Going for gas: the risky strategy of the world’s largest companies

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Closing ceremony World Gas Conference

Closing ceremony World Gas Conference

They are the biggest companies in the world and they are making a huge bet: they are staking their – and our – future on natural gas. At the World Gas Conference in Paris, the major oil companies all avowed their belief that gas will be the world’s “fuel of choice”, because it is “the cleanest fossil fuel”, “abundant” and “competitive”. But Karel Beckman argues they are overstating the case for gas. And may even be betting on the wrong horse. 

“The question before us today defines our industry and perhaps our society in the 21st Century.” The “question” that Robert Franklin, President of Exxon Mobil’s Gas and Power Marketing Company, was referring to, during a panel debate at the World Gas Conference in Paris (1-5 June), was that of “how to meet the world’s energy demand while reducing the risk of climate change”. The answer to both sides of this question, he said, increasingly was: natural gas.

Franklin was not alone. At the 26th edition of their triennial global gathering, the gas industry made it abundantly clear that they believe gas is the foremost solution to the world’s energy problems. One CEO after the other sang the praises of what Gazprom lovingly calls the “blue fuel”.

Energy trilemma

Natural gas, so the industry contends, meets all three of the great challenges of the “energy trilemma”: it is (relatively) good for the environment, good for “energy security”, and good for the economy. “If you look at each of the three legs of the energy trilemma, you see natural gas solutions emerging”, said Dick Benschop, Shell’s Vice President of Gas Market Development, in a typical statement.

Gas, echoed Robert Franklin, “is the only energy source that significantly reduces emissions while also being abundant, versatile, trusted, affordable and rapidly deployable on a large scale.”

Similar claims were repeated incessantly in Paris. Peter Coleman, CEO of Australian oil and gas producer Woodside, said it had been a mistake of the industry to bill gas as a “transition fuel”. That was “a politically motivated phrase”, he said, which has become obsolete: gas should be seen as permanent part of the energy mix.

French giants Total and Engie (formerly GDF Suez) issued “a call to arms against coal”

One might dismiss this propaganda for gas as a typical case of an industry singing its own praises. But there is a lot at stake here. The fact is, the largest companies in the world, that take up most of the top spots in the Fortune 500 list, have made a strategic decision to go all-out for gas. It is a decision with huge ramifications for the world economy and the world’s environment.

The world’s oil companies have been shifting their emphasis from oil to gas for some time of course, but in Paris they definitely put their cards on the table. BP’s CEO Bob Dudley, for example, noted that the share of gas is expected to grow to 60% of his company’s total output over the next decade, compared to around half now. Shell is following the same course, underlined by its recent acquisition of BG Group.

ExxonMobil’s CEO Rex Tillerson noted in Paris that he expects gas to overtake coal as the second most “prolific” fuel source by 2025 and to surpass oil by 2040. He anticipates gas demand to grow by “approximately 300%” over this period. Chevron’s CEO John S Watson sounded a more cautious note, saying that “natural gas as part of Chevron’s portfolio is growing significantly”, but also voicing some doubts as to where the gas would come from.

Business model

The reasons for this seismic shift are not difficult to deduce. The energy companies see climate policy tightening its noose and they believe the use of gas is compatible with stricter greenhouse gas emission standards. In addition, the US shale gas revolution has created a large new resource of “domestic” gas for them. By converting US shale gas into LNG and exporting it, while at the same exploring for shale gas opportunities in other parts of the world, they believe they will be able to create a global gas trading market in which they will be the dominant players.

This is no small matter: at the tune of $120 billion LNG is already set to become the second biggest commodity market in the world this year, behind oil but surpassing steel.

An additional advantage of gas is that it doesn’t require the “oil” companies to adopt a new business model. On the contrary, the gas business is even more capital-intensive and complex than the oil business, which is exactly where the big oil companies see their unique skill sets.

“US LNG exports will be good for the climate”

The oil companies’ public pronouncements on energy and climate policy have to be viewed in the light of this new strategy. Not without reason did Europe’s top oil companies recently issue a plea for carbon pricing: higher carbon prices will enhance the competitive position of gas versus coal.

