A GLUT IN GAS - Why are we paying higher bills?
Gas glut threatens investment in renewables sector, IEA warns
Gas glut threatens investment in renewables sector, IEA warns
• Liquefied gas capacity will shoot up 47% by the end of 2013
• Shell and Exxon-Mobil are repositioning as gas producers
by Tim Webb guardian.co.uk, Tuesday 9 November 2010
A global gas glut which could last a decade will act as a "major barrier" to the development of renewable energy, cleaner coal plants and nuclear power, according to the International Energy Agency (IEA).
"The golden age of gas" will lead to cheaper gas prices for consumers, particularly in Europe. But the IEA added that it is also likely to result in a rush to build gas-fired power plants at the expense of much cleaner forms of electricity generation.
The IEA's chief economist Fatih Birol also said that "Big Oil" – oil majors such as Shell and Exxon-Mobil – are suffering an "identity crisis" because they find themselves increasingly shut out of regions like the Middle East where most of the world's remaining oil reserves lie. They are repositioning themselves as gas producers, which companies like Shell are marketing as a cleaner form of energy, he said. "In terms of climate change, gas is definitely a good solution compared to coal and oil. But it's not very innocent compared to renewables and nuclear."
The world faces a long term gas glut because of recent technical advances which have made possible the exploitation of previously untapped shale gas, coal bed methane and tight gas deposits, mostly in the US, China and Australia. The IEA, publishing its annual world energy outlook now estimates that 35% of the increase in global gas production to 2035 will come from such unconventional projects. Last year it estimated that unconventional gas production would account for 20% of the growth, although this covered the period 2007 – 2030. Gas is also the only fossil fuel for which it expects demand to grow by 2035.
The world is already awash with cheap gas because of a fall in demand after the global economic downturn and unexpectedly high production of shale gas in the US, despite fears that the industry would be held back by environmental regulations. This has coincided with a surge in the construction of new LNG facilities and equipment which liquefies gas so it can be shipped by tankers from remote areas to market rather than having to build new pipelines. LNG capacity will shoot up 47% by the end 2013, the IEA said. As a result of higher gas supplies and lower demand, globally only about two thirds of pipelines and LNG facilities will be full this year. The figure will be even lower in Europe, which could prompt energy companies such as E.ON to try renegotiating their long term contracts with exporters such as Russian firm Gazprom to get a cheaper deal.
The IEA said that the utilisation rate of pipelines and LNG facilities will still not have returned to 2007 levels by the end of the decade. This assumes that no new infrastructure is commissioned, which it said was extremely unlikely. It has cut its long term global gas price forecasts, by as much as 10% in the US after 2020.
There are environmental benefits to a gas glut because cheaper gas-fired plants are more likely to replace old coal plants, which emit twice as much carbon. But gas plants' low operating cost will make it harder for wind farms and other renewables, including nuclear, to compete and attract investment. "From the perspective of renewables and nuclear it's not good news," Birol said. He also said that despite the £1bn recently committed by the UK government to develop a coal plant fitted with expensive carbon capture and storage technology (CCS), there may be less appetite to invest in CCS.
The IEA report also spelt out the predicament faced by international oil companies. Opec, the body that protects the interests of leading oil-producing countries is forecasting to increase its global share of oil production from a third to more than a half by 2035. State controlled oil companies will account for all of the world's increase in global oil production in the next 25 years, while total non-Opec production will start falling after 2025.
Birol added: "Big Oil face an identity crisis. They got used to being able to explore, produce and market oil. But they're not able to do this in the same way any more. Much of the world's oil reserves are out of reach to them. Therefore they have to redefine their business strategy. Gas becomes one alternative for them to redefine their strategy."
Black gold and greens
The International Energy Agency is estimating that average oil prices will hit $113 a barrel in 2035. This is some way short of the record of $147, set in 2008, and current prices are already close to $90. But the agency admitted that in practice, "short-term price volatility is likely to remain high" – in other words, prices could be much higher or much lower than $113 in decades to come.
The organisation, which advises companies and governments on future energy trends, was also scathing about the Copenhagen climate change summit last December.
