Alexander's Commentary
Change of face - change of phase
A Future?
Climate-Change – Change of Climate
Oil-Around 2013
Finally there: The Campbell’s Atlas of Oil & Gas Depletion
New time arising
Ein heisser Herbst? (A hot Autumn?)
Where is this going? – 3
Where is this going? -2
Where is this going?
Is it important?
A Moment of Truth at Passing
The Iran Hoax
The 2012 Adventure
Solstice Greetings
Taking on the future
A new beginning
Twist and Turn
Fly-by-wire
Shale-gas: just a gas?
Little miracles, big wonders
Unconventional gas
Media-power
To Peak or not to Peak, is that the question?
Going on ...
Time for change
Economy; What Economy?
Media Noise Windfall Profit
The Winds of Change
Signs of the future?
Reality and Hope
Best Wishes
What goes around, comes around
A throughout, integrated view
Signs of change?
P.P.P. versus Need
Working for climate-change?
Good signs
Contradicting signals
All over again? The difference between perception and reality.
The paradigm, the mind-set and reality
Two minds
Positive inclination
Different values?
The long view
Leaping to the future
Contango
New signs of hope?
A message of hope?
Some good news anywhere?
A project gone awry?
Traces of light
Driving the markets II
Driving the markets
Meeting reality
Silence for the storm?
The times are changing
Refinery-runs
The Theatre
Some Questions, no answers
Ocean carbon sinks and returns
The good news, the bad and the ugly
A President speaks the truth!
Green masks
Saving us with or from bio-fuels?
The good news
Driving the oil-price?
A new dilemma?
Kenya: a new oil-frontier?
Forecasting a trend?
Some early signs for 2008
2007; A year to remember
The good news
A bit of a shock II
Fraud alert - bogus job ads
A bit of a shock
A simple but far-reaching idea
Hype, Realism, Convergence
Energy-security?
A touch of globality
Climate change and changing the climate
Refineries, Biofuels and internal demand
Figures, figures & figures
Pipelines, Biofuels & Reserves
Expectation, projections, contradictions.
Ponder
A box of Pandora?
Changing systems
A dynamical environment
Projections and reality
Changing reality
A different reality II
A different reality
PPP: Prices, poverty and politics
A whirling 2007
The year of shifting balances
One world, two systems?
Oil and development?
The year 2065?
Mixed signals II
Mixed signals
Trust
Awakening
A War on hold?
No Comment
Changing balances
Truth or Deception?
A fresh overview
Bigger picture first
National Interests vs. Shareholders Value
Fear??
'The Dialogue'
Consumption
Do we actually need to worry?
 

Unconventional gas

As the leak in the Gulf of Mexico seems to be secured and British/Beyond Petroleum subsequently is being taken over by the Americans, the attention can be directed again to other developments that may have far-reaching consequences for the global oil and gas-industry; we are talking about the rise in unconventional gas.

Over the last few years the US has seen a quiet energy-revolution in the fast expansion of the finding, drilling and exploiting of shale-gas and Coalbed Methane, which has brought it to becoming the first natural gas producer in the world, bypassing Russia. This has made that the US imports of gas and LNG has been shrinking very substantially.

This development is taking place just as demand for gas is being reduced due to the economic shrinking in large parts of the world, whilst at the same time quite some new capacity of LNG is coming on the market.

At the same time the technology of unconventional gas production, which has been developed and used mainly in the US, is now being exported, with the hope to bring large quantities of unconventional gas to the surface in Europe and several places in Asia, where large swaths of land now are being prepared for drilling.

The consequences of this relatively new source of energy are far-reaching in several ways.

First let's look at the drilling and "fracking": after the first great stories and successes and large volumes of gas being found and produced, slowly also the other side of the successes start to appear, which cause increasingly sceptic responses about the technology and its long-term consequences for the land and its inhabitants.

