Why natural gas will never bring 'energy independence' to the US and European Union

November 19 2008 / by Garry Golden
Category: Energy   Year: Beyond   Rating: 2

It is impossible to talk about the future of energy without giving serious consideration to the role of natural gas as a 21st century resource. And it should not be a surprise! The case made by energy historians is that human civilization has been gradually moving away from dirty carbon rich fuels like wood and coal towards cleaner hydrogen rich fossil fuels of petroleum and natural gas. The next step for civilization is to grow our own energy supplies and reduce reliance on extracting reserves. (But we’re not there yet!!)

Even as leaders from the US and the European Union boldly focus on efforts to get off their ‘oil dependency’ their domestic utility providers, energy giants and chemical companies are opening the spigot for natural gas supplies that often come from the same oil rich regions. Natural gas is arguably the most complicated and overlooked piece of our future energy puzzle.

What happened?
We now have an updated picture of what is happening inside the United States. The Energy Information Administration has posted a web based presentation looking at expansions to the country’s natural gas pipeline network over the last decade [Link launches web based PPT].

The presentation looks at the last ten years of laying more than 20,000 miles of new transmission pipeline (97 billion cubic ft/day capacity) that has opened up access to new new supplies from Canada and the Gulf Region that feed natural-gas-fired electric power plants, factories and homes. [We will feature Europe’s pipeline in another post.]

Why is this important to the future of energy?
The world’s largest natural gas reserves are of course located within today’s oil-rich nations like Russia, Iran, Qatar, UAE, Saudi Arabi, Nigeria, and Venezuela.

While The Pickens Plan paints a picture of vast US supplies, they are tiny relative to global production capacities outside US borders. And Europe is already committed to connecting its power plants to resources from neighboring regions.

Coal might be challenged by carbon policies, oil is likely to hit a production plateau—but natural gas might just be getting started as a global industry.

What to Watch: The Petro Product poker hand

Skeptics of natural gas playing a central role to the future of energy often argue that ‘peak natural gas production’ will deter massive expansion, while others argue that Liquified Natural Gas (LNG) will never be economical.

And then there are those energy insiders that argue – never bet against the hydrocarbon industry from being innovative in extracting resources and bringing them to market.

Within the US and Europe natural gas is likely to continue as a major source of electricity generation, and could find itself at the center of hydrogen production and distributed power generation.

There are many alternative futures to consider for natural gas!

So the debate will continue but there is another option that is generally avoided in all conversations: Petro Products.

Even if reserve-rich regions take natural gas out of the energy resource market, they could always construct massive chemical and manufacturing facilities that transform their hydrocarbon reserves into more valuable petro products that appear on retail shelves around the world.

So even if the US and Europe doesn’t buy its energy resources from outside regions, it could still turn to them for basic commodity products made from processed hydrocarbons.

What to expect? The story of ‘energy independence’ will continue to get more cloudy as the global economy becomes more integrated. There is no simple solution!

IEA Natural Gas Homepage

EIA Natural Gas Basics

Comment Thread (1 Response)

  1. Working with the incomplete portion of information I have, I am inclined to think that California will see less natural gas usage than other states in months to come, and more energy from other alternative sources, because of the relatively low supply of natural gas in CA, which would require that gas to be pumped in from TX or wherever, and because of the number of alternative energy companies waiting in the west coast wings for an opportunity to expand their clean energy business. It is interesting that T. Boone Pickens was on The Daily Show with Jon Stewart, and that Jon was so receptive to him, even gushing, because here in San Francisco one of our beloved progressive local rags, The SF Guardian, recommended a NO vote on a recent alternative energy proposition, claiming that it was misleading and would cost taxpayers money to expand Pickens’ booming business rather than cost Pickens and his investors. I have no problem making a rich man richer. Lucky him. But Californians are aware that there are more options available than Pickens’ repeated claims, and local journalists have venues for their discoveries as they continue to follow the money.

    Posted by: Adam Cutsinger   November 20, 2008
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