Indeed, in Paris the oil companies declared outright war against their fossil fuel brothers in the coal sector. The conference’s official newspaper reported that French giants Total and Engie (formerly GDF Suez) issued “a call to arms against coal”, while Peter Coleman of Woodside “pulled no punches as he launched an attack on coal”.

At the same time, the companies are strongly lobbying in favour of shale gas. For example, Tillerson of ExxonMobil called Europe to task over its resistance to fracking. He said “Europe could see a natural gas renaissance similar to North America’s” if it allowed fracking .

For companies like ExxonMobil and Shell shale gas exploration outside of the US, where they are not hindered by the competition of hundreds of small, low-cost producers, represents an important opportunity, both to grow their production and their resource base, and to be able to create the competitive global gas market which is an essential element in their scheme of things.


So we may ask how do the companies’ claims about the virtues of gas stack up? Unfortunately at the World Gas Conference itself, no outsiders had been invited to provide critical notes or engage the industry leaders in serious debate. The CEO’s gave their speeches and left.

Lesser company representatives debated the question largely among themselves. At one plenary session, called “Political leaders, industry, industries and NGO’s: geopolitical debate”, there were no political leaders and no NGO’s. Five of the six panel members were from the gas industry (ENI, Gazprom, ExxonMobil, Gasterra and Shell). The only “outsider” was a representative from the US Department of State.

This was unfortunate, in view of the importance of the issue. It also caused some grumbling among attendants. One CEO of a gas company called the conference a “missed opportunity”.

We are left to our own devices, then, to analyse the merits of the industry’s case for gas. Let’s look at some of the main arguments.

Perhaps the most straightforward – and most frequently cited – argument in favour of gas is that it leads to lower CO2 emissions – that is, compared to coal in power generation (and oil in transport). “Gas releases up to 60% less CO2-emissions than coal”, said Franklin of ExxonMobil. Patrick Pouyanné, CEO of Total, said in Paris that the use of coal causes twice the carbon dioxide emissions of gas.

During 2012-14, the consumption of coal in the US actually increased and natural gas decreased within the power sector

For this reason, the gas industry contends that “fuel switching” is the most cost-effective step the world can take to reduce emissions. As Franklin put it: “Fuel switching can make meaningful reductions quickly without affecting economic growth.”

The US shale gas revolution is often referred to in this context as a great benefactor of the climate. Franklin claimed that thanks to the shale gas revolution “energy-related CO2-emissions have fallen more in the US than in any other country” and are “at their lowest since 1994”.  He even cited a report from Carnegie Mellon University saying that US “LNG exports will be good for the climate”.

The famous Daniel Yergin, Pullitzer Prize-winning author, founder of consultancy IHS CERA, also proclaimed his allegiance to shale gas, saying that US CO2-emissions are “at their lowest since the early 1990s”, thanks to shale.

Alexander Medvedev, Deputy Chairman of Gazprom (CEO Alexei Miller was notably absent in Paris) similarly jumped on the climate bandwagon. “It may surprise you”, he said, “but I will start my presentation speaking about ecology and the environment”. And he went on to say that for fifty years Gazprom had benefited the climate by delivering to Europe “the most friendly fossil fuel”. If, he said, Europe had used coal instead of the 4.2 trillion cubic meters (tcm) of Russian gas supplied by Gazprom, CO2-emissions would have been 1.7 billion tons higher.

Of course neither the US shale gas producers nor Gazprom ever gave a moment of thought to “ecology” or the climate when they developed their business, but we will let that pass. What counts is the result. But is the result as great as the gas champions would like to have us believe? Hardly.

Logical fallacy

The first thing to note about the gas-for-climate argument is that it is an argument for fuel switching only, not for the use of gas as such. In other words, the use of gas only leads to lower emissions if it replaces coal or oil. As Laszlo Varro, lead author of the latest IEA medium-term gas market report said in Paris: “If shale gas replaces nuclear and renewable energy, it does not benefit the climate.”

