nearly a 100% increase with British Columbia's Horn River Basin, Montney Basin and others across Canada. This abundant cleaner fuel should represent a greater portion of the overall energy mix in North America. IHS CERA Chairman Daniel Yergin is quoted:
A common reference was to the 40% increase in energy demand from 2007 to 2030 and the pressures on countries to reduce green house gas emissions. Statoil President and CEO Helge Lund is quoted:
Philippe Boisseau, president of gas and power at Total is quoted:
Read the full article. "Unconventional gas revolution? - hot topic at conference" |
Unconventional oil "hot areas"
Published: March 5 2010 15:20 | Last updated: March 8 2010 15:24
As oil groups look to find ways to access resources other than through the conventional oil well method, technology breakthroughs have allowed companies to extract reserves from reservoirs previously seen as impervious, holding out the promise of transforming the industry.
While these reserves may hold the key to the future oil supply, companies must deal with the additional time, cost and resources it takes to extract the unconventional oil.
This interactive graphic examines the areas that have a high-level of interest from the industry and Carola Hoyos explains the five key types of unconventional oil.
Batavia Energy announces business combination
Saturday, 13 March 2010 21:24 Batavia Energy
Canada. Batavia Energy Corp. has completed an arm's length business combination with Batavia Energy Inc. The parties completed the Business Combination by way of a three-cornered amalgamation, wherein Condelta Inc., a wholly-owned subsidiary of the Company amalgamated with Batavia and have continued as one company under the Business Corporations Act (Ontario) under the name Batavia Energy Inc.
Pursuant to the Amalgamation, the Company will issue 20,520,410 common shares at a deemed price of $0.20 per share, to the holders of the common shares of Batavia to acquire a 100% interest in Batavia.
In addition, each of the current holders of the 1,000,000 stock options, a CDN$750,000 principal amount convertible promissory note and a CDN$75,000 principal amount promissory note of Batavia will receive an equal number of replacement stock options, convertible promissory notes and promissory notes of the Company, which shall be exercisable on the same terms and conditions as the Batavia Options and Batavia Notes, as applicable.
Batavia, the wholly-owned subsidiary of the Company, will continue to pursue the natural gas exploration and development projects of coal bed methane gas in Indonesia and shallow gas in Alberta.
Batavia and its partners on the Sekayu CBM Block spudded the first commercial CBM well in Indonesia in the fall of 2009. The results from the CBM-SE-2 well indicated an economic project, and a second well is planned for the first half of 2010. Batavia is carried on the Sekayu CBM Block up to US$13 million of field activities.
In addition, Batavia will start field activities in 2010 related to its Alberta shallow gas project. The 2010 exploration program includes an aerial resistivity survey, geochemical work, and exploration wells on 2 1/2 townships of land in Southeastern Alberta.
Reported by Cristina Gallardo, write to cristina.gallardo@ordons.com
Nowe sposoby wydobycia gazu zmienią geopolitykę w Europie
- 11-03-2010 11:14
Ameryka ma mnóstwo gazu. Dzięki zmianom w technologii wydobycia własne zapasy tego paliwa wystarczą jej na ok. 100 lat. Jeśli technologie te wprowadzono by w Europie mogłyby zmienić euroazjatycki krajobraz geopolityczny - pisze w czwartek "Wall Street Journal".
Postęp w technologii wiercenia i wydobywania gazu z niekonwencjonalnych źródeł, takich jak łupki sprawił, że USA z importera mogą stać się eksporterem tego surowca. Ma to olbrzymi wpływ na amerykańska gospodarkę i bezpieczeństwo energetyczne - pisze nowojorski dziennik.
Jako potencjalne regiony, w których można będzie wydobywać gaz taką metodą gazeta wymienia Niemcy, Szwecję i Polskę. Według gazety regiony te, mają podobną budowę geologiczną jak bogate złoża w USA czy Kanadzie. Międzynarodowa Agencja Energetyczna i amerykańskie ministerstwo energetyki szacują, że złoża te wystarczyłyby na pokrycie obecnego europejskiego importu gazu przez 40 lat. A według wielu ekspertów szacunki te są zaniżone - przekonuje "WSJ".
Korzyści z wykorzystania tych nowych zasobów są oczywiste - pisze gazeta. Po pierwsze zmniejszenie wpływów Rosji na jej europejskich klientów. Po drugie może to zapobiec przeobrażeniu się Forum Państw Eksporterów Gazu, do którego należą m.in. Iran, Libia czy Wenezuela, w gazowy kartel podobny do OPEC.