It said that based on the extremely loose and uncertain commitments made, global oil production would peak soon after 2035. If governments took firm action to prevent the earth's temperature rising by more than 2C by 2050, it reckoned, "peak oil" would be reached before 2020.
A global gas glut which could last a decade will act as a "major barrier" to the development of renewable energy, cleaner coal plants and nuclear power, according to the International Energy Agency (IEA).
"The golden age of gas" will lead to cheaper gas prices for consumers, particularly in Europe. But the IEA added that it is also likely to result in a rush to build gas-fired power plants at the expense of much cleaner forms of electricity generation.
The IEA's chief economist Fatih Birol also said that "Big Oil" – oil majors such as Shell and Exxon-Mobil – are suffering an "identity crisis" because they find themselves increasingly shut out of regions like the Middle East where most of the world's remaining oil reserves lie. They are repositioning themselves as gas producers, which companies like Shell are marketing as a cleaner form of energy, he said. "In terms of climate change, gas is definitely a good solution compared to coal and oil. But it's not very innocent compared to renewables and nuclear."
The world faces a long term gas glut because of recent technical advances which have made possible the exploitation of previously untapped shale gas, coal bed methane and tight gas deposits, mostly in the US, China and Australia. The IEA, publishing its annual world energy outlook now estimates that 35% of the increase in global gas production to 2035 will come from such unconventional projects. Last year it estimated that unconventional gas production would account for 20% of the growth, although this covered the period 2007 – 2030. Gas is also the only fossil fuel for which it expects demand to grow by 2035.
The world is already awash with cheap gas because of a fall in demand after the global economic downturn and unexpectedly high production of shale gas in the US, despite fears that the industry would be held back by environmental regulations. This has coincided with a surge in the construction of new LNG facilities and equipment which liquefies gas so it can be shipped by tankers from remote areas to market rather than having to build new pipelines. LNG capacity will shoot up 47% by the end 2013, the IEA said. As a result of higher gas supplies and lower demand, globally only about two thirds of pipelines and LNG facilities will be full this year. The figure will be even lower in Europe, which could prompt energy companies such as E.ON to try renegotiating their long term contracts with exporters such as Russian firm Gazprom to get a cheaper deal.
The IEA said that the utilisation rate of pipelines and LNG facilities will still not have returned to 2007 levels by the end of the decade. This assumes that no new infrastructure is commissioned, which it said was extremely unlikely. It has cut its long term global gas price forecasts, by as much as 10% in the US after 2020.
There are environmental benefits to a gas glut because cheaper gas-fired plants are more likely to replace old coal plants, which emit twice as much carbon. But gas plants' low operating cost will make it harder for wind farms and other renewables, including nuclear, to compete and attract investment. "From the perspective of renewables and nuclear it's not good news," Birol said. He also said that despite the £1bn recently committed by the UK government to develop a coal plant fitted with expensive carbon capture and storage technology (CCS), there may be less appetite to invest in CCS.
The IEA report also spelt out the predicament faced by international oil companies. Opec, the body that protects the interests of leading oil-producing countries is forecasting to increase its global share of oil production from a third to more than a half by 2035. State controlled oil companies will account for all of the world's increase in global oil production in the next 25 years, while total non-Opec production will start falling after 2025.
Birol added: "Big Oil face an identity crisis. They got used to being able to explore, produce and market oil. But they're not able to do this in the same way any more. Much of the world's oil reserves are out of reach to them. Therefore they have to redefine their business strategy. Gas becomes one alternative for them to redefine their strategy."
Black gold and greens
The International Energy Agency is estimating that average oil prices will hit $113 a barrel in 2035. This is some way short of the record of $147, set in 2008, and current prices are already close to $90. But the agency admitted that in practice, "short-term price volatility is likely to remain high" – in other words, prices could be much higher or much lower than $113 in decades to come.
The organisation, which advises companies and governments on future energy trends, was also scathing about the Copenhagen climate change summit last December.
It said that based on the extremely loose and uncertain commitments made, global oil production would peak soon after 2035. If governments took firm action to prevent the earth's temperature rising by more than 2C by 2050, it reckoned, "peak oil" would be reached before 2020.
