The successes of the natural gas market in North America are driving major changes in the energy business. The impact of the gas revolution on the electric power industry gets a great deal of attention. One impact is to contributed to the ongoing decline in electricity prices in the US. Here are a few news articles discussing a trend that I think is going to be big — natural gas impacting the transportation market.
Gas is outcompeting coal in many markets. The railway industry, which depends heavily on coal carriage revenue, is being impacted. Here is news of CP Rail cancelling plans to expand into Wyoming’s Powder River coal basin.
There are lots of projects underway around the continent to replace diesel in trucking with natural gas. Here is news of the development of a natural gas trucking corridor from Alberta to the Pacific coast.
Another way to get gas into the transport sector is to convert it into transport fuels including sulphur-free diesel and jet fuel. This process can also produce paraffins, lube oils, and naphtha (important for pipelining bitumen). Here is a report Sasol’s peripatetic gas-to-liquids proposal. Cheap natural gas not enough to make GTL a success. Jurisdictions will need to create the conditions to sustain a low cost of capital and competitive labour costs to attract GTL investments. Here is a report on Shell’s GTL facility, called Pearl, in the Qatar.
I have posted on this subject in this post called “Future of Road Fuel”addressing the peak oil theory, and “Three Technologies Poised to Impact Oil Market” part of which compares the cost of Shell’s Pearl GTL facility with the cost of a green field oil refinery.
“Gas is outcompeting coal in many markets”
Amazing, isn’t it?
Long term, do you think GTL diesel + li-fe-po hybrid, or li-sulphur all-electrics?
The former certainly has advantages in terms of re-using existing infrastructure and allowing burn in transport vehicles.
But the later also uses existing infrastructure and makes a handy-dandy dump load for those negative-price dumping events at night.
I believe the natural gas glut is temporary.
It’s my understanding that the price required to make fracking economical is high enough to kill off demand new – particularly the misguided rush to replace coal with gas in the electricity sector.
We have a glut because prices were very high a few years ago: high prices make shale economical. Gas companies went on a drilling spree, and it backfired badly.
North America conventional gas production is way past peak (pretty much flat production), so growth is not possible without unconventional gas.
We need gas not only for heating and electricity generation, but fertilizer production, petrochemicals, manufacturing and much more. In a decade or two (incidentally the amount of time it takes to replace the automotive/trucking fleet, not to mention start building gas filling stations) I don’t think there will be enough affordable nat gas available for transportation – heck, there may not even be enough for electricity generation.
We probably have much less nat gas than oil.
I forgot to mention that shale gas has very serious environmental problems.