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Guest Post: Export Shale Revolution Rather than Gas

The views expressed are those of the author and are not necessarily those of Scientific American.


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By Kevin Jianjun Tu and David Livingston

The so-called shale revolution is re-drawing the energy landscape in the United States and beyond. While the Obama administration is still trying to craft a strategy to manage this energy windfall, more than twenty liquefied natural gas (LNG) export applications are awaiting approval to ship U.S. gas abroad. If all were to be given the go-ahead they would represent over 25 billion cubic feet per day of capacity, nearly 40 percent of U.S. gas demand. However, there are significant risks and uncertainties associated with such large-scale gas exports and due to construction and licensing needs, and it will be at least 2016 before any major volume of LNG leaves US ports. In the meantime, Washington should prioritize a different category of export—the technology and expertise needed to responsibly replicate American shale success in other select parts of the world.

With shale gas production growing exponentially over the past five years, the United States is expected to become a net exporter of gas by 2020, a sharp turnaround from the perception just a decade ago when many of the country’s now-stranded LNG import terminals were built. The glut of gas in the continental United States has led to prices briefly dropping below $2 per million BTU (about 1000 cubic feet), more than 80 percent below average gas prices in 2008. As a result, gas is now outcompeting coal in many locations as the preferred fuel for power generation. In 2011, the United States was the only region in the world where domestic coal demand declined.

In Europe, with gas prices largely pegged to expensive crude oil and the recent global economic crisis pushing down coal prices, European utilities are switching from gas to coal at scale. According to the International Energy Agency (IEA), in the absence of a high carbon price, only fierce competition from low-priced gas can effectively reduce coal demand. Closer US-EU collaboration on standards, technology, and policy pertaining to shale gas resources would do much to mature the industry and enable significant expansion of production in Europe.

China’s coal addiction is far more entrenched than that of the EU with the Middle Kingdom currently consuming almost half of global coal output. This bodes well neither for China’s environment, nor for the world’s climate. However, according to the US Energy Information Administration (EIA), China’s technologically recoverable shale resources are greater than any other country in the world, and Beijing has shown strong interest in duplicating the US shale revolution. A major obstacle is that China lacks technical know-how, the institutions, and the legal framework necessary to attract the right type of developers and unlock its huge shale potential.

Though an increased share of natural gas in the global energy mix is a desirable scenario for many countries including the United States, the role Washington should play in stimulating such development is an open-ended question. Two recent US government-commissioned reports on the economics of LNG exports have only confused the matter further. The US Department of Energy released a study in December 2012 concluding that the economic benefits to the nation from allowing LNG exports would more than outweigh any small domestic gas price increases. However, a January 2012 EIA study envisages large increases in domestic gas prices that make exports look far less attractive.

Gas market dynamics are therefore far from certain, and permitting large scale LNG export facilities brings significant financial risks for individual project developers. The US is currently paying much less for gas than any other part of the world, but the duration of such an arbitrage opportunity is highly uncertain. It only took a decade for the US to switch from building LNG import terminals to considering gas exports.

Shale gas is not a panacea, but for now it is certain that Europe, China and others are keen on securing additional gas supply. The best help the United States can provide in meeting this demand is not necessarily the lion’s share of its gas output but instead the export of technology, expertise, and professionalism of its industry and policy apparatus, which can be easily translated into market opportunities for US companies.

About the Authors:

Kevin Jianjun Tu is a senior associate at the Carnegie Endowment for International Peace. You can follow him on Twitter @KevinJTu. David Livingston is a consultant working for Carnegie’s energy & climate program and can be reached at david.livingston@ouce.ox.ac.uk.

Photo Credit:

1. Photo of LNG Carrier Alto Acrux Departing Darwin February 2010 by kenhodge13 and used under this Creative Commons license.

Melissa C. Lott About the Author: An engineer and researcher who works at the intersection of energy, environment, technology, and policy. Follow on Twitter @mclott.

The views expressed are those of the author and are not necessarily those of Scientific American.





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  1. 1. shorewood 4:25 pm 02/25/2013

    The authors’ suggestion will happen in the long run. However, right now, most of the pertinent potential importers [China!] lack the infrastructure [eg, pipelines] to utilize their own domestic shale deposits.

    Environmentalists have deterred, maybe ruined, a fantastic opportunity for the U S to climb out of its recession by exporting natural gas. If we had acted sooner [it may / may not be too late, now], we could have generated billions of dollars of income [and taxes] from our shale deposits. Fortunately, we can still stimulate a domestic boom by accelerating the changeover to natural gas.

