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The murky future of U.S. shale gas
Chris Nelder, Smart Planet
Eight months ago I made a controversial assertion: “U.S. gas production appears to have hit a production ceiling, and is actually declining in major areas.”
It was greeted with jeers. The hate mail flowed in. “This is a joke right,” wrote one reader, “on a day when gas prices are down to 1998 levels despite high demand – every agency, consultancy and producer says production is up and you trot out tired old Art Berman down from the ‘grassy knoll’ of the gas industry.”…
Another reader, apparently still furious with me, recently demanded that I retract a similar statement I made in a subsequent guest post at Foreign Policy, and that I apologize for making it. “‘[G]as production is not growing under current conditions’ was controversial when written, and ludicrous in hindsight,” he wrote, and then helpfully provided a link to the latest EIA data on U.S. gas production. “Notice how marketed natural gas production continues to set records, even 8 months after your claim that it is not growing,” he sneered.
As that very data shows, U.S. marketed gas production hit a peak of 2,150,494 million cubic feet in January, 2012, the month before my articles were published. It has remained below that level ever since. Indeed, on the same day that I received that lovely email, the EIA published a short post noting that “U.S. marketed natural gas production has flattened since late 2011, mainly in response to lower natural gas prices” and providing this helpful chart:…
(17 October 2012)
After the Boom in Natural Gas
Clifford Krauss and Eric Lipton, New York Times
Rex W. Tillerson, the chief executive of Exxon Mobil, which spent $41 billion to buy XTO Energy, a giant natural gas company, in 2010, when gas prices were almost double what they are today, minced no words about the industry’s plight during an appearance in New York this summer.
“We are all losing our shirts today,” Mr. Tillerson said. “We’re making no money. It’s all in the red.”
Like the recent credit bubble, the boom and bust in gas were driven in large part by tens of billions of dollars in creative financing engineered by investment banks like Goldman Sachs, Barclays and Jefferies & Company.
After the financial crisis, the natural gas rush was one of the few major profit centers for Wall Street deal makers, who found willing takers among energy companies and foreign financial investors…
Now the gas companies are committed to spending far more to produce gas than they can earn selling it. Their stock prices and debt ratings have been hammered.
“We just killed more meat than we could drag back to the cave and eat,” said Maynard Holt, co-president of Tudor Pickering Holt & Company, a Houston investment bank that has handled dozens of shale deals in the last four years. “Now we have a problem.”…
(20 October 2012)
US natural gas boom claims first nuclear plant
Scott DiSavino, Reuters
Dominion Resources Inc’s plans to shut its Kewaunee plant in Wisconsin next year, the first U.S. nuclear plant to fall victim to growing competition from natural gas, triggering expectations more reactors could be forced to shut down.
After claiming hundreds of coal-fired plants, the surge in U.S. shale gas output is now starting to grind down the nuclear industry, with smaller, older plants like the 566-megawatt (MW) Kewaunee plant the first to be affected.
Power prices have followed the natural gas market to decade lows this year, as the market grapples with the shale gas boom and flagging demand due to the struggling economy.
For the nuclear industry, it means the Dominion plant — which had been up for sale since April 2011 — will be the first U.S. reactor to shut since the late 1990s when it closes in the second quarter of next year…
(22 October 2012)
Report sees economic boost from unconventional oil and gas
Jennifer Dlouhy, Houston Chronicle
A surge in unconventional oil and gas extraction nationwide will trigger more than $5.1 trillion in capital spending and support more than 3.5 million jobs by 2035, according to a new IHS Global Insight study.
The findings suggest that domestic energy development – specifically unconventional oil and natural gas extraction – will be a bright spot in an otherwise dim economy, said lead author John Larson, a vice president at the research firm.
"You’re talking about a growth opportunity in an economy that doesn’t have a lot of strong growth leaders right now," Larson said…
(22 October 2012)
US fracking sites impact health – report
US residents living near gas fracking sites frequently develop health problems as chemicals used in the gas extraction have been tracked in water and air surrounding the sites, a new report has found.
The Marcellus Shale natural gas field, which stretches across several eastern states, is the biggest and cheapest natural gas field in the US and could contain “almost half of the current proven natural gas reserves in the US,” a Standard & Poor’s report said this week.
But the fracking report, titled “Gas Patch Roulette: How Shale Gas Development Risks Public Health in Pennsylvania,” details health impacts faced by residents near Marcellus Shale. The report, conducted by Earthworks’ Oil & Gas Accountability Project, shows that negative health impacts are not isolated incidents. Close to 70 percent of those living near a fracking site reported an increase in throat irritation and 80 percent suffered from sinus problems after drilling began…
(22 October 2012)
Link to report
UK public favours wind turbines over shale gas wells, poll finds
Damian Carrington, The Guardian
More than two-thirds of people would rather have a wind turbine than a shale gas well near their home, according to a new opinion poll published on Tuesday.
Asked to choose between having the two energy sources within two miles of their home, 67% of respondents favoured a turbine, compared to just 11% who would support the gas development.
The findings of the UK-wide ICM survey shows that only nuclear power and coal are less popular than shale gas developments.
The ICM poll, together with a second new poll from YouGov, show public opinion is against George Osborne’s push for a new "dash for gas" as the central plank of the government’s energy policy…
(23 October 2012)