There are two sides to this: due to the nature of the resource, gas in tight rock, the amount of gas per well is first substantial, then fading to low volume for quite some time, to then fade out, makes that many holes need to be drilled and that the natural environment gets littered with drilling rigs, active wells, exhausted wells, pipes, treating equipment and much more and basically undisturbed nature becomes, after being made subject to non-conventional gas exploitation, a scarred landscape with much residue and litter, with the question of who is responsible for the mess and for the restoration of the landscape.

The other issue is that for the gas to be able to come out of the source-rock, so-called "fracking" needs to take place: the usage of a fluid that is being pumped into the source-rock under very high pressure, for the gas to be able to be set free from the very small openings in the rocks, so it can be gathered and brought to the surface. It is this "fracking"-fluid that is causing much controversy in the USA and is one of the causes of the much slower adoption of the technology in other parts of the world.

The "fracking" fluid, about which very little is known, seems to consist for 95 % of water and about 5 % of diesel, benzene and other volatile and highly toxic fluids. The problem with it is that the fracking in the fields often takes place in the vicinity of groundwater-bearing layers, aquifers or water-wells and that ever more stories are popping up of people living on the land, with their farms and own water-sources that find themselves, after having allowed drilling on their land, their water suddenly undrinkable and their water-sources polluted, irreversibly so.

As anyone having handles some oil somewhere in their life knows: only a few drops of oil or diesel in a bucket of water makes that the water becomes undrinkable and smelling for oil, and that it is not possible to get this out anymore. It is this that is one of the great dangers of unbridled expansion of unconventional gas exploitation; the irreversible pollution of the drinking water of communities and irrigation-water for the land with highly toxic substances.

Then of course there are the global consequences of the incredible rise in production of unconventional gas: The US has gone from being a large importer from natural gas and LNG to becoming almost self-sufficient, leaving much produced gas and LNG suddenly without off-taker.

In Europe much unconventional gas is being expected, and it is interesting to see how quick some US-companies are in spreading the technology to apparently promising areas in Eastern Europe, close to the Russian border or to other areas which may be holding large quantities of unconventional gas.

This will have substantial add-on effects as for example Europe, already taking off much less gas than expected, may now have quite some more gas from itself, which may be able to change the relation with our large providers especially Russia, Norway and North Africa for piped gas and several other for LNG, for which there will be less need. That is: if unconventional gas delivers and it actually will come to a situation in which the environmental, social and regulatory concerns can be overcome.

It might also put question-marks to the validity, or the timing, of some of the pipeline-projects that are now being pushed into Europe. Combining the reduced demand, the cheap LNG and possibly its own unconventional gas, may put Europe in a very different situation that might be able to free it from certain geo-strategic pressures. Depending on where drilling will take place and how and by whom, it may also cause substantial friction in the relationship with certain neighbours.


In China and India and other Asian countries, the possibility for the unconventional gas is also being researched, with apparently great many places that could be important sources for future production, which could cause these countries to be able to produce more of their energy-needs themselves.

For LNG the timing is not very good at the moment, as over the last years quite some new capacity has been thrown on the market and prices are currently very low. This leads for example to new ways gas is being delivered to Europe, in that the Interconnector between Belgium and the UK, which was meant to bring gas from the mainland to the UK, has now reversed direction and is being used to pump cheap LNG via the UK into the gas-storages in Europe, forming an extra source of gas, putting pressure on other off-takings.

All in all the development of unconventional gas is changing the face of the energy-planet, as, at least for quite some time coming, countries that now find themselves bestowed with large quantities of the unconventional source of energy, have less needs or less urgent needs for imports of other countries, which is greatly influencing the balance that exists in the world between the original gas- or LNG-producing countries and their off-takers, and is influencing the prices.

For the coming years we may see therefore relatively moderate prices for natural gas, as the abundance of the moment may persist for some time coming.

We may also see all kinds of fine-tuning in the balance between conventional gas producers and countries that find themselves having and producing substantial quantities of unconventional gas.

Looking forward,

Alexander


Alexander's Commentary

Change of face - change of phase

In the period of July 20 till August 3, 2015, Alexander will be out of the office and the site will not or only irreg

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