The “shale gale” sweeping across North America has more than doubled the size of the discovered gas resource in the continent—enough to satisfy more than 100 years of consumption at current rates, according to new analysis of the leading unconventional gas plays in North America by IHS Cambridge Energy Research Associates (IHS CERA).
The report, “Fueling North America’s Energy Future: The Unconventional Natural Gas Revolution and the Carbon Agenda,” says the recent expansion of gas resources through shale plays provides the potential to transform North America’s energy landscape.
The report features six months of research and dialogue with many stakeholders, including U.S. and Canadian government and regulatory agencies, consumers, oil and gas companies, gas and electric utilities, environmental and other non-governmental organizations, and financial institutions to uncover the key opportunities and challenges presented by the unconventional natural gas revolution. IHS CERA reports more than 100 stakeholder organizations participated in the study.
IHS CERA chairman Daniel Yergin says, “This is simply the most significant energy innovation so far this century. As recently as 2007 it was widely thought that natural gas was in tight supply and the U.S. was going to become a growing importer of gas. But this outlook has been turned on its head by the shale gale.”
The report says that the emergence of shale gas has the potential to be a “game changer,” dramatically augmenting gas supply and opening new opportunities for competition among energy sources.
IHS CERA reports growth in power demand during the next two decades will likely lead gas demand for power generation to nearly double by 2030 from its current level of 19 billion cubic feet per day. Replacing coal-fired generation with gas-fired generation will result in short-term greenhouse-gas emission reductions, but there is a limited pool of “spare” gas-fired capacity that prevents wholesale fuel switching.
Simply replacing coal-fired generation with natural gas-fired units will not, however, allow the often discussed target of 80% reduction in greenhouse gas emissions by 2050 to be met. This will require the deployment of non-carbon emitting technologies including nuclear and renewable power as well as significant advances in carbon capture and storage.
IHS CERA chief energy strategist David Hobbs says, “The shale gale has shifted natural gas from a constrained resource to an abundant one with wide-ranging implications for the energy future in North America. This new abundance of natural gas provides a crucial additional ‘shock absorber’ for supplies, providing greater flexibility to react to disruptions and market imbalances.”
Water—both its use in hydraulic fracturing and the disposal and treatment of produced water—has emerged as the top environmental issue, particularly as oil and gas production moves to the more densely populated U.S. Northeast. While additional federal regulation is now being debated, IHS CERA says the study points out that oil and gas drilling operations are tightly regulated or managed by states.
The report concludes stringency of any future carbon reduction legislation and the viability of CCS technology—yet to be demonstrated at scale—are two major uncertainties facing gas’ future place in fuel.
IHS CERA vice present and senior advisor Lawrence Makovich says, “The power industry has a multiple-decade planning horizon. Because the uncertainty of the stringency of climate changes policy and the viability and cost competitiveness of CCS, there is the possibility that new gas-fired power plants may not run for their intended life spans. For the industry the most prudent way to protect itself against future uncertainty remains through a resilient, diversified portfolio.”
IHS CERA is an advisor to energy companies, consumers, financial institutions, technology providers and governments.
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