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Page added on November 9, 2011
Yergin: How Shale Gas Is Like Walmart
The breakthrough energy innovation of the 21st century is not thin-film solar, sophisticated wind turbines, advanced biofuels or small-scale nukes.
It’s shale gas.
So says Daniel Yergin, the energy guru and author of The Quest: Energy, Security and the Remaking of the Modern World (Penguin, $35), who was interviewed today (Nov. 
by Walter Isaacson at the Aspen Institute in Washington. Yergin, the best-selling author, consultant and all-around energy guru, is right: The ability to extract natural gas from shale, using a controversial technique known as fracking, is reshaping America’s energy landscape.
“So far this century, this is the biggest innovation in energy, in terms of scale and impact,” Yergin said. He likened its impact on the energy business to the arrival of a new Walmart in town, which shakes up competitors, big and small.
The impact of cheap, abundant natural gas on energy usage has enormous implications for the climate crisis.
Cleaner-burning gas could replace dirty coal as a fuel to generate electricity. Then again, Yergin said: “It’s does create a more challenging marketplace for wind and solar and everything else.”
Daniel Yergin
I’ve just started reading Yergin’s book, and it’s fascinating. He knows his stuff, did lots of research and writes well, although it must be said that he’s an establishment figure who some critics (like David Roberts of Grist) say is too industry-friendly.
Be that as it may, there’s no doubt that shale gas is a forced to be reckoned with: Shale gas production grew by 17 percent from 2000 to 2006, which isn’t bad, and then it really took off. Better fracking technology (and higher prices) drove the average annual growth rates to 48% between 2006 and 2010, according to the U.S. Energy Information Administration. Currently, the EIA says, about 23% of U.S. electricity is generated by burning natural gas; by comparison, about 45% comes from coal and just 3.6% comes from all non-hydropower renewables, i.e., wind, solar, geothermal and waste. The U.S. now appears to have a 100-year supply of natural gas, says the American Petroleum Institute, citing the work of the Potential Gas Committee, a nonprofit group of industry experts.
“In the energy sector, it all comes down to scale,” Yergin said.
Yergin views the shale gas revolution as a boon. “This resource will grow and be very beneficial to our economy,” he said, because it will create hundreds of thousands of jobs, across many regions. Shale gas is found in Pennsylvania and Ohio, as well as in Louisiana, Texas and Wyoming. Petrochemical plants that left the U.S. when natural gas prices spiked could return. Consumers should benefit from lower electricity and heating costs.
He’s confident that the environmental issues around fracking can be resolved. Yergin, who served on an energy department advisory committee on shale gas, said: “The likelihood that fracking is going to affect the water supply is, as the scientists on the committee said, very, very, very unlikely.” Local air pollution and waste issues can also be managed, he said. “The need for environmental protection can be met if approached properly,” Yergin told a congressional hearing last month. This matches what I’ve been hearing from companies like Shell.
Yergin does not disparage cleaner forms of energy. Costs of solar are coming down because of low-cost manufacturing in China. Wind, he said, is entering the mainstream. “It’s a conventional form of energy,” he said. Can wind compete with coal or natural gas without subsidies, he was asked. “There’s a lot of argument about that.”
I asked Yergin whether he thought some combination of technological breakthroughs and political developments could bring down greenhouse gas emissions dramatically, which is what scientists say needs to happen to avert climate instability. He replied that regulations such as California’s renewable portfolio standard, which requires that 33% of the state’s energy be provided by renewables by 2020, and the Obama administration’s automobile fuel efficiency standards, which require cars to average 54 MPG by 2025, will have a major impact.
But, he said, such regulations are “a second-best answer.” A price on carbon would be better, giving a clear signal to consumers and spurring the most cost-efficient low-carbon alternatives.
“Wouldn’t the simplest answer to be to put a tax on carbon?” Isaacson asked.
“After seeing what happened with cap and trade, I think the answer is yes,” Yergin replied.
But, he added, “there’s not a big taste right now for raising taxes.” Climate could get back on the political agenda if the economy improves.
But climate is a global problem, and even if the U.S. moves to a low-carbon economy, China and India will continue to burn fossil fuels. “Twenty years from now, on a global basis, our energy mix won’t look too different than it does today,” Yergin said.
If he’s right about that. we’re all in big trouble.
Fortunately, as the saying goes, predictions are hard…especially about the future.
3 Comments on "Yergin: How Shale Gas Is Like Walmart"
Beery on Thu, 10th Nov 2011 12:11 am
The funny thing about Yergin is that, if you see him interviewed, he seems so reasonable and persuasive. Maybe that’s why he’s still being taken so seriously despite having had all of his predictions turn out wrong.
BillT on Thu, 10th Nov 2011 1:25 am
This guy is smoking something good or is totally delusional. ‘Shale’ anything will not save our economy or way of life. Not now. Not ever.