“Europe has energy security only with Russia. Diversification is fine, but only if Russia is part of it”

A recent study from the New Climate Economy initiative shows that gas benefits the climate only “if a series of tough conditions are met”. As Simon Evans of the Carbon Brief writes, according to this report: “A 10% increase in global gas supplies could prevent 500 gigawatts (GW) of new coal capacity being added by 2035, avoiding 1.3 billion tons of annual carbon dioxide (CO2) emissions. But (…) any theoretical benefits could easily be wiped out without controls on methane leakage, limits on total energy use and targets to ensure low-carbon energy sources are not displaced.”

The problem is it’s not clear at all if and when gas replaces coal. True, gas can be a complement to renewables, if it is used as a source of back-up power. But it can also compete with renewables, as Woodside’s CEO Coleman noted.

Franklin claimed the growth of shale gas production in the US did “not come at the expense of renewables”, since “renewables have also shown considerable growth”, but this is an obvious logical fallacy. There is no telling how much renewables would have grown if there had been no shale gas. Just consider that the US has still only about half the solar PV capacity of Germany, in absolute terms.

Coal exports

In addition, what shale gas advocates routinely fail to mention is that the US shale revolution helped drive down prices of coal. Although it is difficult to prove cause and effect, the fact is that US coal exports rose steadily until 2012, including to Europe, although they declined again in 2013 and 2014.

As to CO2-emissions in the US, these too represent a complex picture. First of all, it is not true that they are “at their lowest level since the early 1990s” and it is certainly not possible to prove that shale gas has been the major factor in any emission reduction. US CO2 emissions rose till about 2008, when the financial crisis hit, and then went into a decline, as a result of this crisis. Since 2012, they have been rising again. Last year, they stood at 5.4 billion tons, compared to 5 billion tons in 1991.

What will happen to oil and gas prices if the Middle East is further destabilized and, say, countries like Qatar and Saudi Arabia are thrown into disarray?

According to this remarkable article by US energy consultant John Miller, one of the reasons why US carbon emissions are no longer going down, is that “despite the increase of cheaper, lower-carbon natural gas production during 2012-14, the consumption of coal [in the US] actually increased and natural gas decreased within the power sector.” The US did use more natural gas, writes Miller, but that went to industry and domestic heating.

And all this applies only to CO2 emissions. Gas also notoriously releases methane, a much powerful greenhouse gas than CO2 (34 times more powerful over the span of 100 years). There is still much debate going on about how much methane is released in gas exploration and production. The US Environmental Protection Agency (EPA) reports that methane emissions from the gas sector are declining, but others strongly dispute this claim. As to what is going on outside of the US, I’m sure I don’t know.

For all these reasons Harvard historian Naomi Oreskes concludes in a recent article that there is no evidence that higher gas use has led to lower emissions and there is every reason expect that the dash for gas will “simply increase the total amount of fossil fuel available in the world to burn, accelerating what is already beginning to look like a rush towards disaster”.

Economic basket case

Shale gas, which is as we have seen a key element in our energy future as the oil companies view it, is invariably presented by its supporters as a resounding economic success story. Franklin of ExxonMobil said: “Look at the US: GDP has grown 20% of the past five years, manufacturing has rebounded, employment is down to 5.5%.” How did the US economy manage to go up while emissions went down, he asked? “The major fact has been the growth of shale gas.”

Franklin said “fracking is the technology of the future, certainly from the point of view of the US, or Argentina, or China”. Only Europe remained blind to its blessings, he suggested.

Now I don’t want diverge into a macro-economic debate, since this is an energy publication, but it is clearly preposterous to compare US GDP and unemployment figures to “European” figures and ascribe the difference to the influence of shale gas. The US, with its very limited welfare schemes and very little employment protection, has a totally different economic system from ”Europe”. The high unemployment and stagnation in parts of Southern and Eastern Europe have many causes, but lack of shale gas is not one of them.