Co więcej rosyjski gigant gazowy Gazprom ryzykuje utratę znaczących udziałów w europejskim rynku, a wykorzystanie niekonwencjonalnych zasobów gazu może sprawić, że koncern stanie się bardziej wiarygodnym i uległym dostawcą.
Rosja wciąż ma duże nienaruszone jeszcze rezerwy gazu, ale jego wydobycie wciąż spada z powodu braku inwestycji i technologii. "WSJ" przekonuje, że jeśli europejski kapitał "dobrze to rozegra" jego firmy będą miały szansę na dużo lepsze umowy na wydobycie rosyjskiego gazu, ponieważ Moskwa obawia się, że może przestać być konkurencyjna.
Jeśli Europa pójdzie w ślady Ameryki w wydobyciu gazu, kwestia tego kto jest zależny od kogo w jej relacjach z Rosją może ulec radykalnej zmianie. Pytanie czy Europa podąży za amerykańskim przykładem? - pyta "WSJ"
Gazeta przyznaje, że Europa nie ma obecnie ani odpowiedniej infrastruktury ani umiejętności. Sprawi to, że w Europie niekonwencjonalne zasoby gazu nie będą wykorzystywane tak szybko jak w USA. Z kolei jeśli Europa tego nie zrobi zwiększy to jej zależność od krajów, których polityka uważana jest za kontrowersyjną.
Materiał z portalu www.wnp.pl. - Polskie Towarzystwo Wspierania Przedsiębiorczości 1997-2010
Essar gas reserves valued at $4b
Saturday, 06 March 2010 15:39 Oman Tribune
India - The Ruiasled energy major Essar Oil on Friday said its coal-bed methane blocks actually contain about seven trillion cubic feet (TCF) of recoverable gas, over twice than earlier estimates, which industry values at over $4 billion.
Essar's exploration and production business is set to become a major wealth creator for Essar Oil. Based on the draft reports, we have recoverable resources of seven trillion cubic feet, - the company said. Essar had engaged international consultants to assess reserves, which were previously estimated to hold recoverable gas resources of about three trillion cubic feet.
Reported by Cristina Gallardo, write to cristina.gallardo@ordons.com
Essar Oil's commercial CBM production delayed by a month
Devjyot Ghoshal / Kolkata March 8, 2010, 0:57 IST
Days after Ruias-promoted Essar Oil announced that its coal bed methane (CBM) blocks hold more than double the previous estimates, the company's exploration and production arm has indicated that commencement of commercial CBM production from its block at Ranigunj has been pushed back by a month.
?Commercial production (from the Ranigunj CBM block) will begin by April-end or May. There has been a bit of slippage during the laying of the pipelines,? Essar Exploration & Production, Chief Operating Officer (Clean Coal Business) Prem Sawhney told Business Standard.
In January this year, the company had said that it was aiming at producing between 50,000-1,00,000 cubic meter of gas per day from its Ranigunj block towards the end of March, which it intends to transporting to user industries through 40 km of pipelines.
?The work on the pipelines is ongoing and should be complete in about a month,? Sawhney added.
Essar's Ranigunj block is in proximity to a number of steel and power plants, apart from the Asansol-Durgapur industrial belt. ?We have already got two consumers, one of which is Phillips Carbon (Black), and we are in talks with a number of other firms,? Sawhney said.
Phillips Carbon Black Limited, part of the RPG Group, is the leading producer of carbon black in the country. Its Durgapur unit, with an annual production capacity of 1,35,000 MT, contributes about 24 per cent of the company's overall capacity.
On Friday, in an announcement on the BSE website, Essar Oil said that it had ?aggregate in-place CBM resource of 15 tcf (trillion cubic feet) and recoverable CBM resources of around 7 tcf.? Of this, the Ranigunj block has about 4.6 tcf, with approximately 1 tcf of recoverable resources.
Shale Drilling Moves North, Upending Canada Gas Forecasts
by Edward Welsch
Dow Jones Newswires 2/23/2010
URL: http://www.rigzone.com/news/article.asp?a_id=88219
OTTAWA (Dow Jones), Feb. 23, 2010
An unconventional drilling technique that sparked a boom in U.S. gas production has made its way north.
