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Fracking seen as No 2 source of green house gases

http://www.globalfundexchange.com/blog/2013/02/06/fracking-seen-as-no-2-source-of-green-house-gases/

Natural gas and oil production is the second-biggest source of U.S. greenhouse gases, the government said, emboldening environmentalists who say tighter measures are needed to curb the emissions from hydraulic fracturing.

In its second-annual accounting of emissions that cause global warming from stationary sources, the U.S. Environmental Protection Agency for the first time included oil and natural- gas production. Emissions from drilling, including fracking, and leaks from transmission pipes totaled 225 million metric tons of carbon-dioxide equivalents during 2011, second only to power plants, which emitted about 10 times that amount.

Gas and oil production “is an area where we have technological answers to our problems,” Michael Levi, a fellow at the Council on Foreign Relations in New York, said in an interview. “We know how to fix many of these problems; we just need to make the decision to do it.”

The EPA yesterday released on its website details of emissions from about 8,000 factories, power plants and refineries. Two coal-fired power facilities owned by Atlanta- based Southern Co. topped the list, followed by one owned by Energy Future Holdings Corp. of Dallas.

In total, power plants emitted 2,221 million metric tons of carbon dioxide in 2011, down 4.5 percent from 2010, according to the agency. The EPA report showed the benefits of fracking, as it attributed the reduction to cuts in coal use and increased use of gas as fuel by electricity generators. There was also an increased use of power from renewable sources such as solar and wind, the agency said.

Top Emitters
“This report confirms that major carbon reductions from power plants wouldn’t be possible without a reliable and affordable supply of domestically produced natural gas,” Simon Lomax, research director at Energy in Depth, an industry group, said in an e-mail.

The EPA report on oil and gas looked at emissions from basins, or large production areas, not individual wells. Among the top emitters were ConocoPhillips’ operations in the San Juan basin in New Mexico, and Apache Corp.’s operations in the Permian basin in Texas. Both companies are based in Houston.

Proposed Regulations
The EPA has already proposed regulations to curb emissions from new power plants, setting a standard that would preclude the construction of new coal-fired facilities that don’t capture and sink underground the carbon coming from their smokestacks. Once those rules are finished in the coming weeks, the EPA must move to establish similar rules for existing power plants.

Environmental groups have asked the agency to establish standards to prevent methane leakages from the drilling, fracking and transport of oil and gas. The boom in that production in states such as Pennsylvania and North Dakota means that those rules are necessary, according to environmental groups.
Methane’s lifetime in the atmosphere is much shorter than carbon dioxide, but it’s more efficient at trapping radiation, making its short-term impact 20-times greater than carbon dioxide, according to the EPA.

“Reducing fugitive methane emissions is a top priority because they are so powerful” a force for global warming, said Mark Brownstein, managing director of the Environmental Defense Fund in New York. “You want to make sure the goose is laying what approximates golden eggs.”

http://www.epa.gov/ghgreporting/ghgdata/reported/index.html

by Anric

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Posted by on February 6, 2013 in Climate Change, Gas

 

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Sinopec & Total to Invest $4.5 Billion in U.S. Natural Gas

Booming natural gas resources in the United States have attracted significant investment from major foreign energy players in Asia and Europe.

China’s China Petroleum & Chemical Corp (Sinopec) and France’s energy giant Total SA recently announced new investments totaling $4.5 billion to take advantage of as of yet undeveloped shale rock formations in Alabama, Mississippi, Colorado, Ohio and the Michigan Basin.

In its first entrance into the U.S. natural gas industry, Sinopec will partner with Devon Energy Corporation in  a $2.2 billion joint venture to develop five fields.

Total cemented a $2.3 billion agreement with Chesapeake Energy Corporation to develop the Utica gas field in Ohio, which studies indicate is rich in liquids such as butane, propane and ethane as well as natural gas.

At under $3 per million BTUs, U.S. natural gas prices are at their lowest in over two years.  As a result, shale formations with high concentration of liquids, such as the Utica field, are attractive to investors because prices of extracted liquids are linked with crude oil, rather than natural gas.

Additional interest in U.S. natural gas has been seen from Norway’s Statoil ASA and India’s Reliance Industries Ltd., indicating that global energy conglomerates are seeking to add “unconventional” fossil fuel resources to their portfolios and are willing to spend big money to do so.