Gas glut threatens investment in renewables sector, IEA warns
• Liquefied gas capacity will shoot up 47% by the end of 2013
• Shell and Exxon-Mobil are repositioning as gas producers
By -Tim Webb guardian.co.uk, Tuesday 9 November 2010 19.10 GMT
A global gas glut which could last a decade will act as a "major barrier" to the development of renewable energy, cleaner coal plants and nuclear power, according to the International Energy Agency (IEA).
"The golden age of gas" will lead to cheaper gas prices for consumers, particularly in Europe. But the IEA added that it is also likely to result in a rush to build gas-fired power plants at the expense of much cleaner forms of electricity generation.
The IEA's chief economist Fatih Birol also said that "Big Oil" – oil majors such as Shell and Exxon-Mobil – are suffering an "identity crisis" because they find themselves increasingly shut out of regions like the Middle East where most of the world's remaining oil reserves lie. They are repositioning themselves as gas producers, which companies like Shell are marketing as a cleaner form of energy, he said. "In terms of climate change, gas is definitely a good solution compared to coal and oil. But it's not very innocent compared to renewables and nuclear."
The world faces a long term gas glut because of recent technical advances which have made possible the exploitation of previously untapped shale gas, coal bed methane and tight gas deposits, mostly in the US, China and Australia. The IEA, publishing its annual world energy outlook now estimates that 35% of the increase in global gas production to 2035 will come from such unconventional projects. Last year it estimated that unconventional gas production would account for 20% of the growth, although this covered the period 2007 – 2030. Gas is also the only fossil fuel for which it expects demand to grow by 2035.
The world is already awash with cheap gas because of a fall in demand after the global economic downturn and unexpectedly high production of shale gas in the US, despite fears that the industry would be held back by environmental regulations. This has coincided with a surge in the construction of new LNG facilities and equipment which liquefies gas so it can be shipped by tankers from remote areas to market rather than having to build new pipelines. LNG capacity will shoot up 47% by the end 2013, the IEA said. As a result of higher gas supplies and lower demand, globally only about two thirds of pipelines and LNG facilities will be full this year. The figure will be even lower in Europe, which could prompt energy companies such as E.ON to try renegotiating their long term contracts with exporters such as Russian firm Gazprom to get a cheaper deal.
The IEA said that the utilisation rate of pipelines and LNG facilities will still not have returned to 2007 levels by the end of the decade. This assumes that no new infrastructure is commissioned, which it said was extremely unlikely. It has cut its long term global gas price forecasts, by as much as 10% in the US after 2020.
There are environmental benefits to a gas glut because cheaper gas-fired plants are more likely to replace old coal plants, which emit twice as much carbon. But gas plants' low operating cost will make it harder for wind farms and other renewables, including nuclear, to compete and attract investment. "From the perspective of renewables and nuclear it's not good news," Birol said. He also said that despite the £1bn recently committed by the UK government to develop a coal plant fitted with expensive carbon capture and storage technology (CCS), there may be less appetite to invest in CCS.
The IEA report also spelt out the predicament faced by international oil companies. Opec, the body that protects the interests of leading oil-producing countries is forecasting to increase its global share of oil production from a third to more than a half by 2035. State controlled oil companies will account for all of the world's increase in global oil production in the next 25 years, while total non-Opec production will start falling after 2025.
Birol added: "Big Oil face an identity crisis. They got used to being able to explore, produce and market oil. But they're not able to do this in the same way any more. Much of the world's oil reserves are out of reach to them. Therefore they have to redefine their business strategy. Gas becomes one alternative for them to redefine their strategy."
Black gold and greens
The International Energy Agency is estimating that average oil prices will hit $113 a barrel in 2035. This is some way short of the record of $147, set in 2008, and current prices are already close to $90. But the agency admitted that in practice, "short-term price volatility is likely to remain high" – in other words, prices could be much higher or much lower than $113 in decades to come.
The organisation, which advises companies and governments on future energy trends, was also scathing about the Copenhagen climate change summit last December.