Besides, there is no such thing as a “European” economy.  It would be more reasonable to compare the US to a country like Germany, which is after all the European leader in renewable energy and does not have any oil or gas production to speak of. Yet Germany is hardly an economic basket case. It actually has an unemployment rate of less than 5%, lower than the US. It also has longer holidays.

“In a world of very cheap coal and falling costs for renewables it is difficult for gas to compete”

France performs worse economically, but to suggest that allowing fracking in France would solve its economic problems, is hardly credible. The problem of French industry is not high energy prices.

It seems equally demagogic to pretend, as Tillerson did, that the US shale revolution can easily be replicated in Europe. Tillerson said that the European continent holds more than 1600 tcf (44.8 tcm) of natural gas resources, citing the International Energy Agency (IEA), but this is highly misleading, as it refers to resources most of which cannot under any circumstances be produced.

He also boasted that “our industry” has “hydraulically fractured more than 2 million wells in the US and Canada” and “done so safely”. But this is of course exactly the problem that densely populated countries like Germany and France have: they don’t want millions of wells to be drilled on their land, whether “safely” or not. Yes, if the choice were between abject poverty and a million gas wells, they might go for the wells. But that’s a false choice.

Whether fracking is the “technology of the future”, as Franklin said, also remains to be seen. In China, fracking has so far not been very successful, reports the IEA. Argentina, the other potential new great shale player, has yet to produce its first shale gas in commercial quantities, according to the US Energy Information Administration.

None of this is to suggest that there can be no case for the production of shale gas in certain places under certain circumstances. But to claim that shale presents some kind of unique solution to our energy challenges is something else again.

Only with Russia

A crucial argument for gas relates to the combination of energy security and competitiveness that it is supposed to offer. Shell has long emphasized that gas is “abundant” and “affordable” (in addition to being “acceptable”). Benschop of Shell said in Paris that gas “allows for diversification of supply”. Bob Dudley, CEO of BP, noted that “sources of supply are opening up all around the world, namely shale gas, tight gas and deep-water gas, that will help meet increasing demand for clean energy.”

Yet these claims again seem overstated. Gas may be “abundant”, but conventional resources are heavily concentrated. Russia, Iran, Qatar and Turkmenistan hold 60% of global proved gas reserves. There are no other major gas resource owners in the world, apart perhaps from the US. Certainly supplies of gas are less diversified than of coal or oil.

This could change if unconventional gas resources are developed successfully, as Dudley suggests, elsewhere in the world. But this is not yet the case and there is no guarantee it will happen.

66% of the black carbon in the Arctic is due to flaring of gas

True, LNG exports from the US will increase diversification of supply somewhat, as gas industry advocates are endlessly telling us, but only to a limited extent. Robin Dunnigan, Deputy Assistant Secretary at the Energy Diplomacy section of the US Department of State, noted that new LNG supplies to Europe would only partly reduce the continent’s dependence on Russia and Norway. “Europe is going to benefit for a long time from Norwegian and Russian gas”, she said, “and it should”.

Mario Mehren, the new CEO of German gas and oil producer Wintershall, went one step further. Noting that the demand-supply gap in the European gas market will be “widening”, with domestic supply declining and demand recovering, he stressed that “Europe has energy security only with Russia. Diversification is fine, but only if Russia is part of it.”

Growing dependence on Russia is precisely one of the reasons why a country like Germany is expanding into renewables or why a country like Poland relies so heavily on coal. One of the great advantages of solar and wind power is of course that they do not depend on limited natural resources. They are truly “abundant”.

What is more, unlike gas and oil, renewable energy is not exposed to the serious risk of price volatility. What will happen to oil and gas prices if the Middle East is further destabilized and, say, countries like Qatar and Saudi Arabia are thrown into disarray?

It should also be noted that the two largest countries on earth, in terms of population, China and India, have no intention to rely on gas to any significant extent. As a new eye-opening report from the IEA notes, China does to some extent encourage coal-to-gas switching, but currently relies on gas for less than 4% of its power generation. The IEA bluntly states that “gas will not become the fuel of choice in China’s power sector”.