The explosive growth in North American natural gas resources is one of today’s key energy trends.  For more information, click here to read more of our posts on natural gas.

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Energy & Water – "The Real Blue Chips"

The latest Energy Bulletin from the Post Carbon Institute discusses “Energy and water – the real blue-chips” and important implications for investors:

“The two most important natural resources are water and energy.”

“In most cases, each is required to procure the other.  First, we use water directly through hydroelectric power generation at major dams, indirectly as a coolant for thermoelectric power plants, and as an input for the production of biofuels.”

“By sector, the two largest consumers of water in the United States are agriculture and electrical power plants.  If we count only fresh water, fully 81% of U.S. use is for crop irrigation.”

“For American corn production, an average of 2,100 gallons of irrigation water is required per bushel which yields 2.7 gallons of corn-based ethanol.  This means that 206 gallons of water is needed per gallon of gasoline substitute, ethanol, before refining.”

“Several studies suggest that up to two-thirds of the global population could experience water scarcity by 2050.  The shortages will be driven by the agricultural sector, which is currently responsible for up to 90% of global fresh-water consumption.

“Water shortages could become much more acute if there is widespread adoption of energy-production technologies that require water as a significant input, such as biofuels.”

“If large quantities of water are diverted to energy production because the market dictates this as society’s priority, there would be a significant loss of food production and a decline in human welfare.”

According to data from the Institute, the water requirements for energy production are substantial. Conventional petroleum extraction requires 10-40 liters of water per megawatt hour of energy, oil refining can demand 80-150 liters of water, and enhanced oil recovery can require a staggering 7600 liters of water per megawatt hour.

Coal integrated gasification, closed loop nuclear cooling processes and natural gas combined cycle plants can require upwards of 20,000 liters of water per megawatt hour.  The production of ethanol from irrigated corn can demand between 2 and 8 million liters of water!

Energy and water resources are tightly integrated.  It is impossible to have one without the other.  Water and energy demand is rising, yet reserves are dwindling, resulting in resource stress and an exciting opportunity set for investors.

Read more about investing in water and natural resources

 

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LNG Demand Reaches New Highs in China & Japan

The month of June saw dramatically increased demand for liquefied natural gas (LNG) in both China and Japan.

Japan, still reeling from the Fukushima nuclear crisis, has a serious power deficit as a result of nuclear reactors damaged during the earthquake or taken offline for safety reviews.  Prior to March of this year, nuclear power formerly supplied 30% of all Japanese energy.

Japan was already the world’s leading LNG importer, but since the spring its imports have risen higher.  Current import levels rose 10.6% year on year during June, the third straight month of increases.

LNG has been used as an important fuel substitute for nuclear power.  Industry experts say in the event of total nuclear closure, 20 additional tons of LNG would be tacked on to yearly Japanese demand, which last year reached 70 million tons.

However, Japan may find some resource competition coming from its neighbor China.  Industrial power demands have grown, prompting additional LNG imports.  In June, imports were 4.3% higher than the previous high in December 2010, when the nation imported 1.03 million tons to meet winter heating needs.

PetroChina has opened a new LNG receiving terminal in the eastern province of Jiangsu and expects increase gas imports to help ease power shortages in some provinces.  Tony Regan, analyst for Tri-Zen International remarks “we might be seeing this great leap forward in the [Chinese] gas market.”

Chinese import levels are predicted to rise to 13 million tons in 2011 from 9.3 million in 2010.  By the end of the decade, China will likely surpass South Korea to become the world’s second largest LNG importer.

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Auto Industry Shifting Focus Towards Natural Gas Fuels

The automobile industry is looking beyond conventional gasoline towards a natural gas future.

General Motors, the United States auto giant, has announced plans to develop its first engine to run on liquefied natural gas, joining a group of other smaller companies with their sights set on utilizing the plentiful natural gas resources in the United States.

Although natural gas is widely used in electricity generation, it has not yet broken through to the transportation fuel market.  Currently only 120,000 natural gas vehicles are on the roadways.

However, auto makers expect this will change dramatically as the industry continues to strain under high, and sometimes unpredictable, oil prices.  Conventional gasoline prices spiked due to unrest in the Middle East, with crude prices rising above $110/barrel this year.  The markets have struggled with volatility and political turmoil in key oil producing regions.

