May 8, 2011

SHALE OF THE CENTURY:

Cheap and abundant energy is on hand (Matt Ridley, 9 May 2011, Online Opinion)

The world will use about 450 exajoules (billion billion joules) of fossil fuel energy this year and has so far used less than 20,000 exajoules since the Industrial Revolution began. Total oil, gas and coal resources in the Earth's crust are estimated at more than 570,000 exajoules. So if energy use was a journey from St Pancras to Istanbul by train, we have not yet reached the Channel Tunnel. Resources can be finite yet effectively inexhaustible or, like dodos and forests, infinitely renewable yet easily exhausted.

Quantity is not really the point; price is. Most fossil fuels are impossibly hard to extract at a reasonable price. More than half the reserves consist of methane clathrates hydrated gas found mostly on the seabed near the margins of the continents in vast quantities. Nobody knows how to turn them into fuel except at huge cost, although the Japanese are on the case. So the question is not whether we run out of fossil fuels but whether we run out of cheap fossil fuels.

With oil, the answer may be "yes". A huge amount of oil is still untapped, but most of it is under deep water or in oil sands and is costly to extract. But with gas, the answer is "no". Most free methane is found in impermeable rocks such as shale, not in permeable "traps" whence it is easiest to extract. Shale gas was thought to be as inaccessible as clathrates, and when it began to be exploited in the 1990s it looked as if it would still come in at the top of the price range. Now technological improvements have brought the price down so far that it undercuts conventional gas.

In a report I have written for the Global Warming Policy Foundation, published yesterday, I conclude that this "shale-gas shock" will have far-reaching consequences. It will make gas prices lower and less volatile relative to oil than ever before.

This will cause gas to take market share from coal, nuclear and renewables in electricity generation, and from oil in transport. London buses should follow Washington and Delhi in switching to gas both to save money and to produce less smog.

Shale gas is good news for America and China (which probably has even more of it than America), consumers (cheap fuel means higher standards of living) and farmers (fertiliser is made from gas). It is bad news for Russia and Iran (which hoped to corner the gas market in coming decades), for coal (until now the cheapest fuel for electricity) and for the nuclear and wind industries.

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Posted by at May 8, 2011 5:27 PM
  

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