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Why Cheap Natural Gas Is History

A rapidly tightening natural gas…

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Pipeline Approvals Could Put A Ceiling On Gas Prices

Two new natural gas pipelines…

US Natural Gas Supplies Exploding Without Apparent End

Gas abundance is not limited to the U.S. The latest World Energy Outlook report by the International Energy Agency (IEA) released in early November basically threw the entire natural gas market under the bus by predicting the glut will worsen next year and last for 10 years, which will only fade gradually as demand rises strongly in China.

Shale Production
Chu Market Oracle

You can follow US shale plays at the Shale Blog and at Shale News. One interesting recent find that was mentioned in the recently televised documentary "Haynseville", is that the already huge Haynesville shale deposit was compounded by another huge deposit discovered in a slightly shallower layer of rock. Haynesville's portion of the graph above may continue to grow as a result.

Something has to be done with all of this gas production, so for now a move is on to create LNG facilities for export. Export of LNG to the UK has already begun.

While several import facilities were planned and built (before unconventional gas even came into the picture) in anticipation of high LNG imports in the coming decades, the U.S. has very limited LNG export capability. That could be about to change.

There are two LNG export facilities announced this year--Freeport LNG and Australia's Macquarie Bank have agreed to build one in Texas to export 1.4 billion cubic feet per day of gas, and Cheniere Energy's will be on the site of its Sabine Pass facility to export 16 million metric tons per year. Both plan to produce and export LNG by 2015. _Chu

Besides converting the unconventional gas bonanza to LNG for export, gas to liquids may eventually become more feasible on the US mainland, after the departure of Salazar, Obama, Boxer, and the rest of the energy starvation reich.

By. Al Fin

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  • Anonymous on November 29 2010 said:
    Would appreciate some thoughts as to why we are not converting our natgas largess to diesel (and related) fuels. Would help with effective use of natgas while also reducing oil imports.
  • Anonymous on November 30 2010 said:
    Excellent question, I have asked the same.Shell has an operating gas to liquids plant in Malaysia, and is developing a larger one in the Persian Gulf. US government regulations make such efforts extremely difficult and expensive at this time, under the current regime. When the Obama EPA is more focused upon shutting down shale gas production than it is on finding ways to use the unconventional gas bonanza to relieve energy supply stresses, you know that something is rotten at the top.
  • Motoyasu on March 29 2012 said:
    Important observations, Andrew. I think the point is most sctcinucly encapsulated in one sentence you wrote above, towit If you want emissions-free innovations, price emissions. I would amplify this by suggesting that if you wish to achieve a specific outcome, it is unrealistic (and frankly wishful thinking) to rely on an inadequately structured market to do your work for you. Reliance of this type suggests either a high degree of complacency or a fundamental failure to apprehend the complexity of society or both. In the end, markets are great tools, but they still need to be shaped by policy and that can be hard work.More generally, while it may be possible to set forth a few plausible statements of principle about the way markets function (eg scarcity leads to increased prices in light of continuing high demand and increased prices lead to a search for substitutes ), the outcomes arising out of the interactions between resources, technological innovation and markets over time are fundamentally unpredictable. Thus, if societies (or more precisely groups within societies, whether local, regional or global) wish to at least shape the field of possible outcomes in a context where markets are some of the key tools available to us, the proper conceptual space in which to operate is that in which social norms are formed and, in the case of the modern state, regulatory powers are exercised. (Obviously, I don't accept the fundamentalist idea that free and open markets are themselves desirable outcomes markets are tools; important tools, but tools nevertheless.)Given this, regarding carbon emissions, the best way to proceed may be by getting adequate societal agreement to put a price on all carbon emissions in order to better shape the market for energy (as your remark quoted above suggests). Then, as non-carbon substitutes come to the fore in light of a market that discriminates against high-carbon outcomes, it will be necessary to be ever-vigilant and to deal with the deleterious consequences of some or all of those substitutes too; all in a never-ending process of adjustment.Alternatively, another possibility would be to coax into existence social norms that stigmatize excessive carbon emissions. Thus, even where the price of carbon remains low', it may well be possible to stigmatize its use through non-market social mechanisms. Such a process might mirror the growth of the organic food industry in North America and Europe which has operated through a scheme of moral choices, combined with follow-through by markets that developed in order to cater to those choices (ever more efficiently), providing options that fit within the zone of acceptable moral bounds.Returning to your original thesis, then, because of the complexity of social and economic realities, without a much more detailed picture of the world over time (which we will never have), I agree that it is impossible to state what impact specific prices of carbon will have on the anthropogenic emissions of CO2 into the atmosphere (I'm not sure that you would state your thesis in this manner, so I may be taking some liberties). We do know however that, if we can achieve a consensus to limit those emissions by such means as are available, and are willing to make the efforts required to do so, the outcome that matters CO2 levels in the atmosphere can be influenced profoundly over time regardless of the price of carbon.

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