December 13, 2011

Saudi Aramco on Unconventional Gas, Solar and Oil

After the energy future per Exxon, here is Saudi Aramco on unconventional gas, solar and oil.
Shale gas may turn US from a natural gas importer to a natural gas exporter in a short period of time. 
Only five years ago, for example, observers spoke confidently of the need to build dozens of new LNG import terminals in the United States and of the overdependence of European consumers on Russian gas.  Now, by contrast, the challenge is finding an “outlet” for the new production of shale gas, and downward pressure on natural gas prices.  The positive impact of increased shale gas supplies on American petrochemicals manufacturing is already apparent, and given the vast shale gas resources and ramped-up production in the US, there are even plans to convert existing LNG import terminals into export facilities.  To get some sense of the scale of these changes, consider that the estimates of unconventional gas in place around the world are in the range of 35 thousand trillion cubic feet, compared to currently proven conventional gas reserves of 64 hundred TCF.
Shale oil also has a promising future for the Americas. 
In addition, there is a new emphasis in the industry on unconventional liquids, and shale gas technologies are also being applied to shale oil.  The massive heavy oil potential in both North and South America is drawing greater attention, and the future development of kerogen-based oil shales remains an enormous target.  Some are even talking about an era of “energy independence” for the Americas, based on the immense conventional and unconventional hydrocarbon resources located there. While that might be stretching the point, it is clear that the abundance of resources and the more “balanced” geographical distribution of unconventionals have reduced the much-hyped concerns over “energy security” which once served as the undercurrent driving energy policies and dominated the global energy debate.
Renewable energy investors have been jumping from technology to technology without much success - a poster child being Khosla Ventures. Cheap hydrocarbons change the economics of renewable energy, at least for sometime. They also provide a better window to develop truly robust renewable energy technologies. 
As I said, this current contraction should not come as any great shock.  We all recall government policies which helped direct private sector investments toward a “hydrogen economy” which has not panned out.  Then we witnessed what I call the “biofuels bonanza,” which siphoned off taxpayer monies into subsidies for an unsustainable energy source, while also impacting food prices.  Then it was thought that cellulosic biofuels—which could be produced without diverting food crops from the family table to the fuel tank—would quickly become economically competitive with established sources.  Today though, forecasts of biofuels production are much less bullish, and even the more realistic production targets are being pushed farther into the future.
Saudi Aramco is continuing to invest in Solar and also wants everyone to use more oil and gas.

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