Released August 16, 2013 | DENVER, COLORADO
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Shell Energy North America (SENA) (Houston, Texas), the North American unit of Royal Dutch Shell plc (NYSE:RDS.A) (The Hague, Netherlands), is bullish on North American natural gas because it is abundant, acceptable and affordable--and shale development here is a decade or more ahead of other nations, a SENA executive told about 600 investment analysts at an Oil & Gas conference here on Monday.
Beth Bowman, senior vice president at SENA for sales and origination, spoke to attendees at The Oil & Gas Conference 18. Other nations may not be able to replicate U.S. success in extracting gas from shale formations, at least for the next decade. Because of that, the U.S. has a "competitive advantage" in the global gas business.
Natural gas is a global commodity, Bowman continued, and the U.S. is well-positioned to operate competitively in that worldwide market, either via pipeline exports to Mexico and Canada or via liquefied natural gas (LNG) exports. She predicted that LNG will account for 20% of the world's energy by 2020.
The U.S. and Canada are able to participate in the global LNG business, because hydraulic fracturing has dramatically expanded North America's gas resource base while lowering production costs, Bowman told the conference, which was sponsored by EnerCom Incorporated (Denver, Colorado). Bowman noted that unconventional gas resources like shale gas and coal bed methane accounted for about 50% of overall U.S. gas resources of 2,384 trillion cubic feet (Tcf) at yearend 2012, according to a study from the Potential Gas Committee (Golden, Colorado). Shale gas resources jumped to about 1,073 Tcf in 2012, from about 616 Tcf in 2008, she said.
Bolstered by a robust gas resource base, the U.S. is expected to ship 2 trillion to 3 trillion cubic feet (Tcf) of gas per year to Mexico by pipeline by 2040, she projected. Pipeline exports to Canada are expected to stay flat at about 1 Tcf per year until 2040, she added, citing estimates from the Energy Information Administration (EIA) (Washington, D.C.), the statistical and analytical branch of the U.S. Department of Energy (DoE) (Washington, D.C.).
By 2040, the U.S. will be exporting between 1.5 Tcf and 4 Tcf of gas per year through its LNG terminals, the Shell executive added. Shell was playing the North American LNG export business in two ways: by developing unconventional gas resources located near planned LNG export terminals, and by developing LNG export terminals. Shell's Canadian LNG unit has a 40% interest in the proposed Kitimat LNG export terminal in Canada, which would be able to process 12 million tons of LNG per year. Shell also has an 80% stake in a Western Canadian gas resource, Groundbirch, where the resource potential was recently increased to more than 12 Tcf from an earlier estimate of 6 Tcf. In the U.S., Shell has interests in a proposed Gulf Coast LNG export terminal.
The Shell executive sided with the DoE in downplaying the potential impact that U.S. LNG exports could have on domestic gas prices. "In granting three LNG export licenses, the DoE has clearly recognized that LNG exports benefit the U.S.," she told Industrial Info in an interview at the conference. She declined to speculate on how many more LNG export licenses DoE might issue, but she referenced a study for the energy agency conducted by NERA that predicted the U.S. would gain net economic benefits from LNG exports across a wide range of scenarios.
"The world has about 250 years of gas resources, based on current levels of conventional and unconventional gas production," Bowman continued. "Unconventional gas is transforming the global gas business." Among other global regions, only the Asia Pacific area has anywhere near the amount of unconventional gas resources as North America.
Shell is bullish on North American natural gas for another reason, Bowman said: it is more environmentally acceptable for electric generation than coal. She said up to 65 gigawatts (GW) of U.S. coal-fired generation capacity could be prematurely closed by 2015 as tougher environmental regulations take hold. Gas-fired generation will replace most of that closed coal generation, which she estimated would increase U.S. gas demand by 4 Tcf to 6 Tcf per year.