The same applies to India. Both countries are pursuing a combination of coal-fired power, nuclear and renewables, to solve their energy challenges and limit CO2 emissions to some extent.

The IEA report also notes, more generally, that gas is not really so “affordable” as its advocates are making out. “In a world of very cheap coal and falling costs for renewables”, says the IEA, “it is difficult for gas to compete.” But the “renewables revolution” taking place in the world, with costs for solar power plummeting, and even countries like Saudi Arabia seemingly willing to commit huge resources to solar power, was barely mentioned in Paris. The oil companies simply keep repeating the mantra that “the world’s energy demand cannot be met by renewables alone”. That may be true, but for how long?


All in all, the gas industry’s claims about the benefits gas will bring to the world seem considerably overstated. They rely on a number of unproven assumptions. For one thing it remains to be seen whether unconventional gas can be developed outside of North America to the extent necessary to create a globalized commodity market that would afford countries the security of supply and affordability they require. For another there are serious questions about its alleged climate friendliness.

This does not mean that gas has nothing going for it. It could yet become the world’s fuel of choice, although this would seem to depend strongly on technological progress in unconventional exploration and production, and even more on carbon policies that would favour fuel switching in the power generation and transport markets.

But to put all one’s cards on gas, as the world’s oil companies seem to be doing, seems a risky bet. If I were an investor in Shell or ExxonMobil, I would feel much better if I saw them hedging their bets.

New initiative to reduce flaring

Gas flaring presents yet another ecological burden to the world, although, to be fair to the gas sector, this is mostly a practice that occurs during oil rather than gas production.

At the World Gas Conference, the World Bank presented a new initiative to reduce global gas flaring effectively to  zero by 2030. According to the latest satellite data, from 2011, 140 bcm of gas is flared every year, twice as much as the entire gas consumption of the UK. The World Bank will soon come with updated figures; a spokesman told Energy Post that he expects that flaring has increased rather than decreased over the past few years.

Flaring has negative impacts both on the environment and on the climate. It causes the emission of the pollutant black carbon. International energy consultancy DNV GL, which in Paris presented an integrated approach for companies to reduce flaring, notes that 66% of the black carbon in the Arctic is due to flaring of gas. Flared gas also contributes to global warming by the release of methane (this is because not all flared gas is combusted).

The World Bank’s initiative to stop flaring by 2030 has been endorsed by 10 countries, including Russia, and 10 oil companies, including Shell, Total and Statoil. These together represent 41% of the gas that’s flared in the world, said the World Bank. Neither the US as a country nor any US oil company has yet signed up to the initiative.


  1. says

    The article does not consider that offshore drilling SOLELY for natural gas has a number of advantages over combined oil/gas or solely oil drilling. First, the issues such as the Exxon Valdez and Deepwater Gulf oil spills should not happen if appropriate safety is used to avoid seepage. Second, methane seeping into sea water may reduce the amount of total methane risk from land based seepage. Third, LNG can be directly loaded onto ships for transport anywhere – it is scary that Europe may be even more dependent on Russia for gas. Fourth, there are locations where gas drilling would be more acceptable than oil, such as on the North Slope of Alaska or off the East Coast of the US. Fifth, if flaring is eliminated, and fracking is strictly regulated, then the risk of methane release and water pollution can go down.

    The built-in bias of the “oil” industry seems to be changing. There are probably still a lot of “good old boys” who are only interested in oil, but this seems to have changed at the CEO level. Government policies should recognize this. It is unfortunate that Governor Cuomo in NY refused to consider an experimental fracking program in a small area just over the border from PA. For both the petroleum industry and some environmentalists there seems to be no middle ground. Fracking can use guar gum instead of benzene and recycle clean water, it only takes the political will to change government policies that favor coal and oil. Nuclear can not economically fill the gap, and while solar, wind, geothermal and hydro are better long term solutions from a climate change perspective, it will still take some time. Maybe someday there will be a safe and non-polluting way to use coal and oil; we should wait until then to use these resources. Gas is an interim choice.