In contrast, new natural gas drilling techniques have unearthed vast resources from shale rock in the United States, keeping prices low and relatively steady.  Reuters estimates that when gasoline hit $4 a gallon, drivers who used natural gas as fuel achieved a cost savings of $2 per gallon – a big deal for penny pinched companies and consumers.

The booming U.S. shale gas industry and the rise of hydraulic fracturing or “fracking” drilling practices has decoupled natural gas prices from diesel prices, making natural gas that much more attractive, particfularly to the trucking industry.  Mack Trucks, for example, has noticed a 50-100% rise in natural gas vehicle sales over the past year.

“The big draw is the difference in fuel price, especially with diesel above $4 a gallon,” explained Curtis Dorwart, vocational marketing product manager.  “The movement again toward natural gas is greater than in the late 1990s and this time it looks like it might have legs,” he continued, noting estimate that U.S. gas supply could meet 100 years worth of demand.

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Europe Prepares for New Opportunities in Shale Gas

Unconventional gas resources, such as shale gas, may prove crucial to Europe as it strives to become self-sufficient and reduce dependence on gas imports from Russia and the Middle East.

A recent report from the U.S. Energy Information Administration (EIA) estimates that Europe possesses greater than expected shale gas reserves which if developed have the potential to re-shape the continent’s energy dynamic.  The EIA estimates nearly 624 trillion cubic feet (tcf) of technically recoverable shale gas reserves exist in Europe, particularly in parts of Germany and Poland.

Shale gas resources has peaked the interest of many investors eager to begin drilling operations in Europe.  Some of the world’s largest oil and gas majors have already acquired land and leasing rights, such as Chevron, which will initiate its first drilling well in Poland, and ExxonMobil, which has already completed six shale wells in north-west Germany.

The European Centre for Energy and Resource Security (EUCERS) says, “In theory… Europe’s unconventional gas resources might be able to cover European gas demand for at least another 60 years.”

The highly effective, yet controversial, drilling practice known as hydraulic fracturing or “fracking” presents both an opportunity and an obstacle for the fledgling industry.

Fracking has revolutionized the natural gas industry in the United States, helping to shift the U.S. from a net importer to a net exporter of gas, but has been criticized as unsafe.  Indeed, fears of water contamination from fracking has led France to recently ban the practice.

Greater population density in Europe than the U.S. means that “environmental concerns must be addressed” first and foremost as the industry develops, says EUCERS.

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China Races to Develop Domestic Shale Gas Reserves

China has ambitious plans to develop domestic shale gas resources, says a special report in the Financial Times.

A recent EIA study found China has the world’s largest shale gas resources with an estimated 36.1 trillion cubic meters (tcm) of technically recoverable reserves.

The United States is second, with estimated shale gas reserves at 24.4 tcm.  Advances in drilling technology and rapid deployment has allowed the U.S. industry to grow at a voracious rate over the past few years.

China has been spending billions on foreign sources of energy, including liquefied natural gas, oil and coal resources, to satisfy growing demand.  It lags behind the United States in developing its own shale gas resources, but new activity suggests that may change.

In its 2011-2015 five-year plan, China has identified shale gas as a target for technological breakthroughs.  The National Energy Administration is building a new shale gas research center, and China has strengthened ties with the United States to leverage hydraulic fracturing and horizontal drilling technology that has helped revolutionize the U.S. gas sector in recent years.  China’s Ministry of Land and Resources (MLR) will soon hold its first auction of shale gas blocks, which will cover 18,000 square kilometers across four inland provinces.

Natural gas is a cleaner burning fuel than coal and is therefore becoming increasingly attractive in China, where coal imports have tripled.  The Chinese government has made increased energy efficiency a priority and is under international pressure to reduce its carbon emissions output – further increasing the appeal of natural gas.

China’s largest oil and gas company, China National Petroleum Corporation (CNPC), predicts overall gas production in China will triple to 300 billion cubic meters by 2030 up from 94 bcm in 2010, with unconventional gas sources, primarily shale gas, comprising about a fifth of that total.

Major global firms are bullish on shale gas potential in China.  Royal Dutch Shell, for example, is initiating 17 wells this year as a starting point.  “It’s too early to say that shale gas is a game-changer (in China) but I have great expectations,” said Shell CEO Peter Voser .  “If we are successful, we are aiming to spend $1 billion a year over the next five years on shale gas (in China).

Read our coverage of the EIA shale gas report

 

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