Natural gas is mostly methane. When you burn methane in air, it produces carbon dioxide and water. Combine one molecule of methane (CH4) with two molecules of oxygen (O2) and you get one molecule of CO2 and two of water. The inescapable consequence of this is that when we burn natural gas and release the combustion products into the atmosphere, we warm the climate. The equation couldn’t be more simple.
The world as a whole is on track to blow right past the safe level of carbon dioxide in the atmosphere, and push things to the point where dangerous climate change will almost certainly happen. As a result, every new gas find is a blow to humanity as a whole.
Of course, it isn’t seen that way by the people who find the gas. Off the coast of Israel, the recently discovered Leviathan field may contain 453 billion cubic metres of climate-warming gas. Extracting and selling it will be profitable for the firms and governments involved, but it will probably be counterproductive for humanity as a whole. Whatever is gained today through the use of that energy will be lost in the future, when we need to deal with the consequences of the extra warming.
People sometimes celebrate the increased use of natural gas as a climate change solution, since you can get more electricity for each unit of climate change produced by burning natural gas than you can by burning coal. What this misses is how long it takes for any greenhouse gases we add to the atmosphere to come out. Every unit of fossil fuel we burn is a problem, and each new fossil fuel discovery risks pushing back the day when we move to safer forms of energy.
What the celebration of new gas finds also misses is that there is no reduction in the ultimate combustion of coal, perhaps just a slight delay (at best: i.e. gas now, coal later), or simply more growth in energy consumption (at worst: i.e. coal + gas now).
How can we maximize the price of fossil fuels?
BHPBillitonLtd., the world’s biggest mining company, agreed to buy Chesapeake Energy Corp. assets in central Arkansas for US$4.75-billion in cash Monday, entering the U.S. shale gas business for the first time.
The deal comes less than two weeks after PetroChina announced plans to spend US$5.4-billion to buy half of Encana Corp.’s Cutbank Ridge resource in B.C.’s north east. It also marks a new acquisition strategy for BHP, three months after its US$40-billion takeover offer for Potash Corporation of Saskatchewan was rebuffed by the Federal government.
BHP, Australia’s largest oil and gas company, will add more than 10 trillion cubic feet of gas resources through the purchase of the Fayetteville assets, J. Michael Yeager, chief executive of BHP’s petroleum division, said in a statement.
“This transaction marks BHP Billiton’s entry into the U.S. shale business,” Mr. Yeager said in a separate statement released by Melbournebased BHP. “The operated position we are obtaining will immediately make BHP Billiton a major North American shale gas producer.”
There have been 133 oil and gas deals done globally this year, worth US$36.3-billion, according to data compiled by Bloomberg. Last year’s deals worth US$285.3-billion were the second highest on record, behind 2007. Deal premiums this year have been announced at an average 24% premium, compared with last year’s average 19%.
Byron,
You’re right.
People pretend that burning gas today means we won’t burn coal tomorrow, but that isn’t necessarily true. We may burn conventional gas, then shale gas, then coal – resulting in a huge amount of warming.
The view that we can help the climate by burning beer is a bit like saying we can be healthier by drinking a glass of wine instead of a glass of whisky. The claim is only true if we don’t go on to drink the whisky as well, afterward.
How can we maximize the price of fossil fuels?
By convincing governments to restrict their production and import.
Such issues have been raised in America, too, but energy firms there have been able to ignore them because they are exempt from many environmental rules. An intervention in 2005 by Dick Cheney, then vice-president, wrested an armful of exemptions specifically for fracking. That has helped the industry grow spectacularly. In 2000 shale beds provided 1% of America’s natural-gas supply; they now produce around 25%. But it has also allowed reckless American frackers to do environmental damage. Some are alleged to have pumped toxic chemicals into the ground with impunity.
SHALE gas has turned the American energy market on its head. Production has soared twelvefold since 2000, to 4.9 trillion cubic feet, or a quarter of the country’s total gas output. By 2035 the proportion could rise to half. As the shale gas flows, prices have come crashing down. Not long ago, America depended on imports of liquefied natural gas. Now it is likely to become a gas exporter. These benefits have not gone unnoticed in Europe.
The old continent has nearly as much technically recoverable shale gas (natural gas trapped in shale formations) as America. Europe’s reserves are 639 trillion cubic feet, compared with America’s 862, according to America’s Energy Information Administration, a government agency. But technically recoverable does not mean economically recoverable, notes Peter Hughes of Ricardo Strategic Consulting.