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Page added on July 7, 2018
The Two Biggest Threats To The Natural-Gas Boom
The International Energy Agency is bullish on the prospects for natural gas. IEA sees gas as a versatile player with vast growth potential, in large part because it can solve local air pollution in Asian cities. But IEA Executive Director Fatih Birol warned last week that two threats could derail the growth of the natural gas industry.
“We think gas has a bright future, but there are two major risks for gas, that it will not grow as much as we expect,” Birol said in an appearance last week at the Brookings Institution.
The two threats are:
1 Renewables: If gas becomes more expensive than solar and wind energy—which could happen because of international price shocks—it could lose much of its foothold. If the price of gas remains close to renewables, it should thrive, Birol said.
“If it stays affordable there will be huge demand, especially in Asia,” he said. “There is one big advantage of natural gas and it is the reason why in Asia it is going strong. Namely, local pollution.”
“Today in many countries they use gas in order to reduce the local pollution in the cities, SO2, NOx, and particulate matter. It’s a major issue. It’s a big benefit for gas, vis-a-vis coal.”
2. Methane Leaks: But as climate change worsens, countries will be hobbled in their efforts to deploy natural gas if the infrastructure remains as leaky as it is today. “We are seeing that a significant amount of methane is leaked to the atmosphere through the production and transportation of gas,” Birol said.
Indeed, a recent study of the U.S. gas industry found that methane leaks may be 60 percent higher than the Environmental Protection Agency has estimated.
“If the gas industry cannot address this methane issue,” Birol said, it will come home to roost and, out of necessity, limit the industry’s growth.
The IEA contends that methane leaks can be fixed with existing technology, and that half of methane leaks can be repaired at no cost to the industry. The agency recommends using non-permeable pipe whenever possible, with fewer joints between sections of pipe. The expense is offset by the value of the gas that’s retained.
“This is major homework for the gas industry. They have to make sure prices don’t go up too much, and second, address the methane issue,” Birol said. “We assume they will take the decisions in the right way.”
One Comment on "The Two Biggest Threats To The Natural-Gas Boom"
rockman on Sun, 8th Jul 2018 1:03 pm
First: “If gas becomes more expensive than solar and wind energy—which could happen because of international price shocks—it could lose much of its foothold.” Higher NG prices are not a negative for exploration and production companies. Especially those that have developed significant long terms reserves that were economically justified at lower prices. It also allows companies to develop new reserves as old reserves are depleted.
Don’t buy that? How about a real example and not theory…Texas. In 2006 Texas produced 5.17 TRILLION cubic ft of NG. And then came the huge build out of our alt energy…wind power. And at the same time met with relatively low NG prices. Much lower then folks in the NE had to pay since we didn’t have the high transport cost. And what happened to Texas NG production as wind provided more power to the grid? A grid that had gotten much power by burning NG? In 2014 Texas produced 7.18 TRILLION cubic ft.
https://www.eia.gov/nav/ng/hist/na1160_stx_2a.htm
Granted in 2015 and ’16 production dropped a little. But the rate of wind power expansion also slowed up at that time. But the article’s simplistic model is just that…too simplistic.
Second: ““If the gas industry cannot address this methane issue,” Birol said, it will come home to roost and, out of necessity, limit the industry’s growth.” The world, especially the US, has done nothing to halt the yearly increase in GHG let alone decrease it. And for a simple reason: the vast majority of fossil fuel consumers refuse to give up their efforts for a better life style. As NG has become a bigger a bigger component of that effort I won’t hold my breath waiting for that dynamic to change very quickly.