My editorial last Augustintroduced home-grown natural gas opportunities that were discussed at the Steel Business Briefing’s Shale Play Tubulars conference. The conference was again held in Pittsburgh – the heart of the Marcellus gas play – on May 23-24. New material was shared that is important for our readership. A review of other happenings will also be presented.
Generally, there are a number of natural gas plays throughout North America. The Barnett resulted in the recent development of the horizontal drilling and fracking technologies, which have opened new plays for exploration. Marcellus promises to be the largest natural gas reserve in the world. At current usage levels, identified Marcellus reserves would provide the entire U.S. with a supply of over 40 years.
Energy independence should be our ultimate goal, and there is no doubt that shale-gas reserves offer the promise of reducing foreign oil imports. Current natural gas usage is about 31% industrial, 31% power-generation and 38% residential and commercial with only 1% used in transportation. Currently, 23% of our electricity is generated using natural gas. Gas-fired power plants are cheaper to build, and it is anticipated that power generation is the primary natural gas growth area through 2035.
What will motivate natural gas use in the transportation industry? Vehicle conversion to compressed natural gas (CNG) from gasoline is fairly simple. The cost for 1 GGE (gallon of gas equivalent) of natural gas is between $1.25 and $2.25. If you use $2.00 for simplicity, it is half the price of $4.00-per-gallon gasoline. That sounds like a motivator to me.
At the Shale Play Tubulars conference, Congressman Tim Murphy (R-Pa.) also mentioned the NAT GAS Act (H.R. 1380), which encourages the use of natural gas to fuel heavy-duty vehicles. Ultimately, more and more vehicles would convert over to natural gas. Honda is currently building a natural gas version of the Civic – the Civic GX NGV. Using more natural gas for transportation and power generation will help us to reduce our $1 billion-per-day fund transfer to unstable Middle East OPEC countries.
Congressman Murphy, chairman of the Congressional Steel Caucus and the founder of the Natural Gas Caucus, also encouraged the industry to monitor itself. He indicated that the goals should be responsible exploration, safe transmission and expanded use of natural gas. He said that the industry should have zero tolerance for problems within their ranks. He laid out the following recommendations:
- Honesty with ourselves and the public
- Respect the laws – safety and environmental
- Set a higher standard than government regulations
- Hire and train local people
- Inspire the next generation
Pennsylvania’s Secretary of Environmental Protection, Michael Krancer, spoke during lunch on day two of the conference. He believes that natural gas may be the fuel of the 21st century, but it gets in the way of the green agenda. For this reason (and likely others), he cautioned the industry to be responsible stewards of the environment. He also cautioned the industry and the public to challenge some of the things that are put forth. One example is a Duke study on the global-warming impact of gas wells. Duke refuses to divulge its study information, and the folks at Duke say they would like to see shale gas become largely unnecessary. Does it sound like they have their own agenda? Might the study be biased?
Another study published in Proceedings of the National Academy of Sciences has shown higher-than-normal levels of methane in water wells near drilling rigs, but they do not have “baseline” data from the same wells before drilling. The Obama administration has created a seven-member panel of experts to recommend new regulations for fracking within six months. This panel could help make drilling safer, or it could create regulations that make energy independence more difficult. Watch closely and get involved “if/when” government actions are in opposition to the goal of energy independence for our nation.IH