Unproven and Environmentally Unfriendly: Is Natural Gas Really the New Coal for the US?

Wednesday 19 December 2012, Amsterdam

More efficient power plants, lower carbon emissions and a wealth of recent discoveries across the country has seen natural gas production boom in popularity in the US, but will it prove a long-term and reliable successor to coal?

The report states that while shale gas is expected to surge in the future, outpacing a receding coal sector, there are several reasons for gas companies to proceed with caution.

Firstly, large-scale natural gas production is a more recent US endeavour, and although hailed as a massive boost for the nation’s energy industry, the country’s shale plays are relatively new and unproven.

For example, last year the US Energy Information Administration (EIA) in its Annual Energy Outlook (AEO) estimated the Marcellus Shale play to have technically recoverable reserves of 400 trillion cubic feet (tcf), whereas in the same year the US Geological Survey (USGS) estimated far more modest reserves of 84.2tcf. The latest guess of the EIA, released earlier this year, places the figure between the two at 140.6tcf.

Additionally, although gas is favoured over alternative fossil fuels for its comparatively low carbon emissions output, gas fired plants are still responsible for a substantial amount of pollution. With emissions targets to meet, GlobalData expects the US government’s growing focus on the commercialization of renewable energy generation is to cannibalize a portion of the expanding shale gas sector.

In 2011, the share of gas in the US power mix was a little over 41%, but while natural gas energy production will continue to grow, its share in the national power mix is expected to fall by 1.6% by 2020, thanks in no small part to government initiated renewable energy initiatives.