The Effect Of Unconventional Gas Expansion On Energy Economy

Natural gases are the most important source of energy in the modern world of technology and electricity production, which makes the skyrocketing gas production in the U.S. due to hydraulic fracturing incredibly valuable in terms of global trade and economy. The United States has always been reliant on the Middle East and other European and Asian countries for energy, but is very quickly becoming energy independent. "By 2020, the Energy Information Administration predicts that the USA will become a net exporter of natural gas", reaching energy independence from other countries and starting to export gas to provide revenue and pay off debts (Hassett and Mathur). Even

The Industrial Revolution created a society and energy consumption based on coal. However, in a more traditional society, natural gas has been obtained through oil drilling. While

3. Liss, William. "Demand Outlook: A Golden Age of Natural Gas." Chemical Engineering Progress 108.8 (2012): 35-40. ProQuest.Web. Available at: <http://search.proquest.com/docview/1034899165?pq-origsite=summon>. Date accessed: 1 Nov. 2014.

In 2000, there were approximately 276,000 natural gas wells in the United States (Lallanilla). By 2010, that number had almost doubled to 510,000, according to the U.S. Department of Energy (Lallanilla). Each year 13,000 new wells are drilled and according to a study done in 2014, at least 15.3 million Americans have lived within a mile of a fracking well that has been drilled since 2000 (Lallanilla). This boom in the industry within the United States was prompted by the development of horizontal drilling which combined with fracking unlocked many new oil and gas deposits. Coupled with concerns over energy security and the costs associated with imported oil and other fossil fuels. According to the U.S. Energy Information Administration it estimates that as of January 1, 2013 there was approximately 2,276 trillion cubic feet of recoverable dry natural gas in the United States (“US…”). At the rate of U.S. dry natural gas consumption in 2013 of about 27 Trillion cubic feet per year, the United States has enough natural gas to last about 84 years (“US…”). The general thinking about the industry is that with these natural gas deposits within the U.S. the country can use this fuel to ease its reliance on foreign energy supplies. In addition, provide a cleaner burning source of energy compared to coal and oil, buying the nation time and acting as a reliable bridge to future

In the U.S., the advanced hydraulic fracturing and horizontal drilling lead to a revolution of natural gas and oil, brining about the dynamic job opportunities and economic growth which affects other industries apart from natural gas and oil field. As a superpower of energy, the United States can make good use of its rich resources with the correct policies and build a bright future for Americans and reduce energy-caused risks globally (Mark Green, 2014).

Natural gas is a pillar in Canada’s energy resources landscape. Industry reports (IBISWorld) indicate that the oil and gas industries (e.g., gas extraction, gas field services, natural gas distribution) in Canada are expected to generate revenues of over $56.4bn in 2015. The Canadian Energy Research Institute projects Western Canada’s natural gas sector to add $2.3tn to Canada’s GDP between 2015 and 2035. While, sales are projected to generate $1.4tn in sales and $400bn in taxes, as well as attract over $450bn in capital investments over the next 20 years. Currently, it is estimated that shale gas contributes to 15% of Canada’s natural gas production and is growing. The National Energy Board estimates this to be 28% by 2035.

With having 400,000 natural gas wells across the United States this creates thousands of jobs for people. In 1980 fracking companies supported 267,000 employees according to the Federal Reserve Bank of St. Louis (Hassett, Kevin A.) In 2011 alone the United States produced 850,983 cubic feet of natural gas from shale gas wells (The Numbers.) Per thousand cubic feet of natural gas costs about 4.24 dollars, this comes out to a profit around 36 billion dollars (Hassett, Kevin A.) Not only does it have large profits but it has a huge direct effect on trade balance with the US and other countries. Between 2007 and 2011 natural gas imports decreased by 25 percent, with this four year decrease Energy Information Administration predicts that the USA will become a net exporter of natural gas by 2020 (Hassett, Kevin A.) Though “The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,” says a spokesperson from IHS Drilling Data, an energy research company (The Numbers.) Shocking news that the economics just do not work with the gas companies many are finding out that it’s not as cheap to extract from the shale as the they intended it to be (Hunt, Spencer.) According to hundreds of industry emails and internal documents, and an

Oil and gas have been the world’s commercial energy sources in recent century and it still remain this important role in the 21st century. As industrial productions have grown by approximately 50 times during the 20th century, this led to tremendous increasing of the energy consumption. Presently, oil and gas account for almost 40 per cent of the world energy sources because they are unique commodities and easy to transport in many areas with low costs. The advances of technologies make petroleum become cleaner, safer and more efficient energy. Consequently, oil and gas could meet more strictly environmental regulations and comply with the widely demands of sustainable development. However, petroleum is a scarce resource and the demands of energy consumption will be increased. Humans try to improve recovery rates by enhancing technology and developing infrastructure for better accessibility. Presently, the volatility and high prices of oil market have been a significant cause for concerning among many countries. Even the increasing price trend in recent year, the market has still remained

In the last decade, oil and natural gas development have rapidly expanded in the United States, fundamentally reshaping domestic energy production. It is abundant both within the United States and around the world. Currently, natural gas provides 22% of the U. S. energy demands. It also

For the purpose of this report, the commodity selected is natural gas will be discussed but focus will be on shale gas. The time period for analysing the factors affecting demand and supply of the shale gas will be from the 1990’s to date.

The IEA expects global demand for natural gas to hit 4.75 trillion cubic meters by 2035. If we keep using natural gas how we do, we will have

Most of the natural gas transportation in the USA is done through 305,000 miles of transmission pipelines. Existing LNG degasification facilities allow for limited international trade of LNG (Table 2). Due to free market pricing when natural gas cost less in summer period, gas-storing facilities are widespread over the country including more than 400 underground storages and 113 LNG peaking facilities (EIA, 2008).

(McRae and Ruppel, 2011) However, recent assessments peg China’s recoverable tight-gas reserves at over 1,200TCF. Due to uniquely challenging reservoir lithology, (Faulkner, 2012) China will require assistance from Independent producers as their E&P technology lags by world standard. (Faulkner, 2012) Even with Shell allocating USD1B per year to Chinese shale gas exploration (Hamilton, 2012), it may take a decade until Chinese shale gas flows to market. Therefore, it’s reasonable to expect Asia will continue importing roughly 40% of its gas (roughly half is from in-region) and may become increasingly dependent on supplies from Central Asia (Kazakhstan), the Middle East and Western Africa. (Mitchell, 2012)

In recent years, the globalization of natural gas market is largely based on past patterns of intercontinental shipping basin (i.e. Atlantic and Asia Pacific Basins) or the major regions for natural gas trades (i.e. North America, Europe and Asia).

World oil demand is increasing as emerging economies need more energy to increase their living standards. Estimates, shown below, are that by 2030, China and India as emerging markets will import over 70% to 90% of their fossil fuel needs (1) . Coupled to a continued high and growing demand for oil, makes this a robust market for the next 30 years.