Why Marcellus shale gas really is a game changer

Prior to the upsurge in shale gas drilling, and the vast new reserves that are now understood to exist, the odds-on favorite for supplementing the waning conventional domestic supply of natural gas was liquefied natural gas (LNG) brought here from Indonesia, the Middle East, and Russia. Huge capital investments were made in LNG terminals that now sit largely idle. For example, there is the Costa Azul terminal built on the west coast of Mexico with a capacity of 1 billion cubic feet of natural gas per day, or about 15 percent of the natural gas used in California. The Sabine Pass facility on the Texas-Louisiana border is another one built that now gets practically zero business. A massive floating LNG terminal was also proposed for Long Island Sound, but was put on hold due to opposition by environmentalists as well as the Obama Administration. The present U.S. gas glut is in no small measure the outcome of intense shale gas drilling the past few years in the Barnett, Haynesville and Marcellus shale formations that has created a bountiful supply of domestic gas and dimmed the prospects for building additional LNG terminals. Clearly, the development of shale gas and other unconventional sources such as coal-bed methane has helped enhance the energy security of the U.S. and its allies, and reduced the need for imported LNG. That's something to ponder when shale gas gets completely trashed for the supposed evils of hydro-fracing. Thanks to Marcellus shale drilling in Pennsylvania and West Virginia, now Boston, New York City, Philadelphia, D.C. and other east coast cities have a guaranteed source of natural gas whereas formerly the best hope for expanding these cities' supplies was by importing LNG from unstable and/or unfriendly regions of the world. Read more

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Comment by Tom Copley on December 7, 2009 at 10:16am
Bruce-- I have no idea of what the major US energy producers' plans may be, or why. I was merely commenting on the fact of current market conditions. The North American LNG terminals are getting little or no business. I'm sure the recession has something to do with it too, yet it is a fact that the large eastern U.S. cities are presently benefiting from the advent of Marcellus shale gas in the form of a much more stable supply and will even more as the years roll on. If this story were well understood by a lot more people, it could take some of the sting out of the often baseless environmental concerns about shale drilling. If you have to suffer some pain, it always helps to know at least it's for a good reason. Regarding California, since I live there, I'll just say that its energy policy has been contentious since before Gray Davis was in office. If you will recall, it was almost brought down once before by the machinations of Enron and their ilk. The state should be so lucky as to have its own Marcellus shale, but it doesn't! --Tom
Comment by Bruce Wayne Allen on December 2, 2009 at 11:48am
Why is it LNG terminals are still being built thru out the world (Australia as prime example)? And major US energy producers are still funding capital projects that include LNG, and have their own permitting happening, and new Capital project plans to build more LNG plants? Could it be they can see a change coming in transportation fuels ( Natural Gas) of the future? It is already happening with State of California just adopting there own Cap & Trade program to lessen their Carbon footprint it is in State Legislation as I write?

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