The Joy of Natural Gas, It's Here Aplenty

By: OilPrice.com | Tue, May 17, 2011
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Tired of high gasoline pump prices? Wondering why, with our fearsome energy hunger, all the energy seems to be in the Middle East?

That was yesterday's story.

Almost overnight -- well, in a few short years -- the energy picture has been changing in the US. We are not energy beggars anymore. We have energy bounty -- and that does not include the energy from wind and sun, or the controversial energy from the atom.

Now we have plenty of the most versatile of the hydrocarbons -- more versatile than coal, and oil. It is natural gas; and it is going to change the face of America remarkably quickly, whether it is used to make electricity for electric cars or is burned directly in cars.

Natural gas is the new oil, maybe the new gold, and certainly the most exciting energy development in a long time.

Indeed, it is a Cinderella story: a hopeless orphan who is now the belle of the ball.

Originally, natural gas was found in conjunction with oil and was regarded as something of a nuisance. It was mostly cursed and "flared" or burned at the well; and it is still flared when there is no way of moving it to market, either in a pipe or as a liquid. Cities favored a low-grade gas made from coal for lamps and heating because coal could be transported by rail.

But natural gas turned out to be a wonderful feedstock for fertilizers and many other manufactures and chemicals. It also demonstrated its superiority over coal gas for heating and cooking, and a network of pipelines spread across the nation.

Even as the usefulness of natural gas spread, so did the political desire to control it. The Federal Power Commission, the predecessor of today's Federal Energy Regulatory Commission, issued what became known infamously as the Permian Basin decision. It said that natural gas in interstate commerce had to have the price regulated by the federal government.

The result was two classes of gas, interstate and intrastate. It was a disaster, coming as the demand for gas was rising.

Then came the 1973 Arab Oil Embargo, which meant that gas was wanted for things oil had been used for up until then. Growing gas demand coincided with severe shortage not only in the pipelines, but also in proven reserves in the ground -- low regulated prices had cut into exploration. The outlook for gas was bleak.

By 1977, the Carter administration had declared natural gas a "depleted resource."

There was panic. Newspapers listed all the good things we got from natural gas.

Congress decided it was too useful to be burned, and it passed the Fuel Use Act.

Henceforth, gas was to he husbanded. Pilot lights on domestic cooking stoves were banned, as were all decorative uses of flames. Even the eternal flame at Arlington National Cemetery was nearly extinguished.

In 1987 natural gas was deregulated, and the companies started exploring and drilling again. The gas shortage transformed itself into a "gas bubble." When I told a meeting of Wall Street analysts in the early-1980s that natural gas would again be used for electric generation they were disbelieving. As I left the building, one analyst said to another, "Very droll, but he doesn't know what he's talking about."

But it did happen, and in a big way; not only was more natural gas being sought, but technology was set to change the amount of gas available and the way it could be used.

The first technological advance was a very efficient, gas-burning machine for utilities, the aeroderivative turbine. Then came horizontal drilling, which allows a single gas or oil well to stretch out tentacles for miles in every direction. This drilling technology opened up old gas and oil fields for further exploitation and made new ones very profitable.

The final jewel in the natural gas crown was the ability of drillers to start breaking up rocks in the shale band -- between 6,000 and 9,000 feet below the surface -- in areas that were not before thought to contain gas. The first, and largest field thus developed, is the Marcellus field which extends through Pennsylvania, New York, West Virginia and Ohio.

El Dorado now -- except for environmental concern about the chemicals used to break the rock, in a process called "fracking." Also, groundwater has been affected in many locations; and there is video of tap water burning.

But proponents of natural gas point out that it has half the greenhouse emissions of coal, and few or no nitrous oxides. Natural gas is set to do for the United States what North Sea oil has done for Britain and Norway.

 


Source: http://oilprice.com/Energy/Natural-Gas/The-Joy-of-Natural-Gas-It-s-Here-Aplenty.html

By. Llewellyn King for OilPrice.com. For more information on oil prices and other commodity related topics please visit www.oilprice.com

 


 

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