One of my less endearing traits is to say I told you so, and to say it all too often. This is the sixth anniversary of No Hot Air’s first mention of shale gas way back when. I’ll be doing more posts on shale today and where I see shale six years from now.
For the moment let’s go back to August 12 2008, when Lehman Brothers straddled the earth, the iPad was still two years off and we all rented DVD’s at Blockbuster Video. Absolutely everyone believed in peak oil ,Henry Hub had just reached $13MMBU, Brent was $150 and UK NBP gas prices 80 pence a therm. Everyone thought, in Europe at least, that energy prices would go nowhere except up. Almost everyone.
Some people prefer to be wrong in a group. I’ve always preferred to be unconventional and saw immediately how shale changes everything:
Yet another paradigm shift….
Published: 12 August 2008
Hang on a minute. Aren’t we running out of gas? I read it in the Daily Telegraph. And the Independent. And the BBC.
So where does this fit in:
Chesapeake Energy Corp, said the US is “entering an age of new gas abundance and we will have enough natural gas to meet all areas of new demand”.
“This is a game-changer, a paradigm shift,” McClendon said. “Shale gas makes the US the Saudi Arabia of natural gas.”
As major oil companies search for more oil to meet growing global demand, U.S. natural-gas companies face the opposite problem: what to do with all the gas they soon will be producing.
U.S. natural-gas production is soaring, thanks to high energy prices and new technologies that have unlocked reserves considered too difficult or expensive to tap in earlier era.
If the US is having a revolution in shale gas production, where is the UK/European/Russian or Middle East shale gas? At the very least, this is going to have downward pressure on LNG prices here in Europe:
As some analysts have begun to toss around terms like “gas glut,” natural-gas futures have tumbled 9.2% in the past two weeks, and they have brought producers’ stocks down with them
if recent discoveries prove as successful as companies expect, the industry will need to promote natural gas for both power generation and transportation.
“It’s going to change the dynamics of the gas markets,” Mr. Papa said.
The new supplies could pose problems for importers of liquefied natural gas. U.S. LNG imports are down two-thirds from last year because higher prices in Asia and Europe have attracted shipments to those markets. If new U.S. production keeps prices comparatively low, LNG imports are unlikely to rise
And finally: The key words here (from the WSJ link)are around the world…
But experts say the current situation is different. Instead of a single big discovery or a weather-related demand slump leading to a temporary rise in supplies, the industry has found a completely new resource — shale — that could last decades.
Shale — or dense rock formations that are common in many parts of the country and around the world– has long been known to hold natural gas. But production was impractical because the rock isn’t porous enough for the gas to flow.