Everyone and their mum knows that we’re running out of cheap energy, and that major price spikes are in the offing, even if currently prices are down from their all-time highs. Unless we invest RIGHT NOW in high-speed rail, offshore drilling, wind farms, althewhile blanketing the the desert with solar panels, then we’re doomed to a future of resource wars with China and gas lines.
Trefgarne makes an cornucopianist argument in favour of a natural gas future that will doom the old energy cartel and bring about a more peaceful, less political word:
To understand why, you need to get up to speed on the exciting phenomenon of so-called tight gas. This, after coal, could perhaps be the world’s most prolific energy source. Hitherto, we have relied on conventional deposits of gas. But tight gas is locked into difficult rock formations, such as shale, and in the past couple of years the industry has found low-cost ways of fragmenting those rocks in order to get at the gas, particularly in America. The result is that US gas reserves have effectively doubled, almost unnoticed; and the same technology can be readily applied in Canada, Australia, Asia and even parts of Europe.
As we go into the autumn, US gas storage units are almost full to bursting. Facilities once designed to import are being turned around for export. When it comes to gas, America is the new Russia. And for the rest of the world, tight gas equals one thing: freedom.
How has this amazing development come about? Well, my friends, it is the market at work. The high prices of the past decade incentivised a scramble for new technology and projects which are now producing.
A proper global market for natural gas is also rapidly emerging. But unlike the oil market, it has no Opec cartel to dominate it. Previously, gas was only moved about by pipelines and customers had to accept what they were given. But the world pipeline system is being augmented by Liquified Natural Gas, or LNG, which comes in frozen on ships. The difference is absolutely crucial because LNG cargoes can be redirected, and that means they can be traded.Indeed, the average cargo is probably traded tens, if not hundreds, of times and can change course frequently before it reaches its destination.
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