Cornerstone - Summer 2013 - (Page 45)
North American Shale Gas Production:
A Bright Dawn for the Global Energy
Trade or a Gloomy Monday?
By Les Deman
President, Les Deman Energy Consulting Co.
he terms “game changer” and “disruptive technology” are
often reserved for Silicon Valley or the pharmaceutical
industry; however, they are increasingly being applied to
the development of North American shale gas and shale oil
resources. At the start of the millennium, the U.S. was facing a
growing gap between gas demand and production. In a
government- and industry-sponsored study in 2003, the
National Petroleum Council concluded that North American
producing areas will only provide 75% of long-term needs and
that new, large-scale resources such as LNG and Arctic gas would
be necessary to meet demand.1 Today, some studies predict that
North America will soon be a net exporter of natural gas and
that oil shale development has the potential to reduce imports
to zero within 20 years. In less than a decade the petroleum
outlook in North America changed from a mature and
declining industry to a vibrant and fast-growing economic
segment of the economy.
If the optimism about North American shale resources is borne
out, it will have a profound effect on world energy markets. A
high degree of success in exploiting gas and oil shales would
be contagious, increasing activity levels across the globe.
Larger supplies of natural gas and oil would depress the price
for all fuels. Moreover, lower energy prices would encourage
consumption and raise economic growth. There would be
changes in the geopolitical and economic balance among
exporting and importing nations as oil/gas purchase options
increase and as nations become more energy self-sufficient.
In the near term it would be wise for world energy markets to
prepare for North America becoming a global LNG exporter.
“If the optimism about North American
shale resources is borne out, it will
have a profound effect on world
THE U.S. EXPERIENCE
How and when these shale fuels will be developed outside North
America remains uncertain; still it might be useful to provide
some background on the U.S. shale gas experience, in particular
its market disruptions and cyclicality. Throughout its 100-plusyear history the petroleum industry focused on conventional
natural gas production, which accounted for about two-thirds of
U.S. production 10 years ago.A Declining natural gas production
after 2000 prompted global petroleum companies and domestic
gas utilities to propose 23 new LNG import terminals by 2003.1
Those proposals were abandoned a few years later when it
became apparent that technical innovations in fracturing shale
and horizontal drilling would result in a resurgence in U.S. natural
gas production. As Figure 1 shows, by 2012 U.S. gas production
was one-third higher than the 2005 trough and shale gas
accounted for 37% of the total energy production.
An Aerial Photo of the Dominion Liquified Natural Gas Facility
in Cove Point, Md.
Adding so much supply in a relatively short period transformed
the North American market from one that was in a shortage
Table of Contents for the Digital Edition of Cornerstone - Summer 2013
Cornerstone - Summer 2013
From the Ground Up
Fueling the Future with 21st Century Coal
China’s Coal Industry Must Follow the Path of Sustainable Production Capacity
The Critical Importance of Innovation for the Future of Coal
The Challenges of European Energy Infrastructure Finance
Pollution Control of Coal-Fired Power Generation in China: An Exclusive Interview with Wang Zhixuan
The Rio Summit: Waking Up to the Three Pillars of Global Poverty, Energy Access, and Coal
What Will New U.S. DOE Leadership Mean for Energy?
Profile of Gina McCarthy
North American Shale Gas Production: A Bright Dawn for the Global Energy Trade or a Gloomy Monday?
Relationship between U.S. and International Coal Pricing
Toward Market Launch of Coal/Biomass Coproduction Technologies with CCS
Water Resource Protection Technology for Coal Mining in Western China
Unblotting the Landscape
Case Studies of Successfully Reclaimed Mining Sites
Covering global business changes, publications, and meetings
Cornerstone - Summer 2013