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Low-Emission Shale Gas to Displace Carbon Tech, Chatham Says
2010-09-23 23:01:04.83 GMT
By Colin McClelland
Sept. 24 (Bloomberg) -- Cheap, low-emission shale gas, with
double the global reserves of conventional sources, will
discourage investment in nuclear reactors and carbon storage
that would fight climate change, a British study shows.
"In a world where there is the serious possibility of
cheap, relatively clean gas, who will commit large sums of money
to expensive pieces of equipment to lower carbon emissions?"
Paul Stevens, senior research fellow at Chatham House, a London-
based institute for the study of international affairs, wrote in
the report published today.
Global shale gas reserves are estimated to be 456 trillion
cubic meters (16,110 trillion cubic feet) compared with 187
trillion cubic meters for conventional gas, the London-based
World Energy Council said in a 2010 report. More than 60 percent
of shale gas deposits, or plays, are in North America and
Russia.
Shale gas is considered unconventional because it is found
in sedimentary rock, not in reservoirs. Tapping it requires
more wells, advanced horizontal drilling and chemicals that can
pollute ground water.
A confluence of drilling history, tax credits, emission
goals, technology, and incentives for landowners to allow wells
has reduced U.S. shale gas production costs to less than half of
conventional gas in some places, Stevens wrote. That is shaking
investor confidence in conventional gas.
Cheaper Than Conventional
The cost of producing shale gas is $3 or less per million
British thermal units in the Texas plays of Barnett and
Haynesville, Stevens wrote. Conventional gas drilling is about
$10 per million Btu, said Chris Rowland, executive director of a
research unit of Ecofin Ltd., a London-based investment
management company.
"If gas is available at $5 per million Btu, the all-in
price for gas-fired plants would fall to around 50 euros ($67)
per megawatt-hour without carbon capture and storage, or 70
euros with it," Rowland said. That compares with 160 euros for
a coal plant with CCS, perhaps falling to 130 euros in 10 years,
and 85 euros for a nuclear plant, Rowland said.
Natural gas has averaged $4.63 over the past year. Gas for
October delivery settled at $4.019 yesterday on the New York
Mercantile Exchange.
CCS involves trapping emissions of CO2, a greenhouse gas
blamed for climate change, from sources including power stations
and pumping it into underground reservoirs such as oil and
natural-gas fields or saline aquifers for permanent storage.
Rowland said European shale exploration is growing. Germany
and Sweden are planning to drill within 18 months. Exxon Mobil,
ConocoPhillips and Chevron Corp., the three largest U.S. oil
companies, are negotiating exploration contracts for shale in
the Lublin and Podlasie Basins in southeast Poland.
Stevens said "the list of constraints is formidable" for
developing shale gas in Europe, including poor geology, high
population density, low numbers of drilling rigs, tougher local
environmental legislation and opposition to hydraulic
fracturing.
For Related News and Information:
Top Gas Story Page: TGAS <GO>
Natural Gas Prices: NG1 <COMMODITY> GP <GO>
Top Energy Stories: ETOP <GO>
U.K. Gas Prices: UGAS <GO>
Carbon capture and storage stories: NI CARBCAPT <GO>
Emission market news: NI ENVMARKET <GO>
European power-markets home page: EPWR <GO>
Climate-change news: NI CLIMATE <GO>
--Editors: Richard Stubbe, Charlotte Porter.
To contact the reporter on this story:
Colin McClelland in Toronto at +1-416-203-5725 or
cmcclelland1@bloomberg.net
To contact the editor responsible for this story:
Dan Stets at +1-212-617-4403 or
dstets@bloomberg.net