NIMIGJE on Thu, 10th Nov 2011 10:11 pm
The gas production from shale may and will have some impact on peak gas; these will help us to escape from the consequences of peak oil and peak gas happening simultaneously. One thing is sure, the conventional gas reservoirs are depleting every day, and very fast. The shale gas that will come on stream will deplete even faster, and the ultimate gas recovery will be lower than the conventional gas reservoirs. Solving the peak problem is a great thing, but not on paper or books, the problem must be solved by implementing the ideas on practice. Yes, the peak gas may not be today, it will be a little bit latter. The new inventions, horizontal drilling and multifrac applications, even considered as controversial, are very successful, and this shale gas is giving the world some release to find new sources and implement new breakthrough new technologies, being non renewable or renewable. The mater of the fact is that the entire world understands the problem of demand supply disruption. Everybody understands what we actually are paying for energy, paying for different bills and to fill the car on the gas station with fuel, even on foods, services and taxes.
The peak oil and peak gas, I believe is clear by every company involved on oil and gas production. Allmost all the oil and gas producers, know very well the efforts they have done to keep the production almost flat for these 5-6 years, and the huge investment they have done. They are aware that the oil and gas cost, F&D cost and Production cost are increasing rapidly. Many of them, forced form the needs they have infront of investors, have done tremendous efforts to bring on stream oil and gas from unconventional reservoirs, from shale gas reservoirs, from tight oil and gas reservoirs, and from unconventional bitumen reservoirs or even from deeper and deeper exploration efforts. All these efforts, all the investment have arrived to keep the production almost flat, but the market has dictated higher and higher oil and gas prices. I think this is only the beginning of all the symptoms that the peak oil and peak gas has.
I do not intend to be a critic for any one, however I personaly believe and I join with other people’s opinion that the energy needs are dramatically high and the demand will increase even more on the foreseeable future. This forecasts are based on the past data and my believe is that the non-renewable starting with coal, and going to gas on to oil, will be the energies that will predominate for decades. The renewable energies of course must and will be developed and the requirements are to be developed faster and faster. The same will stay and for nuclear energy, hydro energy, or bio fuels. It will be good to replace the coal with gas, but this sound not possible for the time we live. It is good protecting and the environment from pollutions, but this is not a practical suggestion that some are mentioning. The environment protection is a need, and for this reason, the environment protection must be enforced only by regulations. Until it will be free to dump the combustion products or other pollution product in the atmosphere, the users will continue to dump it for free. Everybody understands that the industrial areas are built away from the residential areas, but the combustion products will be spread all over the atmosphere, being the threat for all, including all habitants. Yes, my opinion is that the regulations must be stricter and protect the environment. This will be an investment which will open jobs for peoples, and on return, all the peoples will pay for the carbon and other polluters. This will benefit to all.
In regards to the forecast that USA has gas for other 100 years, it is really very pleasant news. I hope this is true on a certain degree. USA with conventional gas, coming on decline and consuming less of what the gas consumption is today, comes to a point to produce gas from tight gas and shale gas. This is good for today, but I believe that the 100 years of gas reseves may be achievable with very high investment and of course with very high price. I believe, that hydrocarbons, including here and gas, are everywhere, but only a part of these resources are reserves that can be practically achievable to recover.
Turning back to oil peak, my 30 years job on oil industry, have convinced me that the peak oil, or the plateau has reached and is proved to be behind. The plateau may be kept by Middle East oil producers and Africa oil producers, if the investment on existing reservoirs will be there. The plateau, if this will be implemented may be for other 10 years, other ways a decline by 4% or more may be seen very soon. My opinion is that even if new discoveries with dimensions on the Saudi Arabia will not reverse the peak oil and it is very probable, we will have a shortage on oil supply. This shortage will drive the oil prices to new levels, levels that always will be three digit prices.
The world energy demands that will increase 1.2-1.5% a year are achievable. The future demand will be achievable only with application of new effective technologies, applied on heavy oil, bitumen, and applied on conventional oil reservoirs. The new discoveries, even with dimensions of a Ghawar, cannot be the salvation. The world demand will be more reliable to apply new technologies on existing fields than on new discoveries. I believe that the new discoveries will take place year after year, and the exploration must be a supporting measure to fulfil all the demand on oil, with reasonable prices. I say with reasonable prices, because the price of oil is and must be considered as an exchange prices with other goods. The good that we have in our hands are currencies, being these Dollars, Euros or Libyan Dinars. We, the peoples on exchange of our job, take the respective currencies of each country. If oil and gas producers companies, want us to be oil consumers, then they will keep reasonable affordable prices. The time will show what will happen. The time may show the oil prices going up, or keeping the actual high prices. The actual prices of crude oil around 100-110 $/bbl, to me looks reasonable.
As for the renewable, I believe that the future will bring the renewable on the right place; the renewable must replace non renewable. This has started, and the renewable looks that have some progress. But the renewable have and the restrictions. The free market, the world on depletion on oil, and the world where the energy demand is high, will be a good incentive for investors. We see that the investors are not attracted from these renewable energies without government incentives. We see that many institutions are interested on new breakthrough technologies. Yet it is a long way to teach and solve the problem.
The world has many peoples that may have great ideas, for energies, they may have new breakthrough ideas, but they do not have possibilities to develop their ideas, and get back the wealth that they merit. The actual low on intellectual property is valid only for 20 years, and the intellectual property may be infringed by big companies. This huge potential cannot be used and implemented in practice. I believe that the individuals that have a new idea, which may and will merit the right of intellectual properties, must have the right for 100 Years and not for 20 Years. These individuals must be used, in additions to all research institutes to solve the energy problems that the world has.