Matt Smith – Guest Blog

Last week’s print edition of The Economist had a special feature which ran the gamut across the world of natural gas. Seven articles covered wide-ranging topics, from LNG to fracking […]

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By Geoff Curran

Last week’s print edition of The Economist had a special feature which ran the gamut across the world of natural gas. Seven articles covered wide-ranging topics, from LNG to fracking to the various regional natural gas markets.

While I highly recommend taking a look at these articles, I appreciate it takes a while to get through them (plus there is a paywall limiting access to only 5 articles a week). So to help you wonderful folks out, I have done the hard work and have extracted some of the key points from these seven pieces, and put them into a bite-size format. I hope you enjoy!

  • A shale well uses up to 22 million liters of water (5 million gallons) over its lifetime…but this is no more than a Florida golf course consumes in three weeks, and less than mining processes (article: Sorting Frack From Fiction)
  • 20% of water returns to the surface in the days and weeks after fracking (which must be stored and disposed of or recycled safely), while most stays in the well (Sorting Frack From Fiction)
  • New York, Maryland, and New Jersey currently have temporary bans on fracking, with Vermont to follow (Sorting Frack From Fiction)
  • France and Bulgaria have fracking moratoriums in Europe (Sorting Frack From Fiction)
  • The EPA estimates methane emissions from fracking are 2.2% of the total amount of gas produced, only a little more than emissions produced from conventional gas drilling (Sorting Frack From Fiction)
  • Over the past 5 years the US has seen a decline in greenhouse-gas emissions of 450 million tonnes. The EU has seen emissions rise because higher natural gas prices have led to an increase in coal-fired power generation (Gas Works)
  • According to MIT, residential and commercial buildings account for over 40% of total US energy consumption (Gas Works)
  • Natural gas produces 25% less carbon dioxide than gasoline (Gas Works)
  • Research firm IHS CERA predicts a third of the world’s shipping fleet by 2030 will be running on LNG (Gas Works)
  • Shell’s Gas-to-Liquids (GTL) facility in Qatar cost $19 bln to build (Gas Works)
  • According to MIT, world natural gas production has grown by two-fifths between 1990 and 2009, twice as fast as that of oil (An Unconventional Bonanza)
  • The IEA estimates that the share of natural gas in the global energy mix will rise from 21% to 25% in 2035, as long as shale development is encouraged. It had remained at 16% from the late 1960s to the 1990s (An Unconventional Bonanza)
  • The average cost per well in the Marcellus shale is $6 – $7 million, versus $7 – $11 million in the Haynesville shale (Landscape With Well)
  • Nearly 30% of the world’s LNG is currently being shipped from Qatar…and through the Strait of Hormuz (A Better Mix)
  • Growth in European shale production could reduce Russia’s share of the western European market down from 25% to 13% by 2040 (A Better Mix)
  • Gas-on-gas competition (spot price versus indexed contracts) sets the price for over 50% of the European natural gas market, compared to only 20% in 2005 (Careful What You Wish For)
  • Chevron’s Wheatstone LNG project in Australia, approved last September, will have capacity for 12bcm (=420 Bcf) per annum – more than a quarter of the country’s total gas production (Careful What You Wish For)
  • Only 19 countries in the world export natural gas. Global trade went from 3bcm (= 105 Bcf) in 1970 to 331bcm (= 11.7 Tcf) in 2011 (Careful What You Wish For)
  • Building a liquefaction plant costs as much as $1,000 per ton of LNG per year due to the cost of raw materials such as steel (Careful What You Wish For)
  • Global LNG capacity is expected to roughly double again by 2020 (Careful What You Wish For)
  • LNG tankers cost a pretty penny at around $200 million (Careful What You Wish For)
  • Liquefying, transporting, and regasifying natural gas can cost between $4 – $7/MMbtu (Careful What You Wish For)
  • Cheniere Energy, who owns the Sabine Pass LNG export facility, is entering contracts based on a 15% mark-up on Henry Hub prices plus liquefaction fees of $2.15/MMbtu (Careful What You Wish For)
  • China currently has 4 LNG import terminals up and running, 5 under construction, and a dozen more at the planning stage (Careful What You Wish For)

That’s 24 key points from 7 articles…I hope you found them useful. Thanks for reading; now go forth, and in the words of The Economist….think responsibly!

Matt Smith

Commodity Analyst, Summit Energy Services, Inc.

More food for thought on my blog www.energyburrito.com.