It said that based on the extremely loose and uncertain commitments made, global oil production would peak soon after 2035. If governments took firm action to prevent the earth's temperature rising by more than 2C by 2050, it reckoned, "peak oil" would be reached before 2020.
A global gas glut which could last a decade will act as a "major barrier" to the development of renewable energy, cleaner coal plants and nuclear power, according to the International Energy Agency (IEA).
"The golden age of gas" will lead to cheaper gas prices for consumers, particularly in Europe. But the IEA added that it is also likely to result in a rush to build gas-fired power plants at the expense of much cleaner forms of electricity generation.
The IEA's chief economist Fatih Birol also said that "Big Oil" – oil majors such as Shell and Exxon-Mobil – are suffering an "identity crisis" because they find themselves increasingly shut out of regions like the Middle East where most of the world's remaining oil reserves lie. They are repositioning themselves as gas producers, which companies like Shell are marketing as a cleaner form of energy, he said. "In terms of climate change, gas is definitely a good solution compared to coal and oil. But it's not very innocent compared to renewables and nuclear."
The world faces a long term gas glut because of recent technical advances which have made possible the exploitation of previously untapped shale gas, coal bed methane and tight gas deposits, mostly in the US, China and Australia. The IEA, publishing its annual world energy outlook now estimates that 35% of the increase in global gas production to 2035 will come from such unconventional projects. Last year it estimated that unconventional gas production would account for 20% of the growth, although this covered the period 2007 – 2030. Gas is also the only fossil fuel for which it expects demand to grow by 2035.
The world is already awash with cheap gas because of a fall in demand after the global economic downturn and unexpectedly high production of shale gas in the US, despite fears that the industry would be held back by environmental regulations. This has coincided with a surge in the construction of new LNG facilities and equipment which liquefies gas so it can be shipped by tankers from remote areas to market rather than having to build new pipelines. LNG capacity will shoot up 47% by the end 2013, the IEA said. As a result of higher gas supplies and lower demand, globally only about two thirds of pipelines and LNG facilities will be full this year. The figure will be even lower in Europe, which could prompt energy companies such as E.ON to try renegotiating their long term contracts with exporters such as Russian firm Gazprom to get a cheaper deal.
The IEA said that the utilisation rate of pipelines and LNG facilities will still not have returned to 2007 levels by the end of the decade. This assumes that no new infrastructure is commissioned, which it said was extremely unlikely. It has cut its long term global gas price forecasts, by as much as 10% in the US after 2020.
There are environmental benefits to a gas glut because cheaper gas-fired plants are more likely to replace old coal plants, which emit twice as much carbon. But gas plants' low operating cost will make it harder for wind farms and other renewables, including nuclear, to compete and attract investment. "From the perspective of renewables and nuclear it's not good news," Birol said. He also said that despite the £1bn recently committed by the UK government to develop a coal plant fitted with expensive carbon capture and storage technology (CCS), there may be less appetite to invest in CCS.
The IEA report also spelt out the predicament faced by international oil companies. Opec, the body that protects the interests of leading oil-producing countries is forecasting to increase its global share of oil production from a third to more than a half by 2035. State controlled oil companies will account for all of the world's increase in global oil production in the next 25 years, while total non-Opec production will start falling after 2025.
Birol added: "Big Oil face an identity crisis. They got used to being able to explore, produce and market oil. But they're not able to do this in the same way any more. Much of the world's oil reserves are out of reach to them. Therefore they have to redefine their business strategy. Gas becomes one alternative for them to redefine their strategy."
Black gold and greens
The International Energy Agency is estimating that average oil prices will hit $113 a barrel in 2035. This is some way short of the record of $147, set in 2008, and current prices are already close to $90. But the agency admitted that in practice, "short-term price volatility is likely to remain high" – in other words, prices could be much higher or much lower than $113 in decades to come.
The organisation, which advises companies and governments on future energy trends, was also scathing about the Copenhagen climate change summit last December.
It said that based on the extremely loose and uncertain commitments made, global oil production would peak soon after 2035. If governments took firm action to prevent the earth's temperature rising by more than 2C by 2050, it reckoned, "peak oil" would be reached before 2020.