Companies in Canada, the world's fourth-largest natural gas producer, are turning their attention to gas trapped in shale rock. In the U.S., the emergence of horizontal drilling and high-pressure liquid injections into these formations helped fuel the boom in gas supplies and subsequent bust in prices.
The rise of shale gas in Canada further blurs an already uncertain outlook for the natural gas supply-and-demand balance in North America, leading some companies to seek a way out of a market that historically has been self-contained. It also represents a stark reversal of previous forecasts, some of which predicted that the decline in Canada's conventional gas supplies would force it to become a net importer of gas by 2030.
"There's still a bit of consternation, or an attitude of 'wait-and-see,' among many people who are wondering whether this explosion in shale gas activity is going to last," said Mike Dawson, president of the Canadian Society for Unconventional Gas, an industry group.
Unconventional gas extraction techniques were proven on a large commercial scale starting five years ago in the Barnett shale in Texas, and soon spread to other U.S. basins. In Canada, EnCana Corp. (ECA), Nexen Inc. (NXY) and Talisman Energy Inc. (TLM) are among several companies gaining traction in the Horn River and Montney shale formations, both in British Columbia.
"Shale gas has a fairly short history of production," Dawson said. "[Companies] are projecting stable production for 20 to 30 years, but we don't have a history of that kind of long-term production to say that with any certainty."
Over the course of six months last year, Canada's National Energy Board shifted from a prediction that the decline in conventional gas output would far outstrip new shale supplies, to saying that shale gas could satisfy domestic demand "far into the 21st century" and spur exports of liquefied natural gas.
What changed is that new drilling, almost all of it in shale gas, picked up again as natural gas futures doubled from a low of $2.41 per million British thermal units in September to above $5/MMBtu.
The shifting landscape is forcing investors to rethink projects. A gas shipping terminal in the city of Kitimat on Canada's West Coast was originally planned to import gas, but in 2008 the terminal owners, Kitimat LNG Inc., realized that shale gas could boost Canada's output and redesigned it to export LNG. The C$4.1 billion project is scheduled to begin construction this year, and to begin operation in 2014.
Houston-based Apache Corp. (APA) last month bought a 51% stake in the terminal, and reserved half its capacity. The terminal will be designed for a throughput of 700,000 million cubic feet of gas a day, or 5 million metric tons of LNG per year. And EOG Resources Inc. (EOG), an independent oil and gas company also based in Houston, signed a memorandum of understanding to supply gas to the terminal from its assets in the Horn River.
"The mass resource that has come about with shales has changed the scenery in the gas market," said Tim Wall, president of Apache's Canadian division. "[Kitimat] gives us an alternate market for our gas."
Others are betting that gas extracted using more traditional methods, albeit in remote locations, will continue to be a viable source. Pipeline company TransCanada Corp. (TRP) is working with Exxon Mobil Corp. (XOM) to build a route that would bring gas from Alaska to Canada. BP PLC (BP) and ConocoPhillips (COP) are working on a competing project.
"Our view is that you need all the shale gas, you need all the frontier gas and you probably need LNG [imports] on top of that," TransCanada Chief Operating Officer Russell Girling said at a recent conference in British Columbia. Girling said any excess supplies will be eaten away by the decline in conventional gas, the growing demand from Canada's oil sands industry--which uses natural gas to create steam for bitumen extraction, and new demand from utilities and the transportation sector.
Too much gas or not, Canada will likely have to find more customers for its gas, since its traditional buyer, the U.S., is oversupplied. Recent NEB data show that Canadian gas exports to the U.S. declined 11% in the first 11 months of 2009 compared with the same period a year earlier. Canada produced an estimated 6.29 trillion cubic feet of natural gas in 2009, down 10% from 6.97 trillion cubic feet in 2008.
Copyright (c) 2010 Dow Jones & Company, Inc.
Łupki gazonośne coraz popularniejsze
(Dariusz Malinowski) - 04-03-2010 18:58
Dwieście milionów dolarów chce przeznaczyć 
na zakup części amerykańskich złóż łupków gazonośnych. - Gra się rozpoczęła - mówi prezes BP 
Tony Hayward.
Jeszcze do niedawna wydobycie gazu z takich złóż było nieopłacalne. Jednak zasoby klasycznych złóż gazu kurczą się. Co więcej ze względu na lokalizacje największych złóż w tylko kilku krajach mogą one być wykorzystywane politycznie.
Nic więc dziwnego, że coraz chętniej patrzy się na złoża nietypowe. Dodatkowo według wstępnych szacunków mogą one zawierać dziesiątki razy więcej surowca niż zasoby klasyczne.
