With the stock markets suffering some mild pullbacks I thought it would be appropriate to send out another upbeat piece about shale energy. This article is from Maclean’s, which is Canada’s only weekly news magazine. Early in the article we have the somewhat obligatory reference to the recent report from the International energy Agency:
“North America has set off a supply shock that is sending ripples throughout the world,” declared Maria van der Hoeven, executive director of the International Energy Agency (IEA), which, in May, issued a prediction that America’s oil and gas boom “will be as transformative to the market over the next five years as was the rise of Chinese demand over the last 15.”
If we move past the superlatives, what is undeniable is “after decades spent tracking the global price of crude, North American natural-gas prices have recently become unglued from the rest of the world, plunging from $13 per thousand cubic feet in 2008 to below $2 last year. (They’re now closer to $4.) . . . As the country’s energy boom has shown, even something as seemingly insignificant as figuring out how to drill a hole in a bed of underground rock can change the course of history.”
The Maclean articles has particular insights into the Canadian perspective on shale energy:
"An analysis by CIBC World Markets in February predicted U.S. natural-gas imports from Canada will fall another 10 per cent over the coming decade . . . for now, cheaper gas prices have been good for the economy, encouraging utilities to switch from coal-fired power plants to gas and lowering costs for oil-sands producers, whose operations are among the largest consumers of natural gas. B.C.’s plans to expand its liquefied-natural-gas export industry are based entirely on the premise that North American gas prices will stay depressed—prices here are as much as four times lower than in Japan. More worrisome for Canada is the oncoming glut of global oil. For Canadian producers, whose oil is among the costliest to extract and refine in the world, low oil prices could prove disastrous. Canadian oil-sands companies need prices to stay above $80 a barrel to justify new in-situ drilling operations."
Enjoy the full article. It is an encouraging read on what looks like another down DJIA day!