One does not hear much these days about “peak oil”, as new technologies are developed and implemented that, together with market conditions, make feasible the exploitation of previously uneconomical or irretrievable deposits. A new report by the Diplomatic Center for Strategic Studies (DCSS), based in Kuwait, just published, confirms an International Energy Agency report from two years ago, estimating that under present rates of consumption, global supplies of natural gas could last up to 250 years, until the middle of the twenty-third century.
The figure is slightly speculative, as it refers to “potential” reserves, such as Chinese shale gas that may or may not be actually recoverable. But it leaves no doubt that the American success with unconventional gas is not just a national but a global game-changer. The DCSS report adds the interesting nuance that natural gas is fairly evenly distributed around the world, and all regions have recoverable resources in sufficient quantity to last at least 75 years, i.e. until the last decade of the present century.
At the same time, development of shale gas outside North America will go much slower than it has gone in the U.S. and Canada. The Americans and Canadians were able to mobilize large amounts of capital in a relatively short span of time and already had a significant cadre of highly technically trained personal, not to mention the industrial base and process technology necessary for manufacturing the large amounts of sophisticated equipment necessary.
The geophysical aspects also vary widely. In Poland, for example, which has been estimated to have large amounts of shale gas, it turns out that this is not so easily recoverable because the rock is deeper and there are more complicated geological formations through which it is necessary drill to get to it. So the handwriting was on the wall for the separate decisions by Canada’s Talisman Energy and the U.S.-based Marathon Oil this week to sell their interests in shale gas ventures in Poland. China has this problem too, in addition to which water for hydraulic fracturing (fracking) is in short supply in the remote regions where the rock is to be found.
Natural gas, along with oil and coal, will continue to make up about 80% of world consumption. A recent BP report interestingly shows that the three hydrocarbons have been converging such that each of them now represents just about one-third of that 80%. The remaining 20% is equally divided among solar, wind, and “other” alternative energy sources. Although there is a tendency these days to refer to natural gas no long as “clean fuel” but as “cleaner fuel”, it is unlikely that political and economic momentum in its favor will abate anytime soon either. But economic and geophysical conditions strongly favor North America in the shale gas revolution.
This piece is cross-posted from Oil Price.com with permission.