Global Natural Gas Explosion: Clean, Cheap Product / Costly, Destructive Process

Using technology called hydraulic fracturing, or "fracking," asort of controlled earthquake, companies now bringing previously inaccessible natural gas to the surface all over the globe. But as prices fall, the process is ecologically devastating
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April 9, 2011 - PRLog -- As the world watches in horror as the Fukushima disaster continues to unfold,

it forces a new look at an on-going global revolution in perhaps the least environmentally destructive fossil fuel -- natural gas.

The good economic news is that the fruits of this natural gas revolution may not be long in coming on-line --

especially given the seemingly unstoppable rise in the price of oil.

The bad environmental news is that the process by which it is extracted is quite obviously destructive to local eco-systems.

In many parts of the world, geologists are now testing the ground for natural gas trapped in

   shale (shale gas),
   sandstone (tight gas)
   or coal seams,

gas that has been largely unreachable in the past.

Using a new technology called hydraulic fracturing, or "fracking," a sort of controlled earthquake --

if, after Fukushima, we can consider any earthquake to be "controllable" --

companies are now bringing the gas to the surface all over the globe:

   Latin America and even

The entire planet is being resurveyed.

Authorities in Poland have awarded 70 concessions for exploratory drilling in the last two years.

The race for the best reserves is also in full swing in Canada, where the Chinese are leading the pack:

The Chinese energy company PetroChina has just spent $5.4 billion (€3.9 billion) on a Canadian project.

In the United States, however, the natural gas revolution is the furthest along.

Newly discovered reserves there are already being exploited.

About half of the natural gas consumed in the United States now comes from so-called unconventional sources.

The country has already replaced Russia as the world's leading natural gas producer.

"We have twice as much gas as the Saudis have oil," boasts Texan investor T. Boone Pickens.

The euphoria is being fueled all the more by current global fears of new oil price shocks ,,,

The world's thirst for energy is massive, especially with the growth of China and India, and there are few alternatives to oil.

The situation in world oil makes the exploitation of the new natural gas reserves all the more important.

Today's estimates of the volume of gas reserves considered exploitable are several times higher than a few years ago,

with prognoses ranging from two to six times as high as earlier estimates.

So far, though, engineers have not pumped a single cubic meter of gas out of the earth in most places, except the United States.

In its latest global energy forecast, though, ExxonMobil predicts that

natural gas will replace coal as the most important source of electricity by 2030.

And because only half as much CO2 is emitted during gas combustion as in coal combustion,

the new boom will also have consequences for the world's climate, and for prices in the emissions trading market.

The business of trading pollution rights will likely come under pressure, which in turn will affect renewable forms of energy.

The cheaper CO2 rights become, the harder it is for electricity produced with wind power or solar energy to compete in the market.

Hence, the new global gas rush is also triggering a cascade of effects that will change the world energy market and radically change companies.

Corporations like Exxon, BP and Shell, which have seen themselves primarily as oil producers for generations, are now investing billions in the gas industry.

This is how the game has been played to date:

The big European players, like Gazprom in Russia and Statoil in Norway, exploit their reserves

and then transport the gas through thousands of kilometers of pipelines to the border of Germany or other European nations.

From there, distributors feed the gas into their networks and sell it to municipal utilities or industrial customers.

It has been a profitable business for everyone involved.

Prices were not even negotiated -- they were dictated.

Long-term agreements were in place with terms of up to 40 years, and they were based on the so-called gas-oil price link,

which means that gas prices follow oil prices, only with a few months' delay.

The distributors added a healthy margin of up to 30 percent for the distribution, storage and sale of the gas.

But ever since efforts began to tap the new gas reserves, such astronomical profits have been a thing of the past.

For the first time, something resembling competition has developed in the gas industry.

The volumes being traded on the spot markets are getting bigger and bigger.

New competitors are buying up gas at favorable terms,

which benefits consumers, who can now choose from among an average of 31 gas providers,

as compared with only eight providers two years ago ,,,

But the environmental consequences have aroused intense opposition in most communities where fracking is underway.

One question is about the ingredients of the fracking fluid that's injected into the rock.

Even more important:

How contaminated is the sludge that shoots back up to the surface?

And how is it properly disposed of?

The wastewater contains large amounts of salt, and it often contains benzene, xylene and toluene --

all highly toxic substances that could contaminate groundwater.

There are other potential weak points, for instance, when the steel pipes in the borehole are not properly cemented together.

The US environmental authorities have documented a number of such accidents, in which wastewater has harmed the environment.

Citizens' initiatives have since demanded that the authorities tighten their inspection regimens ...


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