  2. Karel Beckman says

    I was informed by a reader that coal production and use is also accompanied by (high) methane emissions. So in this regard there is no advantage for coal over gas.

  3. Karel Beckman says

    Another note from me. After I published this story, I came across this article on The Carbon Brief: “Climate showdown: Has the US, UK or Germany done more to cut emissions?”, published on 10 April 2015. (http://www.carbonbrief.org/blog/2015/04/climate-showdown-has-the-us-uk-or-germany-done-more-to-cut-emissions/) To my surprise, this article shows that the US loses hands down when it comes to cutting carbon emissions, compared to the UK and Germany, whichever way you look at the figures, both in the short term and over the long term. Thus, the claim made by Robert Franklin of ExxonMobil (“energy-related CO2-emissions have fallen more in the US than in any other country”) appears to be patently untrue. The Carbon Brief article also confirms, as I note in my piece, that the claim made by Daniel Yergin, that US CO2-emissions are “at their lowest since the early 1990s”, is false.

  4. says

    Very good, comprehensive article. A couple of comments. The lack of any viable Carbon Capture and Storage or CCS projects in Europe or North America really calls into question how long this so-called natural gas bridge can last. Switching from coal (and gas) to renewables and efficiency seems less of detour and actually guarantees lower emissions. Secondly, most gas in Europe (40%) and North America (32%) is actually used for heating. With more efficient houses, renewable heating, efficient district heating, heat pumps, etc, and limited population growth, that sector will most certainly shrink. My last comment: Using gas turbines as a back-up for renewables will not require huge volumes of gas. The push by Big Oil and Gas for strong carbon price wants to replace coal with gas for baseload purposes. However, without CCS, this cannot last eternally, if we want to meet our climate objectives. Moreover, gas is far from the only ‘natural’ partner to deal with renewables: smart meters for demand response, dispatchable renewables, efficient LED lights, energy storage (think Tesla Powerwall, electric vehicles), biogas, etc. Big Oil and Gas thinks it has all the answers. It should think again.

  5. says

    The article talks a great deal about gas (well it is err… about gas) but not much about its uses & possible substitutes. Had a good meeting in London on Wednesday on the subject of a substitute. Trust me on this, at least in the heating space (Northern Europe) the news is very very bad for gas. Ditto for A/C (= USA – summer and all those peaking plants to mete a/c driven elec demand). My forecast is that In 10 years time 85% of the Euro market for gas and oil heating, will be gone. Feel free to pass this on.

    • says

      @Mike Parr: Could you give more details how this 85% drop in gas consumption in the heating sector will happen? How will the EU go from 185bcm/y of gas consumption in the heating sector to about 25bcm in 2025? Just playing devil’s advocate here … it seems that the non-gas heating sector is less optimistic than you on this. Any sources that you can refer to?

  6. says

    Karel, you make the mistake that the industry propose themselves as the sol solution. The absolutist approach is that of some European renewables supporters, not of the pragmatic approach shared by the gas industry, several U.S. Green organisations and the IEA among others.

    The future as we see in the U.S and China is for an approach that includes efficiency and renewables enabled, and even accelerated by natural gas. I personally don’t see gas as the solution forty years from now, but if we reject it today, we keep coal.
    Mr Varro also points out that cheap oil means lower indexed gas, enough so to make gas competitive in SE Asia and India against new coal.
    Texas produced over 30% of power from wind this past winter. More wind and solar capacity was added than any other fuel. Overall energy use went down, as GdP went up. All in a price environment at 40 per cent of EU wholesale gas.
    Gas, renewables and efficiency are the recipe for actually cutting CO2. They aren’t a menu, otherwise as in Germany and the Netherlands, new coal plants open.
    EU environmentalists should not feel threatened by gas. It makes sense to use our gas and use the tax revenue to enable green initiatives. Imported gas is exported future subsidies for renewables and efficiency. I’m surprised greens can’t see that.
    Only five years back, peak oil and gas was used to promise that renewables would be competitive and secure compared to expensive gas. Was that because greens couldn’t sell carbon reduction on climate and moral grounds alone? They should try harder. And use gas today, otherwise the future is black. Or brown in the case of German lignite