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  2. 2. ronwagn 6:45 pm 02/25/2013

    China, India and others can afford to hire our expertise and are prepared to do so. They will try to copy it also, but will need to buy equipment and hire trained operators. It is still better to export until they can catch up. In twenty years the natural gas revolution will be a the accomplished. Then few will need to import at high prices, and we may not have any advantage left.

    Natural gas is the future of energy. It is replacing dirty old coal plants, and dangerous expensive nuclear plants. It will fuel cars, trucks, vans, buses, locomotives, aircraft, ships, tractors, engines of all kinds. It costs far less. It will help keep us out of more useless wars, where we shed our blood and money. It is used to make many products. It will bring jobs and boost our economy. It lowers CO2 emissions, and pollution. Over 5,100 select natural gas story links on my free blog. An annotated and illustrated bibliography of live links, updated daily. The worldwide picture of natural gas. Read in 75 nations. ronwagnersrants . blogspot . com

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  3. 3. dwbd 8:22 pm 02/25/2013

    ronwagn, NG lobbyist, once again posting his cut and paste special NG advertisement at any blog or news-site he can find. Notice he never responds to critique and never will debate his outlandish statements.

    Deaths per TWh of energy:

    Coal: 161
    Oil: 36
    Biomass: 12
    NG: 4
    Hydro: 1.4
    Wind: 0.15
    Nuclear: 0.04

    So contrary to ronwagn’s BULL, NG is 100X more dangerous than Nuclear, and LNG about 10X worse than that, with daily, deadly NG explosions & fires, some of which have destroyed entire city blocks, killing hundreds. And a Mud Volcano in Indonesia, caused by Natural Gas drilling, that releases 6 million cubic feet of mud per day, causing the evacuation of 13,000 families already & a dozen deaths and is expected to continue for another 80 yrs. Makes Fukushima look like a bad rainy day.

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  4. 4. dwbd 8:58 pm 02/25/2013

    Including the pollution & methane leakage (72X the GHG potential of CO2) from Shale Gas production, the only expanded source of NG in USA & Canada is just as bad as Coal for GHG emissions & environmental damage.

    US (& Canada) Shale Gas surplus won’t last 10 yrs:

    theenergyreport.com/pub/na/14705

    Cold, Hungry and in the Dark: Exploding the Natural Gas Supply Myth:

    tinyurl.com/Cold-Hungry-and-in-the-Darknes

    Deborah Rogers explains the myth about abundant domestic Natural Gas, a must-see video:

    youtube.com/watch?v=bYzU4bEfJ5U

    The Oil Drum – Don’t count on Natural Gas:

    theoildrum.com/node/7460

    People have been deluded to believe North America is some big NG haven. It ain’t. Current World NG reserves:

    #1 Russia: 18.3% of World
    #2 Iran: 11.1%
    #3 Turkmenistan: 8.7%
    #4 Qatar: 8.5%
    #5 USA: 2.6%
    #6 Saudi Arabia: 2.5%
    #7 Azerbaijan: 2.0%
    #20 Canada: .9%

    The low value of USA & Canada NG reserves is put in even better perspective by looking at # years of current consumption for proven NG reserves:

    Turkmenistan: 1345 yrs
    Qatar: 1242
    Azerbaijan: 621
    Russia: 133
    Australia: 106
    Saudi Arabia: 98
    Canada: 19
    USA: 11

    Even worse when you consider the enormous capital that has been spent on NG exploration & development in Canada & USA vs those other countries. That shows clearly the insanity of building all this LNG export infrastructure in Canada & the USA.

    The only surplus NG in Canada & the USA is Shale Gas which has a production cost of $8/mmbtu vs $0.50/mmbtu for conventional NG in those other countries. With very low environmental & political restraints in those countries. So what kinda of idiot would want to export expensive, limited NG from North America when you have a large surplus of cheap conventional NG elsewhere.

    Pretty obvious we are being duped. Yep you fools, switch to NG fueled transportation, NG power generation, close and don’t further develop Nuclear power, export LNG and when the Big Supply Crunch occurs, who would’ve guessed, the export infrastructure & associated pipelines can be readily converted to import infrastructure. That is the REAL plan. And that will supply our NG at World prices of $15-25 per mmBtu, no more $3/mmBtu sucker trap price. So reliance on Middle East Oil will be expanded to include reliance on Middle East LNG. Brilliant.

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