Remember all this? America is running out of natural gas. Prices will soar, making imported liquefied natural gas (LNG) and T. Boone Pickens’ wind farm plan practical, affordable and inevitable. Well, reality intervened. We are having an energy transformation, but just the opposite of what the non-market energy planners predicted.

Shale Gas Revolution

Barely two years later, America (and the world) are tapping vast, previously undreamed-of energy riches – as drillers discover how to produce gas from shale, coal and tight sandstone formations, at reasonable cost. They do it by pumping a water, sand and proprietary chemical mixture into rocks under very high pressure, fracturing or “fracking” the formations, and keeping the cracks open, to yield trapped methane.

Within a year, U.S. recoverable shale gas reserves alone rose from 340 trillion cubic feet to 823 tcf, the Energy Department estimates.…

Author’s note: No, I have not been in a cave for the past two weeks.  The impacts of unconventional gas on energy markets will be measured in months and years, not in days and weeks.  There is essentially nothing that current unconventional gas production can do to moderate crisis-driven escalation of oil prices and oil-linked LNG prices in the next few weeks.

In Part I and Part II of this series, the impacts of unconventional gas discoveries in the U.S., Australia, Canada and elsewhere were explored.  Gas-to-gas competition was seen as a powerful force for price moderation.

U.S. shale gas discoveries and production from coal bed methane (CBM) have already provided great benefits for energy consumers in the Atlantic Basin.  Gas-to-gas competition – shale v. LNG – has led to interesting market outcomes and investments. …

A California superior court recently issued a tentative decision against the California Air Resources Board (CARB) for failing to comply with environmental law pursuant to the implementation of AB 32, California’s global warming law.

The tentative decision directs CARB to rewrite its documentation pursuant to the California Environmental Quality Act (CEQA), and to cease implementation of the AB 32 Scoping Plan until the violation is corrected. The decision is based on violations of process, not the scientific or economic substance of either the CEQA documentation or the scoping plan as critics of climate alarmism would have liked.

Reactions to the tentative finding have ranged from “no big deal” to “hallelujah.” But it is a big deal; CARB’s implementation of AB 32 hangs in the balance, at least for the time being.…

In Part 1 of this series, the trends in U.S. unconventional gas output in were explored. The impacts on gas markets — $3–5/MMBtu — were noted. If unconventional gas puts pressure on LNG and Gazprom, can this supply and supplier turn to Asia as their new market? Maybe, and just for a while. (1)

1.1.1 Australia’s Experience with Coal Seam Gas

CSG accounts for almost 15% of Australia’s growing gas production, and as much as 30% of probable reserves. LNG plants based on CSG are slated to commence production in 2014, with production of 794 Bcf/y (~16.7 mtpa). Australia’s CSG is believed to occur roughly above shale gas basins, raising the possibility of further unconventional production. Figure 1 shows the CSG, conventional gas fields and transmission infrastructure in Australia’s Queensland State.…