Tag Archives: Coal

Time to seize a prosperous future fuelled by natural gas

Compared with coal, natural gas produces half the carbon dioxide, less than a third of the nitrogen oxide and just one per cent of the sulphur dioxide, with virtually no particulates. That China is looking to import LNG from B.C.’s shale gas is good news for both Canada and for the Earth’s atmosphere. But LNG will only slow China’s massive coal-fired power growth. Here’s the really good news. According to the U.S. Energy Information Administration (EIA), China possesses the world’s largest technically recoverable shale gas reserves that, at 1,115 trillion cubic feet, are almost twice as large as Canada’s. These vast resources remain undeveloped due to the early stage of Chinese recovery technology. That’s why the University of Calgary’s announcement of a new Canadian/Chinese Research Centre aimed at unlocking that potential is so newsworthy. At the signing ceremony in Beijing on October 23, U of C President Elizabeth Cannon stated that the project “will help China move from a coal economy over to gas.”

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EU Seeks Energy Integration as U.S. Shale Gas Widens Price Gap

(Source: Blomberg) According to a commission report prepared for a summit of EU leaders, shale gas production has contributed to a widening gap between U.S. and EU industrial prices for energy. The increase in European energy prices is linked to the inconsistency of EU policies to boost the share of renewable energy, increase energy efficiency and cut greenhouse gases, as well as to national policies that distort the internal market, according to a study.

Bloomberg: “EU Seeks Energy Integration as U.S. Shale Gas Widens Price Gap”

Canada’s natural gas industry could be worth $1 trillion

The Conference Board of Canada published an analysis Monday that expects Canada’s natural gas industry to add more than $1 trillion to Canada’s economy over the next 24 years and support an average of 260,000 jobs a year over that time frame.  At HRN we completely agree!

The ambitious projection factors in all the direct investment, but also ancillary spinoffs down the supply chain and figures all regions of the country stand to benefit, even those provinces without any large natural gas holdings.

Read more: Canada’s natural gas industry could be worth $1 trillion

Natural Gas: North America’s Energy Future – or Just Hot Air?

The team over at Visual Capitalist have put together a really informative Infographic on natural gas titled “Natural Gas: North America’s Energy Future – or Just Hot Air?“. Overall the infographic is very good, however, they fall short on their comments in regards to the “fracking” process. In the infographic they paste a warning that states:

“Hydrolic fracking is very controversioal process with mounting environmental and and regulatory concerns. Environmental organizations have numerous concerns with air quality, water usage, and wastewater management, methan contamination, microseismic events, and the chemicals used in “fracking”.

Though such a statement is factual in that, yes, environmentals have voiced these concerns. That does not make the statements factual. There are independent experts that contradict these statements. So they become merely opinions with equally impressive professional / expert support.

The one thing that could have been mentioned is that technology improves constantly, and though some of these concerns may have been an issue five years ago they are no longer an issue today or have been de-risked considerably. For example, the solutions or “chemicals” used in the fracking process are now non-toxic and are 99.9% recoverable posing little risk in this part of the process (see Gas Frac Energy Services).

Unfortunately, the environmental arguements have not caught up to recent technology, and have become more political and less factual. There is always room for improvement, and the environmentals that oppose fracking should keep pace with technology so they can keep pressure on companies to always make improvements.

Nuclear power is still justifiable in cheap shale gas world

According to GE CEO Jeff Immelt the success of shale gas industry has produced a global adundance of cheap natural gas that has made nuclear power hard to junstify. He is quoted in a Financial Times interview as stating:

“They’re finding more gas all the time. It’s just hard to justify nuclear. Gas is so cheap and at some point, economics rule”.

Here on HRN we support the shale gas industry and its potential to represent a larger part of the overall energy mix in many countries. However, it will never fully displace any other energy source. The world will need all sources of power, to meet growing, sustainable long term demand.

A long term approach must be taken with nuclear power and not economics based on the spot price or projected price of natural gas. Nuclear power is needed, and should be employed with the world’s leading technologies, and built away from earth quake faults, and tsunami zones.

Human nature and price economics will dictate that consumers gravitate towards lowest cost supply. We are finally seeing the number of users of natural gas increasing as trillions of cubic meters of natural gas are unlocked from vast shale gas resources. Coal plants are converting to natural gas and large commercial vehicle fleets in the US are switching to the low carbon, affordability of natural gas vehicles.

There is great opportunity in natural gas globally. However it can not be the sole energy source and will not completely displace or replace other energy sources. No country should bet their future entirely on one energy source but using more natural gas produced from shale gas as a bridge to a more sustainable greener energy future makes more sense. Nuclear is part of that energy future but in order for it to succeed, new generation nuclear reactors need to be built in order to replace existing, aging reactors, and new ones for future demand. It will take visionary leadership, rather then immediate profit considerations and short sightedness that has become common place in deferring problems to future generations.

Reuters: “Nuclear power hard to justify in cheap gas world: GE

Robert Transport decides natural gas is the right choice

Natural gas continues to gain momentum as a mainstream transportation fuel in Canada.