- Krok BP jest racjonalny. Za chwilę, takie złoża znacznie podrożeją. W sumie więc angażując niewielkie środki BP zabezpiecza sobie dostęp do takich złóż - uważa Timothy Brighton, analityk nowojorskiej giełdy.
Według analityków pierwsze większe ilości gazu z łupków gazonośnych popłyną do instalacji w połowie tej dekady.
Materiał z portalu www.wnp.pl. Polskie Towarzystwo Wspierania Przedsiębiorczości 1997-2009
Exxon, Chevron "Land Grab"
for Europe Shale Gas, JPMorgan Says
February 11, 2010, 9:43 PM EST
By Dinakar Sethuraman
Feb. 11
(Bloomberg) -- Exxon Mobil Corp. and explorers including Chevron Corp. are
securing land in
Exxon has
shale areas in
"A land-grab
has occurred in Europe over the last two years with majors such as Exxon,
Conoco, Chevron and Statoil ASA all participating, not willing to miss out as
they did in the U.S.," said Mark Greenwood, a Sydney-based analyst with
JPMorgan. "While it's still early days for European and Chinese shale gas
plays, its potential is yet another threat for the LNG supply-demand balance."
The
International Energy Agency said in November the world may have an "acute glut"
of gas in the next few years because production of so-called unconventional
fuel, which includes shale gas, is set to rise 71 percent between 2007 and
2030. Shale is a rock comprising layers of sediment from which oil and gas can
be extracted.
The success of
shale gas extraction in Europe and
European shale
could be sufficient to displace the equivalent of about 20 million tons a year
LNG by 2015, and about 60 million tons a year of capacity by 2020, JPMorgan
said.
"
Exxon agreed
on Dec. 14 to acquire XTO Energy Inc. for $31 billion for its shale gas expertise
and assets, while OAO Gazprom and its partners delayed the planned start of
natural- gas output at the Arctic Shtokman field by three years because of
lower demand and growth of shale areas in the
Exxon, BG
Group Plc and Chevron may invest billions of dollars in LNG ventures in
Editors: Jane Lee, Alex
Devine.
To contact the reporter on
this story: Dinakar Sethuraman in
Russia dismisses shale gas threat
December 8, 2009
The international potential of natural gas has a number of shale gas development projects underway. Another Horn River basin in Europe would have a major geopolitical impact on EU / Russian relations.
But according to the Moscow Times, a 
spokesman on Monday dismissed concerns that a growth in the production of shale gas would pose a threat to the company?s foreign sales.
Gazprom spokesman Sergei Kupriyanov reportedly said in an interview with Russia Today television;
?The speculations that shale gas is cheaper than the Russian gas are not true? He added, ?It?s a big question whether they are going to make such investments now that the price of gas has dropped on the U.S. market?.
Major natural gas producers in North America have shifted focus to shale gas due to lower production costs. According to various sources, shale gas can reach a break-even point of $4.00 to $4.50 with cost improvements continuing to reduce these costs. Conventional natural gas has a break-even point around $7.00.
Contrary to Mr. Kupriyanov?s statements, major producer continue to invest billions into shale gas plays like BC?s Horn River basin, with many selling conventional producing assets to finance their strategic shift towards shale gas. And apparently low natural gas prices have not delayed plans for two pipelines to carry natural gas from Russia to Germany and Bulgaria under the Black Sea. Mr. Kupriyanov commented that the Nord Stream pipeline (Russia to Germany) was on schedule to be operational in 2011.
In recent years, Gazprom has cut off natural gas supplies to neighboring countries over price disputes. Many European countries are dependent on natural gas imports from Russia. A potential shale gas discovery within the EU or increased LNG imports, would be a welcome alternative to Russian supplies, and would have a big impact on Russian influence in eastern Europe that Moscow leverages as the primary natural gas provider.
A New Energy Source For The Next 60 Years
12 10 2009
Just when people thought there was going to be some sort of Armegeddon over the worlds supply of oil, some smart people (No, NOT Al Gore) find another source. This really sounds promising so I expect the critics to be howling like rabid in-heat Wolves . I personally like this idea because we could switch over relatively fast, and the sooner we can give Oil producing nations the middle finger, the better off we will be.
Engineers have performed their magic once again.
The world is not going to run short of energy as soon as feared.