"Gas-fired power plants are also more efficient than coal plants, and have a much lower capital cost per megawatt (MW) of installed capacity," she said. "As the U.S. has added more and more renewable generation to the system, demand for quick-starting gas-fired generation has risen. Gas is the cost-effective way to back up renewable generation."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
Beth Bowman, senior vice president at SENA for sales and origination, spoke to attendees at The Oil & Gas Conference 18. Other nations may not be able to replicate U.S. success in extracting gas from shale formations, at least for the next decade. Because of that, the U.S. has a "competitive advantage" in the global gas business.
Natural gas is a global commodity, Bowman continued, and the U.S. is well-positioned to operate competitively in that worldwide market, either via pipeline exports to Mexico and Canada or via liquefied natural gas (LNG) exports. She predicted that LNG will account for 20% of the world's energy by 2020.
The U.S. and Canada are able to participate in the global LNG business, because hydraulic fracturing has dramatically expanded North America's gas resource base while lowering production costs, Bowman told the conference, which was sponsored by EnerCom Incorporated (Denver, Colorado). Bowman noted that unconventional gas resources like shale gas and coal bed methane accounted for about 50% of overall U.S. gas resources of 2,384 trillion cubic feet (Tcf) at yearend 2012, according to a study from the Potential Gas Committee (Golden, Colorado). Shale gas resources jumped to about 1,073 Tcf in 2012, from about 616 Tcf in 2008, she said.
Bolstered by a robust gas resource base, the U.S. is expected to ship 2 trillion to 3 trillion cubic feet (Tcf) of gas per year to Mexico by pipeline by 2040, she projected. Pipeline exports to Canada are expected to stay flat at about 1 Tcf per year until 2040, she added, citing estimates from the Energy Information Administration (EIA) (Washington, D.C.), the statistical and analytical branch of the U.S. Department of Energy (DoE) (Washington, D.C.).
By 2040, the U.S. will be exporting between 1.5 Tcf and 4 Tcf of gas per year through its LNG terminals, the Shell executive added. Shell was playing the North American LNG export business in two ways: by developing unconventional gas resources located near planned LNG export terminals, and by developing LNG export terminals. Shell's Canadian LNG unit has a 40% interest in the proposed Kitimat LNG export terminal in Canada, which would be able to process 12 million tons of LNG per year. Shell also has an 80% stake in a Western Canadian gas resource, Groundbirch, where the resource potential was recently increased to more than 12 Tcf from an earlier estimate of 6 Tcf. In the U.S., Shell has interests in a proposed Gulf Coast LNG export terminal.
The Shell executive sided with the DoE in downplaying the potential impact that U.S. LNG exports could have on domestic gas prices. "In granting three LNG export licenses, the DoE has clearly recognized that LNG exports benefit the U.S.," she told Industrial Info in an interview at the conference. She declined to speculate on how many more LNG export licenses DoE might issue, but she referenced a study for the energy agency conducted by NERA that predicted the U.S. would gain net economic benefits from LNG exports across a wide range of scenarios.
"The world has about 250 years of gas resources, based on current levels of conventional and unconventional gas production," Bowman continued. "Unconventional gas is transforming the global gas business." Among other global regions, only the Asia Pacific area has anywhere near the amount of unconventional gas resources as North America.
Shell is bullish on North American natural gas for another reason, Bowman said: it is more environmentally acceptable for electric generation than coal. She said up to 65 gigawatts (GW) of U.S. coal-fired generation capacity could be prematurely closed by 2015 as tougher environmental regulations take hold. Gas-fired generation will replace most of that closed coal generation, which she estimated would increase U.S. gas demand by 4 Tcf to 6 Tcf per year.
"Gas-fired power plants are also more efficient than coal plants, and have a much lower capital cost per megawatt (MW) of installed capacity," she said. "As the U.S. has added more and more renewable generation to the system, demand for quick-starting gas-fired generation has risen. Gas is the cost-effective way to back up renewable generation."
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
