Monday, September 13, 2010

Shale resources set to double market share in 20 years

It is clear that the "bridge" to clean, green fuels is not on the agenda for either this administration nor the corporations who fuel this fossil energy agenda. To become the world natural gas producer is what is on the table, which industry claims, and apparently is backed by our federal and state governments.

In spite of the mounting health claims where natural gas is extracted, the contaminated and depleted water, air, and degradation to communities/cultures, and our natural world, industry receives permits to drill and extract at will.

See below for the projections of the US natural gas market for the next 20 years. When the frenzy to drill began, people were told this was a "bridge" to green fuels, but where is the discussion and advancement of this clean, green energy taking place? It is no longer on the table, it appears.

"This week, the U.S. Department of State launched its new Global Shale Gas Initiative, a move seen by experts to sell the U.S. industry's success story abroad and expand market opportunities for American gas exploration and production firms."

Nathanial Gronewold, E&E reporter

NEW YORK -- Unconventional natural gas sources will double their share of the U.S. market in the next 20 years, say analysts at Deloitte in a new report.
Abundant supplies of gas from huge shale deposits in the United States and the expanding international market for liquefied natural gas (LNG) should also keep prices depressed for years to come, the company says. At the same time, Deloitte's survey of evolving trends in the industry shows shale gas production is getting cheaper and more cost-effective, enticing the world's largest oil companies to creep into a sector long dominated by smaller independent producers.
"Together, shale gas and LNG are abundant new sources of gas that can be produced at lower prices than gas from conventional sources," concludes the new market analysis by Deloitte's Center for Energy Solutions. "It is anticipated that both of these sources will continue to grow significantly in the long term."
Deloitte sees gas supplies from shale rock formations and coal-bed methane growing from about 17 percent of U.S. production today to 34 percent by 2030. New regulations could affect that outlook but likely in a favorable way as costs for Gulf of Mexico producers increase and state and federal environmental legislation comes to favor gas over coal-fired power generation, analysts say.
Gas prices in the United States continue to sink to new lows in the wake of depressed economic news, slipping under $4 per million British thermal units earlier this month. Henry Hub natural gas futures for October delivery were trading at $3.85 per million Btu at the New York Mercantile Exchange at press time.
Deloitte sees low pricing as the norm for some time but does not see it as a problem for shale gas developers as companies have undertaken impressive cost reductions. Gas at $3.38 per million Btu is the "break even point" for producers at the Eagle Ford shale formation in south Texas, the firm points out. Still, analysts acknowledge that the North American average implies producers need a price of at least $6.86 per million Btu to generate an operating profit.
The pricing pressure is driving more competition for cost reductions and enhanced efficiencies, and gas producers are now reorienting their operations around unconventional gas production as they shed ways of doing business that centered more on conventional output, Deloitte analysts believe.
The relative success of independent oil and gas producers, driven largely by shale exploration, is now causing larger producers to enter the fray in an increasingly big way.
"While the independents are building low cost, lean organizations, larger international independents, majors and national oil companies are taking notice," the authors of the report say. "As they watch the transformation of small North American independents into industry movers, they are employing strategies and seeking new business models to gain entry into the unconventional assets."
The best recent example of this trend cited in the study is Exxon Mobil Corp.'s acquisition of XTO Energy Inc. in March for $41 billion. The purchase makes Exxon Mobil the largest natural gas producer in the United States.
Other examples include Royal Dutch Shell PLC's purchase of a 1.25-million-acre stake in the Marcellus Shale in the Northeast from East Resources Inc. for $5 billion. And where they are not buying shale producers or assets outright, the oil majors are likely to increase their number of joint ventures and partnerships with the independents over the coming years, analysts project.
The shale gas industry is now looking to expand overseas. Shale gas exploration involving U.S. and British firms are now under way in Poland and China. This week, the U.S. Department of State launched its new Global Shale Gas Initiative, a move seen by experts to sell the U.S. industry's success story abroad and expand market opportunities for American gas exploration and production firms.