A global gas glut which could last a decade will act as a "major barrier" to the development of renewable energy, cleaner coal plants and nuclear power, according to the International Energy Agency (IEA).
"The golden age of gas" will lead to cheaper gas prices for consumers, particularly in Europe. But the IEA added that it is also likely to result in a rush to build gas-fired power plants at the expense of much cleaner forms of electricity generation.
The IEA's chief economist Fatih Birol also said that "Big Oil" – oil majors such as Shell and Exxon-Mobil – are suffering an "identity crisis" because they find themselves increasingly shut out of regions like the Middle East where most of the world's remaining oil reserves lie. They are repositioning themselves as gas producers, which companies like Shell are marketing as a cleaner form of energy, he said. "In terms of climate change, gas is definitely a good solution compared to coal and oil. But it's not very innocent compared to renewables and nuclear."
The world faces a long term gas glut because of recent technical advances which have made possible the exploitation of previously untapped shale gas, coal bed methane and tight gas deposits, mostly in the US, China and Australia. The IEA, publishing its annual world energy outlook now estimates that 35% of the increase in global gas production to 2035 will come from such unconventional projects. Last year it estimated that unconventional gas production would account for 20% of the growth, although this covered the period 2007 – 2030. Gas is also the only fossil fuel for which it expects demand to grow by 2035.
The world is already awash with cheap gas because of a fall in demand after the global economic downturn and unexpectedly high production of shale gas in the US, despite fears that the industry would be held back by environmental regulations. This has coincided with a surge in the construction of new LNG facilities and equipment which liquefies gas so it can be shipped by tankers from remote areas to market rather than having to build new pipelines. LNG capacity will shoot up 47% by the end 2013, the IEA said. As a result of higher gas supplies and lower demand, globally only about two thirds of pipelines and LNG facilities will be full this year. The figure will be even lower in Europe, which could prompt energy companies such as E.ON to try renegotiating their long term contracts with exporters such as Russian firm Gazprom to get a cheaper deal.
The IEA said that the utilisation rate of pipelines and LNG facilities will still not have returned to 2007 levels by the end of the decade. This assumes that no new infrastructure is commissioned, which it said was extremely unlikely. It has cut its long term global gas price forecasts, by as much as 10% in the US after 2020.
There are environmental benefits to a gas glut because cheaper gas-fired plants are more likely to replace old coal plants, which emit twice as much carbon. But gas plants' low operating cost will make it harder for wind farms and other renewables, including nuclear, to compete and attract investment. "From the perspective of renewables and nuclear it's not good news," Birol said. He also said that despite the £1bn recently committed by the UK government to develop a coal plant fitted with expensive carbon capture and storage technology (CCS), there may be less appetite to invest in CCS.
The IEA report also spelt out the predicament faced by international oil companies. Opec, the body that protects the interests of leading oil-producing countries is forecasting to increase its global share of oil production from a third to more than a half by 2035. State controlled oil companies will account for all of the world's increase in global oil production in the next 25 years, while total non-Opec production will start falling after 2025.
Birol added: "Big Oil face an identity crisis. They got used to being able to explore, produce and market oil. But they're not able to do this in the same way any more. Much of the world's oil reserves are out of reach to them. Therefore they have to redefine their business strategy. Gas becomes one alternative for them to redefine their strategy."
Black gold and greens
The International Energy Agency is estimating that average oil prices will hit $113 a barrel in 2035. This is some way short of the record of $147, set in 2008, and current prices are already close to $90. But the agency admitted that in practice, "short-term price volatility is likely to remain high" – in other words, prices could be much higher or much lower than $113 in decades to come.
The organisation, which advises companies and governments on future energy trends, was also scathing about the Copenhagen climate change summit last December.
It said that based on the extremely loose and uncertain commitments made, global oil production would peak soon after 2035. If governments took firm action to prevent the earth's temperature rising by more than 2C by 2050, it reckoned, "peak oil" would be reached before 2020.