David Ebner writes in his Globe & Mail article “Natural gas gains traction on the road” about Robert Transport based in Boucherville, Quebec,  has decided natural gas is the the sensible way to go and plans to buy 80 new trucks with natural gas engines to add to their 750 truck fleet. The Company is also  plans to build three natural gas filling stations  for itself along the Montreal-Toronto corridor, in a partnership with Gaz Métro LP.

The abundance of natural gas due to unconventional shale gas production and an environmentally sensitive market will see  natural gas will emerge as a preferred lower emission alternative energy source in transportation and electric power generation.

Eureka! U of Texas converts coal to crude for $28.84 a barrel

Researchers at the University of Texas have announced they can convert coal to crude for under $30 with no emissions from the lowest grades of coal. The technology is described as using  “micro-fluidic reactors” that convert coal to synthetic crude at a fraction of the cost incurred with traditional conversion methods.

Mr. Rick Billo, University of Texas’ dean of engineering is quoted:

“We’re improving the cost every day. We started off some time ago at an uneconomical $17,000 a barrel. Today, we’re at a cost of $28.84 a barrel.”

Like other oil alternatives technologies and sources, research attracts investment capital when oil prices are high or in scarce supplies and scientists have been converting one fossil fuel to another for many years. Most notably, during WWII, Nazis Germany converted coal to crude as oil supplies were being squeezed by advancing Allied forces. China built the world’s largest coal to crude conversion plant in 2008 to take advantage of coal reserves and meet growing energy demands. Most methods of converting coal to crude have always come at a high cost and have released Co2 into the atmosphere that are even higher then oil liquefaction processes. In order to avoid these carbon emissions, C02 capture and sequestration could be  employed but that further adds to the cost.

Canada there are an estimated 10 billion tonnes of proven and recoverable coal which represents more energy then oil, oil sands, and natural gas combined. Coal is abundant worldwide with an estimated 1 trillion tonnes which is the equivalent of 4 trillion barrels of oil. The largest amount of proved and recoverable coal is in the U.S.

If the University of Texas has created the technology they claim, the implications would be massive. There is enough coal in the world to power the global economy for centuries. However, the crude produced from the process is still a fossil fuel with C02 emissions when burned.

We are already seeing growing natural gas reserves in North America start to change the way this abundant resource can be better utilized in order to reduce carbon emissions and reduce U.S. dependence on oil from “unfriendly” regimes and the geopolitical changes that shale gas may bring about. If the U.S. could become completely oil independent with clean coal to crude conversion, the world will be a vastly different one then we live in today.

Globe & Mail: Texas university has eureka moment for coal-to-gas

Is Obama looking to end shale gas drilling in the US?

President Barack Obama

As the U.S. Congress begins an investigation to explore the environmental impact and risks associated with hydraulic fracturing – or “fracking” – of shale gas formations, growing concerns that the administration will put some sort of moratorium on shale gas drilling.

Will President Obama side with Waxman and call for a drilling ban for natural gas? Where would that leave the U.S. or for that matter, the opportunity to use natural gas to reduce carbon emissions and reduce U.S. dependence on foreign oil supplied by countries that are basically enemies of the U.S. The stakes here are huge, and given the falling approval ratings of Obama how can the president afford to risk such a great opportunity. The one thing we know for sure is that going back to the way things use to be done is not sustainable. In the case of the U.S. they must find a practical way to reduce their dependence on foreign oil from states that hate them, and they – like every country – also needs near immediate  and practical means for reducing carbon emission through proven resources. The massive amount of natural gas that has been unlocked from shale resources in North America provides this solution.

However, many have raised concerns that Obama may just place a all out ban on shale gas while the congressional committee conducts there investigation or puts regulation into place that will make the drilling process for shale gas economically unfeasible. In his article, Obama’s Determined to Derail Nat Gas, Real Money Columnist, Jim Cramer, states:

The single biggest detriment to natural gas as a bridge fuel remains the president of the United States, and the only question I have is whether he will put a moratorium on further drilling until the EPA can launch a multiyear study of the hazards of natural gas drilling to the nation’s water supply. That will allow nuclear and clean coal to catch up to the fuel’s use and keep the focus on anti-carbons or sequestration.

I have never seen anything like this. This president is determined to frustrate natural gas.

It is very important to point out that the U.S. Congressional investigation is based on a few isolated incidents of concern – see HRN “U.S. Congress to investigate shale gas “fracking” process”. Calmer heads need to prevail here, and it is important to focus on the fact that technology has and will continue to improve and do so with minimal environmental impact. Successful solution always evolve and improve. Its what makes commerce work.

If Obama does ban shale gas drilling (not likely, some form of regulation is more likely which may prove to be just as disastrous for the U.S. natural gas  industry and economy) the economic and geopolitical opportunities and impact are significant and far reaching.