  7. Claude Mandil says

    Dear Karel, I usually love your papers. This one less than usual. I can agree with you that some arguments are stupid, that does not mean that the basic facts should be forgotten. And the basic facts are 1) switching from coal to gas is today one of the cheapest ways to reduce GHG emissions, 2) in a number of countries coal use is so huge that everything will be necessary to reduce this share: renewables, nuclear AND gas 3) Shale gas changes dramatically the scene even if the US case is not replicated elsewhere, just because the US does not need to import LNG anymore, which makes the stuff abundant for other consumers worldwide 4) Gas supply security in Europe does not mean that Europe should avoid importing gas from Russia, Iran or Qatar, it means that it could decide at short notice to stop importing gas from one of these countries because of a political crisis, even at a higher price. LNG and gas storage are an adequate answer. So, in a nutshell, congratulations for those Big Oil CEOs who have–at last– made a plea for a high carbon penalty. It may be in their interest, maybe not, but it is definitively in the interest of our world.

    • says

      Agree with Claude Mandil that there has got to be a middle ground. As noted in my previous comment, FRACKING can be environmentally acceptable if the materials used are green and the water is recycled and comes from sources not used for agriculture or consumption. An example would be to use filtered NYC wastewater to frack wells in the Hudson Valley (if there is shale gas).

      Have tried to find in the media what is happening with the proposal to grow guar beans for fracking in Oklahoma. The use of guar gum for fracking went down when the price jumped from $1 per pound to $12. For those who do not know, much of the ice cream in the US uses guar gum for the precise reason it is used in fracking – its is one of the strongest emulsifiers that exists. This is one part of the solution, which will require flexibility and creativity to balance natural gas with other options.

  8. says

    Karel, a very comprehensive and persuasive article. One point I would add: increased production of gas via hydraulic fracturing (the first word in this combination is often ignored, but critical) will require increased amounts of water, and that will become harder to come by as climate change advances. Indeed, the opposition to hydro-fracking in such locales as Romania, Argentina, South Africa and China is in large part driven by farmers’ fears that already precarious supplies of water will be further threatened by oil and gas drilling. The IEA wrote about this problem, in the World Energy Outlook for 2013, but it has not received the attention it deserves.

    Indeed, the World Resources Institute, in a report entitled “Global Shale Gas Development: Water Availability & Business Risks” (Sept. 2014), noted that: “38 percent of shale resources are in areas that are either arid or under high to extremely high levels of water stress; 19 percent are in areas of high or extremely high seasonal variability; and 15 percent are in locations exposed to high or extremely high drought severity. Furthermore, 386 million people live on the land over these shale plays, and in 40 percent of the shale plays, irrigated agriculture is the largest water user. Thus drilling and hydraulic fracturing often compete with other demands for freshwater, which can result in conflicts with other water users.”

    Under these circumstances, I find it highly unlikely that the oil and gas companies will be able to develop all the shale gas resources they consider exploitable, especially as the planet warms and water becomes more scarce.

    • says

      Water and shale isn’t an issue. It was in 2010 and was disproved. There are multiple studies pointing out the total use is less than 0.5% of local use. Water is a precious. So let’s deal with the 25% lost in leakage from UK water systems for example.
      BTW almost 100% of water in Pennsylvania, which is has about as big a water “shortage” as Ireland (where 50% is lost in leaks), is recycled. Water use and transport is one of the biggest costs to shale operators, providing the incentive to use less.

  9. Gerben Wulff says

    Gas use for heating is going down. For electricity gas is too exoensve (valuable). But there are other markets. The automotive market is growing rapidly. CNG has been around for a while and is growing although faster in some countries than others. LNG is going to be the new standard fuel for trucks in Europe. Diesel is going out. This is a major transition and companies like Shell are going to fight over this huge market.


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