Gas glut threatens investment in renewables sector, IEA warns
• Liquefied gas capacity will shoot up 47% by the end of 2013
• Shell and Exxon-Mobil are repositioning as gas producers
By -Tim Webb guardian.co.uk, Tuesday 9 November 2010 19.10 GMT
A global gas glut which could last a decade will act as a "major barrier" to the development of renewable energy, cleaner coal plants and nuclear power, according to the International Energy Agency (IEA).
"The golden age of gas" will lead to cheaper gas prices for consumers, particularly in Europe. But the IEA added that it is also likely to result in a rush to build gas-fired power plants at the expense of much cleaner forms of electricity generation.
The IEA's chief economist Fatih Birol also said that "Big Oil" – oil majors such as Shell and Exxon-Mobil – are suffering an "identity crisis" because they find themselves increasingly shut out of regions like the Middle East where most of the world's remaining oil reserves lie. They are repositioning themselves as gas producers, which companies like Shell are marketing as a cleaner form of energy, he said. "In terms of climate change, gas is definitely a good solution compared to coal and oil. But it's not very innocent compared to renewables and nuclear."
The world faces a long term gas glut because of recent technical advances which have made possible the exploitation of previously untapped shale gas, coal bed methane and tight gas deposits, mostly in the US, China and Australia. The IEA, publishing its annual world energy outlook now estimates that 35% of the increase in global gas production to 2035 will come from such unconventional projects. Last year it estimated that unconventional gas production would account for 20% of the growth, although this covered the period 2007 – 2030. Gas is also the only fossil fuel for which it expects demand to grow by 2035.
The world is already awash with cheap gas because of a fall in demand after the global economic downturn and unexpectedly high production of shale gas in the US, despite fears that the industry would be held back by environmental regulations. This has coincided with a surge in the construction of new LNG facilities and equipment which liquefies gas so it can be shipped by tankers from remote areas to market rather than having to build new pipelines. LNG capacity will shoot up 47% by the end 2013, the IEA said. As a result of higher gas supplies and lower demand, globally only about two thirds of pipelines and LNG facilities will be full this year. The figure will be even lower in Europe, which could prompt energy companies such as E.ON to try renegotiating their long term contracts with exporters such as Russian firm Gazprom to get a cheaper deal.
The IEA said that the utilisation rate of pipelines and LNG facilities will still not have returned to 2007 levels by the end of the decade. This assumes that no new infrastructure is commissioned, which it said was extremely unlikely. It has cut its long term global gas price forecasts, by as much as 10% in the US after 2020.
There are environmental benefits to a gas glut because cheaper gas-fired plants are more likely to replace old coal plants, which emit twice as much carbon. But gas plants' low operating cost will make it harder for wind farms and other renewables, including nuclear, to compete and attract investment. "From the perspective of renewables and nuclear it's not good news," Birol said. He also said that despite the £1bn recently committed by the UK government to develop a coal plant fitted with expensive carbon capture and storage technology (CCS), there may be less appetite to invest in CCS.
The IEA report also spelt out the predicament faced by international oil companies. Opec, the body that protects the interests of leading oil-producing countries is forecasting to increase its global share of oil production from a third to more than a half by 2035. State controlled oil companies will account for all of the world's increase in global oil production in the next 25 years, while total non-Opec production will start falling after 2025.
Birol added: "Big Oil face an identity crisis. They got used to being able to explore, produce and market oil. But they're not able to do this in the same way any more. Much of the world's oil reserves are out of reach to them. Therefore they have to redefine their business strategy. Gas becomes one alternative for them to redefine their strategy."
Black gold and greens
The International Energy Agency is estimating that average oil prices will hit $113 a barrel in 2035. This is some way short of the record of $147, set in 2008, and current prices are already close to $90. But the agency admitted that in practice, "short-term price volatility is likely to remain high" – in other words, prices could be much higher or much lower than $113 in decades to come.
The organisation, which advises companies and governments on future energy trends, was also scathing about the Copenhagen climate change summit last December.
It said that based on the extremely loose and uncertain commitments made, global oil production would peak soon after 2035. If governments took firm action to prevent the earth's temperature rising by more than 2C by 2050, it reckoned, "peak oil" would be reached before 2020.
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