First, the shale gas boom in North America has been made possible because of technology development in horizontal drilling and fracking. Like any technology it has been improved over a number of years, and continues to be improved. Today, the technology has reached some point of standardization whereby others are also able to incorporate it into their drilling processes and it is being exported and used in other markets. It is only a matter of another year or so when we will start to hear about massive shale gas plays being discovered in other countries providing cleaner domestic natural gas resources to those countries. HRN has discussed how these new discoveries will have significant geopolitical impact. Specifically in the EU where new supplies of natural gas within the EU will reduce the political clout that Russia uses as a tool to influence the eastern EU. A reduction in this Russian influence should not go unnoticed by the U.S.

However, it is the economic impact – or perhaps lost opportunity – that should be of greater concern to the U.S. Last year nearly $265 Billion left the U.S. economy to purchase foreign oil. This unsustainable dependence on foreign energy and massive export of capital is simply the key point behind T. Boone Pickens’ Plan. This critical problem is magnified when the price of oil increases, and all indications are that prices will appreciate over the long term. Cheap oil energy is a thing of the past. New energy sources from renewable technologies like solar, wind, geothermal etc are required. But all these sources require energy to build, and that energy comes from fossil fuels. What the U.S. and others need to consider, is using the cleanest fossil fuel available… and that is natural gas. By increasing the amount of natural gas used in the overall energy mix, and reducing oil and coal, Canada and the U.S. will reduce carbon emissions while meeting their energy needs from domestically available resources.

“Another year went by, another $265 billion siphoned out of America’s struggling economy, and we still haven’t adopted a real energy plan to reduce our dependence on foreign oil”. –  T. Boone Pickens.

For the most part, T. Boone Pickens  is pleased with the support that Obama has provided him and his Pickens’ Plan. According to recent quote in U.S. Today Mr. Pickens stated a press conference at the National Automobile Dealers Association meeting in Orlando “They haven’t done anything but support me”. Mr. Pickens believes the legislation he is driving  to offer $65,000 tax incentives for conversion of 8 million 18-wheel long-haul trucks from diesel fuel to natural gas, has a good chance of bipartisan support in Congress. He also believes truck-st0p operators will be willing to invest $1.5 million or more per station to install natural-gas fueling equipment. But the Pickens’ Plan will not work without shale gas production.

While a ban on shale gas drilling in the U.S. would have huge negative implications for the natural gas industry there it would certainly lead to a economic boom in Canada’s natural gas industry – especially in Alberta – where drilling activity is down considerably. A U.S. ban would dramatically increase U.S. imports of natural gas and Canada is the largest exporter of natural gas to the U.S.

One of the key factors in fracking is the shale’s thickness. In areas where the formation is thick there is a greater opportunity to provide a buffer of rock that contains the cracking fluids within the formation. Fortunately, the Horn River basin enjoys a very thick shale formation that is up to 75 meters thick in parts.  In addition, shale gas drilling in Canada was completed with the benefit of the more advanced technologies.

Shale gas represents a global opportunity to reduce carbon emissions and provide a bridge fuel. The industry should be supported, technology should be improved (and history dictates that it will be), and North America should move forward with using cleaner natural gas as a bridge fuel to reduce carbon emissions and become more self sustaining with meeting their energy needs. Shale gas has provided a game-changing opportunity to meet these objectives.

The Street.com: Obama’s Determined to Derail Nat Gas

Greener natural gas takes on coal

Shale gas technology has closed the gap between the energy equivalent between natural gas and coal. Horizontal drilling and fracturing have increased natural gas reserves in the U.S. by as much as 40% which have lead to lower prices (more affordable) and greater less price volatility – a problem that has historically plagued the natural gas industry. Despite the progress by natural gas industry to reposition natural gas as the cleanest fossil fuel domestically available to meet U.S. energy needs, considerable hurdles are yet to be cleared and the coal lobby in the U.S. is well funded and well established.

National Post: Greener natural gas takes on coal

Encana CEO sees low natural gas prices for next two years

Randy Eresman, CEO, EnCana Corp. (archive photo)

Following their shareholder meeting approving the split of Encana into two companies – EnCana Corp. (natural gas) and Cenovus Energy (oil saneds) – company CEO Randy Eresman gave his prediction that natural gas prices are likely to remain under $5.50 and likely under $6.50 for the foreseeable future as technology improves production costs.

This may be bad news for shareholders of natural gas companies, but Eresman stated that those companies like EnCana positioned in lower cost shale gas properties like the Horn River basin will do fine while higher cost conventional plays may be more challenging. Eresman is quoted as stating:

“The best producers at the lowest cost will be the ones that survive in this new environment. And with our exposure to these lower-cost plays, we are very well-positioned.”

Eresman went on to state:

“We can do well and survive and have a very strong positive cash flow. [But] I expect there will be some difficulty in bottom-line earnings for all corporations that are exposed to natural gas.”

The Horn River basin remains one of the only active basins in Canada, and one of three in North America. And while some may be concerned about their natural gas stocks, the abundance of shale gas and low prices simply reinforces the opportunity to leverage this abundant domestic resource as a low-carbon alternative to oil and coal.

Globe and Mail: EnCana sees tough terrain ahead