Skip to comments.Report: Reaping the benefits of natural gas will require action now
Posted on 11/14/2012 10:54:03 AM PST by thackney
Reports about the game-changing nature of the countrys natural gas reserves, newly recoverable with the combination of hydraulic fracturing and horizontal drilling, seem to come out every week.
But Marc S. Lipschultz, global head of energy and infrastructure for KKR & Co., says the ability to reap the economic benefits are far from assured.
Among the key challenges, he said, are smoothing the boom-and-bust cycles in gas prices and mitigating the environmental impacts of gas drilling that limit social acceptance.
Lipschultz estimates gas production could increase by 44 percent between 2011 and 2035. But theres a pricetag. He says it will take:
$2 trillion in upstream investments. $205 billion in capital expenditures for gas infrastructure development. expansion of the gas transmission system by 35,600 miles and an additional 589,000 billion cubic feet of working gas storage by 2035.
The payoff could be similarly huge. Lipschultzs paper joins other recent studies in suggesting that increased shale gas production could produce hundreds of thousands of new jobs and add to GDP. It could also save consumers $41 billion in lower gas prices in 2017, he said. That includes direct savings to natural gas consumers, indirect savings from lower electricity prices and lower prices for industrial products.
His tally suggests 330,000 additional direct jobs in natural gas, oil and natural gas liquids production, along with as many as 210,000 additional manufacturing jobs linked to the increased production of natural gas.
He also is predicting as many as 40,000 additional construction jobs.
But none of that is a given, Lipschultz writes.
He suggested four steps must be taken for all the benefits of shale gas to be achieved.
Industry must work with regulators, the community, environmental and other stakeholders to develop appropriate regulation and best practices to reduce impacts and protect health and the environment. He pointed to a study announced last month in which some of the nations largest natural gas producers, including Anadarko Petroleum, Shell Oil Co. and ExxonMobil subsidiary XTO Energy agreed to work with the Environmental Defense Fund and the University of Texas to look at methane leaks at well sites as a positive step.
Expanding natural-gas based transportation infrastructure, including municipal and corporate natural gas powered fleets, heavy duty trucks and consumer vehicles.
Clearer, faster and more consistent procedures for securing permits on federal lands.
Exports of liquefied natural gas. LNG export sales
will directly reduce our trade deficit, Lipschultz writes. Additionally, because the resource base is so large, these exports are expected to have only a modest impact on domestic prices while providing a steady source of demand to support expanded production and delivery infrastructure.
All well and good assuming the EPA doesn’t decide hydraulic fracking causes drinking water pollution, earthquakes, painful rectal itch and/or seasonal depression. I’m not so keen on exports of gas to address the trade imbalance. I’d rather use the cheap energy to fuel a manufacuring boom and export finished goods instead of raw natural resources.
That makes a lot of sense. We do have increasing Chemical plants being built to use cheap ethane and the like for feedstock.
I think the methane production may quickly exceed current demand unless we continue to shutdown coal fired power plants and replace them with natural gas. Much of this year's demand growth in natural gas came from power plants.
We need to keep the natural gas supply growing to make enough for significant growth in vehicle fueled by natural gas. My 2¢, exporting in the early stages allows the economics to grow the supply market. When we grow our demand enough to take up that slack (and reduce more crude oil consumption), exports would then start to diminish.
Sometimes it becomes a chicken and the egg discussion. The industrial and transportation consumers don't invest money for facilities and infrastructure until the supply is large enough to support them. The supply doesn't grow until there is enough demand to keep price support above the cost of additional supply.
Then again, I'm not the sharpest knife in the drawer.
With a son majoring in chemical engineering at Purdue, I’m all for increasing our chemical plants. I just don’t want to become an extractive economy where our resources go to benefit the rest of the world just because we have a balance of payments issue. That’s not how to climb out of the hole.
Anecdotal evidence; a few years ago in rural Mississippi I saw a large amount of idle rolling stock that appeared to have been idle for some time, mostly plastic pellet containers. Was this a sign of decreased American production of finished plastic products, and would the natural gas boom reverse the trend? Normally I think of plastic as an oil byproduct.
There is a much better and cheaper way that does not require the purchase of new vehicles.
Your links are rather lacking in the cost support of that claim.
Several companies have done Gas-to-Liquids (more typically diesel like rather than gasoline). They include majors like Shell.
Construction of the world's largest gas to liquids (GTL) plant, Pearl GTL in Qatar, is a major step towards meeting the worlds growing demand for cleaner energy.
I've followed such projects for years. It would make a world of difference to a place like the Alaskan North Slope. The technology is well developed. The economics don't work in the US, yet. Eventually I suspect they will.
I think of plastics as mostly coming from natural gas liquids. Some is from refineries as well.
We stopped building LNG import facilities a few years ago. Now many of them are trying to expand and get licenses to become an export facility.
DOE delays decision on natural-gas export license
U.S. Natural Gas (LNG) Imports by Point of Entry
Thanks for the reply.
There are still some proposals on the books. The market fell pretty quick with the Shale Gas. Just like the Alaska Gas pipeline is dying a slow and lingering death.
Also the Maine and Oregon sites may still proceed as a regional need.
I was just wondering because we just put a new import plant online a year ago here in Pascagoula. Gulf LNG. It has 1.3 Bcf/d capacity.
This past summer, Gulf LNG applied to become an export terminal.
Gulf LNG was first announced in 2004, back when we still expected to build a lot of LNG import terminals. They did not get federal approval until Feb 2007; we still expected to need LNG import at that time, but the Shale Gas rush had started by then.
They started receiving LNG summer 2011.
You can see by the link below, they have not received any LNG since.
U.S. Natural Gas Imports (LNG) by Point of Entry
and if we can make gasoline for less than $1.00 per gallon, this project will be a real money maker,"
Won't it take quite a bit of additional construction to convert? I sure would like to get some nearby work. They're pushing me hard to go to N. Dakota. I am fighting it tooth and nail.
This Houston boy wants nothing to do with sub-zero temps! I don't care what kind of money they throw.
Yes if they could, too bad they can’t.
They didn’t provide any information that it was reasonable with the current technology and natural gas prices.
They have most of the systems in place with the . The big addition is a Natural Gas liquefaction unit(s). It will be a decent construction work. But if they just requested the permit a few months ago, it will be quite some time before engineering is done, equipment purchased, fabrication of units offsite completed then start local construction.
LOL!!! I've worked design, construction and start-up of some of the Natural Gas Processing plants. The do not produce diesel from the gas. They separate out Natural Gas liquids like ethane and propane from the Natural Gas stream. They do not have heavier fractions like those found in crude oil.
I fixed your statement above. From the article you linked:
He is seeking $625,000 in seed funds to develop a prototype unit to demo the technology at a natural gas well.
They had only built a theoretical lab model, not an actual working unit. They were trying to produce cash from the gullible, not diesel from a well.
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