America is not going to bleed its wealth importing fuel. Russia's grip on Europe's gas will weaken. Improvident Britain may avoid paralysing blackouts by mid-decade after all.
The World Gas Conference in Buenos Aires last week was one of those events that shatter assumptions. Advances in technology for extracting gas from shale and methane beds have quickened dramatically, altering the global balance of energy faster than almost anybody expected.
Tony Hayward, BP?s chief executive, said proven natural gas reserves around the world have risen to 1.2 trillion barrels of oil equivalent, enough for 60 years? supply ? and rising fast.
"There has been a revolution in the gas fields of North America. Reserve estimates are rising sharply as technology unlocks unconventional resources," he said.
This is almost unknown to the public, despite the efforts of Nick Grealy at "No Hot Air" who has been arguing for some time that Britain?s shale reserves could replace declining North Sea output.
Rune Bjornson from Norway's StatoilHydro said exploitable reserves are much greater than supposed just three years ago and may meet global gas needs for generations.
"The common wisdom was that unconventional gas was too difficult, too expensive and too demanding," he said, according to Petroleum Economist. 'This has changed. If we ever doubted that gas was the fuel of the future - in many ways there's the answer."
The breakthrough has been to combine 3-D seismic imaging with new technologies to free "tight gas" by smashing rocks, known as hydro-fracturing or "fracking" in the trade.
The US is leading the charge. Operations in Pennsylvania and Texas have already been sufficient to cut US imports of liquefied natural gas (LGN) from Trinidad and Qatar to almost nil, with knock-on effects for the global gas market and crude oil. It is one reason why spot prices for some LNG deliveries have dropped to 50pc of pipeline contracts.
Energy bulls gambling that the world economy will soon resume its bubble trajectory need to remember two facts: industrial production over the last year is still down 19pc in Japan, 18pc in Italy, 17pc in Germany, 15pc in Canada, 13pc in France and Russia. 11pc in the US and the UK and 10pc in Brazil. A 12pc rise in China does not offset this.
OPEC states are cheating on quota cuts. Non-compliance has fallen to 62pc from 82pc in March. Iran, Nigeria, Venezuela et al face a budget crunch. Why comply when non-OPEC Russia is pumping at breakneck speed?
The US Energy Department expects shale to meet half of US gas demand within 20 years, if not earlier. Projects are cranking up in eastern France and Poland. Exploration is under way in Australia, India and China.
Texas A&M University said US methods could increase global gas reserves by nine times to 16,000 TCF (trillion cubic feet). Almost a quarter is in China but it may lack the water resources to harness the technology given the depletion of the North China water basin.
Needless to say, the Kremlin is irked. "There's a lot of myths about shale production," said Gazprom's Alexander Medvedev.
If the new forecasts are accurate, Gazprom is not going to be the perennial cash cow funding Russia's great power resurgence. Russia's budget may be in structural deficit.
As for the US, we may soon be looking at an era when gas, wind and solar power, combined with a smarter grid and a switch to electric cars returns the country to near energy self-sufficiency.
This has currency implications. If you strip out the energy deficit, America's vaulting savings rate may soon bring the current account back into surplus - and that is going to come at somebody else's expense, chiefly Japan, Germany and, up to a point, China.
Shale gas is undoubtedly messy. Millions of gallons of water mixed with sand, hydrochloric acid and toxic chemicals are blasted at rocks. This is supposed to happen below the water basins but accidents have been common. Pennsylvania's eco-police have shut down a Cabot Oil & Gas operation after 8,000 gallons of chemicals spilled into a stream.
Nor is it exactly green. Natural gas has much lower CO2 emissions than coal, even from shale ? which is why the Sierra Club is backing it as the lesser of evils against "clean coal" (not yet a reality). The US Federal Energy Regulatory Commission said America may not need any new coal or nuclear plants "ever" again.
I am not qualified to judge where gas excitement crosses into hyperbole. I pass on the story because the claims of BP and Statoil are so extraordinary that we may need to rewrite the geo-strategy textbooks for the next half century.
Chesapeake explores for shale gas in South Africa
November 27, 2009
Starting in the Barnett shale of
Texas, the shale gas boom has been primarily a North American play. U.S.
natural gas company Chesapeake Energy Corp its joint venture partner Statoil
ASA and the oil and gas arm of Sasol Ltd recently launched a bid to explore for
shale gas in the Karoo Basin in South Africa. The Karoo basin has
unproved shale gas potential and significant exploration efforts are
required to assess the resource.