Shale gas is abundant and now beginning to undercut the price of other sources of natural gas. It is already cheaper than LNG transported around the world which requires both terminals for liquefaction and receiving stations for evaporation. Gas-fired power plants are relatively cheap and quick to build. In simple-cycle operation gas turbine based power plant provide the economic method of choice for emergency power and peak power. In combined cycle operation they provide the highest efficiency of all types of fossil fired electricity generation (around 60%). The ratio of gas price to coal price determines whether this can be cheaper than coal fired power generation.
Shale gas is abundant: map via Wikipedia
Total oil, gas and coal resources in the Earth’s crust are estimated at more than 570,000 exajoules. The world will use about 450 exajoules (billion billion joules) of fossil fuel energy this year.
The exajoule (EJ) is equal to 1018 joules. The 2011 Tōhoku earthquake and tsunami in Japan had 1.41 EJ of energy according to its 9.0 on the Richter magnitude scale. Energy in the United States used per year is roughly 94 EJ.
Quantity is not really the point; price is. Most fossil fuels are impossibly hard to extract at a reasonable price. More than half the reserves consist of methane clathrates hydrated gas found mostly on the seabed near the margins of the continents in vast quantities. Nobody knows how to turn them into fuel except at huge cost, although the Japanese are on the case. So the question is not whether we run out of fossil fuels but whether we run out of cheap fossil fuels.
With oil, the answer may be “yes”. A huge amount of oil is still untapped, but most of it is under deep water or in oil sands and is costly to extract. But with gas, the answer is “no”. Most free methane is found in impermeable rocks such as shale, not in permeable “traps” whence it is easiest to extract. Shale gas was thought to be as inaccessible as clathrates, and when it began to be exploited in the 1990s it looked as if it would still come in at the top of the price range. Now technological improvements have brought the price down so far that it undercuts conventional gas.
The “shale-gas shock” will have far-reaching consequences. It will make gas prices lower and less volatile relative to oil than ever before.
This will cause gas to take market share from coal, nuclear and renewables in electricity generation, and from oil in transport. London buses should follow Washington and Delhi in switching to gas both to save money and to produce less smog.
Shale gas is good news for America and China (which probably has even more of it than America), consumers (cheap fuel means higher standards of living) and farmers (fertiliser is made from gas). It is bad news for Russia and Iran (which hoped to corner the gas market in coming decades), for coal (until now the cheapest fuel for electricity) and for the nuclear and wind industries. The last two had expected to be rescued from dependence on subsidies by rising fossil fuel prices. They may now not be.
The losers are formidable enemies, so there is a movement, whose fans range from Gazprom to Greenpeace, to strangle the shale-gas industry at birth, by claiming that drilling for it contaminates water with carcinogenic and even radioactive chemicals. This turns out to be true only in the sense that coffee is carcinogenic, bananas radioactive and dihydrogen monoxide (water) a chemical.
The use of gas for power generation is perfectly sustainable into the foreseeable future. As the hysteria and alarmism around carbon dioxide causing global warming is debunked and begins to fade away the fashionable and unsustainable focus on bio-gas will also die away. The price of electricity production from gas will be the benchmark for judging whether wind and solar power make any sense. Without artificially imposed penalties on carbon or carbon taxes on fossil fuel, bio-gas can never be more than a marginal fuel of little significance. For bio-gas to have any significance catchment areas become so large that food production is adversely affected. The cost of production is relatively high. Without a carbon dioxide scare and the resulting subsidies, wind and solar power are still not able to compete against any form of fossil fuel power generation or hydro power or nuclear power.
But the success of technologies for the extraction of shale gas ensures availability of significant quantities for a long time to come. These quantities are so large that there is no “peak” in sight and all the alarmist “peak” gas scenarios are rendered meaningless.
Moving peaks: Peak gas will never come
The k2p blog 